Canwest and CTV make rare, unified appearance before CRTC

The debate over carriage fees is creating strange bedfellows. In an historic moment between competing conventional broadcasters, Canwest Global Communications Corp. and CTVglobemedia presented a joint intervention on day eight of the CRTC's BDU and specialty hearing. But before the temporary allies could get to the well-known topic du jour - fee for carriage - pride had to be swallowed and lengthy introductions made. "Seated next to me, and I can't believe I'm going to say this...is Ivan Fecan, president and CEO of CTVglobemedia," said Fecan's Canwest counterpart Leonard Asper. And once the introduction of the full 18-member CTVglobemedia panel, which alone surpassed some of attendance figures from some of last week's hearing days, was out of the way, the broadcasters set to their task. "We have set our fiercely competitive differences aside to come before you with a unified vision for the future of Canadian television, a vision that promotes diversity of ownership, a diversity of voices, consumer choice and, most importantly, a pride of place for Canadian programming and services in the system," said Fecan. "This entire proceeding revolves around two key concepts: fair access and fair compensation." CTV's senior VP of regulatory affairs David Goldstein elaborated on the concept of fair compensation, saying the broadcasters' proposed carriage fee of $0.50 per subscriber, per month will allow them to continue to meet their obligations relating to local programming. CRTC chair Konrad von Finckenstein, however, asked the broadcasters' opinion on his contention that a carriage fee would only be introduced if it was tied to an increase in local programming. "Our view is that we've been wronged for a long time and we would like that wrong to be righted," said Asper. "We don't think we should have to give anything extra ." Because all of the BDUs, with the notable exception of Shaw Communications Inc., have already intervened in the hearing, the commissioners had the opportunity to put the BDUs' ideas back to the broadcasters. While last Tuesday Rogers Communications Inc. said it pays fair compensation - $0.50 per subscriber, per month - back to the broadcasters for access to distant signals, Canwest and CTV noted that this fee doesn't come close to making up for the estimated $93 million loss caused by distant signal viewing. The broadcasters noted that in week three of this year's broadcast season 55% of the viewing to the program Desperate Housewives in the Ottawa-Gatineau market was on out-of-market channels, not the local broadcaster. This type of viewing is a disincentive for advertisers to buy time on TV at a fair rate. "Because of distant signals, ad agencies can game the system and get away with it," said Brian McCluskey, senior VP of revenue management at CTV. "They can get a network buy effect by only buying ad time on individual stations." Von Finckenstein returned to the BDU proposals, asking CTV and Canwest their thoughts on the idea that broadcasters and BDUs can share revenue from new advertising streams such as video-on-demand and dynamic ad insertion, which allows broadcasters to send different ads to specific regions. While the broadcasters said they are in favour of targeting viewers to generate ad revenue, they questioned whether these new technologies will actually add more revenue to the system. Canwest's VP of sales for broadcasting, Errol Da-Ré, said there are too many questions to be answered regarding new advertising streams, including how their effectiveness is measured, and therefore monetized. CTV's president of revenue, business planning and sports, Rick Brace, added that regionally and demographically specific advertising means agencies have to produce incremental creative, which would increase the expense to advertisers. " is very interesting and it would be wonderful to go down this road," he said. "But our thought right now is this is a way to hold revenue." Finally, the broadcasters were asked to address the more philosophical issue of whether they should have carriage fees to prop up one arm of their businesses - conventional broadcasting - while another - specialty - is doing fine. Or as Rogers' vice-chair Phil Lind told Canadian Communications Reports two weeks ago, "Rogers Video makes a lot less than the other companies in Rogers, so should we impose a tax for all other Canadians for Rogers Video?" Fecan said broadcasters have to look at their conventional broadcast assets as an entity unto themselves, not as a cost of doing business so they can make a profit in the specialty space. "And if we see there is no chance for a future we'll walk away." "If that's Rogers' stance then they can fund the fee for carriage with their Internet revenues instead of passing it on to customers," added Asper. "We're not turning up to the regulator for help. We're saying our regulations are punitive and we want some of them lifted. If you lift our local obligations then we'll talk about lifting the carriage fee."

Canwest and CTV make rare, unified appearance before CRTC

Broadcast | April 17, 2008

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