Months of negotiations have finally yielded affiliation agreements between Shaw Communications and the new specialty services, but problems persist in talks with Rogers Communications that have left the specialties in very different places. At one end of the spectrum, Showcase has triggered a mediation process with the Cable Television Standards Foundation to break the stalemate. At the other, The Discovery Channel and Bravo!, have resolved the issues and say a deal is imminent.

Over the last month, Shaw has signed agreements with Bravo!, Showcase, Life Network, and ncn, and is ‘extremely close’ to signing a contract with Discovery, confirms Ken Murphy, vp of production and administration at Discovery.

Specialty channel execs are tight-lipped on the details, but Shaw will reportedly pay the specialties for actual penetration, with a make-whole floor somewhere between 70% and 75% penetration. Premiums are reportedly part of the agreement.

At Rogers’ end, Bravo! and Discovery are well on the way to closing a deal with Rogers. Both have reached an agreement on how it will pay the specialties, the major stumbling block in negotiations over the last six months. ‘We’re not spending a whole lot of time talking about fees anymore,’ says Murphy.

Similarly, David Kirkwood, director of sales and marketing for MuchMusic and Bravo!, says an agreement will be signed ‘very soon’ and that the fees issue has been resolved.

But Showcase and Life are markedly less optimistic about the Rogers’ deal on the table.

Showcase is taking its case to the Cable Television Standards Council, an independent committee that administers and adjudicates Canadian Cable Television Association standards. The ccta’s 1994 Access Commitment paper contains a dispute resolution mechanism that dictates once a service and a cable operator reach a standstill in negotiating an affiliation agreement, a neutral mediator can be appointed.

A mediator will be chosen by Sept. 29, says Gerald Lavallee, president and ceo of the ctsf. From that point, the players have 45 days to resolve the dispute. If mediation is unsuccessful, the players have the choice of signing for binding arbitration with the ctsc or taking their case to the crtc. ‘It’s private arbitration or commission arbitration, but either way the issue gets solved,’ says Lavallee.

Primarily carriage issues are on the table, says Phyllis Yaffe, president and ceo of Showcase. ‘Fees are a primary issue, but not the only one.’ She won’t say exactly how far apart the two parties are, but ‘obviously you don’t go to mediation unless you feel there’s a significant difference in approach and the numbers.’

One issue at stake may be Rogers’ creation of a second tier in which most of the specialties, including Showcase, have been placed.

‘It’s the cable company’s final decision on where we fit in different strategies, and that of course has made a huge difference in our delivery and in our revenue. Given our entire business plan was based on a high-penetration tier, it’s been an important factor. We’ve modified our business plans, but we have to be able to keep our commitments.’

Life has no immediate plans to call in the ctsc, but president Juris Silkans says, ‘We are watching the situation closely.’

Key to the specialties signing affiliation agreements with Shaw was believing that Shaw is making a concentrated effort to trap subscribers, and that as a result, penetration is going up and will continue to go up, says a source who asked not to be identified,

‘Shaw is going out to trap and subscribers are saying, `No, we want to keep the services.’ We’re confident Shaw’s penetration is going up. Rogers is paying us for 46% but the number of people getting all the services is closer to 100% and we’re not being paid for them.’

Rogers confirms that the specialties are being paid for actual penetration which, nine months after the launch, sits at 46%.

Rudi Engel, executive vp for Rogers Cablesystems, says that Rogers is trapping slower than it would like, about one-third of the way through the number of subscribers that have canceled the service or 300,000 homes. But the problem is the lack of available traps rather than a lack of footwork on Rogers’ part, he says.

Rogers is relying on three trap manufacturers, and since there are 19 trap configurations necessary to cover the different Rogers channel systems across the country, and orders must be made to specifications, that complicates the delivery, says Engel.

But at the same time, Rogers is putting about $4 million into a telemarketing effort which is dragging up penetration, albeit slowly. According to Engel, the telemarketers have had a 27% success rate since the campaign began. Of the subscribers signing up, about 50% take both tiers and the balance take basic services plus the first tier. Less than one-half of one percent take only the new services on a standalone tier, Engel concludes. AV