Shaw sponsors USA Network’s contentious bid to return to Canada

After nearly two decades' absence, New York-based USA Network is once again being considered for distribution in Canada. It seems that little has changed over the years, however, with the application proving as contentious as ever.In its January 24 application sponsoring the network - one of the largest cable networks in the US with 90 million subscribers - for inclusion on the list of eligible satellite services, Shaw Communications Inc. claims that USA Network doesn't compete with any domestic services. Even if it did, Shaw's correspondence reads, the competitiveness test isn't in the best interests of Canada's broadcast system. Competition, the company says, will strengthen Canadian services and win viewers, not regulatory crutches.Shaw's application also contends that should the commission refuse the application to add USA Network to the lists of eligible satellite services, the beneficiaries will be black- and grey-market DTH providers as well as Internet-based distributors."Canadian customers should be provided with choice because, simply put, they deserve choice," reads the application, which is signed by Shaw's senior VP of policy and regulatory affairs, Ken Stein. "Shaw's customers frequently demand new services that are available outside Canada and fail to appreciate or understand the logic of policy limitations on the choice that can be made available within Canada. In a digital universe, it is no longer possible nor prudent - nor is it in the public interest - to dictate programming choices to Canadians through artificial regulatory constraints."Backing Shaw is fellow cableco Rogers Communications Inc., which in its intervention says USA Network does not compete with any existing or planned Canadian services, and will prove invaluable in driving uptake of digital cable services in Canada."Our cable customers will only commit to the additional cost of digital technology if they are able to receive an array of attractive services that are distinct from those services otherwise available on analog," writes Rogers VP of regulatory Pamela Dinsmore in the cableco's April 25 submission. Like Shaw, Rogers believes that turning down USA Network will play into the hands of unauthorized and unregulated distribution networks.But Canada's most recently licensed pay TV competitor says USA Network shouldn't be allowed under any circumstances because it is very competitive with both existing and yet-to-be-launched premium television services. In its April 25 comments, Allarco Entertainment Inc., which received a licence to operate Canada's third pay TV undertaking last May, notes that in one week it monitored - April 15 to 21 - USA Network devoted no less than 45% of its airtime to movies. That programming policy would put it in direct competition with Allarco's planned pay TV offering and existing ones offered by Astral Media Inc. and Corus Entertainment Inc.Indeed, Allarco notes that more than 15 years ago, in PN 1990-115, the CRTC found USA Network posed enough of a "competitive threat" to incumbent Canadian pay channels that it agreed to remove it from Part II and Part III of the list of eligible satellite services. Then, as now, cable companies - including Rogers - lined up to argue for keeping the channel on the list.Allarco also notes that three prominent programs featured on USA Network's schedule - Law and Order: SVU, Law and Order: Criminal Intent, and House - are already offered by Canadian services. In fact, more than 19% of the content aired by Mystery, a Category 1 service co-owned by CanWest MediaWorks Inc. and Quebecor Media Inc.'s Groupe TVA Inc., appears on USA Networks' programming grid, an amount far in excess of the 10% duplication figure the CRTC uses to determine competition between licensees.For that reason, CanWest filed its own letter of objection to Shaw's bid to bring USA Network back to Canada. Director of regulatory affairs Jon Medline notes that although Mystery is the best example of a Canadian service that would suffer should USA Network be eligible for distribution here, an array of other domestic programmers - ranging from analog sports specialty channel The Score to over-the-air broadcasters such as Rogers' OMNI.2 and Global TV - would lose exclusivity to some of their content too.Meanwhile, the Coalition of Canadian Audio-visual Unions - a group made up of 10 unions, associations, guilds and federations with members in Canadian broadcasting system - notes in its submission that while Shaw claims Canadian viewers support more choice in programming, many seemingly average citizens intervened to oppose the addition of more big-media-driven content from south of the border to BDUs' lineups. USA Network is a division of NBC Universal.In an attack on Rogers' contention that the service would be a crucial tool in promoting and growing digital cable subscriptions, the CCAU also writes Shaw simultaneously pressed for changes to the requirements for adding general-interest services on the satellite distribution lists, including removing the rules that restrict services to analog or digital distribution only, when it sponsored USA Network's return to Canadian BDUs.Such changes would, of course, allow USA Network to be carried on discretionary tiers on both analog and digital cable, negating the incentive among subscribers to upgrade to digital in order to get it. "Shaw has since withdrawn those latter comments but the mindset remains," claims the CIAU.Both the CIAU and CanWest also take Shaw to task for attempting to apply rules meant for third-language services to the English-only network. In its application, Shaw writes that approving USA Network for carriage "would be consistent with the commission's approach in BPN 2004-96, in which the commission introduced a more open-entry approach to the addition of new third-language services.""Shaw's suggestion that USA Network - all English-language, all the time - should receive identical regulatory treatment to, say, Polsat 2 International (Polish) or Channel One Russia Worldwide TV (Russian) or Dandana TV (Arabic) defies logic and credibility," CanWest's Medline writes.Stornoway Communications LP - operator of the Category 1 specialty service iChannel as well as Category 2 offerings bpm:tv and The Pet Network - also urged the commission to reject Shaw's proposal, noting that neither of its Category 2 digital services are carried by Shaw's cable and DTH BDUs. "Lack of capacity is a reason given for Canadian television services not being carried by Shaw Cable or Star Choice," Stornoway president and CEO Martha Fusca writes.

Shaw sponsors USA Network’s contentious bid to return to Canada

Broadcast | April 27, 2007

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