Review of Over-the-Air (OTA) TV Policy
By Greg Taylor, 27 November 28, 2006
These public hearings which commenced Monday morning in Gatineau (Hull) immediately across the river from Parliament Hill are the most significant broadcasting meetings convened by the regulator since 1999. The room was overflowing as the CBC group led by President Robert Rabinovich stepped up to deliver the first submission of seven days of hearings before the commission. The public broadcaster presented a rare united front with the private networks in requesting a fee for carriage from cable and satellite companies who have always had access to the signal of conventional networks free of charge. One of the cable representatives beside me laughed as the CBC crew told the commission they thought this change could occur without substantial change to cable bills or a drop in subscription rates. Many of the other major broadcasters were well aware they do not receive an overwhelming tide of public sympathy. As Eric Reguly noted in Wednesday’s Globe and Mail: “Canadian broadcasters have the sweetest deal around. They get special treatment through monopoly licences that cost them nothing up front and are renewed without competitive bidding.”
Canadian Broadcasting Corporation
Among the key points raised by Mr. Rabinovich during his address:
- conventional over-the-air television remains the cornerstone of Canadian television broadcasting. Over 90% of Canadians watch programming on conventional channels.
- conventional television in Canada faces two fundamental changes: a weakening business model and the switch to digital broadcasting.
- the business of conventional television suffers from audience fragmentation and an advertising base that is fast deserting traditional television for newer forms of media (he identified youtube and myspace). All this is happening at a time of rising production costs.
- this led to the crux of his argument: that conventional TV must receive a portion of the revenues generated by subscriber fees to BDUs (Broadcast Delivery Undertaking). Under the current system, conventional TV receives no financial compensation for being carried on cable or satellite; this contrasts specialty channels which receive a fee per subscriber.
- the other fundamental problem facing CBC is the switch to digital. All communities of 500 or more in Canada have the right to access the CBC. This involved a huge investment in OTA broadcasting transmitters in the early 70s. This equipment is coming to the end of its usage and Rabinovich stated that it would be fiscally irresponsible to replace them with analogue equipment in a broadcasting world quickly going digital.
In the question period, CRTC commissioner Richard French put it very succinctly: “Is the CRTC being asked to compensate for the failure of public financing?”
The Quebec broadcaster took the most directly free market approach of any of the organizations represented on the opening day of the hearings. Pierre Karl Péladeau, chief executive officer of Quebecor, told the hearings that the best thing regulators can do for broadcasters is deregulation on everything from advertising time limits to investments in programming.
Leonard Asper led the large Global group in its afternoon address to the commissioners. Asper and Global have been leading the charge in seeking compensation from the cable companies. Most in the room were well aware of Global’s current financial difficulties, many of which stem from their purchase of the money-draining National Post from Conrad Black. Global also holds far fewer specialty channels than either CTV or Quebecor.
In assessing the current regulatory framework, Asper stated that it “is under so much stress, it’s going to crash”. He believes a carriage for fee system should have happened a long time ago and that the influx of money to the networks (money that is duly theirs and not a ‘benefit’ he noted) should come with no spending requirements from the CRTC and conventional networks should maintain the right to simulcast privileges. Local programming remains a problem for Global as they are losing money in 8 of 14 local markets in Canada.
A common refrain from the Global team was “we do not need another layer of regulation”. Perhaps not, but they were certainly seeking the help of the regulator.
Ivan Fecan led the CTV delegation into the afternoon session with the strut of a champion boxer. When given the chance to speak, Fecan listed the accomplishments of Canadian programming on CTV in recent years: most highly rated newscast; top comedy (Corner Gas); top investigative journalism show (W5); and highest rated Canadian television show in history (Canadian Idol). I couldn’t help but think this last ratings triumph was like a McDonald’s franchise operator taking credit for creating the Big Mac. CTV then argued many of the same points made by the other OTA broadcasters. A study which claimed there would be a substantial drop in cable rates was dismissed as the product of “misleading and biased questions”.