CAB says CCTA has broken anti-piracy coalition in bid to bring U.S. channels here

Canada's private broadcasters say the cable industry has torn apart a coalition aimed at combating TV signal theft with its proposal to bring popular U.S. channels to the country. On June 18, the Canadian Cable Television Association (CCTA) asked the CRTC to authorize the distribution of 17 U.S. channels for carriage on a digital basis only, including Family Net, Noggin, and Sundance Channel. The CRTC rejected the CCTA's request to make these three channels eligible for carriage in Canada two years ago because they were deemed either "totally or partially competitive" with existing Canadian specialty channels (Public Notice 2001-82). In asking the CRTC to change a long-standing broadcasting policy that prohibits U.S. channels that compete with Canadian services from being carried here, the CCTA argues that a wider channel offering will help decrease the satellite TV black market. The Canadian Association of Broadcasters (CAB) protests, saying the reasoning is suspect since many people turn to the black market to get programming for free, not because of a lack of choice. "We find it preposterous that this would be a solution for theft of satellite signals. If theft was going to be beaten by bringing services to consumers at a higher cost than free, it would work elsewhere. In the United States, there are three or four million households who do not subscribe to DirecTV but still get the signal," CAB president and CEO Glenn O'Farrell tells Canadian Communications Reports. "We feel that the coalition has done extremely good work up until now. Cable has taken the decision now to abandon the coalition." Luc Perreault, VP communications and regulatory affairs of MétéoMédia and The Weather Network and chair of the CAB's committee on piracy, noted during a June 19 conference call with journalists, "(The CCTA's plans) came as a big surprise to Glenn and myself…because we've been involved with the CCTA in meetings with government…We've met with most of the government agencies who could help fight the piracy problem. Never did it come up in any discussions we had with any government authorities that this was even a thought they might have…I can tell you this is not the solution." But CCTA president and CEO Janet Yale tells CCR that the black market enforcement strategy must have two prongs: increased enforcement and offering repatriated viewers more choice. "I completely disagree with their reaction to the black market. We have always been strong believers in enforcement and nothing in this application takes away from that," she says. "We are firmly involved (in enforcement measures) and do not see this as an abandonment of the coalition at all. Having said that, the issue is that as we shut the dealers down and people lose access to programming, we want them to feel good about coming back to the Canadian system…. By doing this, we cut the legs off the (choice) argument or justification that people use for going to U.S. satellites. The only reason left would be because they are stealing it." But O'Farrell retorts that most of the programming on the channels that the CCTA wants to see come into the Canadian market is already available on Canadian channels. For example, The Movie Network carries such popular Home Box Office (HBO) shows as The Sopranos and Six Feet Under. Moreover, O'Farrell notes that if a channel like ESPN was authorized to be carried in Canada, its schedule would probably contain a lot of blackouts since it won't have the rights for such programming as NHL hockey or NFL football, which the respective leagues have negotiated with Canadian broadcasters. If other channels, such as HBO or Nickelodeon Kids, decline to sell their programming to Canadian channels as they do now, he argues that it would undermine the whole Canadian broadcasting system. "The channels would be diluted (because of the blackouts), or if (the CCTA) is suggesting that ESPN would acquire the rights to Canadian hockey games, for instance, in the future - at whose expense do you think that would be? It would obviously be at the expense of Canadian programming services. So why would we knowingly and intentionally assist that?" Interestingly, Dean MacDonald, executive VP and COO of Rogers Cable Inc., appeared at a June 19 media conference with Yale to plead the CCTA case. Rogers Cable affiliate Rogers Media owns the analog sports specialty channel Rogers Sportsnet, which in the long run would likely be negatively affected by a decision to allow ESPN into the Canadian market. In its application to the CRTC, the CCTA also argues that adding the popular U.S. services would increase choice and diversity, maximize the benefits of competition, and accelerate digital penetration. O'Farrell points out that the digital universe doesn't just involve cable, but also satellite TV distribution, which substantially increases the number of digital subscribers. He adds that there are other things that cable can do to push the digital rollout, including more aggressive marketing plans and the distribution of more Canadian diginets. "It was ironic to hear Shaw's suggestion that they've done everything they possibly can to assist the digital rollout, when in fact they only picked up some of the services that are being offered by Canadian programming services and not all," O'Farrell notes. The broadcasters call the cable industry's move a "thinly disguised cash grab" on the backs of Canadian consumers, but cable responds that consumers don't have to buy the discretionary tiers containing the U.S. channels. "We think there is a big demand for it (U.S. channels)," Yale says. "But as I say these are discretionary services. If people don't like it, or don't see value, they don't have to take it. This isn't taking away anything, it's adding." But O'Farrell warns that down the road the Canadian options may not be available, and then consumers would have no choice but to pay cablecos more to get the programming on U.S. channels in digital tiers. The supply costs would probably be lower for distributors as the U.S. channels tend to view foreign markets as non-core extensions of their home market and usually do not charge distributors wholesale rates that are as high as what they charge U.S. distributors or what Canadian specialty channels would command.

CAB says CCTA has broken anti-piracy coalition in bid to bring U.S. channels here

Broadcast | June 30, 2003

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