GATINEAU – The sale of advertising time on American cable channels, by a new third-party company, can help fix what ails the broadcasting system, says former Canadian Association of Broadcasters president and CEO Glenn O’Farrell.
His new company, Mediadenovo (Italian for “media of the new”, we’re told) would be a new programming undertaking that would sell the two minutes per hour of local availability ad time to national advertisers. Mediadenovo submitted its application for a license to the CRTC months ago, said O’Farrell, but it has yet to be made public.
American cable channels like CNN, A&E, Golf Channel and others make two minutes an hour available to distributors to sell into local markets. While in the States it’s a multi-billion-dollar business where dynamic ad insertion is being directly launched, in Canada it’s a far different story. CRTC regs prohibit the sale of that ad time and instead mandate that 75% must be provided, at cost, to Canadian broadcasters for promotion while 25% can be used to market carrier services.
Mediadenovo proposes to send 70% of gross revenues from national ad sales within the avail time “wherever it is needed,” said O’Farrell. This would be a way to potentially boost funding within the system for local news, for example, without increasing consumers’ monthly bills.
The idea was directly supported by Telus at the CRTC hearing going on now in Gatineau.
“Telus considers that this third-party solution is the best means of monetizing the avails without threatening or causing any market and/or regulatory distortions. More importantly, monetizing the avails provides a new source of revenue for broadcasters and BDUs without any impact on consumers. It is truly win/win,” read Telus’ opening statement to the CRTC, which it will present today, just after lunch.
And last week, Bell Canada, which has long wanted to sell that avail time on its own, changed its mind on that matter. “Bell would be prepared to reconsider its previously expressed interest in establishing a new revenue source for itself that would be realized from advertising in the local avails. Access to avails’ advertising could be restricted to OTA broadcasters as another way of bolstering their bottom lines,” said regulatory chief Mirko Bibic.
“(The avails) should serve Canadian programming,” insisted O’Farrell.
Former broadcast executive Kevin Shea brought an idea like this (then dubbed 49th Media) to the Commission in 2003, as did Drew Craig under the “Only Imagine” banner in 2006. Neither of those business plans contemplated returning so much of the cash (some estimates that revenues would be in the $60 to $70 million range, annually) right back to both local TV as well as cable and satellite companies and the Commission rejected both ideas.
The cable industry has made several requests to do the same over the years, the latest in 2005, saying the added revenue to their bottom lines would then boost the CTF (now CMF).
The CRTC has consistently turned down all of these proposals over the years but with the Commission grasping for new proposals to raise more funds without corresponding increases to monthly cable/satellite/telco TV rates, this proposal seems certain to get some serious thought this time around.
“What attracted me to this concept was the opportunity to transform the idea into sensible and smart public policy,” O’Farrell told Cartt.ca. “Those assets are out there – unmonetized assets that are being squandered every day.”
The funding model proposed by Mediadenovo should be flexible, he added, so that money can be directed wherever it’s needed to produce Canadian content.
And as for the complaints from broadcasters that this new ad inventory would dilute the already saturated market, or from carriers who say this is their time to sell, since it’s in their contracts, O’Farrell has one message: “this is a sensible, reasonable solution.”
Mediadenovo would also give some of the time away for free to Canadian programmers, too.
