GATINEAU – If the Canadian TV industry is to fend off the growing power of unregulated sources of video (yes, especially Netflix), exclusive deals on content must be allowed, Quebecor president and CEO Pierre Karl Péladeau told the CRTC Monday afternoon.
He was appearing in front of the Commission on day one of its hearing into the regulatory framework on vertically integrated corporations (those big four companies which own big broadcast assets and big distribution companies: Bell, Rogers, Shaw and Quebecor).
While noting “vertical integration is the only viable tool to allow us to protect the Canadian broadcast system,” Péladeau also explained that if adding regulations to govern the Canadian content available on the likes of OTT providers such as Apple TV, Google TV and Amazon, “it’s very possible Canadians would be upset if (those companies) ignored Canada if the Commission decided to regulate their activities.”
(Ed note: While much noise has been made about the potential for the CRTC to place Cancon minimums or contribution requirements on OTT providers, that’s not the direction the vertically integrated companies want to go. They want all video players to have a similar playing field, but they want to see many of their regulations eliminated, instead of adding some for Netflix.)
However, Péladeau added, if regulations continue to stifle what Quebecor can do to stave off competition like Netflix, he’s worried “consumers will simply give up Videotron.
“In other words the very existence of our cultural industries is being threatened… We can’t simply stand by and do nothing when sites as popular as YouTube and Netflix evolve in a dangerous fashion.”
That means “exclusivity is an essential tool to allow us to make our services different than the other ones also in the market.”
Later in a scrum with we scribes, the CEO was asked if Canadians should have to subscribe to multiple companies and be forced to use multiple devices just to get all the content they want, since different vertically integrated companies would own the exclusive rights to different branded content under the Quebecor plan.
“This is what competition is all about and therefore, yes, at the end of the day, you will have different product on different devices. I think this is how you’re going to be able to stimulate competition because if not, then it’s going to be plain vanilla everywhere and only the large companies, like Bell, will succeed, and will unfortunately, provide a lower level of development in terms of competition.”
Péladeau then pointed to how YouTube is spending millions on building new online channels with original content and to the fact Netflix recently signed a deal with Paramount for both the English and French-language rights to a library of content as examples of how exclusive content is the business model of the future.
However, when the panel of commissioners asked if Quebecor’s broadcaster, TVA, or cable company, Videotron, is really hurting as Netflix marches towards a million Canadian subscribers, the company’s executives couldn’t say, nor did they like Rogers’ idea which says everything made available for the regulated TV system must be made available to all on a non-exclusive basis on whatever platform desired.
“I’m perplexed by Rogers’ position,” said Péladeau, “In fact, I have questions how well they understand over-the-top services. Other people have spoken to this and if I were an English language broadcaster or distributor I would be very concerned about the financial abilities these other (OTT) companies have to invade our markets.”
However, CRTC chairman Konrad von Finckenstein pushed Quebecor, noting this hearing isn’t really about OTT, but about Canadian vertically integrated companies potentially keeping popular content from one another in the hopes of attracting TV, Internet and wireless customers.
He asked a number of times how Rogers’ idea would negatively affect Quebecor, given how high profile content is best monetized by more people, not less, consuming it.
However, the Quebecor CEO stuck to his message that the exploding growth of OTT video is, or should be, the prime worry.
When asked by commissioner Peter Menzies if Quebecor could put a number on potential subscriber losses, Videotron president Robert Dépatie couldn’t say. “It’s under investigation,” he said. “We feel we have lost some.”
Péladeau added that while Videotron did lose a small number of basic subscribers (3,000) in the last quarter, it’s competitors are not increasing its subscriber rolls by the same number, suggesting customers aren’t changing TV providers, but cord-cutting.
The hearing continues Tuesday morning with Bell Canada up first, followed by Telus.
Cartt.ca editor and publisher Greg O’Brien is in Gatineau this week covering the CRTC’s vertical integration hearing.
