CRTC’s own regulations undermine survival of local TV stations: Fecan

American stations are baffled by a CRTC rule that allows cable and satellite companies to re-transmit local TV stations – a situation that is creating unfair competition for local stations and undermining their financial survival, CTVglobemedia president and CEO Ivan Fecan told the House of Commons Heritage Committee yesterday. Fecan said the CRTC has given BDUs in Canada free reign to import signals from other markets, which results in a shrinking advertising pool that undermines local television stations and their capacity to produce local programming, a phenomenon that is not allowed in the U.S. “Rochester is just 118 km from Buffalo. The citizens of Rochester are not allowed to see Buffalo television stations on Rochester cable because this would infringe on the program rights owned by the Rochester stations,” he said. “In contrast, Toronto is 160 Km from Buffalo and we happily import all of the Buffalo over–the-air signals to our cable systems. Our colleagues in America shake their heads because they can’t understand why, as a country; we would undermine our local stations by doing this.” The crisis, he said, has been allowed to go on for too long and has now reached a “tipping point.” In order to correct the situation, Fecan said the CRTC must come up with a new regulation that compensates local stations through new sources of revenue—like fee-for-carriage—or reduce restrictive obligations such as caps on local news and the amount of Canadian drama that local stations are allowed to buy from independent producers. He dismissed the Local Programming Improvement Fund (LPIF), saying it is “a small band aid for a very big problem. I don’t think it is a solution.” The Heritage Committee is currently conducting a study on the financial crisis affecting local television in Canada. CTVglobemedia, CHCH from Hamilton, Canwest Television and distributors Shaw Communications Inc. and Cogeco, were among some of the stakeholders who appeared before the committee yesterday. Fecan’s comments also echo sentiments expressed by some members of the Heritage Committee who have increasingly been hinting that the CRTC—and the industry—share responsibility for conventional television’s financial woes. In questions to Fecan and Peter Viner, CEO Canwest Television, MPs Pablo Rodriquez and Ruby Dhalla suggested that the CRTC and the industry saw the crisis coming a long time ago but didn’t do enough to thwart it. In response to a question on whether CTVglobemedia had discussed the need for a new revenue source to save local programming through fee-for-carriage with the CRTC, Fecan replied that his company had done so but added: “Clearly they didn’t listen to us.” The statement sharply contradicts remarks by CRTC chair Konrad von Finckenstein, who told the Heritage Committee in March that he received a “resounding no” from CTVglobemedia and Canwest Global Communications when he asked if fee-for-carriage funds would be earmarked for local programming. Concerned about the disparities on fee-for-carriage, the Heritage Committee has summoned von Finckenstein to re-appear before the committee on May 25, according to the CBC. Dismissing arguments presented by BDUs that fee-for-carriage will impact negatively on the industry and spark a consumer backlash, Fecan said there’s no need for Canadians to pay more for a service they are already paying for. Between 2003 and 2007, BDUs have upped basic cable rates by 36%, “almost four times the rate of inflation,” he said. Charlotte Bell, senior VP, regulatory for Canwest, reiterated Fecan’s comments by stressing that local television is not competing on a level playing field. She also said she doesn’t see why BDUs oppose fee-for-carriage when they paid $2 billion over the last nine years for U.S. cable channels like CNN, A&E, and Spike TV. Fecan called for an “industry-to-industry” solution, one that allows negotiation for a fair regime. He also objected to calls for conventional television to be subsidized through profits from specialty television, which is currently quite profitable. Last year, CTVglobemedia’s specialty television generated an estimated $200 million and Global’s earned $164 million. “First of all, our most successful specialty channels, TSN, RDS, and Discovery, have shareholders that are not shareholders of our local stations. How do we tell one shareholder that his or her money is being used to pay for something in which they have no ownership interest?,” he asked, adding that it will also be unfair for specialty competitors like Astral and Corus who don’t own conventional TV stations. Responding to accusations that CTVglobemedia and its counterparts spend too much money on bidding wars for U.S. programming, Fecan said cash generated from American shows compensates for losses from Canadian programming. “This is not a criticism of Canadian programming; it’s about the reality of our market size and the cost of production,” he said. To save local programming, Canwest’s Viner suggested that fee-for-carriage be imposed, Part II fees be eliminated, and a fair distant signal regime be created, in addition to relaxing advertising rules to allow pharmaceuticals to sell ads. However, fee-for-carriage is likely to be the most contentious issue that will dominate deliberations of the Heritage Committee as it seeks a solution to the financial problems of conventional television. In yesterday’s hearing, MPs kept up the pressure on fee-for-carriage, asking a myriad questions regarding its impact on local programming. The committee will meet again on April 27 to hear testimony from CBC/Radio Canada.

CRTC’s own regulations undermine survival of local TV stations: Fecan

Broadcast | April 23, 2009

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