CTV plan would force BDUs to drop popular US programs if negotiations with TV stations fail

Nearly 20 years after the United States began allowing fee for carriage of local television signals, CTVglobemedia Inc. told regulators today that it’s finally time for the CRTC to follow suit with a made-in-Canada retransmission consent regime that would force broadcast distribution undertakings (BDUs) to drop popular U.S. programs that are simulcast on Canadian channels they reach a deal to compensate local stations for their signals. CTVglobemedia was the first to appear before the CRTC as part of its much anticipated hearing (2009-411) considering a group-based approach to television licensing. The most contentious proposal comes from broadcasters who are fighting for the right to negotiate with cable and satellite carriers a fee for their local channels, on a station-by-station basis. It’s a proposal the CRTC has twice rejected in the past. CTV CEO Ivan Fecan said his company’s fee-for-carriage plan is “reasonable, practical and provides a future for local Canadian television.” "It would be an old-fashioned negotiation," Fecan told commissioners. "We need to see some cash value for signals in order to maintain the commitments you require of us." CTV is proposing a made-in-Canada version of the U.S.’s retransmission consent model. The Canadian model would give local TV stations that offer a tangible amount of local programming the right to choose mandatory carriage which would include no monthly carriage fee, or negotiate a fee with BDUs and risk losing their priority carriage status. Negotiations would occur once every three years. However, under the CTV proposal, broadcasters would have a powerful fallback position. If a station pulls its signal or are dropped by a BDU, the BDU must respect the program rights the station has acquired and delete any programming on any other station, such as the U.S. 4+1. Removing or blocking popular shows like CSI would undoubtedly raise the ire of many television viewers. Paul Sparkes, executive VP, corporate affairs at CTVglobemedia stressed that enforcing program rights is crucial to the success of the regime, otherwise there would be little incentive for BDUs to negotiate. “Without this protection—negotiation for value will not work,” he told commissioners. CTV has stressed previously however that, according to an analysis of the U.S. compensation for carriage regime prepared by a former Federal Communications Commission chair, such program takedowns “have been extremely uncommon, relatively short-lived and minimally disruptive to viewers.” CRTC commissioners were keen to know how the negotiation regime would work and where BDUs would get the cash from to compensate broadcasters. CTV executives said they envisage individual stations negotiating with BDUs over the value of their signals. Regarding a cash value for signal carriage, CRTC chair Konrad von Finckenstein asked CTV executives where they think BDUs will get the money from. Sparkes replied that BDUs spend millions on U.S signals and some of that money could be used to compensate Canadian broadcasters. “Maybe they can take it out of that,” he suggested. The CTV proposal also contains a provision that would see the CRTC taking a hands-off approach, limiting its role to offering support for “good faith” negotiations. The role also bars the CRTC from setting rates for any bargaining process between broadcasters and BDUs. However, if a television station and BDU are unable to reach a consensus, CTV asks that the CRTC intervene in the form of an “expedited, final offer “baseball style” arbitration”. Until a regulatory regime for carriage fees is in place, CTV recommends that the CRTC continue the Local Programming Improvement Fund and increase its funding base. “Let’s keep it going until something is in place,” said Fecan. The group-based hearing was called in June to find a solution to the financial woes facing the broadcast industry. In opening remarks, von Finckenstein said the hearing is about the future and not the past. “It is not about enshrining or protecting old business models. And it is not about taxing consumers,” he said. In his questions, the CRTC chair cautioned against having new costs pushed onto consumers, saying he wanted a “win-win” situation for all parties. He asked why broadcasters and BDUs are not able to reach a deal on their own and suggested that proposals from both groups are “antagonistic” and asked them to think about bridging their differences. "You are in a symbiotic relationship," von Finckenstein said. "There has got to be a symbiotic solution." But Fecan suggested that narrowing the differences is a difficult task. “It’s hard to have a conversation when one party is not there,” he said. The hearing ends on Nov. 27. A total of 77 stakeholders are expected to testify. The CBC and Bell Aliant and Bell Canada are up next on Tuesday.

CTV plan would force BDUs to drop popular US programs if negotiations with TV stations fail

Broadcast | November 16, 2009

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