GATINEAU – Local TV is struggling mightily. Ad revenue is down and showing no signs of growth, while the ever growing lineup of new specialty channels and the rapid rise of Internet-based alternatives are blasting away at what has always been the bedrock of the television system in Canada.
Some are telling the CRTC that it’s time to adopt a radically different approach for local TV, one that would bolster the revenue side of the ledger while also helping to encourage the development of compelling Canadian content.
For example, Bell Canada and CBC/Radio-Canada suggest shutting down over the air infrastructure completely and giving conventional TV subscription fee rights, just like their specialty cousins, would help offset the decline in advertising on linear TV. The channels would retain their must-carry status despite having no off-air signal, but by having advertising revenue and subscriber fees, conventional broadcasters would have access to a dual income stream for Canadian programming development, they argue.
“The conventional television system is broken, and there are no other options which have the potential to re-establish sustainability for local television,” – Bell Media
Bell acknowledges that this may lead to higher prices for TV packages, but says it will “provide medium to long-term sustainability for local television in Canada.” It adds that urgent action is needed. “The conventional television system is broken, and there are no other options which have the potential to re-establish sustainability for local television,” the company argues in its intervention.
Others aren’t so sure that this is the right approach. Global TV owner Shaw Communications maintains that doing what CBC and Bell are asking could open the door to the denial of distant signal and U.S. time-shifted channel retransmission, something its cable and satellite subscribers love. Moreover, moving to this type of system might create a bilateral dispute with U.S. border stations seeking the affiliation payment rights as Canadian local TV would gain. In fact, as we have reported, there is already a group seeking such payments during this hearing.
The new broadcasting environment where on-demand viewing is increasing at the expense of appointment TV also requires a different approach to Canadian content. The Vertically Integrated companies argue it’s time to focus on hits, or quality, rather than ensuring a set amount of Canadian shows run every day. They say that exhibition requirements need to be altered, so they have greater flexibility to produce content Canadians want to watch.
Rogers Communications suggests that exhibition requirements be reduced to 50% for the entire broadcast day without any Cancon commitments during the evening schedule. “We believe that reducing (but not eliminating) the exhibition requirements for Canadian programming would allow Canadian broadcasters to focus their resources on the production of quality of programming that consumers want to watch,” the company argues.
Any move by the Commission to reduce requirements for Canadian program exhibition and expenditures would have a disastrous impact on the broadcasting system, according to groups representing the performers, directors and independent producers. The Directors Guild of Canada says previous experience demonstrates that without requirements, Canadian content production and broadcast will suffer.
“We only need look at the drastic fall in dramatic programming following the removal of CPE requirements on conventional services in 1999, and the significant turnaround which followed the creation of group CPE and PNI requirements, for evidence of this.” – Directors Guild of Canada
“We only need look at the drastic fall in dramatic programming following the removal of CPE requirements on conventional services in 1999, and the significant turnaround which followed the creation of group CPE and PNI requirements, for evidence of this.”
For exhibition requirements, the current level of 55% Cancon exhibition throughout the day and 50% in the evening isn’t “an undue burden for the Canadian broadcaster,” adds DGC.
ACRTA notes that there is a real worry that “unpopular or difficult programming types, such as children’s and youth programming” will be abandoned by broadcasters in lieu of content to shore up “their bottom line.”
The collectives, along with many others, also argue that since more and more Canadians are turning to unregulated platforms for their viewing, companies making these services available should be become part of the system, too, and start contributing to Cancon. Of course, all fingers are being pointed at Netflix which, according to some submissions, has Canadian revenue in the $300 million range and could hit $650 million in the future. As we have already reported, Netflix is geared up for a fight on this front.
Other companies such as MTS have suggested that these unregulated broadcasters should be required to contribute 5% of revenue to Cancon. Still more, like the Independent Broadcast Group and CBC say the CRTC should set a revenue threshold after which these providers would have to chip in for Canadian programming development. The national public broadcaster picks $25 million as that starting point. SaskTel takes a different tack and argues “a more fair and equitable methodology” for Cancon should be based on the number of devices – tablets, wireless devices, computers, televisions – which receive a broadcast signal.
Bell points out that it’s unfair when an exempt BDU with a subscriber base of 2,001 has to contribute 5% of gross revenue to Canadian programming initiatives, yet Netflix with more than 3 million subscribers in Canada does not.
Netflix acknowledges that over the top (OTT) services have garnered an increasing share of the market, but contends they are still complementary to the regulated system. Besides, the company adds, any concerns over “cord trimming” appear to be the result of BDU prices, which have “significantly exceeded the rate of inflation in recent years.” Moreover, imposing regulations on OTT services could have the “unintended and unwelcome consequences” of further entrenching the hold incumbents have on the market.
“For Netflix, a contribution to the CMF (Canada Media Fund) would therefore amount to subsidizing productions made primarily for Bell, Rogers, Shaw/Corus and Videotron, who would acquire exclusive online streaming rights in addition to broadcast rights,” the company says.
The hearing starts September 8th with Netflix, Google and Amazon all slated to appear on day one.
ED NOTE: This is the 10th story from our ongoing, summer-long breakdown of the official submissions made to the CRTC for it's Let's Talk TV, TV Policy Review. The first nine are linked below.
Different rules for different language markets
Genres have long been monkeyed around with. Do they still need protection?
Is basic bloated? Does it need a diet?
Pick and pay in Canada strikes out with U.S. media heavyweights
U.S. border stations want to use Let's Talk TV to wrest cash from Canadian BDUs
Should Yankee go home? The changing role of U.S. channels in the Canadian broadcasting system
No “Netflix Tax”, company warns CRTC
Snap Judgements: Everyone wants more choice – tied to a lot of ifs, ands, buts…
Original artwork for Cartt.ca by Paul Lachine, Chatham, Ont.
