With a much-anticipated September launch of roughly 40 new digital services, including 16 mandatory ones, broadcasters and distributors are in the final stretch of carriage negotiations for second-tier digital channels, and there’s still little word on who’s picking up what.

‘It’s a very complicated negotiation process, more so than ever before,’ says Janet Yale, president and CEO of the Canadian Cable Television Association. ‘[Distributors are trying] to work out a lot of many parts (sic), all at the same time.’

In the last launch, in 1997, Rogers had a virtual monopoly over broadcast distribution, there was a fixed number of services to be launched, the technology only allowed for one kind of packaging and, of course, all the new services were granted guaranteed carriage.

‘This time around there’s multiple distributors, with cable and satellite competition, more services than ever before, some of which don’t have guaranteed carriage, and there’s more packaging choices. Distributors may put in multiple packages, themed packages or singles,’ says Yale. ‘It makes it hard to conclude with one player until [the distributor has] dealt with all the players. Then you can think of packaging thematically.’

Industry insiders have consistently reported that well-branded services are the best bet in attracting audiences as well as distributors looking for ease of launch. Nesting, which allows for repurposing of content and resource sharing, is also a major incentive for broadcasters, who acknowledge that the new onslaught of channels, even the successful ones, will lose money for the first few years.

Alliance Atlantis Broadcasting is so far confirmed to be launching an impressive combination of highly branded and nested Category 2 channels on Shaw Cable Systems and Star Choice’s direct-to-home.

They include: National Geographic Channel, a 24-hour chronicle of some of the world’s most remote destinations; BBC Canada, a presentation of the best of British television, with a contemporary feast of edgy comedies, gritty dramas and classic favorites; BBC Kids, a lineup of children’s programming from the British broadcaster’s library; Showcase Romance, a star-studded lineup of heartthrobs and heroines in some of the most famous love stories of all time; and Showcase Action, an uncut, adrenaline-packed lineup of high-speed action movies and explosive series. AAB is still negotiating carriage for Showcase Classics and Do-It-Yourself Canada, which AAB CEO Phyllis Yaffe says will likely launch later in the year.

Some distributors, confirms Yaffe, will introduce small packages in the winter and the following fall. ‘What’s different this time is that each distributor has to make up their own marketing and rollout plan. We’re used to industry-wide initiatives…but this is good for [broadcasters] because the distributors will be putting more effort into making audiences aware of our services.’

Of course, AAB’s group of seven (including its two Category 1 services, Health Network Canada and The Independent Film Channel Canada) already has a leg-up on the awareness trail, perhaps one of the reasons the specialtycaster is the first to complete its negotiations with at least one cabler. While it has also confirmed it has inked a deal with Bell ExpressVu, details are yet to be made public.

‘The process has been rigorous,’ says Yaffe. ‘[But] the biggest challenge hasn’t happened yet, which is launching all these channels….It’s a phenomenal ramp-up. We’re hiring new people every week.’

Meanwhile, Jim Shaw, CEO of Shaw Communications, says Shaw continues to negotiate supply deals with Corus, CTV, Global and Chum, with final contracts due as early as mid-July. ‘This is the biggest launch of programming in Canadian history.’

Shaw will launch 28 channels this fall, including 16 Category 1s and 12 Category 2 services. Among the second-tier channels, Shaw will air MSNBC Canada, in which the cable company has a minority stake (Rogers Broadcasting has majority) and one channel from affiliate Corus Entertainment. Picking up the two affiliated Category 2 services means the cabler must, according to the 5:1 rule, pick up an additional 10.

The cabler has also been limited to the Category 2 services that are ready to launch in September, a reality that so far excludes one-off operators, says Peter Bissonnette, president of Shaw.

One-off players are said to be delaying their launches for a year. ‘With no track record, it’s a hard sell,’ says Yaffe. ‘Distributors are concerned about launching channels that don’t explain themselves automatically. Without recognizable names, they have to ask how much marketing is needed.’

Because the Category 2 services are only incrementally required to program 35% Cancon over their seven-year licence term (15% in year one, 25% in year two and 35% in year three and beyond), many services, like AAB’s BBC channels and Corus’ soon-to-be launched Discovery Kids, will begin with mostly foreign content and become Canadianized later on, says Yale.

The two million Canadian homes ready to receive the digital channels include 600,000 subscribers to Star Choice and 250,000 subscribers to Shaw’s cable delivery option, 750,000 to Bell ExpressVu, 200,000 to Rogers and 100,000 to Cogeco.

While it is the broadcaster’s concern to figure out the most commercially viable services to put out in an ever-fragmented market, the distributor has to decipher its capacity to pick up these services.

And capacity is an issue, confirms Bissonnette. ‘We need five or six analog channels to carry the digital signals and that puts us at the current limit,’ although the company is upgrading to allow for more capacity.

Channels are added on multiples of compression. The compression ratio is generally 8:1; meaning every one unused channel provides space for eight compressed digital signals, depending on the amount of action being aired. Sports, for example, takes up more space than, say, interviews. *

-www.ccta.ca

-www.allianceatlantis.com

-www.shaw.ca