WHEN IT COMES to the billions of dollars Canadians pay for television every year, the main numbers which are poured into everyone’s spreadsheets for regulatory analysis are basically the same.
Thanks to the public documents available through the CRTC or via the companies which are publicly traded, the folks in the TV biz have a pretty good sense of how much money consumers willingly fork over (or which is pried from our bank accounts, depending on your point of view) for television, our primary form of video entertainment, and how it is divided.
But once dumped into those spread sheets, those figures can be manipulated, managed, massaged, cut and pasted (and sprinkled with magic pixie dust?) so that they can say just about anything, depending on your point of view.
Case in point:
While reading through the final replies (this just in: no one has changed their mind…) from some of the major players in the CRTC’s BNC 2009-411, the Value For Signal (or Fee For Carriage or TV Tax or Local TV Matters) and group licensing hearing, the number nuancing was rampant.
Canwest Global’s final submission, for example, insists that BDUs are not paying enough into the system to support Canadian content, especially when you look at the distribution sector’s overall profitability. “(T)he superior financial performance of the BDU sector, both in absolute terms and in comparison to the conventional television sector, suggests that the regulatory obligations on the BDU sector are not sufficiently burdensome as to prevent their record-breaking returns in a time of economic turmoil,” reads the Canwest submission.
It also notes that the largest four Canadian cable companies earned $2.35 billion in PBIT (profit before interest and taxes) in 2009 in comparison to a PBIT loss of $155 million for the three largest Canadian conventional broadcasters.
It further notes that the BDU contributions to content production (in the form of CTF, independent funds, community channel and the LPIF) only amount to $425 million in a year. (Canwest was using 2008 data there and adding in LPIF as though it was around in 2008). That amount is just 6.3% of the BDU’s TV-related revenue, it says.
On the other hand, reads the Global submission, the amount the OTAs spend on Cancon in 2008 was $616 million (29% of revenue) while specialties spent $939 million on Cancon (44% of revenue, but specialties also have CPEs to adhere to, so they must spend).
“Even if we accept the contention by certain BDUs that contribution levels contained in the Commission’s financial database do not fully reflect the value of their contributions (and we do not), the level of BDU contribution to the creation and production of Canadian programming still falls well short,” reads the Canwest submission. “For example, if we added the supposed BDU ‘benefits’ of distant signal payments, CBRA royalties, and the BDU-estimated value of substitution (noting that inclusion of this last ‘benefit’ is completely inappropriate since it is really the BDU that benefits from this regime), the BDU contribution level is still only 11% of basic and non-basic BDU revenues.”
Rogers, on the other, other hand, came up with a slightly larger BDU Cancon dollar figure than did Canwest but didn’t compare anything as a percentage of revenue in its final submission. “With the recent introduction of the LPIF all BDUs combined are now contributing close to $465 million annually to Canadian programming based on 2009 revenues, through contributions to the LPIF, CMF, independent production funds, and community channels. That contribution is more than $100 million larger than the $348.6 million that Canwest and CTV spent in total on Canadian programming in 2009.”
What’s my point? Both sides have access to these public numbers, plus many others, and when presented as they have been by the respective companies, both look damning, depending on your point of view.
Canwest’s submission, for example, says nothing about the hundreds of millions cable has invested in its networks to make video better – and uses a PBIT figure for BDUs that includes income from Internet and phone, which is where most growth in the cable sector is coming from.
Then again, Rogers’ submission compares the contributions of all BDUs to just Canwest and CTV from the mix of broadcasters, ignoring the contributions of the rest of the private broadcasters, and each one is a much smaller company than any of the top four BDUs.
My point? For a skilled conductor of numbers (and believe me, each side has some very clever crunchers) you can make them sing just about any tune you like. It’s not dishonest. It just depends on your point of view.
(Personally, I rather like the numbers of this woman, this woman and this woman. For two of them, it crosses into the 2009-614 hearing, but they know EXACTLY what they want to see on TV, what they can afford or not – and the decisions to come from 2009-411 will directly affect them. These are the real numbers that must be paid attention to because they are the source of the jillions brought in by the broadcasters and BDUs running the TV game in Canada.)
A new value for signal regime seems all but certain to us and nothing we read in the Rogers, Canwest, Telus, Bell, CTV or CCSA final replies we went through has changed our minds. OTAs will give up their mandatory carriage in exchange for the right to negotiate a fee. But, the fact that BDUs are earning scads of money is irrelevant to the debate. As CRTC chairman Konrad von Finckenstein pointed out repeatedly, input costs are passed on by any business. That’s just the way it is. Heck, the broadcasters, having hiked ad rates as high as they can already, are just looking to pass on their own increased input costs – albeit in a new way – with this renewed push to payment.
However, the decision from 2009-411, should it come down the way we expect (and who knows, maybe the LPIF will just be increased), will be appealed. Somewhere. Everywhere. The BDUs are convinced the CRTC doesn’t have the legal right to set up a new regime they say is a new copyright one and say they are fighting to protect consumers from paying more.
The broadcasters say the CRTC certainly is within its rights to impose a value for signal construct and insist it’s high time for the BDUs to pay for what they sell – and that they are protecting consumers who need and want their local TV station and news to survive.
It all depends on your point of view.
