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TV networks win battle with cable companies, but war ahead

March 22, 2010
By Jennifer Ditchburn, The Canadian Press

GATINEAU, Que. - Those CTV and Global shows that come into your home courtesy of a cable or satellite company could soon hike your monthly bill - or even go dark - following a landmark ruling on how money flows in the broadcasting system.

The TV networks won their fight Monday before the country's broadcast regulator to negotiate a fee for their signal with cable and satellite providers, who have never paid before for those transmissions.

But the Canadian Radio-television and Telecommunications Commission (CRTC) also wants the Federal Court of Appeal to review the new "value for signal" system before it kicks in.

And the Conservative government will have to decide whether it can live with the decision, or balk against the threat of increased costs for consumers by prescribing a different scenario.

The broadcasters had warned that the future of local TV programming depended on their getting a solid new source of revenue, with advertising dollars drying up and audience numbers dwindling. The cable companies posted an 11.9 per cent rise in revenues in 2009, a recessionary year.

If the court gives the green light, the industry and consumers will be in for a wild ride. Suddenly, cable and satellite companies would be forced to negotiate with conventional broadcasters for payment to carry their signals.

CRTC chairman Konrad von Finckenstein underlines that payment can be in exchange for other considerations, and doesn't necessarily always involve cash changing hands. He is skeptical - as he was during last fall's consultation period - that consumers will see the cable bill hikes executives have been warning of.

"It's not the only game in town, after all consumers can watch all of this on the Internet for free, and they might do that if you raise your cable company's freight too high... " he told The Canadian Press.

"It's in the parties' own self interest to come up with a solution that's in the best interest of the consumer."

CTV's corporate vice-president Paul Sparkes celebrated the commission's decision.

"They have recognized that there is value associated with the content that we produce, so we're very happy with that," said Sparkes.

"I'd like to thank the thousands of Canadians who wrote in to the CRTC in support of our position and in support of local television."

However, the cable and satellite firms repeated their warnings of higher costs for consumers.

"Consumers are going to see increased bills on monthly basis for access to local programming, and that's the part that I find rather sad," said Mirko Bibic, Bell's senior vice-president of regulatory and government affairs.

Rogers vice-chairman Phil Lind added: "We think the CRTC has essentially placed a tax on cable and satellite customers, so they're going to pay more..."

TV stations would be able to withhold their signals completely from a cable or satellite company if they don't like the way negotiations are going. Because they pay for the rights of a given television show in a given season, the cable firm would be blocked completely from transmitting it in any capacity.

In the United States, viewers saw this month what can happen when there's such a dispute: there was a short, rare blackout at the beginning of the Oscars broadcast as a cable and broadcast giant duked it out.

On the other hand, broadcasters will give up all their protections in the current system if they opt for getting paid for their signals. A cable company can drop them from their packages and give them whatever position they want on the dial.

The commission can be brought in to mediate a negotiation at the request of the parties.

Some broadcasters might prefer not to negotiate and simply live under the current system, which the CRTC says is their other option.

The CBC has been excluded from the new regime, and will not get that revenue stream - a stunning disappointment to the public broadcaster.

Private broadcasters will also get more flexibility in how much they spend on Canadian programming and how they move it around their various stations.

The CRTC now says it will look at how much a broadcasting group, including specialty and pay channels, spends on Canadian programming as a whole. It will require 30 per cent of its spending be on Canadian shows, but will allow those networks to divvy the share up among all its channels.

Groups that represented actors, producers and the viewing public criticized the ruling as not going far enough to ensure the stability of the domestic television system and Canadian programming within it.

"It was a business-as-usual decision, punting the opinion to the Federal Court of Appeal, which is months if not years away...," said Ian Morrison of the Friends of Canadian Broadcasting.

"It's pretty difficult to negotiate on the basis of withdrawing your product from the market, it's certainly not in the interest of the viewers, and the CRTC has a responsibility to stick up for the viewers."

A second report that overlaps Monday's decision, in response to a direct order by the Conservative government to examine the Canadian broadcasting environment, is to be released Tuesday.

Heritage Minister James Moore sent out a vague statement after the ruling. He has been unequivocal in his opposition to increased costs for consumers, yet MPs within the Tory caucus are also alarmed by the possibility of more local TV closures in their ridings.

"Our government's primary focus has always been the interests of Canadian consumers," said Moore. "We appreciate today's decision of the CRTC on the future of an important industry for all Canadians."

The Conservative cabinet overturned the CRTC's decision on wireless provider Globalive in December, allowing the company access to the Canadian market after the commission had turned them down.

But the process for going against a broadcasting decision is much more arduous than that for telecom decisions. The government would have to come up with an entirely new policy, based on the Broadcasting Act, and direct the commission to follow through with it.

"I would have thought that a solution whereby the players in the market work out the differences between themselves would be something that would appeal to the government," said von Finckenstein.

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