GATINEAU – The place, and prominence, of American specialty networks in Canadian television programming packages may soon be changing as the CRTC grapples with the part that U.S. discretionary services play in our rapidly changing broadcast environment.
When the Commission launched the third phase of Let’s Talk TV: A Conversation with Canadians last April, it also proposed a potential new approach to licensing foreign services for carriage in Canada. That proposal suggested a simple test: a non-Canadian service would be authorized for carriage and distribution unless it would have “an undue negative impact” on the Canadian TV system. Services that held program rights otherwise available in Canada, or were a key source of programming for an existing Canadian service, are examples of services that would be denied.
In addressing that proposal, many broadcast distribution undertakings (BDUs) told the CRTC in their Let’s Talk TV filings that foreign services, including popular U.S. specialty stations, should have to follow the same rules as Canadian discretionary services. Those services shouldn’t be able to insist on packaging requirements, penetration guarantees, or other practices outlawed by the Vertical Integration Policy. If a la carte should become broadly available, American services would have to follow that as well.
Telus Corp. argued in its intervention that regardless of what the Commission decides with regards to pick and pay and/or other channel packaging provisions, treating non-Canadian services differently would be “patently unfair and detrimental” to the Canadian system.
“Prohibiting foreign services from insisting upon packaging terms which artificially boost penetration levels beyond actual consumer demand for their services is a measure which would support the Canadian broadcasting system,” Telus wrote, adding that there’s no reason that the CRTC couldn’t prohibit certain terms in affiliation agreements between foreign and Canadian BDUs as a condition of distribution in Canada.
While the Canadian Cable Systems Alliance (CCSA), MTS, Bell Canada and others added their voices to the chorus, arguing for similar treatment of domestic and foreign services, the CCSA declared the specialty services market mature and healthy, and suggested that it’s time to just open the doors to all non-Canadian programming.
“Non-Canadian services should be authorized for distribution in Canada even if they compete with existing Canadian services”, reads its submission. “In a mature pay and specialty sector – especially one characterized by the power of a few, major integrated media companies – the Canadian services should be competitive.”
Other distributors worried that a rigid approach to a la carte and small basic packages would have a significant negative impact on the Canadian subscription TV business. Rogers Communications pointed to a Strategic Council survey that found if certain U.S. channels – namely AMC, CNN, A&E, TLC, The Golf Channel and Peachtree, were no longer available in Canada, customers would either cancel or downgrade their cable subscriptions. The percentage was strongest with respect to A&E (52%), AMC (49%), TLC (48%) and CNN (45%).
“The findings of the Strategic Counsel survey demonstrate the high value customers place on paying for and watching these popular US. Services”, said Rogers. “We are very concerned that the Commission’s approach, if applied rigidly, could result in one or more of them being removed from our channel lineups with negative consequences for our customers and the Canadian broadcasting system.”
Groups representing some U.S. services argue that they have been an integral part of the Canadian system and should therefore be allowed to keep their place in it. A&E Television Network, for example, noted that bundling its service with newer Canadian services benefited those emerging channels. “The power of the A&E brand was used to draw viewers to evolving Canadian channels in order to build audience numbers for those new entities,” it wrote.
But not all U.S. specialty channels are against the idea of a la carte or being subject to more flexible packaging requirements. Turner Broadcasting System said that it has gone through these types of negotiations with Quebec distributors, and it believes that market rules should dictate the outcomes of these talks, and not specific regulation from the CRTC.
A group of U.S. border stations used their comments to continue in their efforts to push for affiliation agreements with Canadian BDUs that would require payment for the retransmission of their signals here. “The requirement for American TV stations to serve as a forced subsidy for the continued growth and profitability of Canadian TV services is no longer warranted or justified, if it ever was,” wrote the U.S. Television Coalition, which represents stations in New York, Minnesota and Michigan.
While arguments have been made that American specialty services play, and will continue to play, an important role in the Canadian broadcasting system, particularly as part of a basic service bundle, Bell Canada said it doesn’t see a future for U.S. discretionary services in basic. It argued that even though it doesn’t believe in a skinny basic package, removing these services is just a way to reduce the number of channels in these entry level packages.
“Mandate that U.S. (over-the-air) signals (both the first and second set of 4+1 signals) be removed from basic and only sold stand-alone, or in discrete, discretionary tiers,” wrote Bell. “Any of the programming on these channels that is popular with Canadians is largely duplicative of what is available on Canadian services, and the presence of these stations in the market only undermines the continued existence of a discrete Canadian rights market.”
