Why the CBC should think twice about selling off its terrestrial distribution system

As has been widely reported, CBC management is considering changes to the dissemination of CBC television signals to the Canadian public. This would involve replacing many, perhaps most of CBC television's terrestrial transmitters and relying upon other technologies to distribute CBC television's signals to Canadians. Currently the English television network reaches almost 99 per cent of Canadian households, largely through terrestrial transmitters. More than 10 per cent of CBC television's costs are devoted to maintenance of its terrestrial distribution system. CBC management is considering means to reduce this cost and to re-deploy the "savings" into programming. This is a substantial challenge because, among the 12.8 million households in Canada, only 8 million - or 63 per cent - currently receive basic cable service. The current penetration of Canadian satellite television is estimated to be approximately 800,000 households. While a majority of these three-in-ten households are in rural Canada, a substantial number of the households which rely upon over-the-air transmission to receive CBC television's signal are in urban, cabled areas. Among these hundreds of thousands of urban households are many which cannot afford cable or satellite service, or which wish to receive only local over-the-air signals including, principally, CBC television. We understand that CBC management is considering making a deal with Star Choice, the Shaw Communications-controlled satellite television distributor, to subsidize the distribution of satellite receiving units in rural areas where CBC transmitters may be taken off the air. If Star Choice for example, were to propose a special deal for new subscribers to receive only CBC's four television signals, such an offer would be illegal under Section 5 of the CRTC's Broadcasting Distribution Regulations, which require a broadcast distribution undertaking to provide the 'basic' service to subscribers before other tiers are offered. Also, if the CBC Television turned off its transmitter in a given community, cable companies would no longer be required to give CBC television's signal 'priority carriage'. While a cable operator would probably elect to carry CBC Television's signal for competitive reasons, the Broadcasting Distribution Regulations would no longer require that cable operator to place CBC television's signal on 'basic'. In fact, the operator would have an incentive to place CBC television on an optional tier in order to increase the penetration rate for that tier. The vast majority of Canada's some 1,800 cable operators pick up CBC television's signal through a high-gain antenna aimed at one of CBC's transmitting towers. If CBC's transmitter were to go off the air, CBC would likely have to incur the one-time expense of subsidizing those cable operators' access to CBC television's signal through satellite down-link equipment. It is highly likely that BCE's recent decision to acquire CTV was influenced in part by that company's evaluation of the business potential of CTV's terrestrial transmitters for efficient carriage of non-licensed information to customers, once CTV coverts to digital transmission. As CBC's transmitters are public assets, it will be prudent for CBC's board of directors to consider their future value as revenue sources before casting them aside, or offering them to private interests at concessionary rates. Ian Morrison is the spokesperson for the Friends of Canadian Broadcasting, a Toronto-based lobby group for Canadian programming. The above column is from an April 21 memo to the organization's steering committee.

Why the CBC should think twice about selling off its terrestrial distribution system

Broadcast | May 25, 2000

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