Gay-lesbian channel scores victory in battle for fair carriage on Shaw systems

Shaw Cablesystems Ltd. received a slap on wrist Tuesday for marketing practices that specialty channel OUTtv says have cost it hundreds of thousands of dollars in lost subscriber revenue. While an executive with the gay and lesbian channel welcomes the ruling, he says safeguards are needed to protect independents who often face tough carriage negotiations with cable and satellite TV providers.In regulatory speak, the CRTC said Shaw subjected 6166954 Canada Inc., the licensee for OUTtv, to an "undue advantage" under the Broadcasting Distribution Regulations with respect to marketing of its Category 1 digital channel. At issue is Shaw's marketing practice of not providing OUTtv in its "All In" package unless subscribers specifically ask for it. Marketing material promoting the package includes an asterisk stating that "All In includes OUTtv by request only.""OUTtv is the only service that is offered as an ‘add-on' to a package," the CRTC writes in Decision 2008-299. "In addition, the record demonstrates that Shaw's CSRs (customer service representatives) do not appear to be promoting OUTtv, or even making it available as an option, when subscribers inquire about Shaw's All In pack."The commission also took issue with Shaw's decision last year to move OUTtv from channel 200 to 370, next to Hustler (371), Playboy TV (372) and Red Light District (373), describing it "as the only non-adult programming service adjacent to these adult programming channels"."We woke up one day and we were at channel 370, right smack in the middle of the porn channels," Brad Danks, COO for OUTtv told Canadian Communications Reports. "Our service has no adult programming. It's a lifestyle service, yet they still put us in the adult section. It defies common sense."It isn't enough, adds Danks, to get carried on a cableco. He says it's essential that the packaging and marketing rules are the same for all services - whether they're independently owned or owned by a broadcast distributor."I had conversations with two other programming services this morning and they both said that the terrific thing about this (decision) is that the CRTC gets the fact that packaging and marketing are fundamental to the carriage issues. The more we don't define these marketing and package rules, the more we're going to drive those services straight to the BDUs for acquisition. If we want to have independent programming services we absolutely have equitable packaging rules."Shaw has 30 days to respondOUTtv argued - and the CRTC agreed - that Shaw's marketing practices have hurt its bottom line. The service says its number of subscribers would increase by 80,000 - generating about $34,000 more each month - if it received the same marketing treatment as other Category 1 services.The penetration rate of OUTtv, as recorded in December 2007, was 0.49% of subscribers on Shaw systems. This compares to 18.11% for Telus systems, 15.69% for Bell TV, 9.27% for Cogeco Cable, 7% for Rogers Cablesystems and 6.61% for Star Choice Communications. The average penetration rate for OUTtv on Cogeco, Bell and Rogers was 10.7%.However, the CRTC didn't grant OUTtv's request for a mandatory order to change Shaw's carriage practices. Rather, it has given Shaw 30 days to provide details on how it will set things right.Shaw's VP regulatory, Ken Stein, is optimistic they can come to an agreement with OUTtv before the end of the year. He also contends the CRTC decision is in keeping with what Shaw had already proposed."Essentially what the commission agreed to is what we proposed," says Stein. "We proposed to make (OUTtv) available as part of a package, or not, depending on the subscriber and let the subscriber make the decision."When asked if subscribers will have to continue to ask specifically for OUTtv, Stein says they would not, rather "they would have to choose the package with it."Stein says OUTtv was treated differently than other specialty services because of community feedback they received. "The focus groups that we had, there was some sensitivity to that so it was decided to make it clear to people what the channel was about. We believe that people should know exactly what they're getting and that they should have a choice, and that's something that distinguishes us as a distributor - it always has and always will."Nine years of battlesThe dispute between Shaw and OUTtv has been going on for years. When it was relaunched in April 2005 as OUTtv (previously PrideVision), Shaw, Star Choice and Bell ExpressVu refused to add the must-carry channel to their lineups. PrideVision, unlike OUTtv, did carry some adult programming.Shaw also resisted offering the channel in 2001 when it was PrideVision. Later that same year, the CRTC ruled that Shaw as well as Star Choice were in breach of Section 9 of the Broadcast Distribution Regulations for the way the channel was being carried during free previews. (CCR, Sept. 27, 2001 and CCR, Oct. 3, 2001)"This has been a long and onerous regulatory battle," says Danks. "And even if you win, there's no reparations for the years of subscribers and revenues that you're out and the costs involved in winning the application."Danks says he's cautiously optimistic that OUTtv will be available soon, but says it will depend on what Shaw proposes in the next 30 days. "The question is whether it's going to be something that we agree is acceptable. If leopards don't change their spots, it won't be, but I'd rather just settle with them and get on with business."

Gay-lesbian channel scores victory in battle for fair carriage on Shaw systems

Broadcast | November 6, 2008

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