Front Page, Industry News

Tune in for the broadcasters vs. cable-satellite fight

Wednesday November 18th 2009

CRTC hearings are a battlefield again. It’s the private broadcasters versus the cable and satellite providers. You, the consumer, are somewhere in the middle.

Both sides are marching with your banner. You’ve seen the ads. The full-page newspaper ones screaming, “Stop the TV tax!” and “Save local television!”

Eyeball the cable companies’ TV shorts, with credulous man-in-the-street actors being strung along by a faux-journalist’s biased line of questioning: “They’re already getting support, right?” he asks, of CBC, CTV and the rest. “How do you feel about them wanting more?”

One replies, “Uh, it’s pretty selfish and kind of sneaky.” Another: “I think it’s disgusting.”

Then watch the broadcasters’ YouTube video, featuring a Canadian folksinger who became famous earlier in a viral video on that social network.

In it, he sings: “Seems they don’t think it’s worth a dime, for stories that are yours and mine. So come on now, CRTC, it’s showtime.”

Showtime, indeed.

The hearings at the Canadian Radio-television and Telecommunications Commission could alter Canada’s media landscape dramatically. A second set of hearings, set for early December, will consider the impact on consumers.

Some key questions:

WHO ARE THE PLAYERS?

In one corner, the cable and satellite companies – led by giants Rogers Communications Inc., Bell Canada and Telus Corp. They want to keep the status quo.

In the other are the broadcasters including Canadian Broadcasting Corp., CTV/Globemedia Inc. and CanWest Television LP. They are arguing for the right to fees from cable and satellite companies – now using broadcast signals free – to help make their local TV programming profitable. The broadcasters argue this is not gouging and that cable companies should not get a free ride.

At a news conference in October, Bill Chambers, head of corporate affairs at CBC, stressed, “Our position is that the consumer shouldn’t pay any more.”

Also affected by the CRTC decision-making process are other providers, including Shaw Communications Inc., and smaller broadcasters, such as S-VOX.

Count in as well a slew of other groups mainly interested in Canadian content issues, including those brought forward by ACTRA, the actors’ union, and representatives from several provinces and territories worried about the possibility of losing local TV coverage.

WHAT’S THE BACKGROUND?

This is not the first time cable and satellite companies have taken on broadcasters at the CRTC.

Broadcasters argue the business model for local TV is “broken.” As the recession deepened, local advertising dropped sharply. Because the cable companies do not pay anything for such local programming, broadcasters argue, TV networks will be forced to kill unprofitable local TV coverage, including news and talk shows.

Twice before, broadcasters have approached the CRTC with this suggestion: Let us charge the cable companies for running local shows, so we can afford to keep local TV. Both times, the CRTC has rejected the proposal.

Broadcasters have not explained how they would guarantee money received through any new fee scheme would be put into local TV. They could funnel it straight into their profits and continue to close local stations.

WHAT’S THE BIGGEST ISSUE?

Fee-for-carriage – though you will not hear either side use the term. The broadcasters know that idea has twice been thrown out by the CRTC. The cable companies insist on calling it a “TV tax,” a scare-phrase they use endlessly.

“That kind of thinking is rooted in the old way of doing business,” Rogers CEO Nadir Mohamed said Friday. “The broadcast industry is challenged, in terms of advertising… Advertising will come back. But what we shouldn’t lose sight of, is in fact consumers are actually behaving different. And fee-for-carriage in no way actually addresses that. It doesn’t solve any issue.”

The issue is complicated somewhat by CRTC’s Canadian content regulations that stipulate a certain amount of programming must be Canadian. Broadcasters complain these strict regulations make manoeuvring difficult and oblige them to carry shows that are relatively unprofitable compared with cheaper, more popular American-made shows.

HOW WILL IT AFFECT ME?

Be wary. Both sides claim to fight for the consumer. Both have launched multimillion-dollar ad campaigns to win you over. But both sides are still primarily mindful of their own profits.

“It’s definitely all about money and it’s all about trying to make more of it – or keep what you’ve got,” said Alan Sawyer, principal consultant with Two Solitudes Consulting.

Cable companies will likely continue to raise the price of your bill, regardless of whether you are charged their so-called “TV tax.”

Broadcasters have already closed – and likely will continue to close – local stations, regardless of whether they get to negotiate the fee they seek.

WHAT ARE THE POSSIBILITIES?

Several options, although the CRTC has handed down shockers in the past.

The agency could dismiss the broadcasters’ case outright, as it did with fee-for-carriage in the past. That seems somewhat unlikely, given the stakes for local Canadian TV content and the fact that this is the third hearing on what is essentially the same issue.

The CRTC could approve the broadcasters’ request to negotiate without any qualifications. That also seems unlikely, since the providers – though disappointed – could simply present consumers with new monthly charges and say, “Thank Ottawa for this in the next election.”

Because the CRTC is under pressure to consider the consumer, this may not make sense; and the agency has already ordered another set of hearings in December for this reason. It is also unlikely – given the negative consumer reaction in late October – after the CRTC rejected wireless upstart Globalive’s bid to enter the Canadian market, a decision many analysts said was bad for competition and bad for the average consumer, in terms of choice and pricing.

WHAT’S THE MOST LIKELY OUTCOME?

The old-fashioned compromise, which several analysts have said they expect. This, for the cable and satellite companies, would mean something resembling defeat – given they support the status quo. But it could benefit consumers, while letting the CRTC – and the government – off easy.

“The commission has in the past found delicate middle points in sharply contrasting options,” said Kaan Yigit, a Toronto-based analyst with Solutions Research Group. “I suspect this will be no different… there will be some level of compensation.”

It is currently mandatory for cable and satellite companies to carry the broadcasters’ local programming. One compromise could see the CRTC grant broadcasters the right to negotiate a fee for these channels, but then remove mandatory carriage requirements. This would free the two sides to negotiate but open the possibility of a ramped-up ad rematch, and even more public bickering. That could include broadcasters threatening to withhold popular channels (think TSN) from cable-satellite providers.

Source: The Toronto Star