GATINEAU – While Rael Merson said repeatedly that he believed the conventional broadcast system will right itself, if left to market forces, there was one idea he brought up that he will hear about for a while.
It’s the idea of a luxury tax. Merson, the president and CEO of Rogers Broadcasting, insisted during Monday’s first day of hearings into the policies on BDUs and specialty services that Canada’s top two conventional broadcasters, CTV and Global, have been beating themselves up so bad buying programming Stateside every year, paying ever-higher for prime time fare. That, he said, is the real reason margins are under pressure at CTV and Global. “That’s where the money is going,” he said.
In the sports world, a luxury tax is what a team would pay to the league when it spends more on player salaries than what the league set salary cap is for each team. A luxury tax in the Canadian TV system would see a set cap on spending for foreign programming on OTA broadcasters – and if they overspent, they would pay a penalty which, one assumes, would be funneled towards Canadian content production or directly to local news.
Merson tried a couple of times to backtrack out of the idea saying he believes the market will sort itself out, if left alone. “There are hundreds of economic models to adopt… but I do believe the market will right itself,” said Merson.
Konrad von Finckenstein, the chair, noted that it sounded “highly interventionist." However, Merson was queried on it by commissioners just enough to make it seem a not unreasonable gleam of an idea with a modicum of interest.
But not to Charlotte Bell, head of CanWest Global’s regulatory department, who talked with Cartt.ca after Rogers completed its presentation.
“I think it’s a ridiculous notion,” she said. “If you understand the economics of broadcasting in Canada, you have to understand those economics are tied to our geography in the sense that we’re stuck with the U.S. – and that programming is coming into this market, whether we like it or not.
“If you start tinkering with the foreign programming side of it, it’s going to absolutely have a devastating impact on the Canadian side of it,” Bell continues. “The Canadian programming pot comes from the revenue you make on the U.S. programming.”
As for the high price of American programming, Bell said she’s anxious to see what the much-deeper-pocketed Rogers does later this year when it comes time to bid for next season’s American TV hits for its recently acquired Citytv stations.
“It’s going to be interesting to see what they do when bidding for the same programming in the future,” she explained, “to see what that does to the price of programming.
BTW – we’ve covered fee-for-carriage and genre protection and advertising and distribution so on for the past week, and positions have not changed (as RCI vice-chairman Phil Lind made exceptionally clear on fee-for-carriage Monday morning – alluding to the potential for legal action by Rogers, should any such fee be imposed), so we’re trolling for, and reporting on, what’s new coming from the hearing.
Comments? Criticism? Kudos? Let us know at editorial@cartt.ca.
