Starlight would cost TV viewers $775M over seven years, VMedia says

A channel dedicated to Canadian film is a “terrific” idea though Canadians should not have to take on the risk or the $775-million cost of supporting it, said George Burger, a partner at VMedia, an IPTV provider in Ontario. In an interview with Macleans published on its website Thursday, Burger said Starlight, an all-Canadian movie channel being proposed to the CRTC as part of its mandatory carriage consultation, would cost Canadians about $775 million over a seven-year licence period if it was granted the special licence. In January, the CRTC said it would consider 22 applications for mandatory distribution of channels under section 9(1)(h) of the Broadcasting Act, which allows the commission to require broadcast distributors to carry specialty channels “on such terms and conditions as the Commission deems appropriate.” “I think it’s a terrific idea,” Burger said to Macleans. “What I object to is the Canadian public taking on all the risk, while the principals get all the benefit.” Starlight argues that it needs mandatory distribution because the pay and specialty television sector does not provide enough support for the Canadian feature film industry. In its comments filed with the CRTC last month, VMedia said private initiatives such as Starlight, Stornoway Communications Limited Partnership's proposed Fusion channel or Zoomer Media Ltd.'s Vision TV, which have also applied for mandatory distribution licences, would use "public monies" to build businesses that Canadians aren’t interested in. “In addition, by being subsidized in this way, the principals behind those businesses will be able to build those enterprises without any financial risk whatsoever, beyond submitting their respective Applications,” VMedia wrote. Burger told Macleans that there is a “false” argument in the industry that Canadian films aren’t being watched because they are not available. He said there were more than 10,000 hours of Canadian film aired on television per year. “It’s not exactly the Sahara Desert of Canadian film,” Burger told Macleans. “But every time we talk about how acclaimed our films are, we always get back to the same four or five titles. There’s something wrong with this picture.” Burger told the magazine that Starlight, which proposes to put 70 per cent of its revenues back into original productions, would own the resulting movies. “It’s easy to say that when it’s not your money that you’re committing,” Burger said to Macleans. “Why not 90 per cent? If you started up a charity, you don’t pat yourself on the back for spending most of the money people donate to you.” Starlight, owned by a group of Canadian film industry members, has named former Canadian Media Production Association (CMPA) president Norm Bolen as its CEO and plans to air only Canadian films. The channel has proposed mandatory distribution on basic cable with a 45-cent per subscriber per month wholesale rate, which would be collected from broadcast distributors. Robert Lantos, a part owner of Starlight and an award-winning Canadian film producer who produced Barney's Version and Men With Brooms, said in a phone interview with The Wire Report Friday that VMedia's $775 million number is false and was created to generate “some type of panic.” The numbers are “a smorgasbord of falsehoods, fabrications and spinning, and none of them are either true or accurate,” Lantos said, pointing out that Burger worked under him as executive vice-president at former company Alliance Communications Corp. in the later part of the 1990s. Lantos said if Starlight’s 45 cents per month wholesale rate is multiplied by 12, it comes to $5.40 per year. On a seven-year licence term, he said, the Starlight channel would total $37.80 per subscriber. “ works out to about half the monthly cable bill, at the most, that Canadians pay today for seven years,” Lantos said. “That’s the real math.” Burger said in a phone interview Friday that there is a discrepancy between the numbers because Starlight fails to acknowledge broadcast distributors' 50 to 100 per cent retail markup on the wholesale price, plus a 12-cent “transport” fee covering the cost of getting the channel from Starlight to the distributor. VMedia numbers also do not include HST, which would be another cost, Burger said. “He didn’t add on the transport. He didn’t add on the retail markup that a BDU like Rogers or or VMedia would be charging. So that $37.80, you double that,” Burger said. “Consumers are not paying 45 cents.” In an interview Feb. 6 on CBC’s Q with Jian Ghomeshi, Lantos said Starlight has no control over how much the distributors would charge subscribers for the channel, though he said it would not be more than $10 per year. Burger told The Wire Report that VMedia is opposed to all mandatory carriage applications that would require distributors and consumers to pay. “VMedia’s strategy as an Internet-based BDU is to try to provide people with as much choice and as much flexibility in what they watch, whether it’s on television or on the Internet, as we can possibly give them,” he said. “The idea of forcing new channels on customers is very difficult for us to accept. There’s no justification of it whatsoever that we can see.” Lantos said Starlight has more than 700 Canadian films in French or English that would be available to the Canadian public, films which he said are rarely featured on television. He said what differentiates Starlight from other specialty services seeking mandatory carriage is that its Canadian films would appeal to a broader Canadian audience. “It offers Canadians access to an entire legacy of Canadian stories that are virtually never available to them in both official languages,” Lantos said. “That is one reason why Starlight is unique.” Starlight would be “100 per cent Canadian, 100 per cent of the time,” Lantos said, adding that the channel’s shareholders would not have access to Starlight's funds for the purpose of making films. “These are specifically for arm’s length, third-party producers,” he said. The channel has received attention from the mainstream news media with columnists in the National Post supporting its CRTC request. Post columnist George Jonas, in an article published March 13, drew attention to the way national broadcasters focus on their own countries' athletes in their Olympic Games coverage, and compared that to the way domestic Canadian content may be preferred over foreign content. The chance to see Canadian programming on TV should be given to viewers, Jonas wrote, with some people wanting "to see a compatriot who didn’t finish more than an alien who won. I wouldn’t deny them the opportunity." He noted in the column that Lantos is a friend of his. Former newspaper publisher Conrad Black also supported Starlight's application in a National Post column published Feb. 22. Black wrote that the channel is “a home run for the declared objectives of the CRTC” and that the distributors' arguments that consumers “should not be saddled with an additional 50 cents or even a dollar a month without having asked for it, strains credulity.” The CRTC’s public hearing on mandatory carriage is scheduled to start April 23 and is expected to run for two weeks. Channels that have applied for mandatory carriage will file their written replies for the consultation next week. —With reporting by Danika Grenier at dgrenier@thewirereport.ca, and files from and editing by Simon Doyle at sdoyle@thewirereport.ca

Starlight would cost TV viewers $775M over seven years, VMedia says

Broadcast | March 14, 2013

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