CCR Update

Corus, Astral fight pay TV hopefuls; licensing hearing underwayPublic hearings on pay TV got underway this week, with the four pay TV hopefuls and the incumbents reiterating many of the arguments that they made in the written part of the process (CCR, Oct. 24/05). Spotlight Television, Allarco Entertainment, Quebecor’s Archambault Group, and Channel Zero’s The Canadian Film Channel are all vying for national pay TV licences. Archambault’s licence application is for both French-language and English-language national pay TV services. If the CRTC grants all or any of the licences, it will break the existing pay TV monopolies enjoyed by Astral Media’s The Movie Channel in eastern Canada, and Corus Entertainment’s Movie Central in western Canada. Up first were the new applicants, with the parties stating that competition would drive higher penetration rates for the pay TV platform. They also noted that as more consumers adopt digital television, the market for pay TV will expand. On the other hand, Astral and Corus - both of which appeared before the commission on Wednesday - stated that the digital rollout was slowing. They also noted that they had invested and turned around the pay TV industry, which was in rough shape in its earlier days following the licensing of eight different services. They said the industry now faces challenges from emerging technologies, such as personal video recorders (PVRs), video-on-demand (VOD) and Internet video transmission, along with a burgeoning batch of new specialty TV channels that carry movies - the content that drives the pay TV platform. The commission asked for more details on the program scheduling of the four proposed pay TV services. The Canadian Cable Telecommunications Association (CCTA), the last intervener to appear before the commission on Wednesday, neither opposed nor supported any of the new pay TV applicants. However, it expressed concerns about the commission licensing new pay TV applicants if carriage is mandated due to bandwidth capacity constraints. The CRTC panel overseeing the public hearing consists of chair Charles Dalfen, vice-chair of telecommunications Richard French, national commissioner Joan Pennefather, regional commissioner for B.C. Helen del Val, and regional commissioner for Alberta and the Northwest Territories Ronald Williams. In his opening day address, Dalfen said the panel would focus on: the benefits to the Canadian broadcasting system in licensing a new general interest pay television service, particularly with respect to contributions to Canadian programming; the capacity of the English and French-language pay TV markets to absorb the entry of additional general interest pay TV services; the impact this would have on existing services, including the impact on the program rights market; and the appropriateness of granting digital access rights to new pay services, and the capacity implications for broadcasting distribution undertakings. Corus reports subscribers up for Movie CentralCorus Entertainment announced October 25 that a growing subscriber base for its pay TV service Movie Central during the fourth quarter ended August 31 helped buoy the company's revenues. "Corus Television revenues for the fourth quarter were up 7% to $83.4 million from $78.3 million last year driven by double digit specialty (TV) advertising growth as well as strong subscriber growth at Movie Central," reads a company media release. Movie Central finished the year with 748,000 subscribers, an increase of 6% from last year, Corus states in its fourth-quarter financial results. Overall TV revenues on a full-year basis increased 7% to $354.2 million, and segment profit grew 13% to $140.8 million compared to $125.1 million the year earlier. Also, on September 16, Corus announced that Movie Central would be available in high definition on Bell ExpressVu. A highlight of the quarter was the July 7 announcement of the launch of Vortex on Demand, a video-on-demand (VOD) channel operated in partnership with Comcast in the U.S. market. Corus notes that Vortex marks a new platform for delivery of content from its Nelvana subsidiary, as well as recognition of the appeal of its programming library. Discovery HD gets CRTC approval; launch expected before end of yearThe CRTC has approved a Category 2 joint licence application submitted by CTV and U.S.-based Discovery Communications for Discovery HD Theatre (CCR Update, April 27/05), and the service is expected to launch before the end of the year. The partners are billing the channel as "Canada’s first 24-hours-a-day, seven-days-a-week high definition (HD) specialty service." "CTV Specialty Television Inc., in partnership with Discovery Communications, is uniquely positioned to lead the way in the Canadian HD arena and feed a growing consumer demand for high-definition content. The CRTC approval of Discovery HD will greatly benefit not only Canadian audiences but the Canadian television production industry as well," said CTV president Rick Brace in an October 25 media release. The programming on the channel will consist of Discovery Channel U.S.’ most popular series and specials plus original HD programming from Canadian producers. The partners note that this standalone channel is distinguishable from the existing simulcast Discovery service because Discovery HD will air content that is specifically produced and broadcast to capitalize on the advantages of HD. Initially, the Canadian Cable Telecommunications Association (CCTA) applied for regulatory permission to bring into Canada the U.S. version of Discovery HD, which launched south of the border in June 2002 as a 24/7 HD network. The CCTA also wanted to have HDNet added to the list of channels eligible for carriage in Canada. However, the CRTC dragged its feet on the application - it still hasn’t ruled on HDNet - and in the meantime the CCTA’s Discovery HD application was withdrawn in place of the joint CTV-Discovery application (CCR, Jan. 28/05). Rogers to reduce discounts in its bundlesRogers Communications plans to restructure its bundles so that multi-product customers get lower discounts according to the company’s third-quarter financial results for the three months ended September 30, 2005. Rogers notes in financial results released October 25 that the change is necessary as the discounts are offsetting increases in average monthly revenue per subscriber (ARPU). "To mitigate impacts on ARPU and operating profit margins associated with bundled offering discounts, effective during the fourth quarter of 2005 once systems permit, Rogers is modifying its Better Choice Bundles plans to reduce certain of the available discounts," states the company. Rogers notes that its ARPU increased 3% to $48.45 at September 30, compared with $46.97 at the same time a year earlier. The increase, says Rogers, reflects the growing penetration of its digital products, its continued up-selling of customers into enhanced programming packages, and certain pricing increases. The higher revenues generated from these initiatives, however, were offset by bundle discounts and to declining equipment revenues, mostly from lower equipment rental prices, the cableco noted. Rogers also said it signed on 71,000 additional digital TV households in the quarter for a total of 840,100 at September 30, 2005. On the VoIP telephone front, Rogers said that it had generated $0.7 million from 18,100 Rogers Cable telephony subscribers. Rogers introduced its telephony service on July 1 in the Greater Toronto Area. Roger also stated that its Rogers Media subsidiary faces increased competition from the introduction of subscription radio. "These new subscription services have the potential to offer a wide variety of music and spoken word programming channels, and will compete for audiences with the Media radio stations in markets across Canada," noted Rogers in its financial report. "However, given that these new services are also prohibited from carrying local programming content and selling local advertising, the Media radio stations expect to sustain their competitive advantage as local broadcasters in their local markets." Cogeco records larger than expected increase in telephony subscribersCogeco Cable Inc. on October 24 announced that earlier projections for its digital telephony services were too low. The company’s fourth quarter results for the three months ended August 31, 2005, state: "As a result of strong demand for its telephony service, the corporation has revised its projected customer growth from between 7,000 and 8,000 to a range of 32,000 to 37,000" for fiscal 2006. Desjardins Securities noted that digital telephony adds of 1,448 were ahead of the financial firm’s estimates of 1,000 for the quarter, and that it is currently tracking 500 additional net additions per week. Cogeco anticipates expanding its telephony footprint to 75% of homes passed from its current 25% by August 2006. Cogeco also added 11,555 digital TV households in the fourth quarter for a total of 255,289 at August 31, 2005 (167,662 in Ontario and 94,222 in Quebec). The company pointed out that it doubled its video-on-demand (VOD) service capacity from 800 to 1,600 hours of content, which it called "an important improvement for customers who are increasingly tuning in to on-demand television." Cogeco added that in its drive to continually offer enhanced functions and services, it has launched a new interactive program guide, iGuide, in Ontario. "The new guide is very fast and features an improved design and many other functions," the company stated. CPAC refreshes look, aims to increase interest in politicsThe Cable Public Affairs Channel (CPAC) has a new on-air look that is aimed at renewing Canadians’ interest in politics. "Canadians are looking for truth in politics - no spin, no agenda. CPAC viewers get the unvarnished truth, the whole story. Our viewers watch, listen and decide for themselves what the real truth is," said CPAC president and general manager Colette Watson in an October 24 media release. The channel added that its "hipper, urban look also reflects the channel’s goal of engaging younger viewers." CPAC said that it is also now more accessible. For example, the House of Commons’ Question Period is now available in four ways: on live TV, a daily replay at 9 p.m. ET/PT, real-time streaming at cpac.ca, or anytime through CPAC podcasts. As well, new shows include audience participation shows Outburst and Détonations. W-Five cracks million-viewer level markCTV Inc.’s news show W-FIVE attracted 1.1 million viewers for its 40th anniversary show on Saturday, October 22, according to BBM Canada statistics. The program explored questionable tactics used by the U-Haul company. The show drew 33% more viewers than last year’s season premiere. Degrassi sings its way into storesSongs from the CTV Inc. television series Degrassi: The Next Generation were released October 25 on CD. The compilation CD is all-Canadian, and features music from artists such as Sam Roberts and Buck 65. The CD was released in conjunction with the TV show’s 25th anniversary. Other anniversary memorabilia include student planners and the illustrated book Degrassi: Generations. The show is produced by Epitome Pictures Inc. in association with CTV. The series also airs on "The N" cable network in the United States. Sportsnet has record audience for NHL hockeyRogers Sportsnet announced October 26 that its broadcast of the 5-4 shootout win by the Toronto Maple Leafs over the Boston Bruins a day earlier drew 791,000 viewers (2+). It set a record for NHL hockey coverage on Sportsnet Ontario. TV audiences for the game, which was broadcast in the Toronto area but excluded regions in Ontario west of Belleville, peaked at 1.147 viewers during the overtime period and shootout. The previous high for viewership of an NHL game on Rogers Sportsnet was 697,000 for a 2002 game between the Los Angeles Kings and Colorado Avalanche. TSN has also been recording record numbers for its hockey coverage (CCR Update, Oct. 13/05). Bell Canada granted licence amendment on local availabilitiesThe CRTC has approved a request by Bell Canada for a licence amendment to its yet-to-launch Class 1 broadcast distribution services in the Toronto and Montreal areas that will allow it to use a maximum of 25% of its local availabilities for the promotion of discretionary programming services and packages, subscriber service information, channel realignments, cable FM service and additional cable outlets (Broadcasting Decision 2005-529). The remaining 75% of its local availabilities must be made available for use by licensed Canadian programming services for the promotion of their respective channels or programming. The ruling is in keeping with a recent CRTC decision to maintain the status quo on local availabilities, despite a request to the contrary by the Canadian Cable Telecommunications Association (CCR, Sept. 27/05). CTAM to examine future of advertisingThe Canadian chapter of the Cable and Telecommunications Association for Marketing (CTAM) is hosting a panel on the future of advertising in Toronto on November 15. The event asks the question: Is the 30-second ad becoming a dinosaur? Media buyers now are looking not just for viewers, but for target audiences, which may be reached through addressable digital set top boxes. The panel features Association of Canadian Advertisers VP of policy and research Bob Reaume, Zenith Optimedia president and CEO Sunni Boot, Rogers Communications chief strategic officer Michael Lee, Invidi CEO David Downey, and Corus Television president Paul Robertson. The discussion runs from 3 p.m. to 5 p.m. (registration at 2:30 p.m.) at the Velma Graham Theatre, Rogers Communications, 333 Bloor Street East, Toronto. Cost is $35 for CTAM Canada members and $75 for non-members. See the upcoming issue of Canadian Communications Reports for a report on a non-traditional approach to advertising that is being adopted by the hit TV show Corner Gas. INTERNATIONAL Sportel examines sport and mobile TV"Sport and Mobile - A Marriage in Heaven" was the focus of a panel discussion on October 25 at Sportel, the TV broadcasting conference devoted to sport. "The marriage of sports content and the mobile media channel has the opportunity to be the celebrity wedding of the decade," say Sportel organizers. The panel looked at the factors driving sports and mobile, what sports offer mobile and what mobile offer sports, and whether mobile sports consumers will be owned" by the sports rights holder or the mobile operator. Scott Robinson, general manager of new media projects at Alcatel Mobile’s communications group, moderated the discussion. Sportel runs until October 27 in Monaco. Cable TV levels playing field with satellite TV distributors: Kagan ResearchCable television now accounts for 40% of total U.S. basic cable subscribers, an indication that the industry has leveled the playing field with rivals such as director-to-home (DTH) satellite distributors, according to a study by Kagan Research. The attraction is a result of cable TV migrating from analog and offering on-demand programming and high-definition (HD) TV resolution. Kagan notes that cable has positioned itself to cash in on high-growth, digital-based businesses such as interactive TV, VOD, and IP voice and local cable advertising. Kagan predicts that the average revenue per unit (ARPU) - the average amount paid per subscriber per month - will rise to $143.15 per month by 2015 from $72.89 per month in 2004. U.S. cable well positioned to withstand telco competition: S&PU.S. cable TV operators are well-positioned to withstand competition from telcos in the TV area because of their dominant market position, growth opportunities from advanced services such as video-on-demand (VOD), and technological advantages over direct-to-home (DTH) satellite TV providers and local phone companies in providing advanced TV features, according to a Standard and Poor’s report, Key Credit Factors for U.S. Cable Television Operators. "Given their head start in providing a triple-play bundle of video, data and voice, cable companies are well-positioned to solidify their market positions before local phone companies become a meaningful business threat for video services in the next few years," said Standard & Poor’s analyst Eric Geil. U.S. Senate sets April 2009 deadline for digital rolloutThe deadline for U.S. TV stations to switch entirely to digital was revised to April 7, 2009 by a U.S. Senate panel on October 26. The legislation, which was approved by the Senate Commerce Committee, requires TV stations to vacate their analog spectrum by that date. The bill also sets aside U.S.$3 billion to subsidize the cost for Americans to buy devices that would enable existing analog TV sets to receive converted digital signals. The U.S. had initially set a deadline of December 31, 2006, or when 85% of the country could receive the digital signals, whichever came first. The U.S. is expected to make U.S.$10 billion or more by auctioning off the freed-up spectrum. In Canada, the CRTC has not set a firm date for conversion to digital, instead preferring a more market-based approach (CCR, June 21/02).

CCR Update

Broadcast | October 27, 2005

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