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CAB backs tier III renewals
5/30/2003

OTTAWA - The Canadian Association of Broadcasters (CAB) appeared before the CRTC today to provide an industry perspective on the 22 specialty television services facing a license renewal hearing this week and next, saying the Commission must provide the specialties with "the means to succeed in a changing environment."

Three of the specialties, Rogers Sportsnet, The Score and CTV Newsnet have asked for sizable increases in the wholesale rates they are allowed to charge. VoicePrint, a service for the visually impaired, has also asked for an increase (see related story on this site "Week-long hearing begins" [5/27/2003], for more background).

"Notwithstanding the various challenges that they face, these specialty services introduced in 1996," (most were launched in the fall of '97), "have provided thousands of new hours of diverse Canadian programming, have attracted Canadian audiences and have contributed to over half a billion dollars to Canadian programming during their first license term," said the CAB release today.

In his presentation to the Commission, CAB president and CEO, Glenn O'Farrell was joined by Pelmorex vice-president Luc Perreault, who is also vice-chair of the CAB's specialty and pay board; and Wayne Charman, CAB's senior vice-president, television, specialty and pay services and new technologies.

"These are fantastic services, owned and operated by programmers who both challenge and reward their audiences with a unprecedented array of Canadian programming, alongside the best the world has to offer," said O'Farrell. "As we look ahead to the environment in which these services will be operating over the next seven years, we see many uncertainties."

While not directly endorsing any of the terms of renewal sought by the channels or mentioning the proposed rate increases specifically, "(f)ailure to consider these uncertainties when setting terms and conditions of renewal could call into question the ability of the 22 specialty services to sustain business plans consistent with the level of contributions they are currently making to the Canadian broadcasting system," said O'Farrell.

"During the first license term, the 22 specialty services have faced many challenges, including a staggered launch over a three-year period with varying penetration levels being achieved. A number of services are still not in a profitable situation."

The CAB pointed to the fragmentation of existing revenue sources, the continuing erosion of shared audience base to domestic and international signal theft, and the consolidation of the distribution sector as items for commissioners to bear in mind when renewing the so-called tier III channels.

"The consequences of signal theft are very clear," said Perreault. "It could mean the death by a thousand cuts to the ability of specialty services to meet their commitments, not to mention the very regulatory framework on which the entire broadcasting system depends."

"The extent to which we can expect continued success for the 22 specialty services being reviewed at this hearing will depend on their ability to remain attractive to Canadian viewers," O'Farrell concluded. "What is needed from the Commission is a regulatory approach that minimizes uncertainties and provides specialty services with the means to continually exceed the expectations of viewers."

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