THE PUBLIC RELATIONS war between Canadian BDUs and broadcasters over fee-for-carriage got a little sillier yesterday.
Right away, I already know the broadcasters are reading that opening line and getting hot under the collar. “It’s not fee-for-carriage, it’s value-for-signal,” or “it’s about the right to negotiate for fair value for our signals,” they are muttering.
And now, the BDUs out there are thinking “screw that, it’s a fee, call it what it is.”
In an extreme nutshell, broadcasters are trying to re-frame the debate saying now they only want the ability to negotiate for a fee for their local TV signals, which Canadians say – in droves – that they want to keep. At yesterday’s broadcaster press conference, that was the message CTV’s Paul Sparkes, A Channel’s Peggy Hebdon, Canwest Global’s Charlotte Bell and CBC’s Bill Chambers were trying to hammer home: “Our signals have value, let’s talk about what that value is,” if I can paraphrase.
The BDUs on the other hand, have a stronger, far more basic, argument. The message they are taking to the public is much simpler to understand: “This is a new tax and your cable or satellite bill will go up from $5 to $10 a month.”
That is SO much easier for consumers to understand than the broadcasters’ present argument. Even among the web site URLs (www.stopthetvtax.ca and www.localtvmatters.ca) the BDU one hits the point hardest.
Some of the reporters in the audience yesterday (yours truly, included) begged the broadcasters for some kind of number. How much are we talking about? How much of any new fee would be spent on Cancon? On local? How much less did you spend in Hollywood last year? How bad was the 2009 broadcast year, which ended more than a month ago, in real dollars?
Nothing. No answer. Just more talk about how they can’t quantify the signal value they are looking for yet because they only want to talk about the right to negotiate now. Their answers were unhelpful, to say the least.
The broadcasters are also calling the BDUs’ ballpark rate increase of $5 to $10 a month more added to your monthly subscription into question. Incredibly, they are now saying they don’t know where the MSOs got that number from.
Let me refresh the memory. They got that FROM THE BROADCASTERS! The 50-cent per month per signal figure was the central one talked about during the last two hearings on fee-for-carriage. Canwest CEO Leonard Asper and CTV CEO Ivan Fecan used the figure in their presentations when they faced the Commission just LAST YEAR!
And even I can work that out on the back of a napkin to hit the BDUs’ number.
My cable company, Cogeco, offers 13 Canadian OTA signals in its $28.99 basic analog “Classic Cable” package. Thirteen times 50-cents is $6.50. My daughter tells me that’s definitely between five and ten bucks a month.
So for broadcasters to now disavow their prior 50-cent request and try to say with a straight face that number is fiction and that now they only want to talk about having the Commission let them negotiate a fair value for signal is disingenuous at best.
The BDUs are hammering the $5-$10 figure hard in their PR campaign, and near as I can tell, it’s working. It’s the only number in the public debate so far, and it’s one the broadcasters themselves came up with. So, as much as they don’t want to give any numbers, broadcasters need one of their own (and saying cable companies are raking in billions just won’t cut it. You might as well say grillions or bazillions because people can’t fathom such large numbers the way they can $5-$10 out of their own pocket.)
So just for fun, I looked at that $28.99 Classic Cable package (and I’m NOT picking on Cogeco here, they’re just my BDU is all) and what goes into it. Ed note: Personally, I pay them $200-plus a month and while there are a few channels missing that I’d like, I find it good value.)
There are 31 total channels in the pack. Thirteen Canadian conventional broadcasters (CTV, Global, CHCH, Citytv, SunTV, CTS, A Channel Barrie, TVA, OMNI.1, OMNI.2, CBC, TVO and TFO) and the U.S. 4+1 (ABC, CBS, NBC, Fox and PBS, all out of Buffalo). Collective fees paid for these signals? $0. Yes, there are some copyright dollars that flow to U.S. broadcasters but in the grand scheme of things, it’s chump change.
Also in that basic pack are specialties YTV, CTV News Channel, The Weather Network, TSN, Viva, BNN, APTN, Vision, Treehouse, Slice, and CBC Newsworld. Using the CRTC’s basic wholesale rates list for these services, Cogeco customers pay $5.87 a month each to these 11 specialties.
The other two channels rounding out the package are cable-owned CPAC and my local community channel, Cable 14.
Now, according to the CRTC’s aggregate financial returns, Cogeco contributed $30 million to Canadian content (CTF, its community channels, etc.), or $2.89, per subscriber per month, based on the 865,000 or so basic Canadian cable customers which Cogeco has. The LPIF would add about 70 cents or so on top of that.
So, out of a $28.99 basic monthly cable bill, just $9.46 goes to Canadian content, or 32%.
Plenty of room for that $6.50, right, especially when you consider not very many of Cogeco’s customers take only basic (its digital penetration is close to 60%, according to its last quarterly report) – but that all have to buy basic before they can get any other services beyond it.
Now before the folks at Cogeco and all the other BDUs come by to string me up by a length of co-ax or whack me on the head with a dish and try to educate me about capex and opex and all the other costs that go into it, I’ll reiterate what I’ve said before. I don’t like the idea of more money tossed into the broadcasting system as it now stands.
For the broadcasters to say on one hand the model is broken and cite fragmentation statistics and tell us what we already know about iPods and iPhones and netbooks and BlackBerrys and over-the-top video – and then on the other to ask for more money to keep doing TV the way they are doing it now – and with little more choice or any new programming committment or anything else new – it’s not a bargain I want any part of as a consumer.
A better argument would be to say to take ownership of that 50-cents and tell Canadians “yes, we need that extra dough, and isn’t your local station worth half a buck? And hey, 75% of that new money is going right to your local TV station which now loses $X-$X per customer.”
And then they need a concept that is a winner.
Like choice. Choice of what to pay for, for example. Yes, a-la-carte. Perhaps it’s time to talk about full on pick and pay – with a preponderance of Canadian channels, of course.
And to their credit, the broadcasters are moving in this direction. Sparkes said yesterday they’d be willing to barter mandatory carriage versus a fee (there’s way more to it than that though as under the broadcaster plan, U.S. ‘casters signals would be blocked if no deal for the Canadian broadcaster could be reached, for example) and he told me customers should have more choice in what they pay for.
What if Jane Bagadonuts likes Citytv and Global and not CTV? Can she pay for just the two she likes? What about a package of locals and just Sportsnet, Raptors TV, HGTV and W. How much is that? Maybe she wants The Score, Silver Screen Classics, Pet Network, CHCH and CBC. Can she buy that?
Folks will understand that choice will cost more. And if ol’ Jane has a family, it’s likely she’ll want lots of channels to keep her kids and hubby happy. Besides, they have a Costco card and the Bagadonuts clan gets that its cheaper to buy bulk than one at a time.
And our limited history with a-la-carte and TV shows that most people still pick packages of TV because it’s cheaper.
Cleaning up the message, fessing up to the increased costs and coming down hard on the side of choice for the consumer may be the only way for broadcasters to rebalance this battle.
