Start the debate: review of regulatory framework delivered to commission

Just as they were asked to do in April, Fasken Martineau DuMoulin LLP lawyers Laurie Dunbar and Christian Leblanc left no stone unturned in delivering their 337-page Review of the Regulatory Framework for Broadcasting Services in Canada to the CRTC. And even though the commission just made the report public on September 12, some of its recommendations - specifically the suggestion to reassess the impact of simultaneous substitution - have already drawn the ire of Canada's broadcasters. "Obviously we knew that would be a sensitive issue," says Dunbar, who is also co-chair of FMD's communications law practice. "I'll make the point that we haven't recommended getting rid of simultaneous substitution. What we're suggesting is look at the net benefits and consider whether there are other ways of basically achieving the positive results of simultaneous substitution without the negative impact."The positive result of simulcast rights, of course, is the pumping of a bare minimum of $200 million into the Canadian broadcasting system. But the negative, as the report details, is a crowding of Canada's over-the-air broadcasters' primetime line-ups with almost exclusively American content. "In other words, simultaneous substitution pushes Canadian content out of the time slots on OTA television services when the greatest number of Canadians are watching and which have the greatest revenue potential," reads the report. However, the mere suggestion of tinkering with simultaneous substitution seemed to immediately cause serious, and collective, concern among the broadcasters. "Simultaneous substitution is a mechanism of fundamental importance to ensure that broadcasters are able to preserve their territorial programming rights," said Canadian Association of Broadcasters (CAB) president and CEO Glen O'Farrell in a press release also issued on September 12. "To remove this mechanism would effectively expropriate rights holders. It is irresponsible to suggest such a recommendation without any rationale demonstrating an understanding of the economic underpinnings of the industry."To some, that the CAB issued such a partisan statement on the Dunbar/Leblanc report is a statement in itself. "The CAB has a paucity of issues these days where they can actually speak for all their membership - most of the tension is between their members - but this is one of them," says Ian Morrison, spokesperson for the advocacy group Friends of Canadian Broadcasting. Indeed, Global Television parent company CanWest MediaWorks Inc. declined to comment on the report other than to say it supported the CAB's position. Morrison echoes the broadcasters' sentiment. "Strip out simultaneous substitution and you strip out profit from English language television broadcasters in Canada," he says. "It's not just something the CRTC designed 30 to 40 years ago to kind of prop up the broadcasters, it's also a matter of intellectual property.... It's the underpinning of our system unless somebody can think of some other way to get $200 million out there."Effectively, that's what the report is asking the commission, and the industry, to do. While Dunbar doesn't feel obligated to defend the report or respond to the early criticisms, he and Leblanc obviously aren't proposing a change that will cripple the industry. They were commissioned by CRTC chairman Konrad von Finckenstein on April 27 to examine all of the commission's broadcasting policies and regulations, and to make recommendations as to whether the requirements of broadcasting services could be better served through more efficient, or less, regulation. Dubar and Leblanc applied the principles of smart regulation, which includes examining the unintended consequences of regulation, to the CRTC policies. When they came to simultaneous substitution, the unintended consequence was obvious. "It adversely affects Canadian content," says Dunbar, "but it's a paradox because at the same time it produces revenues that help generate Canadian content." It's a rub strong enough to end any debate on simultaneous substitution before it begins.Of course there's more in the report, much of which will be considered as part of the commission's review of its policies for specialty and pay services, and for broadcasting distribution in January. Dunbar and Leblanc's involvement ended when they turned the report over to the CRTC, but the chairman's participation is just beginning. "Reaching outside is not in and of itself a bad thing, but there is a cost," says Morrison. "Not just a dollar cost, but a cost to the morale and the capacity of the permanent staff of the commission.... In a way von Finckenstein's on the hook for this report, one way or the other."The broad scope of the report also means that, for better or worse, the commission will be hearing from a wide cross-section of industry players. Other recommendations in the report include: drop genre protection; consider removing advertising restrictions for broadcasters; maintain a Canadian basic cable package but eliminate some tiering and linkage rules so BDUs have more flexibility in marketing discretionary services; develop more targeted and effective measures to facilitate broadcasting Canadian content during peak viewing periods; study the pros and cons of reducing broadcaster's requirements to use high percentages of independently produced programming; and consider asking the Minister of Heritage to possibly table legislation to grant the CRTC a power to impose administrative fines as a means of enforcing regulatory observations. Says Dunbar: "We were asked to do a pretty thorough job and we think we've hit all the major policies."

Start the debate: review of regulatory framework delivered to commission

Broadcast | September 14, 2007

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