Friction between domestic broadcasters and Canadian cable companies took on a nationalistic turn when Canadian Association of Broadcasters president and CEO Glenn O’Farrell suggested Canada should end the ‘free ride’ of foreign signals vying for Canadian audiences.

In a broad-ranging talk to members of the Broadcast Executives Society in Toronto on March 25, O’Farrell challenged Canadian broadcast policymakers to ‘put Canadians first.’

‘Canada’s private broadcasters believe in Canadian programming and are investing major dollars in it,’ says O’Farrell. ‘However, they must also compete with foreign services brought into Canada that benefit from access to our market, fragment our audiences, and make absolutely no tangible contribution to the system. The time has come to put an end to the free ride. It’s time to consider how foreign services can best contribute to the Canadian broadcasting system.’

The Canadian Cable Television Association interpreted his comments as a call for levies against top cable channels such as CNN and A&E, and immediately issued a rebuttal, warning that levies would lead to higher consumer prices and be a ‘trade irritant’ with the U.S.

The CCTA says foreign services already contribute to the success of the Canadian broadcasting system by paying 5% of their subscriber fees to the Canadian Television Fund and to local community channels, and by packaging popular American services with Canadian pay and specialty services; the latter strategy generating $1.9 billion in revenues to Canadian services in 2003.

‘In 2003, Canadian analog services, the main beneficiaries of the current packaging rules, reported profits of $278 million,’ says CCTA president Michael Hennessy.

CCTA adds that Canada is courting a trade dispute with the U.S., following the CRTC’s September ruling to close the border to new services like HBO and FoxNews, and CAB’s request to have SpikeTV removed from the dial.

‘In a world where consumers can use technology to bypass the Canadian system – the last thing we need is new restrictions and higher costs,’ says Hennessy. ‘What we need is more competition and more choice, because packaging the best in Canada with the best in the world has always contributed to the growth of the system.’

Pierre Pontbriand, VP of communications at CAB, says that the speech was meant to spark discussion and was not a specific proposal for levies.

What he said

An excerpt from Glenn O’Farrell’s March 25 speech to the Broadcast Executives Society in Toronto

There has been significant discussion of late about the supposed demand for non-Canadian [television] services. In fact, recently some Canadians have argued that their need for foreign services justifies the illegal practice of stealing television services with pirate satellite equipment.

Let’s make one thing extremely clear. The Canadian broadcasting system already offers one of the most diverse viewing menus in the world. Look at other countries: rarely can you find so many foreign services available.

Canadian broadcasters face enormous competitive challenges – competition for audiences as well as advertising dollars. They’re also facing the need to make substantial investments in HDTV and digital broadcasting that viewers will soon be demanding.

Canada’s private broadcasters believe in Canadian programming and are investing major dollars in it. However, they must also compete with foreign services brought into Canada that:

* Benefit from access to our market

* Fragment our audiences, with all the revenue impact that implies – and

* Make absolutely no tangible contribution to the system. None. Zero.

In essence, these foreign services are ‘getting a free ride.’ The time has come to put an end to the free ride. It’s time to consider how foreign services can best contribute to the Canadian broadcasting system.

We are not looking for a trade war here. We are not looking to withdraw TV services from Canadian audiences. We are looking for equity to once again put Canadians first.

-www.cab-acr.ca

-www.ccta.ca