April 30, 2003   Bell ExpressVu has worst quarter ever for subscriber growthBell ExpressVu LP’s fiscal 2003 first quarter ended March 31 was its worst quarter ever for customer growth based on an analysis of publicly released results, according to financial results released today by parent BCE Inc. The direct-to-home (DTH) satellite TV operator added just 13,000 net subscribers in the quarter, compared to 83,000 in the previous quarter and 76,000 in Q1 2002. BCE blamed the decline in customer gains in the quarter on a "significant slowdown in DTH market demand, as well as fewer promotions and less advertising, particularly in the early part of the quarter." This was the first quarter in quite some time – if ever – that Bell ExpressVu did not beat rival Star Choice Communications Inc. in subscriber additions, although the quarterly periods for the two companies are different. As previously report by Canadian Communications Reports, Star Choice added 17,041 net subscribers in the period between Dec. 1, 2002 and Feb. 28, 2003 (CCR, April 10/03). As a result of the lower than expected subscriber results for the first quarter, BCE revised downward its 2003 year-end subscriber guidance range to 1.41 million-1.46 million from 1.45 million-1.55 million.On the financial side, Bell ExpressVu revenue increased 17% in Q1 2003 from the same period a year earlier to $177 million from $151 million. BCE expects the satellite TV company’s revenue growth to be at the low end of 2003 guidance of 20% to 25% and confirms previously stated guidance of approximately 50% EBITDA growth. More details: 2003 First Quarter Shareholder Report First Quarter 2003 Supplementary Financial Information Bell Globemedia sees strong advertising revenue growth in first quarterBell Globemedia revenues increased 7% in its fiscal 2003 first quarter ended March 31 compared to the same quarter a year earlier, largely driven by a 13% increase in advertising revenues, according to financial results released today by parent BCE Inc. Revenues rose to $335 million in Q1 2003 from $312 million in Q1 2002. Subscriber revenue increased from $73 million to $74 million. More details: 2003 First Quarter Shareholder Report First Quarter 2003 Supplementary Financial Information MTS announces it has applied for VOD licenceManitoba Telecom Services Inc. (MTS) announced April 29 that it had applied to the CRTC for a licence to offer video-on-demand (VOD) as part of its digital TV service (CCR, March 27/03). At its Annual General Meeting on the same day, MTS president and CEO Bill Fraser noted that the telco has signed up 1,600 customers in just over three months since launching its TV service in early January. CTF, signal piracy among familiar topics discussed at APFTQ conferenceDaniel Gourd, executive VP of French Television at Radio-Canada, told an industry conference last week that he didn’t think the Canadian Television Fund (CTF) was organized in a way that could meet the diverging needs of public and private TV broadcasters. Speaking at the conference of the Association des producteurs de films et de télévision du Québec (APFTQ) April 24-25, he said, "Anyone who knows me and my track record at the Canadian Television Fund knows that I have always championed the idea of a single fund, based on a coalition of the public and private sectors, with the same rules for everyone and a single management structure for both programs, or at least greater cooperation between the two. But today, I am no longer sure that this is compatible with the direction the industry is taking." Gourd has represented CBC’s four TV networks on the CTF’s board of directors and has sat on its executive committee, currently as vice-chair.He noted that private broadcasters want the CTF to finance ever-more hours of programming at ever-lower cost with ever-higher ratings targets, while the public broadcaster prefers to do more exploring and take more risks. He questioned whether a single agency and single system could adequately serve these diverging priorities. He also pointed out that changing rules and delayed decisions by the CTF have created "insecurity and uncertainty" in the production industry. Gourd also criticized the more than $15 million that will be spent this year on administering the CTF. During a panel at the conference, Canadian Association of Broadcasters (CAB) president and CEO Glenn O’Farrell touched on another issue troubling the industry. His words had a familiar ring as he likened signal theft to shoplifting or robbery. "We are arguing for more stringent penalties. Canadian laws must be brought into line with the U.S. in order to prevent Canada from becoming a haven for illegal activity," he noted. "For example, Canadian fines currently range from $5,000 to $25,000 for an individual (stealing signals), while in the U.S., the fines range from $50,000 to $1 million, depending on the violation and the number of offences. It is time that we start making it financially damaging to the people who steal." Dissenters denounce Industry committee recommendation that foreign ownership limits be liftedThe Bloc Québécois and the NDP dissented on a House of Commons committee report that recommends that foreign investment limits in telecom and cable be lifted. The report, officially released April 28, calls for the complete removal of foreign ownership limits in the telecommunications and cable industries. Walt Lastewka, chair of the Standing Committee on Industry, Science and Technology, said, "For cable, for satellite, for broadcasting, it should be removed. These are the same as telecommunications. But not the programming – those people who develop Canadian programming and sell it to others to distribute." The Canadian Cable Television Association, which has long advocated for no foreign ownership restrictions in the industry, and AT&T Canada Inc. commended the recommendation.The committee also recommends that a special joint Parliamentary committee of Industry and Canadian Heritage look at broadcasting and a review of the Telecommunications Act every five years. Lastewka’s comments were backed by James Rajotte, the Alliance vice-chair of the committee, who joked that it was rare for the Liberals and Alliance to agree on anything.In its dissenting opinion, the Bloc Québécois calls for the status quo "because we think that deregulation of ownership would irreparably erode the government’s ability to regulate local content delivery." NDP MP Brian Masse said the decision to remove foreign ownership limits should not be made too quickly. He has called for the establishment of a House of Commons committee to comprehensively review the governance structure of both the telecommunications and broadcasting sectors in Canada, including technological convergence.In another yet-to-be-released report, the Standing Committee on Canadian Heritage is expected to recommend the status quo on foreign ownership limits for cablecos and broadcasters. That report could be released in May, according to one committee member. Lastewka indirectly criticized the Heritage committee for taking so long to release its report. The Industry committee has asked the government to respond to its report within 150 days. For more information, see the upcoming issue of Canadian Communications Reports. Satellite TV distributors make huge gains between 1998-2000, while cable subs fallThe subscriber bases of direct-to-home (DTH) satellite TV distributors grew dramatically between 1998 and 2000, while cable subscribers declined, according to CRTC statistics released April 29. The number of basic cable subscribers in the country declined 3.2% or 232,668 to just over 7 million in that time period. The number of discretionary cable subscribers fell to 5.5 million from about 6.1 million. Still, revenue for the cable industry grew 32.1% to $3.4 billion from $2.6 billion, as cable prices were raised and new offerings such as high-speed Internet were rolled out. The basic subscriber total of DTH and MDS distributors jumped an average of 72.5% annually from just 227,006 in 1998 to over two million in 2002. Non-basic subscribers increased from 102,735 to 1.9 million over the five years. The cable industry employed 14,572 people in 2002 and paid salaries totaling $594.3 million, while the DTH and MDS sectors employed 2,139 people and paid out $109.9 million in salaries. CRTC asks for comments on proposed changes to winback rulesThe CRTC is asking for comments on the Canadian Cable Television Association’s (CCTA) request that winback rules for incumbent cable operators be eliminated (Broadcasting Public Notice 2003-21). The CCTA states that the winback rules were based on the dominant position of cablecos vis-à-vis new entrants and says that the competitive entry in the broadcast distribution industry has changed substantially since 1998 (CCR, Nov. 28/02). First round comments are due by June 9, and second round comments by July 2. CRTC expands small cable exemption to systems with 6,000 subscribersThe CRTC has expanded a small cable licensing exemption to include systems serving between 2,000 and 6,000 subscribers, or generally Class 2 systems (Broadcasting Public Notice 2003-23). The current exemption includes systems of up to 2,000 subscribers. Cablecos that are fully interconnected will not qualify unless the aggregate number of subscribers is 6,000 or less. The CRTC also indicated that it would amend linkage requirements for Class 2 systems so that they are closer to their satellite TV competitors. A proposed exemption order will be released at a later date for comment. The move comes at the request of the Canadian Cable Television Association (CCR, July 18/02). Star Choice gets licence amendment so it can bulk bill Satellite TV distributor Star Choice Television Network Inc. has received regulatory approval for a licence amendment that will allow it to bulk bill (Broadcasting Decision 2003-124). Both Star Choice and satellite rival Bell ExpressVu LP have argued that they should have the same right as cable to bulk bill customers in multi-unit dwellings (CCR, Aug. 15/02, Aug. 30/01). Kent calls for separation between broadcast and newspaper industryThe first intervener before a Senate committee studying media concentration on April 29 called for a ban on broadcasters from owning newspapers and a new national broadcast strategy. The opinion was expressed by Tom Kent, who headed a commission examining the state of the newspaper industry back in 1981, when he appeared before the Senate Standing Committee on Transport and Communications (CCR, April 25/03). The goals of the committee’s study include determining the appropriate role of public policy in helping to ensure that the Canadian news media remain healthy, independent and diverse in the face of globalization, technological change, convergence and increased concentration of ownership. More details. Multivan receives CRTC approval for ownership reorganizationThe CRTC has given the green light to an ownership reorganization of Multivan Broadcast Corp., which has been licensed for an over-the-air ethnic TV station in Vancouver (Broadcasting Decision 2003-128). Multivan is owned by 6500504 B.C. Ltd. (a company owned and controlled by Art Reitmayer), RCG Forex Service Corp. (a company owned and controlled by James Ho), and three other minority partners. CRTC renews Shaw’s PPV licence, but rejects bid for new calculation for contributions to Canadian productionThe CRTC has renewed the licence of Shaw Pay-Per-View Ltd.’s (formerly Corus VC Ltd.) pay TV service known as Viewer’s Choice from Sept. 1, 2003 until Aug. 31, 2010 (Broadcasting Decision 2003-132). But the commission denied a request by Shaw to change the way it calculates gross revenues to determine how much it pays in support of Canadian programming. Shaw had proposed that the amount it has to contribute to Canadian programming be calculated as 5% of 50% of total retail sales. Shaw argued that calculating its gross revenues in this manner would be consistent with the CRTC’s approach with video-on-demand (VOD) service providers. It was estimated that Shaw’s contributions under the proposed system would be 14%, or $1 million, less over the licence term than under the current condition of licence.Fidelity sells shares in Corus EntertainmentFidelity Management & Research Company and Fidelity Management Trust Company announced April 28 that they had sold 1.8 million shares, representing a 4.41% share, of Corus Entertainment Inc.’s common stock. Fidelity had control but not ownership of those shares. Persona gets regulatory approval to acquire Quinte CablevisionThe CRTC has granted approval for effective control of Picton ON-based Quinte Cablevision Ltd. to be transferred to Persona Communications Inc. (Broadcasting Decision 2003-125). It is a Class 2 cable system. Persona announced the sale in August 2002 (CCR Update, Aug. 21/02). VisionTV partners with Ellis Entertainment on production ventureBroadcaster VisionTV has formed a joint-venture company with Ellis Entertainment to create Canadian programming for audiences worldwide, it was announced today. The company, VisionTV International, will develop, produce and distribute original TV programming worldwide. APTN, National Film Board partner on Aboriginal productionsThe Aboriginal Peoples Television Network (APTN) and the National Film Board (NFB) have agreed to work together in telling Aboriginal stories, through such initiatives as a NFB strand on APTN, the development of new documentaries and possibly animation pilots, special access to NFB’s considerable Aboriginal archives, production and outreach activities such as mobile production labs, and research and development. The announcement was made during the Minister’s Forum on Diversity and Culture last week in Ottawa (CCR, April 25/03). Global making progress on another reality seriesThe Global Television Network has hired the 10 Canadians who will travel on a train and improvise dialogue around a daily storyline. The series is based on the Australian series Train 48 that debuted in 2000. "Listening to their discussions, anticipating their reactions, sharing in their suspense – this kind of instant drama is unlike any other and promises to be fresh, fun and engaging for viewers," Loren Mawhinney, Global’s VP of Canadian production, said in an April 28 media release. Produced by Protocol Entertainment in association with Global, the series is set to debut on June 2. INTERNATIONAL NEWS FCC likely to loosen cap on the number of TV stations a company can ownThe Federal Communications Commission will likely recommend that the limit a single company can own in a broadcast market be increased to 45% of TV homes in the United States, according to Television Week. The current cap is 35%. Minerva Networks to demonstrate delivery of TV services over telephony linesCalifornia-based Minerva Networks says it will demonstrate new products and features that significantly enhance delivery of broadcast quality TV and video-on-demand services over xDSL and FTTH at the SuperComm 2003 trade show, running June 1-5 in Atlanta GA. In a media release released today the company states that its new IP Television Lab System allows users, at minimal cost, to see the benefits of IP television before making the commitment to a trial or full-scale deployment. Advanced features of its iTV Manager Version 1.5 include subscription VOD, targeted messaging, two new set-top boxes, and new video server.