A GROWING SENTIMENT AMONG many industry folks is that the carefully (and sometimes not-so-carefully) constructed, heavily regulated, TV system we have built here in Canada can not withstand the global media environment of the 21st century.
So, is it time to completely de-regulate television in Canada? Do we need to re-write the Broadcasting Act and just blow it all up?
Yesterday I talked with two people with long histories in Canadian television with diametrically opposed points of view. I think they’re both right about a number of things and if they are, our regulatory system is in for some shattering.
Donna Skelly, whose idea you can read about here, is trying to put together a bid for the CHCH television station in Hamilton. She’s been a broadcaster in the Steel City since 1988 and knows both broadcasting and the Hamilton-Halton-Niagara region backwards and forwards.
She believes local broadcasting can work without relying on revenue brought in from ever-more pricey American programming to backstop it. A local news station, strictly focused on its niche – the desires and news affecting the viewers and advertisers in its market – and structured sort of like CP24 or CBC Newsworld, supported by an aggressive online presence, and backed by local advertisers and money from the cable and satellite carriers can work, she says.
I believe her. I think the demand for local news and news in general has never been higher and I think they just may be able to make a go of it.
Wait a minute you say, CP24, an all-news Toronto station, only finally turned a profit in 2007, it’s first in 10 years of existence, so how can a mostly-news CH Hamilton make any money? Well, CP24 is licensed as a specialty, meaning that by regulation, it has to stick to national advertisers so despite its hyper-local focus, isn’t allowed to go after local Toronto advertising. Of its $14.2 million in revenue in 2007, $10.7 million was from national advertisers with the rest from cable and satellite subscribers.
Regulatory changes would be needed to remake a local broadcast station into a specialty local news outlet with no drama content, for example.
Paul Sparkes is EVP corporate affairs at CTVglobemedia. He, too, has been in the industry a long time – but his company faces different pressures than Skelly’s CH.
In comments re-submitted to the CRTC this week in advance of the new, smaller, April license renewal hearings, Sparkes said CTV is asking – again – for fee for carriage. Local news is too expensive to produce he says, and the conventional broadcasters need more money to sustain themselves while at the same time, its mandated local content levels need to be reduced.
“They’ve acknowledged the model is broken,” said Sparkes of the Commission. “My fear is that it’s too late at this point. The only real solution to the crisis right now is fee for carriage.
“We’ve asked the regulators twice in the past few years for this. We know the viewers value their local stations and believe they’re paying for it but the cable and satellite companies oppose this on the basis it would be wrong to raise rates for no additional service – but ironically some of the cable companies in this country, even just last month, raised their rates.”
Sparkes’ predicament is understandable. CTV has but one source of revenue (and the How-to-Run-a-Business textbook tells you on page one this is a very bad thing). They can neither charge carriers for their local station signals nor sell their programming around the world because beyond their news and sports, they don’t own it.
CRTC policy says that they must buy most of it from independent producers. So conventional TV ’casters can’t charge for distributing that programming nor can they make enough of their own that’s saleable in other markets – in the way they purchase CSI from CBS every spring in the States, for example.
But the broadcasters can’t have it all. They can’t really expect to knock off all regulations for production and slash local content requirements while also getting a new fee for carriage and maintaining must-carry rules along with simultaneous substitution of their ads.
Plus, allowing broadcasters to make all of their own content could decimate the independent production industry in Canada.
And now, in advance of the April hearing, the CRTC is talking about placing limits on what conventional broadcasters can spend on U.S. programming in relation to what they spend on Cancon. Why not a 1:1 ratio, it’s been asked?
This would be a disaster for conventional broadcasting, unless a whole lot of other things change at the same time. If CTV was suddenly limited so that could no longer buy Grey’s Anatomy or other shows for the Canadian market, how fast would Corus try to get it for W? Or would Rogers trump them all to get Grey’s for its VOD platform? And with the advertising on the VOD platform looking like it might be opened up this year with new regulation, that combination makes VOD an even scarier potential competitor for OTAs, especially if their spending is all-of-a-sudden artificially limited.
“Having us spend less on American programming is something we’ll obviously discuss but you just can’t take a conventional broadcaster and focus on us. You have to look at it from a holistic approach where you look at VOD, you look at pay, and look at specialty channels, because that could place us at an unfair advantage to BDUs who compete with us for over the air,” said Sparkes.
“The revenues we get from our American programming pays for our Canadian and if you start limiting that, you’re just going to drive viewers to watch the U.S. channels… What does that do for the system? That’s what I don’t understand.
“Fee for carriage is essential for the survival of conventional television in this country. Otherwise, we’re going to be faced with more Windsors.”
However, (and conventional stations know this) simply re-broadcasting U.S. shows in the Canadian market, which they’ve done for decades, provides less and less value every year as consumers turn to multiple places to get their favourite TV shows (and if Rogers does come out with a Fancast-like web video portal in Canada, as expected this year, it will further impact the business model). So, what if broadcasters were able to take the hundreds of millions they spend on U.S. programming and do something else? If everyone agrees the model is broken – and everyone tells me that everyone else says so… why can’t we do something else?
It’s not as though the TV ad budgets for large Canadian national companies would vanish. The vast majority of the $2.1 billion in ad revenue will stay in the system. Sears will still want to do TV ads for their many “One Day” sales. Honda will still need to show off their new hybrids on CTV during popular shows. Global viewers will still need to be shown how extra crispy McCain fries are and there isn’t enough shelf space for them to advertise on U.S. television, hoping it somehow reaches their target demo here – and they don’t get the tax credit when they buy time on a U.S. station like they do when they spend in Canada.
There’s also not enough room on the web or on radio or in newspapers and as long as conventional TV still reaches a mass audience, advertisers will come.
It’s clearly time to do something different. Maybe a local conventional broadcaster can be what Skelly and her co-workers envision and be a success.
If so, current regulations would have to be rewritten, or tossed aside entirely, for anything truly new to actually work.
So let me toss something else into the ether.
Maybe we should have just one reg, one policy: What if that one reg was 51%
That would mean that 51% of prime time programming on all channels has to be Canadian. 51% of the programming spend has to be with Canadian independent producers. 51% of the channels offered in cable and satellite lineups has to be Canadian, with some caveats against self-dealing.
But everything else? Open to commercial negotiation. Want a fee for carriage? Negotiate. Want must-carry and simsub? Negotiate. Want to do a co-pro rather than outsource? Negotiate. And broadcasters, in a deregulated world, would have the right to pull their signals.
I know the broadcasters will automatically say to this: “No way! The BDUs have all the power.”
But if our home grown broadcasters are producing or co-producing their own programming that everyone wants to watch, while also buying the best from elsewhere, the BDUs will have to come to the table. And needing to make kick-ass TV will sharpen content quality in Canada, making it saleable around the world.
But to do something different, we would need different regs. We’d need a new Act. Is it time to blow it up?
What do you think of the admittedly simplistic 51 idea? How far off my rocker am I? Do you have a good idea? Does the system need to be blown up? Is it fine the way it is? Let us know at editorial@cartt.ca. We’ll keep it confidential if you like.
