Canada’s pick-and-pay cable pricing fuse, lit by the CRTC last week, could see U.S. broadcasters pulling out of the Canadian market, or reevaluating their presence here.

Those scenarios were put to the regulator by participating U.S. channel groups during the Let’s Talk TV hearings, before the CRTC last week ordered TV channels here to be sold individually or in small packages after consumers purchased a skinny basic cable package by December 2016.

The prospect of popular U.S. channels no longer bundled on high-penetration tiers or Canada setting a pick-and-pay cable pricing precedent for the U.S. market lay in part behind that opposition.

Despite those pull-out threats, however, the CRTC called the Americans’ bluff.

There were heated exchanges between CRTC panel members during deliberations on cable unbundling before arriving at the latest Let’s Talk TV decision, according to sources close to those negotiations who spoke to Playback Daily on background.

But ultimately the regulator is betting that the Americans’ challenge against Canadian cable unbundling will dissipate and the status quo will mostly hold.

“They (CRTC commissioners) don’t think any of [the American channels] will leave. Or if they leave the traditional system, they’ll simply go online,” the industry insider said.

And U.S. channels returning into the Canadian market over-the-top (OTT) is not broadly viewed as a negative at the CRTC as it presses ahead on pick-and-pay and pick-packs.

If anything, the number of U.S. services like CBS and Starz that have so far talked about going OTT is small, and includes HBO, a pay TV mainstay that already has a Canadian long-term supply agreement with Bell Media.

What’s more, the regulator believes the Americans, like Canadian broadcasters, see value in maintaining an independent Canadian programming rights market. Here major U.S. suppliers can sell product on conventional, specialty, pay TV, VOD and now SVOD services, and where even American OTT services like Netflix  buy and profit from Canadian rights.

At the same time, current affiliation agreements between Canadian BDUs and American broadcasters mostly stipulate U.S. channels cannot be sold on a standalone basis. Other contracts from the U.S. channel groups require a minimum level of available subscribers guaranteed by a distributor before they can be made available for sale.

Here CRTC sources caution this is just standard contractual language in any Canadian carriage agreement that indicates they can be reopened if market circumstances change.

Canadian distributors will have a job to re-educate the American broadcasters about possible impacts from cable unbundling.

And both the U.S. and Canadian parties will likely renegotiate their affiliate agreements after the CRTC ordered cable unbundling north of the border.

“That’s likely a conversation that the BDUs would have wanted to have with the Americans anyways,” according to the CRTC insider.

As a backstop, the regulator will require U.S. channels to agree to be sold a la carte in Canada if they want to continue to remain on the CRTC’s list of foreign channels authorized for distribution here.

“The commission considers that the imposition of this condition on non-Canadian services is essential to ensuring a fair playing field between Canadian and non-Canadian services available to Canadians in the context of a competitive, consumer-driven environment,” the CRTC said in its decision last week.

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