ANYONE WISHING A BIT of a preview of January’s hearings on broadcast distribution undertaking and specialty services policy changes need only speed through Shaw Communications intervention in the CanWest Global/Goldman Sachs purchase of Alliance Atlantis proceeding.
The three page document outlines in very brief terms what Shaw – and likely other cable companies – will be looking for once that policy review comes around.
Shaw didn’t object at all to the proposed merger but the company rarely misses a chance to state its case on where it believes the regulator should be heading.
"In combination with other recent or pending transactions including CTV Globemedia/CHUM Limited and Rogers/CityTV, there is absolutely no basis on which to continue to maintain outdated distribution, linkage, carriage and affiliated services rules that unduly limit the ability of BDUs to similarly respond to the challenges of the competitive marketplace," reads the submission from senior vice-president, corporate and regulatory affairs, Ken Stein.
"Given the size, strength and bargaining power of programming conglomerates and the intensely competitive distribution environment (that includes unlicensed new media platforms and the black market), all limitations on the ability of distributors to offer maximum choice to customers must be eliminated."
This is a "be careful what you wish for" request, however, because as BDUs demand its limitations be removed, the broadcasters (the big ones, anyway) intend to make their own demands. For example, we hear that broadcasters want the Commission to drop its policy that says broadcasters are not allowed to remove their signals from a BDU in a contract dispute, thereby depriving viewers of their favourite shows.
Such disputes are commonplace in the States and an open market here would likely lead to the fierce battles which those in the Canadian industry have only been spectators to coming north. Programmers play hardball telling the cable company "you need our channel(s) while the MSOs swing back saying "you need our distribution." Meanwhile, Joe and Jane Bagadonuts miss their favourite team’s run to the pennant or whatever.
"If you want to have The Popular Channel, you must carry our new Micro-Niche Channel, too," is a popular scenario between MSOs and broadcasters. Another would be: "We’re hiking The Mega-Popular Channel’s rates by 20% this year. If you don’t like that, tough beans. Pay up or we’re pulling our signal."
Under current CRTC policies, programmers, protected by must-carry rules, aren’t allowed to pull their signals from BDUs. Deregulation could certainly change all that.
The rest of the text of Shaw’s regulatory laundry list is as follows:
* Eliminate the “structural separation” rules pertaining to Star Choice and Cancom (now Shaw Broadcast Services), which are inequitably applied to and unfairly discriminate against Shaw and which create inefficiencies within the broadcasting system,
* Replace the existing distribution and linkage rules and the Category 1 mandatory carriage rules with a simple preponderance rule that requires distributors to offer consumers a majority of Canadian programming services,
* Eliminate the “5:1” Category 2 rule set out in section 18(14) of the BDU Regs (which says that for every affiliated channel a BDU carries, it must also offer five non-affiliated ones. This rule has played a role in Shaw’s carriage of Corus channels in the past as both companies are majority-owned by the Shaw family).
* Eliminate the access rules for exempt programming undertakings set out at section 21 of the BDU Regs,
* Eliminate the “1:1” pay audio rules as set out at sections 24 and 41 of the BDU Regs,
* Eliminate the “equitable carriage” requirements for large, over-the-air broadcast groups on DTH,
* Eliminate the one-per-genre policy that insulates services from competition with other Canadian and non-Canadian services,
* Replace the current process by which non-Canadian services are added to the Lists of Eligible Satellite Services with an open-entry approach governed entirely by market forces and negotiations between services and distributors.
* Eliminate advertising restrictions on broadcasting distribution undertakings (so that BDUs can sell ad time on the U.S. cable channel local avails and community channels).
Finally, adds Shaw, "to the extent that access rules for the expanded roster of CanWest services are not immediately suspended, CanWest must be prevented from demanding that negotiations for services be tied, or from tying the distribution of discretionary carriage services to that of mandatory carriage services."
While the western MSO’s submission in the CanWest proceeding asks that the company’s regulatory changes be heard in context with such merger proceedings, so "that Canadians realize the maximum benefits from consolidation," we doubt the Commission will examine them September 5th and instead wait until January.
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