CRTC proposes ‘must offer’ news channels, denies Sun News mandatory carriage request

The CRTC denied Sun News Network's application for mandatory carriage on basic TV packages while opening a consultation on a proposal to give Canadian all-news channels “must offer” licences and requiring distributors to group them together on the dial in “news neighbourhoods.” The regulator said in a notice of consultation Thursday—released in tandem with its denial of 13 channel requests for mandatory carriage on basic TV packages—that it will consult on a new regulatory approach to Canadian all-news channels like Sun News Network, CBC News Network, and CTV News Channel. Sun News, owned by Quebecor Media Inc., had applied for mandatory carriage on basic TV, arguing at a CRTC hearing in April that that it needed to be on basic packages to get a leg up as a “new entrant” in Canada’s broadcasting market. It said mandatory carriage would help it deal with failed carriage negotiations or competing broadcast distributors that place the channel in the dial’s “stratosphere.” Executives with the channel said at the hearing that Quebecor had spent more than $40 million on the conservative-oriented news channel since its launch in the spring of 2011 and that it lost a net $17 million in 2012. The CRTC said Thursday news channels are important to TV viewers and that it recognizes the challenges faced by newly launched services. “Television news channels provide an important public service by ensuring that Canadians are exposed to different opinions and perspectives on matters that concern all citizens. We are concerned that, under the existing rules, Canadian news services are not being given a pride of place in our broadcasting system,” CRTC Chairman Jean-Pierre Blais said in a statement. The commission proposed new regulations for all-news specialty channels operating with Category C licences. It proposed that all Canadian national news channels receive “must offer” licence designations, so that broadcast distributors must offer them to customers (not necessarily on basic service); that distributors must place Canadian news services in “close proximity” in the channel lineup (i.e., create “news neighbourhoods” on the dial); that all-news channels must be available to customers in a TV channel package as well as on a standalone basis; and that news services should be offered in the “best available package consistent with their genre.” To avoid prolonged carriage disputes, the CRTC also proposed a regulation similar to a licence condition imposed on BCE Inc. as part of its purchase of Astral Media Inc. for $3.38 billion. That rule would require broadcast distributors to file with the regulator all carriage agreements reached with Category C channels, so the regulator can see the rates. Where carriage agreements are not reached within 120 days before the expiry of the existing carriage agreement, the distributor should enter the commission's dispute resolution process to resolve it, the CRTC said. The regulator also laid out a number of factors for broadcast distributors to take into consideration when negotiating wholesale rates for the carriage of an all news channel, including historical rates, the number of subscribers to the channel, and the retail price for subscribing to the channel and to the channel package, among other factors. “he Commission is sensitive to the problems of access to the broadcasting system of new mainstream Category C national news specialty services, such as Sun News TV,” the CRTC notice said. “hese problems are not unique to one service, but are rather indicative of a larger, more systemic issue with respect to the distribution of new and existing Canadian national news services on fair and commercially reasonable terms. These barriers constitute a significant obstacle to the exchange of ideas on matters of public concern and the overall democratic dialogue in Canada, principles that the Canadian broadcasting system has a duty to facilitate,” the notice said. In a release Thursday, the commission said while some Canadian channels struggle, foreign news channels are, “for the most part, distributed in popular packages and have significant access to Canadian viewers.” Foreign news channels receive wholesale fees from cable and satellite distributors that average 73 cents per subscriber per month while Canadian news services receive average monthly wholesale fees of 36 cents per subscriber per month, the release said. That's “half the fees paid to non-Canadian services,” the CRTC release said. Kory Teneycke, vice-president of Sun News Network, told commissioners during its hearing on mandatory carriage that the Sun News channel would close if it does not receive meaningful help from the CRTC to address its carriage issues and, in turn, help reverse its financial losses. Teneycke said a “must offer” licence from the CRTC would not be enough for the channel to continue operating, though he said a “news neighbourhood” regulation for the grouping of news channels on the TV dial would be helpful. Quebecor, in a release Thursday, said it is disappointed the CRTC did not rule in its favour. “However, we are encouraged they have found merit in the main arguments laid out by Sun News on price, channel placement and distribution, and have provided a mechanism to address these issues,” the release said. “The CRTC has made it clear that it is no longer acceptable for distributors to pay twice as much to foreign news channels as they do to Canadian news channels. Closing that gap will benefit all Canadian news channels." Quebecor added that the company is “glad that our application has acted as a catalyst for this broader review of the framework for national news services announced today. We intend to participate fully in those proceedings, and will continue to operate pending an outcome." In Sun News' request, which the CRTC denied Thurday, it had applied for mandatory carriage on basic TV service with a wholesale fee of 18 cents per month per subscriber. It said its current average wholesale fee is 9.7 cents while CBC News Network receives 63 cents and the average for Canadian news channels is 33 cents. The CRTC release said 45 per cent of the time that Canadians spent watching news programming in 2011-2012 was on all-news specialty channels. The deadline to comment for the CRTC consultation is Sept. 9, 2013, with reply comments due Sept. 24. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

CRTC proposes ‘must offer’ news channels, denies Sun News mandatory carriage request

Broadcast | August 8, 2013

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