GATINEAU – The Canadian conventional broadcasters who in April, while facing the Regulator, insisted a new subscription fee was a must for them in this new media age, just didn’t make a good enough argument, the man leading the panel six months ago told Cartt.ca on Thursday.
(Click here for our comprehensive summary of the new regulatory frameworks for BDUs and specialty & pay channels.)
Saying the Commission certainly isn’t blind to the negative turn in the overall economy since the hearing into the policies governing broadcast distribution undertakings and specialty & pay channels, it can’t make policy based on fluctuations in the stock market and consumer confidence levels. “The overall economy affects everybody, including broadcasters,” said CRTC chairman Konrad von Finckenstein in Gatineau Thursday afternoon after the decision was announced. “(But) the broadcasting industry is affected by these events as much or as little as anyone else – so that wasn’t foremost in our mind.”
What was foremost, when it came to making a decision on fee-for-carriage, were the benefits OTA broadcasters already get, coupled by the fact that their balance sheets aren’t exactly crippled.
“As an over-the-air broadcaster you get priority carriage, you’re part of the basic package, you will be delivered to every home,” said von Finckenstein, which is of course, key for producing ad revenue. “And then you have simsub,” (simultaneous substitution) which inserts the Canadian broadcasters’ advertising over top of any American broadcast channel showing the same programming.
These are very clear benefits to being a Canadian OTA broadcaster.
“But when you come for fee for carriage, you’re basically saying ‘pay me because I need to have that money in order to live up to the requirements you impose on me as the licensee.’ And that case has not been made out,” explained von Finckenstein. “The industry is not in a particularly profitable place right now, but on the other hand, it’s not on the edge of bankruptcy.”
(One of the conditions of license conventional broadcasters are finding particularly onerous, is producing local programming especially in smaller markets. However, in this decision, the Commission is trying to address that problem with a new levy that will create a $60 million annual Local Programming Improvement Fund.)
He continued, pointing to the various mega-million-dollar deals (CTV/CHUM, Canwest/Alliance Atlantis) the conventional broadcasters have pursued and won as proof things aren’t quite so bad for Canadian OTA TV broadcasters.
“There have been multi-million-dollar deals in the past. They have been acquiring specialty channels and enjoying the synergy between them and the over-the-airs,” noted the chair. “There have been a lot of mergers – we have been facilitating it and allowing it to move but to now say ‘let’s change the whole ballgame’ so then not only are you part of the basic package, not only do you have simsub but also you’re going to get a specific fee like a subscription service? That case has not been made.”
However, when it comes to distant signals, where today’s public notice says broadcasters can begin charging a subscription fee, “that’s a question of fairness,” said von Finckenstein. Cable, satellite and telco TV services make local OTA channels available coast-to-coast so that, for example, if you miss The Simpsons on Global Toronto on Sunday at 8 p.m., you can catch it on Global’s B.C. station at 11 p.m.
“That is actually something that Canadians want, ones who want to watch the news at five or eight or seven or whenever they want to. Everyone is offering it, but are not paying for it,” he explained. “That’s a freebie. You should be paying for it.”
“If you think it’s worth $70 million or $90 million – I don’t know what it’s worth – negotiate it, set a fee. If you can’t, I’ll arbitrate it.”
