Broadcaster

Canadian cable wants to add up to 47 U.S. channels - it's a "cash-grab" say broadcasters

6/20/2003

OTTAWA - The Canadian Cable Television Association has applied to the CRTC to add up to 30 new American channels to the eligible satellite list.

Key to the application is that the channels would be made available for digital distribution only, could only be distributed linked to Canadian digital specialties and would not be made available to analog customers.

The channels are:
* Home Box Office (HBO) and HBO multiplexes (which total seven)
* Showtime and Showtime multiplexes (a total of five)
* Starz and Starz multiplexes (four)
* Sundance – the independent movie channel owned by Showtime
* Cinemax – the HBO-owned movies-only channel
* The Movie Channel – which is owned by Showtime
* Lifetime Movies
* Flix –owned by Showtime which shows classic movies from 1970s, '80s and '90s.
* Fox Regional Sports Net Channels (there are 18 of these)
* The NFL Channel
* ESPN
* ESPN2
* Fox News
* FamilyNet
* Noggin – a Viacom channel that sprang from Nickelodeon
* Nickelodeon Kids
* WAM! – owned by Starz! which bills itself as "America's Kidz Network"

During a press conference held today, CCTA president and CEO Janet Yale - backed by Rogers Cable COO Dean MacDonald, Shaw Communications president Peter Bissonnette and Cogeco Inc. president and CEO Louis Audet - told reporters that this is a matter of consumer choice.

Referring to a recent survey of 1,500 Canadians undertaken by the Strategic Counsel for the CCTA earlier this year, Yale explained, "58% think there's little on television they want to watch even with all the new digital channels. Canadians want more choices and they don't care where those choice originate."

The CCTA and its members are also of the belief that moving to add these channels above would have an impact on satellite signal theft in Canada.

"Our livelihood is the consumer and right now a huge portion of consumers – the number, I think is a low figure of 750,000 – are part of the black market and are in fact using these services for free," said Audet. "When you explore the motivation behind that decision, you discover that they resent very much not being allowed to receive some of the more popular (American) programming services.

"And, if you could just distribute these services through the legal system, they would no longer have this grudge about not having choice. They'd have it on the legitimate system. We have faith in the consumer and think that if this choice is offered to them will come back to the legitimate system," added Audet.

These are arguments Canadian broadcasters just will not buy. "We are extremely disappointed with this application, and with the manner in which the CCTA is attempting to distract Canadians from the real impact of adding these American channels," said Glenn O'Farrell, president and CEO of the Canadian Association of Broadcasters. "We want to make the following perfectly clear: this will not be good for Canadian viewers, it will not help solve the problem of signal theft, because it is, at heart, simply a cynical cash-grab by cable companies at the expense of Canadian consumers and the Canadian broadcasting system."

"What we're proposing isn't radical – in fact it's entirely consistent with the Commission's historical approach to ensuring the success of the Canadian broadcasting system," countered the CCTA's Yale. "We're recommending that the Commission essentially adopt the same regulatory model that has been used so successfully in the past - namely using the most popular U.S. services to increase penetration of Canadian services."

However, while that may be true in terms of U.S. channels such as CNN, A&E; and Golf Channel boosting analog cable tiers - much to the benefit of Canadian broadcasters - another historical approach by the Commission is absolute genre-protection for Canadian specialty services (save for the new category two digitals, that is), a policy that has been rooted in the Canadian system and commissioners' mindsets for a long time.

That genre protection insulates such Canadian services as TSN, The Movie Network, and YTV so that no channels (be they foreign or Canadian) serving the same or similar niches can receive a license or be added to the eligible list. It's an offspring of the Broadcast Act, whose heart beats for Canadian content.

The channels on this new list would obviously violate that historical genre-protection. In fact, one of the channels proposed by the CCTA, the independently-owned FamilyNet – a family-oriented channel with a Christian bent – was turned down by the Commission in July of 2001 due to the fact commissioners determined it would compete with existing Canadian specialties.

However, with the 21-month-old Canadian digital channels struggling to find an audience for the most part, the cable industry believes that tying ESPN into a digital tier with Canadian sports digitals, for example, such as WTSN, Fox Sports World and RaptorsTV would boost subscriber levels and dollars - as well as audience rating figures.

"What we're saying is allow us to package these highly-desired U.S. services with the Canadian services and it'll do two things. It'll increase the number of consumers who purchase a digital box or rent a digital box and bring it up more into the 40% and 50% range and within that group of people who have a digital box you will also see an increase in the penetration of the Canadian services… thanks to that packaging alternative," added Audet.

Right now, about 20% of the customers of major Canadian cable companies are digital customers, said the executives. According to Audet, about half of those are accessing at least one of the new digi-nets. It's in the best interest of all involved to boost those numbers.

"The benefit to the Canadian system is that these services will provide a lift to digital and will be packaged only with the Canadian digital services that are struggling to find an audience and will really give these services an opportunity to grow," said Yale. "So, while there may be some impact that others may be worried about, I think there is some real good news here for the system if these services can be packaged with Canadian digital services and give them an opportunity to grow their audiences."

Referring back to the younger respondents in that CCTA survey, "they can get any book they want from a book store, they can get any CD they want at a store, they can buy any type of car from any country in the world and they find (restrictions on U.S. cable channels) something that intellectually is a major leap for them… and therefore because the technology is so easily accessible to them, they just go around it and get it in any regard," said Rogers's MacDonald.

All poppycock, say the broadcasters.

"The notion that this proposal is about consumer choice is wrong," said Phyllis Yaffe, president and CEO of Alliance Atlantis Broadcasting and acting chair of the CAB. "The vast majority of hit U.S. programming that is driving this 'choice' argument is already available on Canadian channels. For example, Canadians can watch HBO's Sex and the City on Bravo! The same is true for HBO's Curb Your Enthusiasm and Oz on Showcase, Showtime's The Chris Isaak Show on MuchMoreMusic and Nickelodeon and Spongebob Squarepants on YTV.

"Thirty-five percent of Canadians will have access to these shows if they are restricted to American pay TV services on digital tiers, and only if they are willing to pay more for what they already get," Yaffe added.

This has the makings of a long, bitter battle.

Surf back to this site for more on this developing story over the next few days, weeks, months……

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