The economic downturn and increasing audience fragmentation is hitting advertising revenue hard at North America’s broadcasters, forcing them to come up with new ways to shore up their bottom lines.
A comparatively quick fix being explored on both sides of the border is collecting retransmission fees for free-to-air channels that run on cable and satellite platforms.
The issue is playing out quite differently depending which side of the border your TV is on.
In the U.S., broadcasters can choose a “must-carry” option, which forces cablers to include such stations in their lineups, but without compensation; or broadcasters can elect to negotiate retransmission consent rights market by market, in which case there’s no guarantee a station will come to terms with the local operator.
The major network affils, however, have clout because of the exclusive program and sports franchises they carry, and in recent years U.S. broadcasters have been pushing cablers to pay far more per household — as much as 50¢ to a $1 — than they have in the past under retrans contracts.
News Corp. CEO Rupert Murdoch told shareholders recently that the conglom will be seeking higher broadcast network retrans fees.
In more heavily regulated Canada, where cable and satellite platforms must carry the Big Three broadcast webs, but pay no fees, the issue has sparked a spat between webs and distributors.
The campaign has gotten down and dirty, with both sides tubthumping their cause on websites, and in political-style man-in-the-street attack ads, media ops and print ads.
Pubcaster the Canadian Broadcasting Corp. and commercial networks CTV (owned by CTVglobemedia) and Global (owned by Canwest) have united behind a campaign dubbed Local TV Matters, and argue their need to secure a revenue stream that will support their money-losing, small-to-medium market stations. Compensation for carriage of the pubcasters’ content, they say, will save such stations from closure.
“We’ve always believed it was unfair the system didn’t allow us to negotiate fees with distributors who get our signals for free, but pay for U.S. channels and other services,” says Global’s senior VP of regulatory affairs Charlotte Bell.
CTV corporate affairs exec VP Paul Sparkes says his company advocates a Canadian version of the U.S. model.
Meanwhile, a coalition of distributors including Rogers Communication and telco giant Bell’s Bell TV launched the Stop the TV Tax Campaign, saying fees will increase customers’ bills.
Broadcasters immediately disputed the use of the word “tax,” since fees would not be collected by the government.
Distributors say they provide the valuable services of expanding a signal’s reach, and keeping it low on the dial, among other benefits.
“From our perspective, we don’t believe the must-carry rule will ever be removed — we’re a different marketplace from the U.S.,” says Rogers’ public affairs VP Jan Innes.
But things may be swinging in the Canuck broadcasters’ favor.
While industry regulator the Canadian Radio-television and Telecommunications Commission has rejected the broadcasters’ pleas for retrans fees for a number of years (turning down the latest demand last October), the federal government ordered the CRTC to revisit the issue last month, considering that cash-strapped companies have been closing local stations.Cable and satellite companies already must contribute a percentage of their gross revenue to the new Local Programming Improvement Fund, a temporary measure introduced by the CRTC that is expected to raise some $100 million during the 2009-10 fiscal year.
Media pundits, local actors’ union ACTRA, producers’ organizations and consumer advocate groups have come out in support of retrans fees, but warn that the spin is distracting Canadians from other issues, such as supporting local programming.
Now the industry and viewers will have a say.
As part of wide-ranging hearings to develop new frameworks for the country’s communications industry, which includes a broadcast rethink, the CRTC will begin a series of public hearings on Dec. 7.
Canuck consumers are being asked to weigh in on fees, as well as the 2011 digital switchover and Canadian content commitment by English-language broadcasters, among other issues.