Nets lose on fees – cablers gain some VOD ad opps

Rethink your business plans, the CRTC tells nets, blocking a repeat bid to squeeze cash from cable and satellite cos.

The new road map for Canadian television will see more channel choice for consumers, more cable money for local programming and no carriage fees for conventional networks for their over-the-air signals – but possible compensation for lost revenue from distant signals.

Other highlights of the CRTC review include allowing cable operators to sell and insert advertising into video-on-demand services, and relaxing rules on genre exclusivity and packaging rules for channel offerings by content carriers.

That’s the broad outline of the latest review by the CRTC, unveiled Thursday.

As it did in 2007, the CRTC denied a request from OTA broadcasters that cable and satellite TV operators be forced to pony up for their TV signals.

‘While [the major networks] have shown a recent decline in profitability, they, as other enterprises, might first look at their own business plans before making a request for increased revenue from the commission,’ the CRTC said in response to major networks demanding fees for carriage of their signals, as specialty channels already enjoy.

The fee-for-carriage proposal, trumpeted by CTVgm and Canwest at CRTC public hearings last April, could have netted the OTA broadcasters as much as $300 million a year.

The CRTC, it turns out, was not swayed by their arguments.

‘Neither the rationale for strategic initiatives by OTA broadcasters, such as recent major acquisitions, nor the basis for financing those initiatives or the impact of those initiatives on profitability were explained to the commission at the public hearing,’ the regulator said in its decision.

While content carriers will be happy with the fee-for-carriage decision, they will be compelled by the CRTC to raise their contribution for local programming production from 5% of revenues to 6%.

However, the CRTC did not explicitly stop cable and satellite TV operators from passing that fee increase on to subscribers, only saying it did not expect them to do so.

The CRTC will also allow the OTA broadcasters to negotiate with cable and satellite TV operators to be paid for so-called distant signals. Such a move will allow TV viewers to continue to watch TV signals from different time zones, while compensating the major networks for lost ad revenue by between $70 million and $90 million a year, according to CRTC estimates.

‘The commission recognizes the value that Canadian subscribers place on the ability to time-shift through the use of distant signals,’ the CRTC said in its decision.

The CRTC said Canadian news and sports services will be opened to more competition from foreign services as they already face competition, or are financially healthy enough to do so.

At the same time, the regulator voted against a ‘wholesale move away’ from protecting existing Canadian channels from foreign competition.

‘The commission will introduce competition in those genres where it is convinced that a competitive environment will not significantly reduce either the diversity of services available to viewers or their contribution to the creation of Canadian programming,’ the regulator said.

The CRTC, in unveiling the new rule book, let it be known that it will remain a referee into the digital age by continuing to tame dominant cable operators while allowing conventional networks scope to raise new revenues.

‘In the commission’s view, a regulatory framework that will carry the system through this transitional period must not allow any one sector to exercise unreasonable power over the services available to subscribers,’ the regulator argued.

From Playback Daily