Levin’s Ethnic Channels Group hampered by 2004 regulatory changes

It’s been less than two years since the CRTC scrapped the competitiveness test for allowing foreign-owned third-language television services into the country (CCR, Dec. 20/04). But while the new approach has been praised as a win for consumers because it has increased the amount of third-language content available, Canadian broadcaster Ethnic Channels Group has had a hard time adapting. "We battle on a daily basis," says Slava Levin, owner of the Toronto-based third-language broadcaster. "Our business hangs on a very thin thread…because the CRTC has put us there." The ruling issued on Dec. 16, 2004 allows foreign-owned specialty TV channels that provide at least 90% of their schedules in languages other than English or French to be granted entry in the digital tier, provided their programming is from a broad range of genres and categories. Previous to that, foreign-owned channels were banned from Canada if they were deemed partially or totally competitive with a licensed Canadian-owned specialty TV channel. The CRTC changed the policy due in part to intense pressure from politicians and ethnic communities. In October 2004, Levin told Canadian Communications Reports (CCR, Oct. 22/04) that he was fearful of how the new policy would affect his business model, and it now seems his fears are being realized. "We built our business in the beginning where we spent all the money under one set of rules," he says. "We might not have gone into this business if we knew the rules were going to be changed. We wouldn’t have spent millions of dollars on the infrastructure…we might have gone out there and bought a McDonald’s instead." While that may be a bit of a stretch, Levin says he might not have put in place the framework to produce the necessary Canadian content to add to his channels had he known competing foreign-owned services would be able to come into the country and skirt those requirements. "This was all money that literally, in our eyes, was thrown right out the window," he says. "We can just as easily go right now and compete with everybody out there for the rights to the programming and bring it in as a rights holder…and make our 50 cents from subscribers." Levin adds that it has become substantially more difficult to obtain services from around the world because these foreign-owned channels know they can come straight into Canada on their own. And, this option is even more attractive considering how long it currently takes Ethnic Channels to secure licences for its Category 2 channels. To illustrate, Levin says that up until about two months ago Ethnic Channels had a total of 18 Category 2 licences, with 11 services launched under those licences. But currently – and even despite recent approvals by the CRTC – Levin has 53 Category 2 licences in his stable, with still only 11 of those being launched. What irks Levin the most is the fact that he applied for these licences in November 2004, before the CRTC changed its policy. He feels the applications that were submitted under the old rules should have been processed under the guidelines, which they were not. And the fact that it has taken him so long to secure licences is causing him to lose credibility in the international broadcasting community. "Do you think a programmer or anybody for that matter is going to trust me when I say that we’re going to have in a month, and then I say two more months, and then nothing comes?" he asks. "I have lost trust with the networks because of this. It wasn’t me who wrecked my reputation, it was the CRTC, so to speak. They put us in a position where is coming, it’s coming, that’s all I heard. Well, where is it?" However, there is one thing that Levin says keeps him in the game: foreign-owned third-language broadcasters cannot sell advertising in Canada. With some foreign broadcasters being lucky to sign up 3,000 to 5,000 subscribers to their offerings in Canada, Levin says he can still attract them to Ethnic Channels by promising increased earnings from a share of advertising. In fact, Levin says that foreign broadcasters are often coming into Canada on their own without knowing that they won’t be able to generate revenue from ads. "It’s my job to tell them," he says, adding that the potential for this extra little bit of revenue has helped them keep Greek broadcaster Mega TV from applying for a foreign service licence, even though the broadcaster was close to doing so. Aside from that small victory, however, Ethnic Channels feels it is operating with its back up against the wall. "We’re put in a position where we have to fight against our own government, while foreign services are shaking their hand and saying ‘Thank you,’" says Levin. "What does a foreign service provider leave in this country other than their programming? They leave absolutely nothing. Not one dollar is brought back into the economy, period." Ethnic Channels, he points out, has employees, produces content and pays taxes, but still Levin says he feels like he’s an afterthought in the Canadian broadcasting regulatory environment. Nevertheless, the company is steady in its pursuit of launching 30 channels, a goal it has focused on from day one. Says Levin: "It’s an uphill battle, it’s not easy. But in the same respect, we’re doing what we’ve got to do to survive."

Levin’s Ethnic Channels Group hampered by 2004 regulatory changes

Broadcast | August 29, 2006

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