OTTAWA – Forcing broadcast distributors to offer specialty services on a pick and pay basis may not result in big savings for consumers, Kevin Crull, president of Bell Media, said during a luncheon keynote speech at the International Institute of Communications Canada’s annual conference in Ottawa on Monday.
Crull’s comments come as the CRTC has undertaken a broad conversation with Canadians about the future of TV and as the federal government has all but told the industry it will force pick-and-pay upon it. After talking directly to consumers for a while, the Commission will host a landmark public proceeding next fall. At the same time, the Regulator has also been asked to prepare a report on a pick and pay environment in response to the federal government’s Speech from the Throne last month.
“As we move forward and respond to consumers, we need to be clear that there is inherent risk: when buying less, maybe the cost is going to be higher and overall savings if any may be smaller,” he warned. “As well, variety and quality could decline, may be dramatically. If we’re only left with U.S. channels in Canada, don’t expect unbundling. They don’t allow it. They won’t do it.”
The Bell Media chief acknowledged that consumers are definitely asking for more flexibility in their TV services. “It’s clear from the Commission’s conversation with Canadians so far that many consumers do want the opportunity to exercise more control over what channels they may subscribe to and pay for. As an industry we absolutely must listen to consumers and provide more flexibility,” Crull said.
He added though that channel bundling has already met consumers’ demands. “They are millions of Canadian families who want to subscribe to the best content package for a diverse household that has adults, teenagers, kids and who appreciate the simplicity and the convenience of large preset packages.”
However, he added, Bell is prepared to meet the challenge of providing more options for Canadians to purchase their TV services. “We’re all working hard to find balanced ways to provide flexible options for consumers so they can make the choice: pay a higher unit cost for fewer channels or pay a little bit more and get way more channels,” he said.
But a pick and pay environment, such as that offered by Videotron and Cogeco in Quebec, and by Eastlink in Nova Scotia, has broader implications than just how retail customers subscribe to TV channels. To accommodate such a system, changes will be need to be made at the wholesale level, argued Crull. “If we are going to ensure balance and maintain quality, variety, employment and investment, an entirely new wholesale model is not optional, it’s absolutely essential.”
He added that the company’s penetration-based rate option (PBRO) approach is a win for all aspects of the TV industry. Developed over the past three years, Bell believes that under this model: “consumers win, distributors win, the Canadian creative sector wins and broadcasters like Bell Media win… At the end of the day, the real question isn’t if we should provide more packaging flexibility, it’s how,” Crull said. “There is no doubt that commercial agreements will have to change, and although not insurmountable, it will be challenging. And we can’t change packaging models while leaving other aspects of the business model unchanged.”
With added TV channel packaging flexibility comes added risk. And any new type of approach will need to consider a number of elements including ensuring Canadian programming receives investment and promotion, reflects regional interests and values, keeps employment levels, and ensuring that there is a level playing field for Canadian programming in an environment of foreign and over the top services, none of whom have Canadian programming expenditures as a condition of license.
Crull concluded that the broadcasting industry will be able to adapt to the new TV realities. But, he said, those who take the risk to invest content creation “need to be given the freedom to adapt and choose appropriate business models, or the system, and all Canadians will suffer.”
The Bell Media exec used a good portion of his speech to toot the company’s TV programming horn as well. Crull noted that the firm spends nearly $900 million annually on Canadian TV production, ordered 24 new original Canadian series and put an additional 67 projects into development this year alone. As well, Bell Media produces 2,000 hours of its own in-house Canadian TV programming, or about five times that of the next closest private broadcaster, he said.
