OTTAWA – The CRTC called for a TV policy review because of the dramatically shifting nature of the broadcast and distribution industry. But, says Telus, it is this uncertainty created by the ongoing shifts that means conventional broadcasters’ requests for a wholesale fee for carriage should be carved out of the review for consideration separately.
Canadian broadcasters have long lusted after the type of wholesale subscriber fees that grow the bank accounts of Canadian specialty services. The over-the-air broadcasters been consistently refused since they already make hundreds of millions off of advertising, the conventional channels are must-carries for distributors and those distributors have to simultaneously substitute the broadcasters’ Canadian commercials over top of the American ones.
Not enough, say some broadcasters. CanWest Global CEO Leonard Asper has been the most vocal on the issue of late.
However, in a letter sent to the Commission on Friday, Telus’ vice-president of broadband and video policy, Michael Hennessy, requests the CRTC "modify the scope of the above-noted Notice of Public Hearing and remove all matters related to a ‘subscriber fee for carriage’ for conventional and high-definition over-the-air television services. Telus considers that it should do so in light of changes occurring in the broadcasting sector that could fundamentally alter the business of conventional television."
Telus and its nascent digital television service would be on the hook for any new subscriber fees, just like cable and satellite companies.
Those changes Hennessy references include the recently announced sale agreement of CHUM Limited to Bell Globemedia and the recent speculation in the Globe and Mail newspaper that CTV/TSN is preparing a $1.4 billion bid to pry the National Hockey League rights away from the CBC.
"The proposed takeover of CHUM by Bell Globemedia (BGM), if approved, will create a media empire which will fundamentally alter the conventional broadcasting sector as control of half of over-the-air broadcasters will be in the hands of a single entity," says the Telus letter.
"This deal goes to the heart of the competitive balance of the conventional sector and the underlying economics of the business. Moreover, the cost of this transaction is $1.8 billion, well above market value thereby casting doubt on any argument that the over-the-air television market is hurting and in need of subsidy. And to the extent that any subsidy is considered necessary, the sheer magnitude of the benefits which would flow from this extraordinary transaction must be weighed against any need for other sources of subsidy."
As for the reported potential NHL deal, which would be a severe blow to the CBC, adds Hennessy, it "may cement the significant advantage CTV has relative to Global in prime time. There is a competitive battle between networks that is driving program acquisition costs to record highs. Distributors and their customers should not be taxed to cover escalating costs of this competitive warfare nor to offset erosion of CBC revenues through the back door."
Plus, in 1993, the CRTC said that it was not the appropriate body to consider wholesale fees for broadcasters because it was a copyright issue. Hennessy’s letter points out that neither the applicable Acts of parliament, nor Commission policy has changed since.
Another issue the Commission must consider, said Hennessy, are the potential effects of ongoing international negotiations.
Retransmission rights "is an issue currently being negotiated/addressed by the Canadian government under the auspices of the World Intellectual Property Organization (WIPO). An international retransmission right could lead to outflows in the order of $500 million annually to U.S. stations," writes Hennessy.
"Presently Canada does not support the proposal for a retransmission right. We submit the CRTC could inadvertently establish precedents with very negative consequences for the overall economics of domestic broadcasting in making any determination with respect to a retransmission right for free to air TV in this proceeding. Telus considers that the question of copyright implications alone justifies the CRTC taking this issue off the agenda for the upcoming public hearing, especially when any consideration of this issue may impact the international WIPO negotiations."
