CRTC ditches “competitiveness” test for foreign-owned third-language TV channels

Bowing to intense pressure from top-level politicians and ethnic communities complaining they are forced to turn to the black market for access to a diverse range of programming in their native languages, the CRTC has thrown its protectionist policy out the window and opened the digital airwaves to general interest, non-Canadian third-language TV channels (Broadcasting Public Notice 2004-96). In a landmark decision released December 16, the commission did away with the "competitiveness" test that has long prohibited the entry of foreign players into the Canadian broadcast scene for third-language general specialty TV channels. Under the new policy, foreign-owned specialty TV channels that provide at least 90% of their schedules in languages other than English or French will be granted entry in the digital tier, if their programming is from a broad range of genres and categories. The "competitiveness" test, which bans foreign-owned channels from the country if they are deemed partially or totally competitive with a licensed Canadian-owned specialty TV channel, remains in place for third-language niche services and all French and English-language specialty services. In changing the policy, the CRTC is relying on tiering requirements to offer some security to the country’s existing analog third-language channels, such as Telelatino, Odyessy Greek TV, Fairchild and the Asian Television Network (ATN). The "walled garden" approach, however, doesn’t apply to Canadian-owned, general third-language Category 2 TV stations, such as those offered by Ethnic Channels Group (CCR, Oct. 22/04). The CRTC has also stipulated that the non-Canadian third-language services entering Canada cannot retain exclusive rights to their programming. Under the rules, Italian public broadcaster RAI International, would be required to continue to make its programming available to the Canadian-owned Spanish/Italian channel Telelatino, for example. During a media conference call on December 16, Canadian Association of Broadcasters (CAB) president and CEO Glenn O’Farrell downplayed journalists’ questions that the ruling could turn the CRTC into an adjudicator in setting the price for third-language program rights between Canada’s analog third-language broadcasters and their foreign competitors. While declaring that the CAB would be "very demanding of the CRTC" to enforce the new program rights and linkage rules, O’Farrell insisted that the ruling wouldn’t push the commission into becoming involved in party-to-party negotiations. "We are going to be looking very much to the CRTC to enforce those (rules) in a timely and transparent way," he said. "But I continue to suggest that as we interpret (the rules) today that they do not include the commercial relationship that relates to price. They relate to the matter of making available…" O’Farrell and Shan Chandrasekar, chair of the CAB Ethnic Services Committee and president and CEO of the ATN, who was also on the conference call, were reluctant to criticize the new policy. The CAB president and CEO said, "We’re not trying to put a positive or negative (spin). We’re trying to put a realistic reaction from an industry perspective on a policy that has industrial implications…I would say to you that, as in anything that is new direction for policy, it is very hard to see with great certainty until there is any of market realities or (there are) market results that we can point to." O’Farrell and Chandrasekar begrudgingly admitted that the new policy could have a negative effect on the Canadian services. The introduction of RAI International, for example, could very well steal away audiences from Telelatino, even if the two services are bundled together. "It will definitely have some repercussions in the market. The addition of any service in the same genre, in the same language in a more competitive environment certainly takes a few eyeballs away," said Chandrasekar. He also admitted that "to a certain extent" the Canadian services will be at a disadvantage because they are required by the regulator to reinvest a certain percentage of the revenues into Canadian content, while their foreign rivals will have no such commitments. "We have to find a way where the Canadian content is being cross subsidized by the distribution system and so there is a lot of homework to be done with respect to the (foreign) third-language broadcasters in Canada and the BDUs (broadcast distribution undertakings)," he noted. "It is essential now under these circumstances that we have to develop a very good working relationship with the BDUs and we have to see eye-to-eye with them." A Canadian Heritage-appointed panel had suggested that foreign third-language channels should be forced to contribute to the Canadian system by contributing 10% of their previous year’s revenues to a new fund for third-language programming. The CRTC, however, decided against implementing that condition for the time being. "…It is unclear whether such a fund…would be of sufficient size to justify the costs of administering the fund and leave enough money to be of any true significant benefit to broadcasters, or independent producers, of Canadian, third-language ethnic programming," notes the CRTC in its decision. "At the same time, the commission acknowledges that the concept of a new program fund, along with other possible mechanisms for increasing the resources available for third-language ethnic Canadian programming, may, in the future, warrant further exploration." Ethnic groups have been lobbying for the change (CCR, May 21/04) as well as politicians such as Canadian Heritage minister Liza Frulla, who in a speech at the recently-concluded CAB convention called for CRTC regulation to evolve to better reflect the multicultural nature of Canada (CCR, Dec. 8/04). The process leading up to the changed policy was sparked by the CRTC’s decision to deny entry to RAI International. Under the old rules, it was deemed to be competitive with Canadian-owned Italian channel Telelatino, which purchases and broadcasts RAI programming. Large-scale public protests and intense political pressure followed. The Canadian Cable Telecommunications Association (CCTA) called the decision a win for consumers. "The addition of general interest services will provide consumers with more programming choice and will improve the ability of the broadcasting system to compete with other sources of entertainment and information, including black market satellite services," said CCTA president Michael Hennessy in a media release. He used the opportunity to call for a similar loosening up of policy in other areas. "We believe a more competitive framework can equally be applied to popular third-language niche and non-Canadian English- and French-language services," he noted. But O’Farrell doesn’t see this ruling as an indication that the CRTC is prepared to move in the same direction in other broadcast areas. "We read nothing into this beyond the scope of foreign third-language services and Canadian third-language services," he noted.

CRTC ditches “competitiveness” test for foreign-owned third-language TV channels

Broadcast | December 20, 2004

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