Glenn O’Farrell is president and CEO of the Canadian Association of Broadcasters.

Canada has a vibrant, dynamic private television industry. Now, consider the motives of people who are taking shots from the sidelines.

Applications recently submitted to the CRTC by the Canadian Cable Television Association and by 49th Media, a start-up underwritten by the multibillion-dollar global advertising behemoth Omnicom, strike at the very financial underpinnings of the Canadian broadcasting system, threatening its vitality and independence with the lure of fool’s gold.

The most ominous by far is 49th Media’s application to the CRTC for a licence to operate a satellite relay distribution undertaking. The applicant, with the backing of Omnicom Canada, a subsidiary of Omnicom Group, proposes to take the signals from CNN, A&E, TLC, TNN and TBS – the top-rated U.S. specialty channels – strip out U.S.-made advertising and substitute Canadian advertising that they themselves will sell.

With one stroke of the regulator’s pen, 49th Media would become, overnight, Canada’s third-largest television audience marketing vehicle, with the capability to strip hundreds of millions of dollars per year in revenue out of the system.

The leaps of logic underlying this proposal would give a circus acrobat vertigo.

The fantasy of 49th Media begins with the far-fetched suggestion that hundreds of millions of dollars in potential revenue are simply sitting around unspoken for. Indeed, the company argues in florid terms that it would be merely ‘unlocking the value’ within Canada’s broadcasting system by recouping ‘lost audiences’ for advertisers.

This is an egregious distortion, largely fuelled by an equally egregious assumption that advertising dollars can be made to grow by downward pressure on unit prices driven by dumping huge amounts of new inventory. The marketing sizzle and buzzwords are evocative but empty. The money has to come from somewhere.

Actually, revenues for the sale of airtime by conventional broadcasters fell by almost $20 million in 2002, with a net reduction in PBIT of more than $60 million.

Clearly, 49th Media’s application would create a glut of advertising inventory at a time when new services have already caused oversupply in the system. This glut would trigger deflation, resulting in discounted advertising rates on all existing media, including conventional, specialty, digital and radio broadcasters. It’s simply the law of supply and demand.

The appeal to advertisers is obvious. The lure to television content producers takes the form of the company’s meaningless undertaking to pay 25% of its expected revenues from Canadian ad sales into the Canadian Television Fund. Again, one has to assume that by some stroke of magic new money will be created. On the contrary, by driving down revenues from advertising, revenues on which conventional and specialty broadcasters depend, a net reduction in funding available for investment by private broadcasters in new programming is an inevitable consequence.

There’s no real worth in this proposal, just fool’s gold. Dealing such a blow to the revenues of broadcasters could even have the additional effect of reducing their ability to meet current levels of licence fee payments to producers.

The CCTA, meanwhile, has come out with two of its own ‘selfless’ applications. One proposal is extremely similar to 49th Media’s, without the pretense of driving new money into program production. The other would authorize cable companies to offer 17 additional foreign services, including HBO, Nickelodeon, Showtime and ESPN, all of which compete directly with licensed Canadian specialty and pay services, which already provide the best of these services.

Under the spurious cover of fighting satellite piracy, and with the argument that all signal thieves want is more choice, CCTA proposes to make Canadians pay for the privilege of seeing shows they already receive on Canadian networks and specialty services. Shows such as Six Feet Under, Sex in the City, The Sopranos and SpongeBob SquarePants would be available only in high-cost premium digital packages for which consumers would have to open their wallets three times: once to get analog, a second time for digital, and a third time for the premium package.

CCTA’s argument falsely assumes that television signals thieves have been driven to do so by lack of choice. They have gone so far as to liken someone stealing satellite signals to a hungry man stealing a loaf of bread to feed his family. Pre-pardoning thieves with a ‘choice’ excuse is like saying a gunman holds up banks because he can never find an ATM. Were this true, signal piracy would not exist in the U.S. Three to four million American viewers would not be stealing HBO and ESPN from DirecTV. The only choice that enters the equation on signal theft is the choice to break the law to get something for nothing. It’s hard to compete with free. Let’s be straight, theft is theft.

Once again, Canadian content, Canadian production, and Canadian talent would end up holding the short end of the stick. ESPN and HBO would not begin airing Canadian shows as a condition of licence. At the same time, conventional Canadian television, pay and specialty services currently earning revenues from airing popular U.S. shows, revenues that enable them to invest in producing original Canadian content, would see their earnings from these sources shrivel as the U.S. services withheld programming for their own use.

This is not about improving choice or fighting signal theft. It’s simply a cash grab: a cynical plan to displace programming from Canadian services to foreign services at increased prices, with the benefit accruing to the cable companies. It would undermine the very foundation of our Canadian television system, in which broadcasters, government regulators, producers and artists are bound together in a unique partnership.

Canada’s vibrant television industry would never have come about without the creativity and passion of this country’s producers, artists and technicians. But neither would it have come about without the support and dedication of Canada’s private broadcasters and government regulators, which, over the past 30 years, staked out the business and regulatory environment in which Canadian talent and skill could flourish.

-www.cab-acr.ca