Jim Shaw, the outspoken chief executive of Shaw Communications Inc., ripped into the federal communications regulator, saying he has “serious concerns” about hearings underway to overhaul the rules that govern the way Canadians receive television.
The CRTC “clearly doesn’t get it,” said Mr. Shaw, adding that the first three days of hearings conducted by the Canadian Radio-television and Telecommunications Commission have been more about “old rules and taxes” than giving television viewers more channel choices to keep them away from watching shows on the Internet or illegal U.S. satellite services.
“When it was first announced, we were optimistic that this hearing was going to be about making the cable and satellite distribution rules more customer-friendly,” Mr. Shaw said. “We thought the CRTC had finally realized that it can no longer restrict customers’ choice and that it is dangerous to subject them to unfair regulatory charges for television service when they can readily look outside of the Canadian system.”
Shaw is not scheduled to appear before the CRTC panel in Gatineau, Que., for another couple of weeks, and Ken Stein, the company’s senior vice-president of regulatory affairs, said executives are concerned the hearings are getting bogged down with issues such as the controversial “fee for carriage” sought by broadcasters CTV, Global and the CBC.
Cable companies, including the country’s largest, Rogers Communications Inc., appeared in front of the CRTC this week and asked the commission for more freedom to select which channels they carry, as did representatives of the country’s biggest satellite TV distributor Bell ExpressVu.
But Glenn O’Farrell, president of the Canadian Association of Broadcasters, implored commissioners yesterday to leave in place mandatory carriage requirements for a long list of specialty channels that includes MuchMusic, YTV and the Weather Network.
The cable firms argue that the established channels will survive without the regulatory requirement.
But Mr. O’Farrell says there is a proxy that provides hard evidence the channels will suffer financially — and Canadian content on TV will decline — if the cable firms are successful in loosening or abolishing the regulations.
MuchMusic, which reached 76% of households on cable, grabbed just 50% on satellite, Mr. O’Farrell said, noting that satellite TV distributors can package channels in smaller groupings so customers don’t have to take as many channels to get the ones they want. Youth channel YTV also saw a sharp decline on satellite, he said, noting that lower penetration leads to lower subscriber and advertising revenue.
“From that lower revenue base, there’s no doubt [Canadian contribution] will fall,” he said, adding that the specialty channels with guaranteed carriage also have Canadian content obligations tied to revenue. Removing the carriage requirement will only exacerbate the problem that is already evident, he told the CRTC panel.
“We don’t have to predict the digital future. We can see it with our own eyes,” he said.
On Tuesday, executives from Rogers said market forces will protect the channels, because it is very difficult to take away a popular channel once it is on the air. They noted their experience with trying to reposition the Golf Channel, a move that drew a large response from angry viewers. The channel was ultimately moved into a more accessible package.
However, the CAB is asking the CRTC to retain mandatory carriage. Cable and satellite companies can have more flexibility in how they package channels to meet customer demands “as long as every subscriber package includes at least an equal number of Canadian and foreign services.”
Mr. O’Farrell said it makes sense for regulators to give more clout to broadcasters in negotiations because existing regulations cause broadcasters to contribute about 30% of revenue to Canadian programming, compared with 5% for cable companies.
The hearings, which are expected to last three weeks, continue today.
Source: Financial Post