MONTREAL- New distribution services are allowing Canadians to watch TV programs when and where they want and unless Canada adjusts to this new reality it will “lock itself out of the global television industry” warns Pierre Karl Peladeau, president and chief executive officer of Quebecor Inc.
He made the comments today, arguing that the approximately 400 rules and regulations governing Canada’s broadcasting industry are stifling Canada’s potential to play a leading role in the industry.
"Within a few years, the Internet may be the main distributor of television programs, piping content over a global network that escapes regulation,” says Peladeau.
He maintains that Canada’s broadcasting system cannot survive in its current state without “dire repercussions for Canadian content and the people who produce it.”
He noted that Canadians are increasingly opting for new distribution services such as IPTV, mobile broadcasting and the Internet. "Given this context, if regulation has the effect of limiting consumer choice or artificially increasing the cost of services without adding value, consumers will simply turn their backs on the system and find what they want elsewhere."
The regulatory setup that allows the specialty channels access to advertising revenues in addition to mandatory carriage fees gives them a formidable position in the advertising marketplace says Peladeau, since they are able to offer advertisers very attractive multi-channel packages. “Together, they dominate the market, while the market share of conventional broadcasters is melting like snow in the sun."
At the same time he says private conventional broadcasters cannot count on advertising revenues to ensure their profitability and survival. “Meanwhile, they are subject to wildly disproportionate regulatory obligations and costs, when compared with the specialty channels. And yet it is up to the conventional broadcasters to provide the lion’s share of Canadian content in the form of full news and current affairs coverage, major dramatic series and diverse programming. We have to try to square the circle and survive without carriage fees, with falling advertising revenues and an unchanging regulatory burden. This is a situation that cannot long endure."
He believes that all broadcasting services – conventional broadcasters and specialty channels alike – should be entitled to collect carriage fees. Broadcasters should be able to sit down with the distributor to settle on a fair price for the product, terms and conditions for the distribution of the service, and its inclusion in the packages offered to consumers he says.
“Each broadcaster should be entitled to a fair price for its products, which means the right to withhold permission for a distributor to carry its channel or channels. The resulting dynamic would force the three central players in the broadcasting system – broadcasters, producers and distributors – to excel in order to claim their place in an industry that soon will have no borders.”
Peladeau also pointed out that the public broadcaster is in a much more advantageous position, with four revenue streams: a substantial government subsidy, a large portion of the funds distributed by the Canadian Television Fund, advertising revenues, and carriage fees from its specialty channels.
"It is baffling that while the LCN all-news channel, owned by TVA, has the largest audience share in its market, RDI, the CBC’s French-language news channel, collects a carriage fee three times as high. It is also shocking to learn that the public broadcaster is now calling for carriage fees for its two main channels. As a public service, the CBC cannot contend it is part of the same free market as private broadcasters that take real risks to offer their audiences a quality product, and lay claim to parliamentary appropriations, advertising revenues, the Canadian Television Fund, and carriage fees for its conventional and specialty channels, all at the same time."
According to a Praxicus survey commissioned by Quebecor, 86% of respondents favour policies to promote the production of Canadian programming and Canadian content; 74% support change and innovation in the television industry; 65% believe the regulatory framework should be reformed to allow Canada to join the digital revolution as soon as possible.
"If our goal is to enable Canadians to compete in this lucrative industry, which is part and parcel of the knowledge economy and a creator of wealth in advanced societies, we have no choice but to rely as much as possible on the laws of the market."
Peladeau also announced the launch of a new website, www.ocanada.tv, which seeks to inform Canadians of the potential for Canadian television in the future. The site is divided into four sections covering television production, distribution, broadcasting and regulation in Canada. Each of the four sections contains three subsections: "Did you know," which provides information on the state of Canadian television; "The new digital environment," which surveys the opportunities created by digitization; and "Building a new world," which discusses ways to promote the creation and distribution of Canadian content.
