Could one-per-genre rule go the way of the dodo?

By all accounts, the scope of the CRTC's newly launched review of the regulatory framework for BDU and discretionary services is impressive. And by embodying chair Konrad von Finckenstein's philosophy of a more compact and market-geared regulatory environment, it also promises to shake up the status quo.But some independent broadcasters think Canadian specialty and pay TV channels still need some form of protection, and at least one doesn't like the tone of the commission's public notice seeking comment on the one-channel-per-genre policy.Conceding innovative alternatives may come out of the hearing, Pelmorex Media Inc. senior vice-president Paul Temple says he's "disappointed with the tone and approach of the notice." His firm was also handed a defeat recently in its bid to maintain must-carry status for its The Weather Network/MétéoMédia service on digital cablesystems - CCR will have more on that story tomorrow.In Notice of Public Hearing 2007-10, released earlier this month, the CRTC indicated it might be time to eliminate the one channel-per-genre policy to give broadcasters more flexibility. The regulator draws its rationale from the observation that the pay and specialty sector "is now a mature, healthy industry characterized by a diversity of popular, recognized brands."The commission also asks what ongoing purpose is served by continuing to maintain genres for pay and specialty TV channels, and whether genres should be broadly defined and individual natures of service eliminated to permit channels to compete directly with other services in the same genre.Currently, analog and digital Category 1 specialty TV channels are licensed on a one-per-genre basis, while Category 2 diginets can be competitive with each other but not with analog or Category 1 specialty TV channels.The look at genre exclusivity is part of a wider CRTC review of the regulatory frameworks for distributors and discretionary programming services. Written comments are due on October 9, and a public hearing will be held beginning on January 28, 2008.But Temple argues that the move to scrap the one-per-genre rule is short-sighted. "Getting rid of the genre protection doesn't solve the issues that the industry is facing," he says. "Just because something is difficult, doesn't mean that you dump it."Temple argues that TV specialty channels in Canada need continued protective legislation because of Canada's market size and its location next to the United States."I think sometimes we lose track of the fact that Canada is still a relatively small country with 12 million households divided between two language groups, and it can't necessarily support two or three services per genre - maybe in some genres such as sports. But when you get into other areas, I don't think that's necessarily true," he says. "The United States has ten times the number of households." There are other considerations. "If you eliminate genre protection, does that mean a distributor could start up a weather channel, for example?" Temple asks. In the context of everything else being proposed - such as the elimination of access rights - a weather service operated by a distributor could be given a better distribution deal and thus stifle competitive services, he notes.That concern cuts to the heart of the proposed changes to genre exclusivity and access: If large companies launch channels that put smaller companies out of business partly because of their gatekeeping role, how is that helping the Canadian broadcasting system?But Cal Millar, VP and GM at Toronto specialty channel operator Channel Zero Inc., is more concerned about a decline in Canadian content than in maintaining genre exclusivity. He notes that Category 2 specialty TV channels could emerge that are competitive with the Category 1 and analog services and don't have as onerous Canadian content requirements, thus likely pushing existing channels out of business."Either we want a unique Canadian system, with Canadian access and Canadian voices, or we're prepared to forgo it," he says, adding that the broadcasting regulator and the industry should decide once and for all which approach to take.A similar argument was made when the CRTC considered four pay TV applications back in 2005, some of them competitive with existing services such as Corus Entertainment Inc.-owned Movie Central and Astral Media Inc.'s The Movie Network. The Canadian Film and Television Production Association (CFTPA) noted it would be "extremely concerned if the licensing of additional general interest pay television services to maintain their current commitments or diminish their capacity to commission original production."The CFTPA added: "From our perspective, the entry of additional players must result in a significant amount of new money available to fund original Canadian independent production. We will not have accomplished anything if we merely fragment the contribution that pay television makes to the funding of the same amount of programming."In the end, the commission licensed just one of the four new pay TV applicants - Allarco Entertainment's proposed service, which has yet to launch. But despite the formal existence of two pay services devoted to movies and a licence issued for a third, many are informally in the movie broadcasting business: many specialty services press for additional airtime for Category-7 programming as outlined in the Specialty Services Regulations, a group which includes both made-for-TV movies and theatrical titles for broadcast."Someone once said to me, genre protection has been dead for a long time - it just keeps breathing," says Millar. "In some ways, it is already dead. But does that mean that removing genre protection means everybody becomes a TSN? I certainly hope not." He suggests this scenario could be avoided through more stringent conditions of licence - by not allowing a channel like The Fight Network, for instance, to broadcast movies with a weak connection to its genre. Millar also wants some kind of protection - but not necessarily a one-per-genre safeguard - particularly when it comes to the entry of foreign-owned services."There's no additional cost of production for ESPN to come in here...if allowed entry," he points out. "I think that perhaps we should allow Canadians to compete with one another, and either continue to restrict foreign English-language services or make them contribute to the system in some meaningful way."It's an opinion shared by Corus president and CEO John Cassaday. During a July 10 conference call, he said he had no concerns about the CRTC dumping its genre exclusivity as long as it didn't mean opening up the border to U.S. specialty TV stations. One of the reasons the CRTC is reconsidering its genre exclusivity policy is the digital environment enables the licensing of more channels. With on-demand viewing and other technologies that put more control in the hands of consumers, the commission notes it may be "time to move away from the current detailed regulation, and to take a revitalized approach to both distribution and discretionary programming undertakings that aims at reducing regulation to a minimum essential to achieve the objectives of the Act, relying instead on market forces wherever possible."Eliminating the one-channel-per-genre policy would also certainly reduce the CRTC's workload. The commission has spent significant time over the years looking into complaints surrounding genre exclusivity.Among the complaints examined by the CRTC was the one brought against TNN: The National Network, which the Canadian Association of Broadcasters (CAB) said became competitive with a number of Canadian channels, including Men TV, when it rebranded as Spike TV. The CRTC found insufficient evidence to support the CAB's claim. But the commission's January 2005 decision came after U.S. owner Viacom International Inc. unilaterally made chances to its service without seeking regulatory approval. And a U.S.-Canada trade war almost erupted the last time the CRTC bumped an American channel - Country Music Television - off the cable dial in the late 1990s.On the domestic front, CTV Newsnet's conditions of licence were changed in March 2004 so that it didn't have to follow a 15-minute news wheel - a condition imposed following a controversial complaint in 2001 by CBC Newsworld that argued CTV Newsnet had broken with the headline news format for which it was licensed. When it sought a change to its condition of licence, CTV Newsnet noted there were at the time eight foreign English-language news services available to Canadians, all operating without any CRTC restrictions, and argued it needed to be able to compete "without unreasonable restrictions" with the US news services.Back in 2003, Craig Media Inc. was also forced to seek a licence amendment for its Category 2 digital TV pop channel MTV2 (since rebranded PunchMuch) after CHUM Ltd. argued a year earlier that MTV2 and Craig's MTV Canada were not operating in compliance with their terms of licence. At the time, the CRTC ruled that Craig's youth channel, originally called Connect, put too much focus on music programming after being rebranded MTV Canada and was competitive with CHUM's MuchMusic. Political pressure, the emerging digital environment and the need to reduce workload have already led to the CRTC loosening the one channel per genre policy in recent years. For example, the commission has placed the onus on existing channel owners to prove Category 2s seeking licences are competitive with their services. And it appears that this is becoming increasingly difficult to do. Also, amid political pressure over RAI International initially being refused entry into Canada due to the genre exclusivity policy, the CRTC ditched its "competitiveness" test for foreign-owned third-language TV channels.With the premises put forward in NPH 2007-10, the CRTC appears ready to push the flood gates open even further. The question for broadcasters is: how far is too far?

Could one-per-genre rule go the way of the dodo?

Broadcast | July 30, 2007

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