CFTPA argues DTH carriage rules need to be changed to protect program rights

The CRTC’s process to examine the carriage of out-of-market signals by direct-to-home satellite TV distributors is shaping up to be a contentious issue (see story in this issue). Star Choice and Bell ExpressVu want no changes to the existing regime. In contrast, the Canadian Film and Television Production Association (CFTPA) argues that local stations should only be offered to subscribers in the market that the local station is licensed to serve. Excerpts from the CFTPA submission to the commission appear below. . ..The business model of the independent production sector hinges on the ability of the producer to negotiate separate licensing agreements for each broadcast window, with the licence fee determined by the value of each exhibition window. This right is undermined when an over-the-air television station signal is given national distribution. ...Broadcast distribution undertakings (BDUs) might argue that the system of retransmission royalties, which was implemented in 1990, was put in place for just this purpose. ...To assume that the retransmission royalty offers full compensation for out-of-market signal distribution fails to take into account certain facts. First, implementation of the retransmission royalty regime was part of Canada’s commitment in entering into the Free Trade Agreement with the United States. It was devised to overcome what the US perceived to be a major trade irritant – the fact that cable BDUs in this country were providing their subscribers with access to distant US channels...While the retransmission right of distant Canadian signals is also covered under the regime, it should be borne in mind that the clear intent of the copyright changes was to deal with the unauthorized distribution of broadcast signals into distant markets. ...Secondly, we find it hard to believe that the legislators who put this regime into effect a decade ago ever contemplated that it would address such situations as the distribution of CBRT Calgary in Halifax or of CFCF-TV Montreal in Vancouver. And this mechanism was certainly never meant to be the justification for the authorized national distribution via DTH satellite distribution undertakings of local market television signals. Third, it is our observation that, over time, the effect of the CRTC’s policy has been diminished. ...When compelled to comply with the provisions in the Copyright Act, the BDUs put forward detailed information concerning what payments they could afford. It is notable that the maximum tariff (an amount equal to $0.70 per subscriber per month) is paid by BDUs with more than 6,000 subscribers, and is triggered by retransmitting 3 or 4 distant signals. Fourth, such payments do not come close to compensating the independent producer for the unauthorized extension of the negotiated broadcast window. Not only is the amount of compensation an inadequate substitute for a licensing transaction, the payment is not direct and immediate. In broad terms, approximately 120 distant signals (Canadian and US), that are on-air for at least 18 hours a day for 365 days a year, are being retransmitted in Canada. In total, the regime is fixed at about $50 million annually in royalties (the aggregate of payments from all BDUs to all the copyright collectives). This amounts to $63.42 per hour for retransmitted programming. Fifth, the wholesale distribution of "local" market stations throughout Canada erodes the market value of our product. ...Further, and more damaging, the broadcasters accorded such wide carriage are not required to purchase program rights for the extended territory. What this means for the independent producer is that a "local" broadcaster (in Halifax or Kelowna) could purchase the rights to a program, at a rate commensurate with the value ascribed to that particular market, but knowing that the signal is potentially available to every DTH subscriber across the country. If the CRTC were to adopt an "open skies" approach, it would have the unintended consequence of serving as a disincentive for producers to license their programs to local television broadcasters.

CFTPA argues DTH carriage rules need to be changed to protect program rights

Broadcast | January 18, 2002

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