OTTAWA – While some have yet to react and others have decried the CRTC’s decisions today on the carriage portion of the Commission’s TV Policy Review, the overall reaction has ranged from generally positive to indifferent. Bell Canada and Quebecor Media have chosen not to respond as yet.
Shaw Communications president and CEO Brad Shaw:
“We support the Government’s direction and the Commission’s commitment to maximize choice for Canadians – as citizens, producers, and consumers. We are pleased that the Commission has built on the foundation of previous Talk TV decisions to support a bold yet balanced and orderly policy framework that will give Canadians increased choice, while providing producers, broadcasters and distributors more freedom and flexibility to innovate and create the next generation of content experiences for Canadians.
We commend the leadership of the CRTC chairman and the opportunity to work with the Commission throughout the Let’s Talk TV process. While this new regulatory environment will not be without challenges, the Commission has provided real opportunities for Shaw to continue delivering the best content experiences possible for our customers and viewers within a healthy, dynamic and competitive environment.”
Rogers Communications
We know consumers want more flexibility and we started down this path several years ago – we already offer dozens of services a la carte and in theme packs. This decision gives us more certainty so we can offer customers even more choice.
CCSA (Canadian Cable Systems Alliance) president and CEO Alyson Townsend
“This increased flexibility is good for consumers, giving them the ability to choose the programming they want in a way that fits their household’s needs and budget. Unbundling the television services offered by the major media companies will help locally-based broadcasting distributors to deliver better service to customers both in the major urban and in smaller markets throughout Canada. We expect this new framework to promote fair competition that will enable our member companies to continue to serve their communities well in the future.
“In order for our member companies to provide more choice and flexibility to our consumers, we require more choice and flexibility in our wholesale arrangements with the large programming suppliers. Today’s announcements provide small and medium sized distributors with the much-needed flexibility and clear guidelines that should allow us to compete fairly with the vertically integrated companies and ultimately provide better service to Canadian customers in all parts of the country.”
TD Securities analyst Vince Valentini (in a research note to clients)
“(W)e do not believe that any public company we cover faces material risk… The ‘old’ system is not being rejected, so consumers who want to stick with big bundles still can (they just have to be given the option of old versus new packaging). Given that the price per channel is likely to be a lot higher with both pick-and-pay and small build-your-own-bundle options, we suspect that most consumers will stick with the old system for a long time, if not forever. Importantly (but as expected), the CRTC is NOT mandating the rates that broadcasters can charge for channels, so there should be the flexibility to maintain the appeal of larger bundles via differentiated pricing.
“…Assuming that dozens of weaker channels disappear, we believe that there could actually be an opportunity for the remaining channels to increase their revenues because audiences will be less fragmented and more of both the advertising dollars and household subscription dollars could end up flowing to the survivors.”
Scotia Capital analyst Jeff Fan
“The $25 ‘skinny’ package provides a more affordable entry price for consumers. However, given the low content cost of the required channels (i.e., local Canadian OTA), we believe BDUs can preserve margins. Sports content is not included, which could impact penetration of sports channels and advertising revenue. We believe BCE's TSN and RCI's Sportsnet could be the most affected.
“In our view, PNP/Pick Packs give consumers more choice, but not necessarily at a lower price. Since there is no price regulation and BDUs can continue to sell their current packages, we believe BDUs will have the flexibility to maintain their existing economics. For the broadcasters, speciality channels with little viewership will be most impacted. We believe Shaw and BCE are most affected given their higher specialty TV exposure.
“We believe the wholesale changes will have the biggest impact on Bell Media. Some of the terms of Bell Media's existing arrangements (i.e., certain PBRCs and revenue guarantees) were deemed unreasonable by the CRTC, which could have an impact on some of its revenues.”
Friends of Canadian Broadcasting
“Even though the government made clear in its 2013 Speech from the Throne that cable channels would be unbundled “while protecting Canadian jobs”, CRTC Chairman, J.P. Blais had little sympathy today for those who will lose their jobs as revenue declines and employment shrinks as a result of today’s decision.
“Evidence placed before the Commission by Friends at a public hearing in September last year predicted a worst case scenario that more than 17,000 jobs and more than $2 billion in revenue would be lost on an annual basis by 2020 as a result of moving to a pick and pay environment. While the CRTC has rejected that scenario, the Commission has offered no other analysis to support today’s decision and seems to have no idea of the economic impact of its decision.
““This decision is irresponsible. The move to unbundle cable channels and introduce a mandatory basic TV service represents a body blow to Canadian content on TV and will leave consumers expecting a price break disappointed.
Cogeco Cable president and CEO Louise St-Pierre
"We strongly believe that the best and most effective way to satisfy the expectations of Canadian consumers is to continuously adapt and meet their needs. We feel the CRTC's decision reflects this belief and will further ensure Canadian consumers remain engaged in the Canadian broadcasting system.”
Public Interest Advocacy Centre executive director John Lawson
“Today’s measures will ensure that Canadians will be the ones who decide how to access television content and what they want to pay for it. That choice should fall to Canadian consumers, not their television service providers.”
Canaccord Genuity analyst Dvai Ghose
“In our view, setting a $25 ceiling on the basic entry package could have negative implications for TV ARPU. For example, current entry-level TV monthly prices for the large BDUs are as follows: Bell Fibe TV $45.95, Rogers Cable $40.48, Shaw $39.90 and Videotron $38.00 and Telus $34.00 ($29.00 if bundled). While we suspect many customers may elect to purchase additional channels beyond skinny basic in sought after categories, such as sports, in a worst case scenario TV ARPU could decline by as much as $9-21 for some customers.
“However, there would be offsets for the BDU through lower programming expense. In addition, if a customer were to supplement their basic package with an OTT solution such as Netflix, this could lead to a revenue shift towards higher margin Internet ARPU and away from lower margin TV revenue. However, it is far too early to tell any potential impact on TV ARPU because we note that the customer can elect to keep their current packages.
Canadian Network Operators Consortium
“This decision, once fully implemented, will go a long way to deliver more programming choice at lower cost to Canadian viewers. Canadian consumers are the true winners today.”
“One area of concern for CNOC relates to the mandated retail price cap of $25 for the entry level TV package. CNOC members have to pay significant wholesale fees to telephone and cable company for the carriage of their broadcasting services. CNOC intends to work with the CRTC to make sure that the difference between the retail cap and underlying wholesale costs don’t have the unintended consequence of driving smaller players out of the market.”
