Vancouver: The Canadian broadcasting sector has found admirers in its American counterparts, who are watching from afar as we grapple with consolidation through multiple platform ownership and forge a digital network universe.

‘The Canadian marketplace is the envy of the U.S.,’ says David Bank, a New York-based director of equity research for RBC Capital Markets, who presented to delegates of the Canadian Association of Broadcasters’ 76th annual convention in Vancouver, Oct. 20-22.

Convergence, through common ownership of advertising-supported media – such as television, newspapers and billboards – and the ability to cross-sell to end-users and subscribers, is a goal coveted by U.S. companies, even though results to date are under-whelming.

‘In both cases, convergence has been relatively unsuccessful in driving top-line growth,’ said Bank, explaining that U.S. media companies are thus far barred from similar multimedia ownership. ‘But these things take time and there is a logical advantage in dealing with single organizations. The scenario needs to play out. We need more patience.’

‘CanWest’s model [of convergence] will either validate the hype or pierce the myth,’ said American analyst Mark Masiello, managing director of Providence Equity Partners, speaking with Bank on a panel called Bay Street Meets Wall Street. ‘Scale matters at the end of the day. Convergence is the way in Canada because of the regulatory realities.’

‘We might not be the best test case for multimedia strategies,’ said panelist John Maguire, VP of finance and CFO at CanWest Global Communications, ‘but we are increasing market share and lowering the unit costs of delivery. We don’t have the results we’d like, but the trending is right.’

That diversification, compared to the pure investment plays of U.S. broadcasters, makes it tough to value Canadian broadcasters, however. According to Bank, valuations of Canadian broadcasters are discounted 25% to 30% compared to U.S. broadcasters.

Caps on foreign ownership also impair values, said panelist John Tory, president and CEO of Rogers Cable.

‘Regulatory overhaul is overdue,’ said Tory, calling for immediate action rather than the ‘incrementalism’ suffered to date by Canadian business. ‘It rests with all of us. There is no industry vision and no government vision. We’ve become cozy and comfortable just to be here. If we want to be major players, we have to look at changing the rules.’

Diginets

The U.S. is also learning from Canadian forays into digital networks such as the Category 1 and 2 licences launched one year ago.

‘For us, year one was a tremendous learning curve,’ said Earl Weiner, VP of marketing and sales at Stornoway Communications, operator of i-channel and bpm:tv, on a panel called The Digital Licencing Framework – Year Two. ‘We’re looking for a brighter year two and year three.’

Success in year two, said Weiner, will come in refining the mission and brands of the diginets.

Better coverage of existing channels, rather than the launch of new channels, will characterize the growth of the digital broadcast sector, said panelist Peter Miller, VP of planning and regulatory affairs at CHUM.

‘We’re surprisingly on track,’ said Miller, looking back at the struggles of the inaugural business year. ‘There is no surprise in the lack of advertising, but the big surprise has been the huge difference in development strategies with distributors.’

Rogers Cable, for instance, has signed up all digital operators, while Shaw has been far more choosy and DTH services somewhere in the middle, he said.

Satellite theft

The CAB conference also tackled the thorny issue of satellite theft, both in a panel called DTH Piracy – The Battle Continues and in two major announcements in the legal and PR campaigns to turn the tide.

Bell ExpressVu, CTV, Astral Media and Alliance Atlantis Communications have joined forces to launch a $100-million lawsuit against alleged dealers of illegal satellite equipment in Toronto, Ottawa, Winnipeg, Brandon and Surrey.

At the same time, the Coalition Against Satellite Signal Theft has launched a bilingual print, radio and television public awareness campaign to educate Canadians that black- and grey-market satellite service is illegal. Coalition members have donated the media space to run the campaign.

According to the CASST, there are between 520,000 to 700,000 illegal satellite systems active in Canada, with an overall impact of $400 million in lost copyright and subscription fees. Individuals convicted of receiving a scrambled transmission without permission face fines of up to $10,000 per day and/or six months in prison.

DTH Piracy panelist Luc Perreault, VP of communications and regulatory affairs for MeteoMedia, said every dollar of revenue lost to piracy steals up to 40 cents from producers of Canadian content.

Panelist Larry Rissler, VP and special counsel at U.S.-based DIRECTV, said his company doesn’t knowingly activate services to Canadians using illegal satellite services. Grey-market subscribers, for instance, have to supply DIRECTV with five or six false statements in order to get the signal in Canada.

One of those grey-market customers, panelist Terrence Corcoran, editor-in-chief at the Financial Post, argued that grey-market service is about choice and that he can’t get C-SPAN anywhere else. Stricter enforcement of the grey market will only encourage greater black-market service, he added.

Keynote

In the convention’s keynote address, meanwhile, Don Tapscott suggested that the term ‘broadcasting’ has a limited shelf life, given the demographic revolution that will impact how television is consumed. The author and chairman of Digital 4Sight said that children spend as much time with their computers and interactive media as their parents did with television.

‘This is the first time in history that children are an authority about something important,’ said Tapscott, reminding parents in the audience as to who handles their systems administration at home.

Kids, he suggested, don’t want to be ‘broadcast to.’ Instead, they want a more personal relationship, which, along with technological change, will affect how television is delivered in the future.

‘Maybe you’ll be called the Canadian Association of Digital Media,’ said Tapscott to CAB members.

New business models – away from vertical integration and toward business networks and partnerships – changes in learning, evolutions in entertainment models such as video games and interactive television and demands of new corporate governance practices will also impact broadcasters.

‘This is the death agony of the old model,’ he said, referring to current headlines outlining corporate accounting misdeeds that are in turn leading to a new transparency in how companies operate. ‘If you’re going to be naked, you better be buff,’ said Tapscott.

As part of the convention, the CAB elected new boards for the 2002/03 year with the challenge of heightening returns for shareholders and improving service in communities.

Gerry Noble, president and CEO at Global Television Network, is the new chair of the 14-member television board, and Jay Switzer, president, CHUM Television, is vice-chair. On the 14-member specialty and pay board, Phyllis Yaffe, CEO of Alliance Atlantis Broadcasting, is the new chair and MeteoMedia’s Perreault is vice-chair.

Joining the new chairs and vice-chairs on the 12-member executive board, meanwhile, are: Alain Gourd, joint chair; Paul Robertson, past chair; Rob Braide and Gary Miles, chair and vice-chair, respectively, for radio; treasurer Doug Rutherford; Rick Arnish, special delegate representing small markets; Michel Arpin, special delegate; and Glenn O’Farrell, CAB president and CEO.

The conference’s closing gala celebrated the outstanding work of CAB members with the presentation of the Gold Ribbon Awards. This year’s recipient of the prestigious Gold Ribbon for Broadcast Excellence was Jim Pattison, the B.C. entrepreneur whose Jim Pattison Group broadcasting operation serves small markets in B.C. and Alberta. A full list of winners is available at the CAB website.

-www.cab-acr.ca