TORONTO – One of Aesop’s centuries-old fables is a good way to summarize Canadian broadcasters and their desire for a new fee-for-carriage, according to the vice-president and general manager of television services at Rogers Communications.
David Purdy was responding to a Cartt.ca story earlier this week quoting CTVglobemedia executive vice-president Paul Sparkes, who, in response to a recent speech made by RCI vice-chairman Phil Lind, said Canadian cable companies are desperate fear-mongers when it comes to the possibility the CRTC might adopt a fee-for-carriage model for local conventional broadcasters.
The issue was front and centre during April’s hearing into the policies governing BDUs and specialty services and the heat of the debate over FFC has yet to cool.
Conventional broadcasters say they need monthly subscriber fees for their signals, to be paid by Canadian cable and satellite companies. OTA broadcast margins are low and they need the hundreds of millions such a fee would bring in, to shore up the balance sheet and meet their obligations under the Broadcasting Act.
Cable companies say the broadcasters already receive very valuable benefits for their signals such as simultaneous substitution of commercials, must-carry status and premium channel placement and any new cost for something consumers can get off-air for free, is just a cash-grab – a tax.
“I’m reminded of Aesop’s Fable where the dog is holding the bone in his mouth and looking at his reflection in the water… And, he wants the second bone as well so he starts barking at the other dog and loses the first bone into the water,” explains Purdy.
“In this case, the bone that’s in their mouths is premium placement, where (broadcasters) have great channel placement, they have simultaneous substitution, they have guaranteed, or must-carry status. These are all things that when they say they’re not getting compensated for our carriage of their signal, it’s just not on.
“I’ve had multiple specialty channels say to me they would gladly give up a subscriber fee to be lower down on the dial with guaranteed carriage and simultaneous substitution,” continued Purdy.
“I’d have them lined up my door ad infinitum. I’d have people not in the broadcasting business wanting into the broadcasting business in exchange for such lucrative terms. We saw that with Mr. Bitove’s application. He saw the value associated with all that.”
(Purdy was referencing John Bitove’s recent application – which was rejected by the Commission – for a new national HDTV network.)
And besides, said Rogers Cable president and CEO Edward Rogers, broadcasters’ narrowing margins are their own doing since they are paying millions more for foreign programming compared to years past.
“The expenditures to bring in U.S. shows has risen far faster than revenue growth, which has lowered margins,” said Rogers. “The model has suffered because the cost of sales has gone up so fast, mainly on the U.S. shows – and that doesn’t warrant a tax on Canadians.”
Instead of asking the Commission for more money from Canadians in a fee-for-carriage scheme, broadcasters should be negotiating with BDUs to launch innovative new “fee-for-value” services, like providing more on demand programming and getting more advertising into the VOD stream (something the CRTC is also grappling with as part of the policy process).
“There are a growing number of people who want a legitimate way of accessing content on demand,” said Purdy. Right now, more and more viewers are going around, or “over-the-top” of the regulated system to find video on demand, online.
Rogers’ own data “shows the amount of over-the-top disruption, the amount of peer-to-peer file sharing that is going on,” explains Purdy. “There is a very real threat that if we overly-tax consumers they’ll migrate to illegal methods of getting content.
“We’re seeing the consumption of video over the Internet grow exponentially… and most of it is going to peer-to-peer file sharing sites and not to network broadcast sites.”
Canadians increasingly want to watch their favourite shows wherever, whenever and on whatever device they want. “But instead of working with the BDUs to try and make this happen, the broadcasters are continually going back to the commission and asking for a fee for carriage,” notes Purdy.
“Unless we continue to add value to the customer, innovate, and provide them with real value for money, we run the risk of them leaving the legitimate Canadian broadcasting system.”
While acknowledging that cable does see revenue from all the folks on broadband, “nobody is really seeing the same revenue stream on video traffic over the web as we see on the cable platform in general,” says Purdy.
