WINNIPEG – After reporting a consolidated net loss of $19 million for the second quarter of fiscal 2006 (way off the $28 million earned during the same time last year), CanWest Global Communications CEO Leonard Asper renewed his persistent calls for a regulatory overhaul.
Asper said he was pleased to read that the CRTC is considering a review of its television policy. "More and more, the CRTC is taking a market-driven approach, so we do think there will be a rebalancing of the television system, allowing conventional television stations to have the same revenue opportunities as other television channels."
Asper has long called for the rules to change so that conventional over-the-air broadcasters can charge a fee for carriage from Canadian consumers – passed through by their TV distributor. If that were to happen, then should the rules for specialty services then be altered so that they can benefit from simultaneous substitution, he was asked?
No, said Asper, who then launched into what he termed a bit of a "rant" on the existing regulatory regime.
"Simulcast is a red herring. When specialty channels talk about it as something they should get, we completely disagree that it’s related to (CanWest’s demand of) fee for carriage. Simulcast is… a very misunderstood thing," said Asper. "It’s partial compensation to broadcasters for copyright infringement that the CRTC allowed 45 years ago when they let NBC and everybody else spill their signals over the border. In no other country in the world does somebody buy a program, like ITV in England or Channel TEN in Australia, and then have to compete against the owner of the program.
"So, Canada is this unique market where you buy the exclusive rights at a high price… and then you don’t get exclusive rights. So, simulcast partially compensates broadcasters for that if they happen to broadcast the program in the exact time slot that the competing channel is broadcasting it," he continued.
But, when a specialty broadcaster like Alliance Atlantis airs an American program bought from a U.S. cable channel, "it has the exclusive Canadian show because it doesn’t compete against Lifetime," said Asper. "If it has an HBO show, there’s no HBO in Canada so there’s exclusive rights to that show.
"For every program the specialties put on, it’s blocked from coming into Canada and competing against them by virtue of the CRTC not allowing those other (foreign) channels into the country.
"So, if (specialties) want to get into (simultaneous substitution) then we’ll say cut out NBC and CBS and ABC and FOX – and let’s all play on the same field," Asper said.
Canadian specialties, he continued, "get full coverage of the country with a lower cost base. They don’t have to have stations in local markets or local programming. So, they have the exact same coverage as we do and they get a fee, and they get advertising revenue. That’s just a bit of a lesson for everybody, or a reminder, on the differences between the two positions. Fee for carriage is just trying to catch up to where (specialties) are and simulcast is a compensation for a problem they don’t have so they shouldn’t get the same thing."
Left unsaid was that if specialty services had simsub rights, they just might use them to buy FOX’s 24 out from under Global, for example, and show it on Showcase.
A little later in the conversation, Asper turned his attention to Quebecor Media CEO Pierre Karl Peladeau, who went on record this week basically backing Asper’s position on a fee for carriage of broadcasters.
"For someone who owns a very large distributor (Videotron) to be saying that is noteworthy I think," said the CanWest CEO. "The inference of that is any pain that a distributor might suffer doesn’t seem to be very much."
"The point is that it means a heck of a lot to the broadcaster and it’s not very much to the cable distributor. Otherwise I don’t think he would have said that. As someone who owns a distributor and a broadcaster (as Quebecor Media does, with TVA), to take the position he should be compensated for carriage is very important to our position going forward."
When pointed out that any money is simply coming from the consumer anyway and not the cable company itself, and that Quebecor would just pass it through, Asper added: "That’s the point. Cable can pass it on. They keep saying they can’t but they pass price increases on every week – they always have a great excuse and it’s always for something that benefits them. But, when it’s something that benefits someone else, they don’t seem to want to find a way to pass it on.
"They will say, ‘gee, we can’t possibly add another cent to your cable bill,’ but somehow the cable bills have gone up by double-digit percentages over the past number of years, so the argument that they can’t possibly afford to pass it on is one they make only when the pass-on doesn’t suit them."
This TV review thing ought to be good.
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Blaming several issues like the Olympics, which had people watching elsewhere and the U.S. nets delaying the air dates of such dramas as Prison Break and Heist, both of which are Global properties in Canada – as well as poor performance from its Australian TV operation, ” "results in the quarter were disappointing," said Asper.
The Company’s consolidated revenues for the quarter decreased by 5% to $646 million compared to consolidated revenues of $680 million for the same period in the prior year. Consolidated EBITDA for the second quarter was $81 million compared to consolidated EBITDA of $147 million for the same period in the prior year.
During the quarter, the Company determined that TV3 Ireland was not a core asset and commenced the process to dispose of its 45% interest in TV3 Ireland. Accordingly, results of TV3 Ireland for the current and comparable periods in the prior year are excluded from consolidated revenue and consolidated EBITDA and reported as results from discontinued operations, together with the results of Fireworks Entertainment, the sale of which was completed in September, 2005.
There has been a slow down in the advertising market generally in Australia following several consecutive years in which advertising market growth outpaced GDP growth, said the company. The broadcast television landscape in Australia remains highly competitive as individual audience shares for the three conventional television networks are more tightly clustered today than they have been for a decade.
"We expect varied financial results for the balance of the year," added Asper. "Through continued strong revenue growth and an improving cost structure, we expect year-over-year operating profit growth for our newspaper and interactive operations. In Australia, the advertising market remains quite short and we will continue to see a very competitive ratings environment… We do not expect any material change to Global’s financial outlook in the second half of the year. A number of initiatives implemented this quarter, including the Global brand re-positioning, the move of Global National News to 5:30 pm across Canada, the strengthening of the Global schedule with program additions, Las Vegas, 24, My Name is Earl, The Office, Conviction, and the streamlining of back-office television operations, will support a strengthening financial position in fiscal 2007."
