COMMENTARY: Don’t blame the big Canadian broadcasters. We need them

And why we must address the real challenges facing Canadian broadcasting

By Kevin Goldstein

IN A RECENT CARTT.CA opinion piece, OUTtv CEO Brad Danks claims Canadian broadcasting policy is biased in favour of vertically integrated (VI) companies and has failed because it has not resulted in the exportable Canadian services that he suggests the CRTC intended with its 2015 Let’s Talk TV policy. Both these claims are at odds with reality.

First, it’s clear the international success intended by the CRTC was for Canadian programming, not Canadian programming services. And a large measure of that success has been achieved. Bell Media, for example, has backed many shows that are both critically acclaimed and fan favourites in Canada and around the world. These include Orphan Black, Cardinal, Letterkenny and, most recently, CTV’s Transplant, which earlier this fall was the most popular drama on U.S. network television.

Second, it is the scale needed to compete with global behemoths – Disney, NBC Universal, CBS-Viacom, Netflix and Amazon – that drove and continues to drive, consolidation in the Canadian media sector.

Indeed, policies supporting vertical integration were not designed primarily to help Canadian companies compete internationally, but instead to strengthen the domestic media sector and to reinforce its ability to thrive in light of major foreign players arriving here in the Canadian market.

While this is obviously important for the continued production of hit programming, it is crucial to maintaining the local news and information programming Canadians depend on day in and day out. In fact, the importance of local news has never been clearer than during the Covid-19 pandemic.

Third, to suggest that Canadian regulatory policy is tilted against independent players is simply false. The CRTC has introduced successive waves of policies and regulations to ensure independent programming services and distributors are not unduly disadvantaged by vertical integration. For example, the CRTC has required distributors to carry a certain ratio of affiliated to non-affiliated services and the Wholesale Code includes numerous provisions to support independent channels, including significant packaging and marketing support.

“Without significant change, we will not only have a lack of compelling and diverse Canadian programming, we likely will not have a Canadian broadcasting system at all.”

A reality that Mr. Danks does acknowledge is that foreign streaming services have accelerated cord cutting, shrinking the revenue available to the traditional system. And while a niche service with narrower appeal is going to feel this first, even the larger players are now being impacted by the changing market dynamics.

Bell, Shaw, Rogers and Quebecor may be the largest Canadian-owned players in the system, but our scale and share is extremely modest compared to international players we now compete with. Over the last decade, Internet advertising has grown from 19.9% of media advertising revenue in 2010 to 53.8% in 2018. Google and Facebook together accounted for more than 78% of Internet advertising revenues in Canada in 2018, totalling $5.9 billion. Meanwhile, conventional television remains generally unprofitable, revenue having declined by hundreds of millions between 2015 and 2019 (and more recently we’ve seen hundreds of millions of dollars more disappear from the system due to the pandemic).

Today, more than ever, we need to look at the market holistically. For example, it is highly inaccurate to exclude Netflix and similar services from calculations of market share when over 6.6 million Canadians spent more than $1 billion subscribing to Netflix alone in 2019.

Finally, there will always be a place for small and innovative niche service providers that are nimble and able to expand internationally. But it also takes well-capitalized, stable players to compete with foreign streaming services, something that will become even more essential over time if Canada is to have a presence on the world content stage.

As it stands, we do not currently have a public policy environment that positions Canadian media companies to succeed in the long term. Obligations on traditional domestic players are out of date and our businesses are fragile, as the current economic crisis brought on by the pandemic has made abundantly clear.

Moreover, the new wave of foreign competitors make no contribution to the system. These companies must be required to contribute to a fund to support content creation, including local news, while the requirements on Canadian companies must be streamlined and eased.

Without significant change, we will not only have a lack of compelling and diverse Canadian programming, we likely will not have a Canadian broadcasting system at all. So while we’re encouraged by the proposed amendments to the Broadcasting Act, we hope the CRTC will act to correct the longstanding regulatory asymmetry between foreign and domestic players by requiring companies like Netflix to contribute to the Canadian system from which they so greatly benefit.

Kevin Goldstein (right) is vice president, regulatory affairs, content and distribution, Bell Canada.