CANADIANS NEED TO PAY MORE for their TV, according to additional submissions to the CRTC on its conventional television policy review.
Filed last Wednesday three months ahead of the November 27th hearing, we could only plough through a few submissions at first, but having had a bit more time to read some more, it’s clear that TV distributors are in tough against many players who want to see wholesale subscriber fees paid to conventional broadcasters.
CTV, Quebecor Media (owners of TVA and Videotron), the Canadian Media Guild, ACTRA, and the Canadian Coalition of Audio-visual Unions all said they were in favor of subscription fees paid to Canadian broadcasters.
However, while the broadcasters want the money to go into its big bucket, the performers, producers and unions want any new cash siphoned to pay for one thing: Canadian content – or more specifically – Canadian drama.
"The Commission should introduce fair market value subscription fees or compensation for carriage for all conventional broadcasters, both in local markets and where stations are imported into distant markets," reads the CTV submission.
"Currently conventional broadcasters compete with specialty services for viewership, yet unlike specialty services, conventional services do not have access to subscription revenue."
CTV, unlike Global, did not speculate on what it thought would be fair market value.
The Canadian Media Guild, which represents unionized workers at the CBC, Alliance Atlantis, APTN and others, didn’t call so much for a subscription fee for broadcasters, but for between $1 and $2 a month per cable and satellite TV subscriber to create a brand new Canadian Broadcaster Programming Fund.
Sixty percent of the fund (of up to $240 million a year under the CMG plan) would go to public broadcasters to make commercial free television while most of the rest would go to private broadcasters – earmarked only for the production of Canadian content. The broadcasters would have to bid for the money when its license is up and account for how it will spend the cash and outline potential programming commitments.
"All existing OTA licensees would continue to have mandatory carriage on basic cable. The fund would support the increase of Canadian programming on television, including commercial-free programming that could serve as a counterweight within the system to the increase in traditional and emerging forms of advertising content. It would also support promotion for the new programming," reads the CMG submission.
"We don’t believe that the implementation of HDTV is an appropriate use of funds generated by subscription fees. Upgrading to high-definition television is a capital, or one-time, expense borne by private and public broadcasters."
The TV producers, while advocating for a wholesale fee, also asked for mandatory exhibition and expenditure requirements for broadcasters: That "priority" programming in prime time climb to 15 hours per week from 12 and that the percentage of broadcasters’ revenues spent on Cancon rise to 15%. The Canadian Film and Television Producers Association also wants the 5% of revenues from BDUs which are either paid to community cable channels or to small market broadcasters be funneled back into priority programming production only.
Quebecor Media, which owns both the largest cable company (Videotron) and private broadcaster (TVA) in Quebec, also wants subscriber fees paid to private broadcasters (and not the CBC or other public broadcasters). Such a wholesale fee paid to broadcasters doesn’t have to mean consumers costs have to go up either, reads its report.
"The distributor (in this case, Videotron) must constantly weigh the relative advantages and disadvantages to being able to offer customers a wide selection of channels versus the expenditures required in order to upgrade its network to meet the new demands created by technological development," says QMI.
"The distributor can hardly increase the amount it charges customers solely because of pressures exerted by new obligations to the large array of broadcast services in its channel lineup."
"(I)t is now clear that conventional broadcaster eligibility for subscriber revenues is an important principle that should be established by the Commission. Not doing so would create a severe economic disparity between specialty and conventional services as the conventional television advertising base weakens, and would risk undermining the economic foundation of the key engines of the Canadian broadcasting system: conventional broadcasters and the broad and original programming they provide," adds the CBC’s contribution, which also insists conventional broadcasters keep their positions in BDU channel lineups – on basic on a mandatory basis.
Shaw Communications, to put it mildly, disagrees. "The current economic and regulatory environment provides no foundation upon which to support a fee for carriage proposal… Consumers should not have to pay for what is free over-the-air."
However, those signals may not always be free over the air, if CTV and CBC have their way. CTV wants to gradually eliminate most of its OTA transmitters. "The Commission should permit conventional broadcasters to transition to digital and HD transmission without the obligation to provide digital over-the-air transmission facilities and to gradually phase out analog transmitters," says the Bell Globemedia-owned broadcaster.
CTV estimates the capital cost of upgrading its 25 main station transmitters and its 89 rebroadcast transmitters to be over $200 million, plus over $15 million in annual operating costs. "This level of investment would be required to reach an increasingly small number of Canadians who rely on over-the-air transmission to receive their broadcast signals," says CTV.
The CBC is already pursuing a plan where most of its OTA transmitters would not be upgraded to digital either. "(T)o help meet the challenge of declining over-the-air reception, CBC/Radio-Canada is developing a hybrid strategy for both its remaining analogue systems and its growing digital/HD systems – using over-the-air distribution in markets where reception levels are still relatively high, and BDU distribution in all other markets.
"CBC/Radio-Canada’s proposed hybrid approach for digital/HD television would comprise the following over-the-air and cable/satellite delivery mix: 44 over-the-air DTV transmitters would cover 80% of the Canadian population (28 markets in English and 16 in French where over-the-air tuning is still relatively significant); outside of these markets, CBC/Radio-Canada would reach Canadians through cable/satellite BDU delivery."
QMI and CTV also agree on another piece of the regs that have to change: the 12 minutes of ads per hour rule. Both companies – unlike Global and Rogers, want the ad market deregulated (in the U.S., broadcasters there have 16 minutes an hour, which is why we see so many station promos in Canada).
"The Commission should eliminate current restrictions on the number of advertising minutes per hour… (t)o provide conventional licensees with the same flexibility currently enjoyed by local radio stations and the growing array of completely unregulated advertising media. Consumers will ultimately decide whether a station is overcommercialized by choosing not to watch," reads the CTV submission.
Quebecor, while it wants ad time regs dropped, has also asked new ones be imposed on public broadcasters, so that the CBC, for example, could only air six minutes of commercials per hour.
"QMI calls on the CRTC to remove all constraints on media placements other than traditional advertising messages. The regulatory system in effect limits commercials to 12 minutes per hour. This restriction should be lifted. General interest TV broadcasters do not need this limit anymore. The market imposes its own limit," says QMI.
"However, the public broadcasters’ access to the advertising market needs to be constrained. We have seen how public television can overstep its mandate in pursuing competition with the private sector as its overriding goal. On this point, the record is abundant. Public television should be limited to 6 minutes per hour, given the massive support it receives from government."
The conventional television sector is sick, adds CTV. "Indeed, many would say that the sector, while profitable today, is approaching a tipping point. CRTC data shows that year-over-year growth in private conventional television revenues has slowed considerably in recent years," reads its submission. "Three out of the past four years have shown negative growth in local time sales, with an annual average change of -0.4%.
"National advertising sales are also soft with a loss in 2003/04 and single digit growth of 4.8% in 2004/05. In fact, had it not been for the national advertising revenues that were displaced from CBC conventional to private conventional due to the NHL season cancellation, broadcast year 2004/05 would have been another year in which national advertising revenues decreased for private conventional broadcasters."
