Waiting for the February blahs

Given the CRTC's desire to lighten its regulatory burden in the broadcasting space we could be headed for a major industry realignment following February's BDU and discretionary services review. Industry observers, however, are wary about how much the commission can, and will, let market forces reign in broadcasting. "I think once the commission starts to look at what the ramifications of major changes may mean, it will be reluctant to make substantial changes to what's already in place," says broadcasting consultant Michael McEwen. "If they substantially change the rules it is going to be a very different market because there's no question that Canadian services and programs as we know them on DTH and cable just won't be as viable. And that certainly we can show from other markets."McEwen is very familiar with other markets; he was engaged by the CRTC to review the obligations and regulations of international distributors as a reference for the upcoming hearing. But he warns that while it's useful to understand what's going on in other countries, their broadcast systems should not be used as models for ours. Because of the size of our market and our proximity to the United States, our broadcasters and BDUs operate in a distinct environment. "As so much happens with the Canadian broadcast system, at the end of the day we are a very unique marketplace," he says. "And we need unique rules, whatever those rules are." Peter Lyman, senior partner at Nordicity Group Ltd., also acknowledges the substantial trickle-down of allowing market forces to rule the BDU industry. Specifically, he says if the commission allows the BDUs the flexibility they are asking for in terms of what channels they carry and what packages they place them in, but doesn't reduce the broadcasters' Canadian content requirements, it will drastically change the broadcasters' business models. Nevertheless, Lyman believes the commission will continue down its path towards lighter regulation to some degree. "I think it'll be a continued evolution in this way, but because it's a more comprehensive the regulations will shift," he says. "I don't know if they'll go as far as the BDUs want them to go, but there'll be some decisions which, I don't know if they'll be groundbreaking, but they'll be significant."Whatever the resulting changes, some stakeholders will be disappointed; both Lyman and McEwen say it isn't likely for all parties to get behind any particular policy direction. "I don't think it's in the nature of things to happen like that because broadcasters and specialty services want to have as many of the features that are protecting their access to the market...and BDUs want to have a lot more freedom in the way they market, promote and tier the specialty services," says Lyman. "So it's a fairly classic ."Adds McEwen: "The euphemism you could use is to say it's a very competitive environment, but it is an interest-driven environment as well. And even with the rules as they are there's a lot of tension out there between suppliers and distributors."McEwen also hopes the commission remembers that public policy in broadcasting over the past 20 years has been an exercise in achieving certain goals, particularly those of the Broadcasting Act. Substantial changes in regulation, he argues, are not valid if they are absent of meeting goals. Indeed, it's highly unlikely the commission will cede too much control to market forces. "It's not going to be total open city," says Lyman. "There are a lot of protections built in, like single genre...and CRTC will still control the entry of US services, and they'll still have the must-carry, it's just where to carry? So I think there's a lot of ways in which the apparatus will still be there, but it'll be market oriented."

Waiting for the February blahs

News | 10/26/2007 11:52 am EDT

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