GATINEAU – Of all the submissions we’ve heard over the past three weeks, Channel Zero’s boiled the issues down very well, kicking of its oral remarks on Wednesday.
Cal Millar, vice-president and general manager of the company which owns Silver Screen Classics and Movieola said he believes the hearing is about Canadian programming and the fact that the consumer doesn’t really care about all the machinations going on within the CRTC or any of the broadcast and distribution companies.
“Canadians don’t say to themselves: ‘I want to spend money on cable or satellite’,” explained Millar. “They say ‘I want to watch TV’.”
It’s the CRTC’s job to figure out those hidden machinations behind what Canadians see on their TV screens so that it’s a fair system for everyone said Millar – and a few other independent broadcasters who faced Commissioners on Wednesday – after Shaw Communications’ appearance that so dominated the news coverage from that day.
Despite what the carriers say about choice in the markets in Canada, Millar pointed out that in every Canadian province, one cable operator dominates. Shaw has 85% of the market in British Columbia, Rogers has 73% market share in Ontario and Videotron 68% in Quebec, he outlined.
That market power can make it extraordinarily difficult for small broadcasters to get a toe in the door, especially owners of category two digital services like SSC and Movieola who have no access provisions and have to negotiate their way on.
Millar told Commissioners how hard his company has worked to try and get SSC, for example, on Shaw or Star Choice and how he was rebuffed at every attempt, despite the fact that Rogers, Bell ExpressVu, Cogeco and others have chosen to add the classic film channel.
Millar said he was told by Shaw in 2003 and 2004 that “we don’t want an old movie channel, nobody will watch just old movies and besides, we have no channel capacity,” he recalled.
“In 2005, imagine my surprise to learn that Shaw Cable and Star Choice launched not one, but two foreign owned old movie channels, Turner Classic Movies and American Movie Classics,” he added. “The cable division launched them in analog packages to millions of subscribers, taking up the channel capacity that might have accommodated up to 12 digital channels.
“Not only was the licensed Canadian service shut out, but we now also faced unfair competition from a competitor with no cost of operations in Canada, who makes no contribution to the Canadian broadcasting system,” Millar continued.
“The foreign competitor charges BDUs two-and-a-half times what we charge… Those fees are equal to more than $20 million annually.”
Adding foreign services to analog like this highlights how the current rulebook is broken (TCM and AMC had been on the eligible satellite list for years) and caused Channel Zero to pitch another specialty service licensing model, which we have reported on previously.
There would essentially be two types of specialty services, under the plan, Category A and Category B. Category A services would be required to contribute significantly to the creation and presentation of Canadian programming, and subject to a minimum Canadian content requirement of 50% and subject to an annual Canadian programming expenditure ("CPE") requirement of at least 50% of the previous year’s gross revenues. In return, the Category A services would be entitled to mandatory digital carriage by Class 1 and Class 2 and DTH BDUs.
All analog specialty services and all Category 1 digital specialty services that are currently in operation would be automatically converted into Category A licensees. Category 2 services that are in operation by April 7, 2008 would have a two year period in which to apply for conversion into a Category A service provided that the Canadian content and CPE requirements would be met
Category B services would be anyone else not meeting the requirements and would have no mandatory carriage on BDUs.
“We believe that Canadian programming services that make significant contributions to Canadian content and substantial expenditures on Canadian programming should be guaranteed access to the BDUs,” Millar told the commissioners Wednesday. “We are not saying they must be guaranteed access to the basic package, but they must be available on the digital shelf for Canadians to select. I believe this is called choice.”
Both Channel Zero and High Fidelity HDTV, which also presented its case on Wednesday, support a moratorium on adding any new foreign services to the eligible satellite list. HiFi owns and operates four all-HD channels, OasisHD, EquatorHD, TreasureHD and RushHD.
The channels are carried by Bell ExpressVu and a number of smaller providers, like SaskTel’s MAX service. Rogers Cable is looking to launch the channels soon.
The current rules, however, make it far too easy for Canadian distributors to add foreign high definition services (Shaw added TLC HD last week, for example) instead of existing Canadian ones, said HiFi’s David Patterson.
HiFi doesn’t want genre protection or guaranteed access. It wants licensing requirements to be far diminished for new HD entrants.
“New entrants should be Canadian owned and controlled. New entrants must not be effectively controlled by a big cable or satellite company or a big broadcaster. New entrants must be all-HD on a 24/7 basis. And new entrants must agree to spend not less than 20% of their previous year’s revenue on Canadian programming,” said John Panikkar, a co-founder of the company.
HiFi had to endure a bit of a dressing down by CRTC chairman Konrad von Finckenstein who objected to the strong wording the company employed in its written submission. “This is the third time I’ve heard from you and each time it’s more abrasive and offensive,” said von Finckenstein. “I have no problem you saying we’re wrong, but that kind of language is unacceptable.”
Panikkar responded by asking the chair “check against delivery” as it often says on the front page of written speeches, because he used more neutral language when speaking as compared to what was in the written text that von Finckenstein was following along with.
HiFi has bumped up against capacity constraints of BDUs who say adding four high definition services is a tough thing to do, even while adding more American HD services instead.
“For months now you have been aware that HDNet programs a separate Canadian feed, with approximately half of its program schedule for Canada being completely different from its various U.S. feeds,” said Patterson. “In other words, you have been aware that the HDNet channel that you approved is not the one that is being dumped into Canada and yet you have done nothing about it.
“In the meantime, HDNet is using up bandwidth that could be allocated to a Canadian channel such as one of ours. We believe it will not be long before HDNet begins to sell Canada-targeted advertising in its Canada-specific feed, in the same manner that CNBC has been doing for some time now with its Canada specific feed.”
The Fight Network, another category two digital channel which is expanding as a global brand, also argued against guaranteed access, saying: “we don’t have it, why should anyone else?” asked George Burger, president and CEO of TFN Global. “(T)o some extent, whatever success The Fight Network has achieve may be the result of not having guaranteed access. We have to market, program, design and build our brand as if our life depended on it, because it does.
“The same can’t be said for channels who are in the black the minute they turn the lights on.”
