July 12, 2012 4 years 7 months ago

ANALYSIS: Hundreds of millions in benefits a golden opportunity for Canadian TV, which needs NSS

THERE HAS NEVER BEEN THIS much money available at one time for the development and production of Canadian television programming.

According to the newly available 2012 report of the Canadian Television Benefits Monitor, Canadian broadcasters must spend more than $450 million on new television programming or programming-related tangible public benefits over the next seven years (by Aug. 31, 2019). When the benefits associated with the BCE-Astral Media transaction currently before the CRTC are factored in, that number will be almost $600 million. This is over and above the hundreds of millions of dollars in baseline expenditures television broadcasters must make annually on Canadian television programming as part of their licence obligations.

This represents a golden opportunity to use all regulatory tools available to maximize the impact of significant spending on Canadian programming in a way that strengthens the Canadian broadcasting system for future generations. So, how can we do that?

LET’S LOOK AT scheduling and program rights protection. Scheduling is a key component to the success of any television program. Unfortunately, poor scheduling has killed all too many good Canadian TV shows. History has shown us that, generally, if Canadian programs are not given prime placement in the prime-time schedules of conventional TV broadcasters they often struggle to succeed in the marketplace.

The 2007 Dunbar-Leblanc report and many industry stakeholders have noted over the years that the simultaneous substitution regime has resulted in Canadian English-language private conventional TV broadcasters tying their schedules to those of the U.S. television networks, thereby relegating Canadian programming to the fringes of prime time when fewer Canadians are watching television and/or during off-peak television days (e.g., Saturdays) or viewing months (like the summer).

While Canadian programs can and do achieve relative success against these and other challenges, Canadian programming can only achieve its full audience and revenue potential if it is scheduled at times of the year, days of the week, and times of the day when television viewing is at its highest.

SO WHAT’S THE ANSWER? Non-simultaneous substitution (NSS). In fact, Bell Media President Kevin Crull told the Canadian Telecom Summit in June that NSS has become a regulatory must.

Let’s assume that, due to scheduling conflicts, CTV is forced to air CSI on another night than the U.S. network airs the show, say Tuesday night, and 500,000 watch it. The U.S. network, CBS, airs the show on Thursday night and another 500,000 Canadians watch the show. While CTV bought the Canadian rights to CSI, it can only monetize 500,000 viewers rather than the million that watched the show in Canada. As the program rights holder in Canada, CTV should be able to monetize the lost audience, in other words, earn advertising revenue from the total 1-million viewership.

NSS is the solution to this problem. The potential benefits of NSS are threefold:

1) It would break Canadian English-language private conventional television broadcasters’ economic dependence on U.S. simulcast programming. In other words, it would give them back control over their own schedules;

2) It would free up opportunities for more favourable and stable time slots for Canadian programming, thereby giving Canadian shows a better chance to achieve audience and revenue success. More successful Canadian TV shows would likely result in many spinoff benefits, including stronger and better capitalized independent production companies, more foreign program sales, more opportunities for the creative community, and so on; and

3) It would generate significant additional advertising revenue for conventional TV broadcasters, not only for their U.S. programming by monetizing lost audiences but also their Canadian shows by scheduling them in the best timeslots.

All industry stakeholders should be interested in exploring ideas that will increase revenue in the system, and there’s no doubt NSS would grow revenue.

A study commissioned by the Canadian Media Production Association (then the Canadian Film and Television Production Association) in 2009 found that NSS could generate almost $100 million in additional advertising revenue annually for Canadian private conventional TV broadcasters by monetizing lost audiences. In addition, the research showed that NSS would also give private conventional TV broadcasters greater scheduling flexibility to put Canadian programs in more desirable timeslots, which would most likely result in higher audience levels and millions of dollars in additional advertising revenue for Canadian programs.

NSS has not been looked at in any significant way in well over a decade. In 1997, the CRTC, at the request of the Canadian Association of Broadcasters (CAB), launched a proceeding to look at options for extending protection of program rights. The proceeding was to examine advanced, or enhanced, substitution.

Unfortunately, before the proceeding could unfold, the CAB asked for a deferral and advanced substitution issues were lumped into the 1998 Television Policy Review. Advanced substitution issues ultimately ended up getting lost in the shuffle.

In 2010, MédiadeNovo expanded its proposed commercial insertion system so that it could offer Canadian broadcasters new program rights protection measures by allowing them to work with broadcasting distribution undertakings (BDUs) to jointly develop NSS. () MédiadeNovo’s application to the CRTC for a new class of programming licence was ultimately rejected without any serious debate about the merits of NSS.

Various reports and industry players (especially BDUs) have identified the challenges—technical and other—associated with implementing NSS. While there are some challenges that need to be addressed to make NSS a reality, they are not insurmountable. The time has come to take an in-depth look at how to address them.

Some players will continue to claim that NSS is not technically possible. It is worth noting that video-on-demand and personal video recorders (or a host of other technologies) were not “technically possible” many years ago. Targeted ad insertion was also not technically possible just a few years ago. BDUs have, however, invested time and financial resources to bring it to test mode today.

While investments are required in order to make NSS and the additional revenue it would generate a reality, they are worth making given the obvious benefits NSS would bring to the Canadian broadcasting system as a whole, as noted above.

Whether it be NSS or other regulatory tools, we have a unique opportunity to take a more holistic approach to broadcasting regulatory policy in a way that leverages the significant funds that will flow to the creation of Canadian programming over the coming years to propel the Canadian production and broadcasting system to the next level.

Mario Mota is co-founder and partner of Ottawa-based Boon Dog Professional Services Inc., a research and consulting firm offering a range of professional services and research studies to clients in a number of sectors, with an expertise in the broadcasting and media sectors. He was previously Vice-President of Broadcasting Policy & Regulatory Affairs at the Canadian Media Production Association. Boon Dog publishes the annual Canadian Television Benefits Monitor and the quarterly Canadian Digital TV Market Monitor syndicated research studies. www.boondog.ca