It’s hearings season in the nation’s capital, and that only means one thing – brinksmanship is again the order of the day.

Those hoping for an immediate broadcaster bailout were undoubtedly disappointed by James Moore’s appearance before parliament’s Heritage committee on April 29. The Heritage minister offered support, but no new concrete initiatives for the ailing over-the-air TV industry, saying the Conservative government hasn’t ‘made any commitments with regard to the broadcasting industry.’

Moore added that the impact of declining ad revenues, fragmenting audiences and new program delivery systems ‘is high on [his] list of concerns,’ but indicated that the industry shouldn’t rely solely on the government and suggested that the changing TV environment is also bringing new opportunities in digital.

However, he did indicate there was a need for a long-term plan, and confirmed the CBC will receive about $60 million in top-up funding for Canadian programming this fiscal year. (The pubcaster has received the additional funding annually since 2001.) ‘Of course,’ the minister sympathized, ‘we have our eyes and ears open for what possible solutions might be best suited for the industry, both for the CBC and for the private broadcasters.’

That’s certainly welcome news to Canada’s national pubcaster. Earlier in the week, CBC president and CEO Hubert Lacroix urged the government to include it in any efforts to help ailing over-the-air networks, and repeated calls for stable, long-term funding. ‘I didn’t come here to ask for additional money,’ said Lacroix, ‘but to remind you that although I have a different mandate [than the private networks], our business model doesn’t work either.’

That said, Lacroix also asked that the CBC not be left behind in a fee-for-carriage world, and be included in programs such as the CRTC’s new Local Programming Improvement Fund. ‘Don’t exclude us from these initiatives just because we get public money,’ he said. ‘Ad revenues are dropping in the 2008/09 year and we’re trying to make sure we can find a long-term solution.’ CBC anticipates a $171-million shortfall for 2009/10.

CBC execs urged the CRTC to establish a level playing field between conventional broadcasters and specialties, with the pubcaster reiterating earlier comments from CTVglobemedia and Canwest Global that fee-for-carriage is essential to its survival. Although CRTC chair Konrad von Finckenstein adopted a slightly friendlier tone with CBC execs than he had with Canwest’s Leonard Asper, he did not back down when it came to queries about the relevance of conventional TV, and wanted specifics on the purpose of the public broadcaster.

‘Our role is essential,’ asserted CBC EVP of French services Sylvain Lafrance. ‘[TV] is where people come together, and is fundamental in building a society,’ he said, pointing to Quebec’s enormously popular Star Académie as an example. Lafrance was flanked by CBC toppers including Richard Stursberg, EVP of English services, and Steven Guiton, CBC’s chief regulatory officer. CBC noted that 80% of original Canuck primetime programming is generated by conventional broadcasters, versus 20% by specialties.

Von Finckenstein pressed Strursberg on that disparity, asking – given its subscription income – ‘Why could the Comedy channel, for instance, not produce Rick Mercer and you repeat it?’

‘[Conventional TV] is the one place where you can aggregate very large audiences,’ countered Stursberg, adding that The Rick Mercer Report generates almost two million viewers a week, including reruns.

CRTC chief throws down

Conventional TV was definitely a pressure point for the CRTC chair. Earlier in the hearings, von Finckenstein had pressed Canwest’s Asper. ‘If conventional broadcasting is broken, then why not treat it like specialty? We are struggling with a model for viable conventional TV. Could you have it without the over-the-air component?’ he asked.

Asper, joined by nearly a dozen Canwest executives, was obviously flummoxed. ‘You can’t compare us to a specialty channel,’ said the CEO.

That exchange came after von Finckenstein had pushed Asper to explain why conventional television was worth saving at all. ‘It provides local information… it is the underpinning of the democracy,’ the Canwest exec answered, adding that specialties don’t have the resources to broadcast and produce major TV events such as the Geminis and the Genies.

Asper asserted his belief that conventional broadcasting is dying because Canadian regulations favor specialties, not because of his company’s heavy debt load or the recession: ‘The financial markets take a dim view of this sector in part because our only source of revenue, advertising, is in decline, and we operate in an unfavorable regulatory environment,’ Asper said. ‘Fragmentation makes it impossible for us to maintain the profit margins we once had from our primetime schedule to offset the cost of our Canadian local and primetime obligations.’

CTVgm topper Ivan Fecan made similar comments on the first day of the hearings, repeating calls for the right to collect fees from cable companies. The same arguments were also heard during the Heritage committee’s hearings on conventional TV.

Canwest production executive Barbara Williams also asked the CRTC for leeway on Cancon regulations and dealing with indie producers: ‘We want flexibility to make the shows people want,’ said Williams. ‘We want to be able to change the mix of types of programs we make. We don’t believe a mandated amount is appropriate public policy.’

While Williams maintains that indie producers are essential, she said Canwest has hit an impasse in the ongoing terms of trade negotiations. ‘We are not willing to turn this into a price-setting exercise,’ she said.

Arguments like ‘blackmail,’ says MP

Though Canwest and CTVgm hoped to make their case for fee-for-carriage to the assembled politicians, the networks again met with fierce opposition from Shaw Communications and Cogeco Cable, with the two sides presenting conflicting evidence to parliament’s Heritage committee.

Fee-for-carriage is ‘a matter of survival,’ said Canwest Television president and CEO Peter Viner, backed up by CTVgm’s Fecan, who argued that allowing conventional nets to collect fees from cablers ‘does not need to impact the consumer nor will it invoke undue harm to the cable and satellite industry.’

Rogers vice-chair Phil Lind had said broadcasters’ contention that the OTA system is ‘broken’ is a ‘self-serving fiction.’ OTA is a ‘cyclical’ industry that has been very profitable in the past, and that will rebound once the economy recovers, he stated, adding that Canwest’s and CTV’s specialty profits should be considered with their OTA properties.

Echoing those remarks, Shaw countered claims that over-the-air television is in crisis and that fee-for-carriage is a necessary solution. If implemented, fees would have to be passed on to consumers, said Shaw president Peter Bissonnette. ‘A regulatory regime based on subscribers is not sustainable in the long run,’ he said.

Cogeco VP of corporate affairs Yves Mayrand also noted that fee-for-carriage would simply delay needed structural changes to the OTA system, allowing broadcasters to continue to ‘overspend on American programming and underspend on Canadian.’

But Quebecor CEO Pierre Karl Péladeau stated he had been warning the CRTC, politicians and others for several years that the OTA sector was dying due to fragmenting audiences and ad revenues, and new developments like the Internet.

Péladeau said fee-for-carriage – plus deregulation of CRTC-imposed wholesale rates, and the ability to acquire cross-platform rights – are needed if his company’s TVA network is to retain its Canadian content, which he pegged at 90% of the TV schedule. Péladeau said lost ad revenues could be recouped by profiting from all platforms. Groupe TVA president and CEO Pierre Dion noted TVA’s average budget for an original TV drama has fallen to $600,000 an hour from $800,000, and it could plunge to $400,000 if nothing is done.

Liberal MP and committee vice-chair Pablo Rodriguez referred to the opposing arguments – which have been circulating around Ottawa for years – as a ‘form of blackmail.’ He noted the broadcasters are threatening to shut down local stations and programming if fee-for-carriage isn’t passed, while distributors vow to pass the extra fees on to consumers and possibly cut jobs if the status quo doesn’t remain.

Fecan told the committee that CTVgm had vowed before the CRTC to tie fee-for-carriage to local programming. Canwest regulatory VP Charlotte Bell said the Winnipeg-based broadcaster had made a similar pledge.

Aside from fee-for-carriage, CTVgm also recommended that satellites should carry local TV stations, and that a hybrid digital transition strategy should be developed and implemented. This would allow broadcasters to save money because they wouldn’t have to upgrade to digital OTA transmission towers in smaller and mid-sized markets. Instead, rural residents would have to subscribe to cable or satellite to get the OTA stations they can now get for free with rabbit ears.

Shaw said possible solutions include implementing the CRTC’s Local Programming Improvement Fund, eliminating Part II licence fees, and decreasing the regulatory burden on OTA broadcasters, for example, by lowering local programming requirements and expanding advertising opportunities by allowing commercials on ‘local avails’ and removing current restrictions on pharmaceutical advertising. *

With files from Patricia Bailey, Norma Reveler, Marise Strauss