No set rates means decision will require a lot of work and time to implement, CEO says
By Amanda OYE
OTTAWA – Last week, when renewing independent broadcaster OUTtv’s licence for a five-year term, the CRTC also granted the service dedicated to the LGBTQ2 community, “must-offer” status for three and a half years in the English-language market starting next March.
Noting that with the decision the CRTC has recognized the distinctiveness and vulnerability of the LGBTQ2 community, OUTtv CEO Brad Danks said in an interview with Cartt.ca the decision was also an indication the Commission recognizes that without regulatory support, OUTtv would be forced to do more mainstream programming to compete commercially.
“I think the must-offer is valuable for sure and will help us with the biggest problem, which is being marginalized through the packaging,” he said, describing the current packaging system as “being weaponized” against independent broadcasters as it is the way Broadcasting Distribution Undertakings (BDUs) have been cutting costs – “by repackaging and moving people into smaller packages.”
While the granting of must-offer status is significant and welcomed, Danks said OUTtv is only “small ‘h’ happy” with the CRTC’s decision.
One of the main reasons for this is the Commission denied the packaging and pricing terms OUTtv proposed, including a penetration-based rate card, which impacts its ability to actually implement the must-offer decision.
“The single most hostile platform that OUTtv is on is the Canadian broadcasting system” – Brad Danks, OUTtv CEO
While noting OUTtv’s proposal “would result in increases in subscriber numbers and total revenues,” the CRTC denied it because its “approval would run counter to the Commission’s long-standing practice regarding commercial agreements of not regulating rates for programming services,” its decision explains.
Instead, the Commission “set out an expectation and an encouragement with respect to the packaging and fair treatment of the service, which apply to all licensed and exempted BDUs operating in both language markets.”
Commissioner Claire Anderson wrote a dissenting opinion agreeing with the must-offer decision but arguing she would have made it mandatory for BDUs to include OUTtv in packages with the highest penetration rates and would have required “BDUs treat OUTtv fairly and avoid withdrawing the service, imposing punitive or retaliatory measures, imposing unreasonable rates, significantly altering the packaging or otherwise substantially reducing the wholesale payment for the service…”
Without these requirements and because the CRTC did not approve a set rate for OUTtv, instead leaving it up to commercial negotiations, it will take a considerable amount of time to implement the decision, Danks said, explaining OUTtv may now have to go through “dispute resolution with every single BDU in the country.”
OUTtv is stuck in a situation where it wants to be available on every platform to generate revenue, and while the CRTC agrees it provides an important service, the decision means “it’s going to be a lot of work to implement the decision,” Danks explained, noting OUTtv will need to focus on more commercially driven content in the meantime.
Many independent broadcasters are finding it difficult to operate in the Canadian broadcasting system. This was made clear in the contributions independent broadcasters made to the CRTC’s recent hearing considering the broadcasting side of the proposed merger of Rogers Communications and Shaw Communications and in contributions to the Standing Committee on Canadian Heritage’s study into Bill C-11, including by Danks.
“There’s a lot of language here, which I think we’re all buoyed by, particularly commissioner Anderson’s dissent…” – Danks
“The single most hostile platform that OUTtv is on is the Canadian broadcasting system,” Danks told Cartt.ca. “A lot of that has to do really with the traditional structure, but some of it has to do with the failure of the CRTC to implement… some of its own rules,” he said.
Danks also argued there is an inherent problem in the system with regards to the CRTC trying to balance interests.
The Commission sees BDUs as operating only a BDU business when most are in the Internet and mobile business as well – the BDU business is “not life or death of them, and in fact, for most of them, it’s a really small concern,” he said. “However, for broadcasters, this is it.”
Danks went on to explain that, further complicating matters, is the fact many broadcasters have an online business sitting outside of CRTC jurisdiction. “The CRTC doesn’t see our whole business and they also don’t consider the greater business concerns of the BDUs, so you have this strange situation where the BDUs now are trying to maintain their revenue and the broadcasters are trying to maintain their revenue and ultimately, there’s really no objective standard on what you get paid and how you get paid in the current broadcasting system.”
However, Danks also indicated he believes this Commission is moving in the right direction with last week’s OUTtv decision. “There’s a lot of language here, which I think we’re all buoyed by, particularly commissioner Anderson’s dissent – when the Commission is dissenting in the right direction, I think it’s a good thing, it shows that they’re thinking about it,” he said.
“But I’ll be blunt, I think their thinking on a lot of these things is going to change dramatically over the next few years. Once they start seeing how the other online platforms operate, I think it would very much behoove them to apply a lot of those ideas to the current Canadian traditional system and we might be able to keep it around longer.”
