CCR Update

Cablecos likely to continue calls for relaxed foreign ownership rules today before Parliamentary committeeCanada's major cable operators are expected to continue their call for relaxing foreign ownership restrictions in the cable industry today before the House of Commons Standing Committee on Canadian Heritage, which has resumed its review of the Canadian broadcasting system. Scheduled to appear before the committee are Canadian Cable Television Association president and CEO Janet Yale, Shaw Communications Inc. CEO Jim Shaw, Rogers Cable Inc. president and CEO John Tory, and Cogeco Inc. president and CEO Louis Audet. The cable industry is also eager to participate in the Standing Committee on Industry, Science and Technology's upcoming review of foreign ownership restrictions in the telecommunications sector (CCR, Nov. 22/02). Appearing before the heritage committee on November 26, representatives of CanWest Global Communications Corp. called for relaxed foreign ownership regulations that would provide the broadcaster with access to more foreign capital, something it has been seeking for years (CCR, Feb. 18/95). Geoffrey Elliot, CanWest's VP of corporate affairs, told the committee that the financing would be used, in part, to allow CanWest to expand into the U.S. market. He suggested tying an easing of the Canadian restrictions to similar concessions by the Americans. BCE Inc. executives took a more cautious approach, saying that changing foreign ownership restrictions could result in many unwanted spin-off effects, such as a reduction in French-language programming on Quebec channels. Elizabeth McDonald, president and CEO of the Canadian Film and Television Production Association, came out strongly against any changes, saying that ownership changes might eventually result in lobbying for changes to current Canadian content regulations. "There's no guarantee that existing rules would remain in place," she told the committee. For a full report of the committee hearings on the foreign ownership issue, see the upcoming issue of Canadian Communications Reports. Supreme Court to consider issue of TV coverage of courtroom proceedingsThe Supreme Court of Canada next month will consider Global B.C. et al.'s case that questions whether the common law prohibiting TV and radio access to courtroom proceedings is an infringement of the Charter of Rights and Freedoms. Alliance Atlantis' digital channels lose $1.7 million in Q2Alliance Atlantis Communications Inc.'s seven digital specialty television channels posted an EBITDA loss of $1.7 million in the second quarter ended September 30, 2002, compared to a corresponding $5.3 million loss in the second quarter a year earlier, according to financials released by the company on November 25. Revenue for the digital channels was $4.8 million, compared to $2 million in the same quarter last year in which the digital channels were launched. Subscriber numbers for the channels at September 30, according to Alliance Atlantis were: 700,000 for Showcase Action; 600,000 for Showcase Diva; 500,000 for the Independent Film Channel Canada; 500,000 for Discovery Health Channel; 500,000 for BBC Canada; 200,000 for BBC Kids; and 500,000 for National Geographic Channel. The digital channels are the only ones that now fall under the company's developing channels. As of April 1, 2002, the company's 50 per cent-owned French-language channels Series + and Historia were transferred from the developing channels category to the operating channels category. EBITDA for the operating channels increased 16 per cent to $17.4 million, compared to $15 million in the second quarter a year earlier. Revenue from the company's broadcast operating channels increased by 27 per cent to $36.6 million in the second quarter from $28.8 million in the same period last year. The company also announced that its broadcast group had recently launched a major new marketing and advertising campaign aimed at generating new subscribers over the holiday season. When all three core operating groups - broadcast, motion picture distribution and entertainment - are included, Alliance Atlantis registered a net loss in Q2 of $3.9 million. That compares to a net loss of $1.1 million in the same period last year. Large TV networks retaining share of viewership through ownership in specialty networks: CRTC monitoring reportOn a combined conventional and specialty TV channel basis, conventional TV ownership groups have been able to maintain or increase their overall viewing share through the acquisition and establishment of new specialty services, states the 2002 edition of the CRTC's Broadcasting Policy Monitoring Report. In all regions, except Quebec, viewing share to channels controlled 50 per cent or greater by CTV/Bell Globemedia Inc. grew from 16.4 per cent in 1997 to 18.4 per cent in 2001, including a 0.2 per cent increase from 2000. Global Television Network saw its share of viewership rise from 9.2 per cent in 1997 to 14.8 per cent in 2001, including a 0.2 per cent increase from 2000. The share of viewership to CHUM Ltd. channels rose from 5.7 per cent in 1997 to 7.0 per cent in 2001, including a 0.3 per cent increase from 2000. Craig Broadcast Systems Inc.'s share of viewing rose from 1 per cent in 1997 to 1.2 per cent in 2001, but was down 0.2 per cent from 1.4 in 2000. The share of viewership to the public broadcaster, the Canadian Broadcasting Corp.'s French- and English-language channels in the English market, fell from 10 per cent in 1997 to 7.3 per cent in 2001, but was down from 7.7 per cent in 2000. The report also notes that drama and comedy programming is the most popular among anglophone viewers, and is twice as popular as viewers' second most popular pick of news and other information programming. Viewing to news and other information programming was predominantly to Canadian shows, while anglophones primarily watched foreign drama and comedy programming. Overall viewing to Canadian programs by anglophone viewers was 31 per cent of total viewing in the fall of 2001. The 110-page report contains a wealth of statistics on Canada's television, radio, broadcast distribution and Internet businesses. For example, a chart shows all the Category 2 digital specialty channels and on which distribution systems they managed to secure carriage. Contribution levy set at 1.3 per centThe CRTC has set the final contribution rate for 2002 that telecommunications service providers including satellite carrier Telesat Canada have to pay to help subsidize local telephone service in high-cost serving areas - Telecom Decision 2002-71. The 1.3 per cent rate replaces the interim rate of 1.4 per cent and is retroactive to last January. The commission has also approved an interim rate of 1.3 per cent for next year. Telesat Canada unsuccessfully lobbied the CRTC to exempt it from the new contribution regime, which requires telecom providers to pay a percentage of their revenues into a contribution pool. About 60 per cent of Telesat Canada's revenues are from broadcasters, and it has passed the contribution fees on to its customers. Broadcasters also unsuccessfully argued that they should not be hampered in their efforts to meet the cultural objectives of the Broadcasting Act by having to make financial contributions in support of the social goals of the Telecommunications Act (CCR, Aug. 15/02; April 11/01; March 29/01). Cable TV sector gets downgradedMost of Canada's major cable companies have had their credit ratings downgraded by Dominion Bond Rating Service Limited (DBRS) as a result of increased competition from their satellite TV rivals and other financial risks. Shaw Communications Inc. was moved to a rating of BBB (low), which is still within investment grade. Cogeco Cable Inc. was moved below investment grade to BB (high), and Vidéotron ltée dropped to BB (low), which is also below investment grade. Rogers Cable Inc.'s below investment-grade rating of BB (high) was not changed. Look, Unique Broadband agreement lapsesAn agreement that would have seen wireless cable operator Look Communications Inc. receive a $5-million cash infusion from Unique Broadband Systems Inc. has lapsed. The deal would have seen Unique acquire a seven per cent equity stake in Look for nearly $1.4 million in cash, and included a $2.4-million equipment supply agreement (CCR, Aug. 15/02). The two companies announced November 22 that they would not proceed with the transaction but that discussions between the companies were continuing. No reason was given for killing the deal. The two companies last month had extended the timeframe for completing the deal (CCR Update, Oct. 17/02). Cinar eligible for Telefilm Canada funding againAnimation and children's programming producer and distributor Cinar Corp. is again eligible for funding from Telefilm Canada. The company was cut off from funding after it faced police investigations into tax fraud and improper offshore investments. Cinar was originally barred from Telefilm Canada financing for a five-year period beginning Nov. 9, 1999, but the timeframe has been shortened after an internal review by the government funding agency at the request of Cinar. Cinar's fortunes were derailed when it was alleged that it had put Canadian names on scripts written by Americans in order to qualify for tax credits and other financial incentives in late 1999. CCTA calls on CRTC to hold hearing on satellite TV signal piracyThe Canadian Cable Television Association (CCTA) is asking the CRTC to conduct on "an urgent basis" a public hearing to examine and assess the nature and extent of the theft of satellite TV signals resulting from breaches in the encryption system currently used by Bell ExpressVu LP, and related problems of hardware and software inventory control. The CCTA wants the commission to consider all technical, regulatory and other options available to address and correct these problems. In a letter dated October 28, the CCTA states that "it would clearly be in the public interest for the commission to undertake an investigation of the growing incidence of theft of Bell ExpressVu services and consequent losses to the Canadian broadcasting system." The cable industry claims that subscribers to Bell ExpressVu are buying basic packages and sidestepping encryption measures to access a slew of other packages without paying for them. The CCTA notes that "theft of Bell ExpressVu's signals in Quebec is particularly problematic due to the fact that Bell ExpressVu offers French-language programming services that are not available on the U.S. DBS satellites." Nationwide anti-piracy campaign launched by CASST highlights problems in Quebec marketThe Coalition Against Satellite Signal Theft (CASST) on November 22 launched a Canada-wide media campaign against satellite TV piracy. CASST's media release zeros in on Quebec, where illegal black and grey market activity is estimated to have cost distributors about $100 million in lost revenues. According to CASST, a recent study by Leger Marketing reveals that one Quebecer out of five, or 19 per cent, knows someone who is illegally receiving the satellite signals of specialty channels. CASST notes that unlike in the rest of Canada where piracy often involves the pirating of U.S. signals from providers such as DirecTV, in Quebec the piracy of Canadian satellite signals is widespread. "It is (pirating of Canadian signals) that threatens to stifle Quebec's cultural industry. Obviously, the thousands of households that pirate signals do not pay Canadian distributors, thus depriving the rightful owners of the royalties they depend on to continue creating," the media release states. The campaign, unveiled at the Canadian Association of Broadcasters (CAB) conference in Vancouver, encompasses television, radio, newspapers, magazines and web sites. CCTA asks for disclosure on documents in complaint filed by ISPsThe Canadian Cable Television Association (CCTA) is asking the CRTC to disclose information filed in confidence by the independent members of the Canadian Association of Internet Providers (IMCAIP) in its complaint to the CRTC regarding cableco and telco high-speed "lite" Internet services. The CCTA wants to see the EKOS Research Associates report entitled The ISP Marketplace and the affidavits of Charles Rifici, the CFO of Cyberus Online; Paul Mercia, the president of Cybersurf Corp.; and Marcel Mercia, Cybersurf's corporate operations manager. The CCTA states that some of the information filed in confidence in the affidavits relates directly to statements attributed to some of the respondents. The cable association states that "procedural fairness dictates that the respondents should be afforded the opportunity to assess the information contained in the affidavits as it relates to them." According to the CCTA, its two largest members have signed agreements with Cybersurf, which it claims is the first third-party ISP provider to seek access to cable lines. IMCAIP argued in a 63-page submission filed with the CRTC in mid-November that "lite" Internet services operated by cable and telephone companies would drive them into extinction. For more details on IMCAIP's complaint, see the Nov. 19/02 issue of CCR affiliate publication Network Letter. CCTA wants winback restrictions on incumbent cablecos droppedThe Canadian Cable Television Association (CCTA) has filed an application with the CRTC asking for the removal of restrictions on communications between incumbent cablecos and ex-customers, commonly referred to as winback restrictions. Established by the CRTC in April 1999, the winback restrictions prevent incumbent cablecos from engaging in direct marketing of customers who, through an agent, have notified of their intention to cancel basic cable service within 90 days of disconnection of the service. Cablecos also cannot offer discounts or other inducements to customers asking to cancel their basic service for 90 days from the date of disconnection. "Given the size and strength of ExpressVu and Star Choice, there can be no doubt that the competitiveness of the BDU market is well entrenched and would not be at risk if the winback restrictions were removed," the CCTA writes in an October 28 letter to the CRTC. Cablecos seek authority to sell ads on U.S. local availsThe cable industry is once again seeking authority to sell ad time on U.S. specialty television channels. The Canadian Cable Television Association (CCTA) is requesting that the CRTC allow cablecos to use the local avails on U.S. specialty channels to sell advertising. The commission has denied similar requests from cablecos in the past (CCR, Oct. 23/96). Analog cable channels originating in the United States, such as A&E, CNN and Speed Channel, provide two minutes per hour of what is known as "local availability" ad time. Canadian cablecos and other distributors, subject to condition of licence, are permitted to use 25 per cent of local avails to promote their services and 75 per cent to promote Canadian programming services. The CCTA says the local avails would provide "a significant source of economic value for distributors and for the Canadian broadcasting system" in the face of increased competition from legal and illegal satellite TV services, rising wholesale rates from the U.S. channels, and costs associated with "expanding regulatory obligations." If past comments on the local avails issue are any indication, broadcasters will likely vigorously oppose the CCTA's request (CCR, Oct. 28/98, March 25/98). Dalfen mentions commitment to drama in CRTC Performance ReportIn introductory remarks to the CRTC's Performance Report for the period ending March 31, 2002, released this month, CRTC chair Charles Dalfen notes the commission's efforts to increase the presence of Canadian drama. "While Canadian artists, producers and directors have made tremendous strides in producing and distributing French-language drama series, we believe that there is yet untapped potential to create and air new and truly Canadian English-language television drama series. The commission is accordingly exploring new and creative ways to encourage and promote the production of high-quality English-language Canadian drama," he writes. According to the report, the amount spent by the commission in 2001-2002 totaled $41.6 million, while the amount authorized by the Treasury Board was $41.9 million. The commission is funded through a combination of appropriations and revenue from broadcasting and telecommunications licence fees. Canadian Heritage spent $1.1 billion, according to the department's performance report (CCR, Nov. 22/02). CRTC renews Canal Indigo, Viewer's Choice Canada licencesThe CRTC has renewed the licences of the French-language pay-per-view service Canal Indigo to Aug. 31, 2009 - Broadcasting Decision 2002-382 and Broadcasting Decision 2002-383. It has also renewed the licences of the regional English-language general interest pay-per-view service Viewer's Choice Canada - Broadcasting Decision 2002-384 and Broadcasting Decision 2002-385. There were no interventions filed in connection with the applications. CanWest lost almost $4.3 million on new TV services in 2002 fiscal yearCanWest Global Communications Corp. lost nearly $4.3 million on television operations in development in Canada - namely its new digital specialty channels - for the year ended Aug. 31, 2002, according to the company's final financials released November 21. There were no changes to the preliminary financial results for the 2002 fiscal year that were released November 5. Those results were not finalized due to ongoing auditing of the company's production company Fireworks Entertainment, which is now complete. CRTC to consider applications for new Quebec radio licencesThe CRTC will consider a number of applications for radio licences in Montreal and other areas of Quebec at a public hearing in Montreal scheduled for February 3, 2003 - Broadcasting Notice of Public Hearing 2002-13. Among the applicants vying for a radio licence to serve the Montreal market are TVA Group Inc., Genex Communications Inc., Radio Nord Communications, Global Communications Ltd., Aboriginal Voices Radio Inc., Metromedia CMR Broadcasting Inc., and Azzahra International Foundation Inc. Applications have also been submitted for radio stations in Laval, Saguenay, Sherbrooke, Lac-Brome and Trois-Rivières. The deadline for interventions on the applications is January 9, 2003. Ontario Media Development Corp., NFB unite to support documentary producersThe Ontario Media Development Corporation (OMDC) and the National Film Board's (NFB) Ontario Production Centre have united to launch a new program that will support documentary productions. The two groups will jointly support the production of up to six new half-hour documentaries over the next 18 months. Up to $45,000 ($15,000 from the OMDC, $20,000 from the NFB and a $10,000 broadcast licence from TVO) in funding will be granted per documentary project. This new program will be administered through the Al Waxman Calling Card, a competitive program with projects selected by an industry jury. Full guidelines and application forms are available on the OMDC web site. NFB opens centre in Toronto that provides instant access to its libraryThe National Film Board (NFB) launched on November 22 the NFB Mediatheque, a state-of-the art building in Toronto where its programming library can be accessed on demand. "The NFB Mediatheque offers unprecedented access to English and French films of the NFB collection, and eventually to other collections as well," says NFB chair Jacques Bensimon. The centre's personal viewing stations provide visitors with access to 10,000 films. The centre is open to the public Monday to Wednesday from 10 a.m. to 7 p.m., Thursday to Saturday from 10 a.m to 10 p.m. and Sunday from noon until 5 p.m. Astral's The Movie Network supports Canadian extension of Chrysler Million Dollar Film FestivalAstral Media's The Movie Network (TMN) is sponsoring a new section of the 2003 Chrysler Million Dollar Film Festival called the "Best of Canada." The competition, which was only open to residents of the United States last year, has been expanded to include Canadian filmmakers. Short films from emerging directors are being accepted until December 14. Twenty-five quarterfinalists will be selected to attend the Sundance Film Festival in Park City, Utah. Ten competitors, based on scripts developed at Sundance, will be chosen to go to New York in May. Finally, five finalists will be sent to Los Angeles to develop a $1-million feature film package under an industry mentor. They will pitch their completed projects during the 2003 Toronto International Film Festival, with the winner being awarded the $1 million to produce the project. The top 25 short Canadian films will be screened on TMN in March 2003. INTERNATIONAL NEWS Formula One auto racing channel shuts downF1 Digital +, the pay-per-view channel covering Formula One racing, has been shuttered less than a year after it launched in England. The channel, available on a number of European digital platforms that allowed viewers to access multi-camera angles of the races as well as statistics and background information, did not prove popular enough. Viewers were charged 12 pounds per race. According to the Guardian newspaper, viewers shunned the pay-per-view option in favour of free coverage on ITV1. A Canadian company is hoping to offer a similar broadcast service through portable devices to spectators attending Formula One and other events (CCR, July 4/02, May 23/02). The company, World Audio-Visual Entertainment Systems (W.A.V.E.S.), tells Canadian Communications Reports that it received a licence from the Federal Communications Commission (FCC) and had a successful test during a CART race in Miami at the end of September. SeaChange's VOD equipment deployed in 16 U.S. cable systemsSeaChange International, the video-on-demand (VOD) equipment supplier to Rogers Cable Inc. and other major cablecos, has announced it has deployed its equipment in 14 Time Warner Cable systems and two other systems. SeaChange states that many of the VOD systems it has set up are operated automatically and are monitored remotely. Australian Broadcasting Corp. to air iTV concert documentaryAustralia's first homegrown iTV-enabled concert documentary will be broadcast on the Australian Broadcasting Corp.'s (ABC) channel 2 over the AUSTAR digital platform on December 1. The show, developed by ABC New Media, will be available to 300,000 households that subscribe to AUSTAR, or four per cent of the viewing public. The documentary, called Long Way to the Top - Live in Concert, puts viewers at the concerts of some of Australia's greatest rock musicians. Viewers will be able to access archival and backstage interviews and choose from different camera angles.

CCR Update

Broadcast | November 28, 2002

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