Opposition expressed to CAB-ExpressVu agreement on out-of-market TV signals

Major players in the broadcasting industry are opposing the proposed deal between the Canadian Association of Broadcasters (CAB) and direct-to-home (DTH) satellite TV operator Bell ExpressVu LP on the distribution of out-of-market TV signals. Not one player outside those involved indirectly in putting the deal together favours the memorandum of understanding (MOU) signed between the two parties in comments filed in a CRTC process (Broadcasting Public Notice 2002-57). The deal is supported by such private broadcasters as CTV Inc., a CAB member owned by Bell ExpressVu parent company BCE Inc., and Mid West Television Ltd., a small market broadcaster that has benefited from the MOU by securing carriage on Bell ExpressVu in Lloydminster AB. But not all broadcasters agree with the agreement brokered by the CAB. Specialty and pay TV channel operator Astral Media Inc., a CAB member, isn’t convinced that diverting funds away from the Canadian Television Fund (CTF) would be universally beneficial for the Canadian broadcasting system. Quebec educational broadcaster Télé-Québec expresses similar concerns about the proposal. The proposed deal calls for Bell ExpressVu to redirect half of the portion it currently contributes to the CTF to a new fund for Canadian local and regional television programming. Under the MOU, Bell ExpressVu will also add more small market TV signals to its channel lineup, while paying the same monthly per subscriber compensation for not having to perform signal deletion of out-of-market TV signals as under an agreement that expired Aug. 31, 2000 (CCR, Oct. 10/02). Star Choice has submitted a licence amendment on out-of-market signals that requests similar provisions, except that it does not want to have to delete existing signals, and it suggests that the new fund be administered as part of the CTF (CCR, Nov. 22/02). In submissions filed last month in the CRTC process seeking comments on the proposed deal, a plethora of interests, including the Canadian Film and Television Production Association (CFTPA), l’Association des producteurs de films et de télévision du Québec, Canadian Independent Film Caucus, Writers Guild of Canada, Canadian Conference of the Arts (CCA), Alliance of Canadian Cinema, Television and Radio Artists, Alberta Motion Picture Industries Association, Telefilm Canada, and the CTF itself, oppose diverting money from the existing fund. As well, numerous independent producers separately intervened in the process against the proposal. The CAB noted in its November 12 filing with the commission that it "has not yet had the opportunity to complete consultations with various stakeholders" on the details of the proposed fund. That is evident in the number of parties outright opposing the MOU. Many stakeholders aren’t necessarily against the creation of a new fund, but they vehemently oppose the redirection of existing money paid to the CTF. "Who’s going to benefit from this (new proposed) fund? Is it major markets? It’s not clear," says CFTPA president and CEO Elizabeth McDonald, who points out that there aren’t even clear criteria or guidelines for the proposed fund. "All of a sudden because people don’t like agreements that they made, or don’t want to adhere to things that they were willing to agree to at licensing – even if it was somewhat reluctantly – now, we find ourselves revisiting these issues. That money is to compensate for the impact of bringing these signals in, and that’s what it’s about," she tells Canadian Communications Reports. "It’s not about co-mingling compensation with the redirection of funds. They’re saying here’s this money that was set aside for one purpose, and we think it should go into something else." In its submission filed December 20, the CFTPA indicates that the sole reason for the new fund is so the DTH operators can avoid having to incur additional financial obligations. "The CAB-ExpressVu proposal to divert funds from CTF represents a double jeopardy for this established program funding support (CTF) and a form of double dipping for broadcasters. Their notion of an ‘independent programming fund’ for broadcaster-produced news, actualities and sports programming would more than displace the CTF funds allocated to enhance broadcast licence fees while at the same time providing cash-back relief for a separate programming obligation. In our view, this is an unconscionable request, without merit." In its comments to the CRTC, the CCA argues that there are two sets of obligations for broadcast distributors in play. One is the protection of local broadcasters’ program rights, and the second is the requirement that each distributor contribute to the creation and broadcast of Canadian programming. "If the DTH undertakings cannot meet the first obligation in the traditional way of simultaneous substitution then they must find a way to meet it without compromising the second obligation," the CCA states. Other interveners point out that the CTF already has a regional component. Yet others point out the potentially damaging effect a slimmed down CTF would have on drama – a genre that has already been hard hit by the 1998 CRTC television policy that redefined priority programming and a dwindling demand in the export market (CCR, Nov. 22/02). CBC, cable oppose MOU The Canadian Broadcasting Corp. estimates that the proposal, if accepted, would divert more than $100 million from the CTF over the next four years. The CAB and Bell ExpressVu peg the amount at $12 million, but as other interveners point out, they don’t take into account the probability that Star Choice would also divert its contributions. Past agreements, the CBC notes, have dealt solely with compensation that did not affect the rights or interests of third parties. The public broadcaster fails to see why things should change now. The CBC, which would be ineligible for money from the new fund as a public broadcaster, opposes the MOU on a number of levels. It argues that while Bell ExpressVu states that blacking out the signals of private networks will turn off viewers, it doesn’t share the concern when it comes to the CBC. Up to eight of the 13 small market TV stations listed in the MOU that are to be added to Bell ExpressVu’s lineup are CBC affiliates, and that means that program deletion would be performed against CBC signals in most of the smaller markets involved, the public broadcaster points out. "ExpressVu and the CAB do not appear to consider program deletion ‘anathema’ when deletion is performed against CBC signals. However, there can be no doubt that DTH subscribers would not agree with ExpressVu and the CAB on this point. Who could possibly have any interest in watching a station that is blacked-out as much as 90% of the time?" the CBC asks in its submission. "Program deletion is intended to protect a local broadcaster’s program rights and advertising revenues. CBC affiliates have no rights in the CBC programming they carry. On the contrary, they are paid by the CBC to carry this programming. In these circumstances the CBC cannot accept the removal of its signals originating in other time zones and the deletion of its programs from any ‘same time zone’ CBC station." The CBC wants the CRTC to initiate a full public hearing to review the CAB-Bell Express MOU and Star Choice’s proposed licence amendment in greater detail. Cable interests also oppose the deal because they want parity in dealing with out-of-market TV signals. Both Bell ExpressVu and Star Choice have agreed to pay 20 cents per DTH subscriber per month to small market broadcasters if they don’t carry their local signal. They have also committed to paying 25 cents per subscriber for every DTH subscriber who buys a second set of U.S. 4+1 network signals. On the other hand, Rogers Cable Inc. reached an agreement with the CAB to pay $1 per month for each Rogers subscriber who receives distant Canadian signals, and 87 cents for each subscriber who receives a second set of U.S. 4+1 signals (CCR, Jan. 18/02). "Rogers has approached the CAB and asked how the proposed Star Choice and ExpressVu deals will be translated into a cable arrangement. The CAB has stated that they are not in a position to determine a cable rate at this time," states a joint submission from Rogers, Cogeco Cable Inc. and Quebecor Media Inc. "Cable operators need to offer a timeshifting package of distant signals to compete with DTH operators. Competitive equity demands that the rate paid by cable operators should be the same as or similar to the rate paid by satellite operators. The proposed arrangements will make it very difficult to establish equitable arrangements." The Canadian Cable Television Association (CCTA) argues that cable distributors should not be required to pay more than the 25 cents per month for each subscriber who opts for a second set of U.S. 4+1 signals that the satellite players pay. The big three cablecos also call for the CRTC to require the satellite TV operators to uplink all licensed Canadian television stations – something they say is now possible with increased satellite capacity. The CAB-Bell ExpressVu agreement calls for the addition of 12 new small market stations and eight additional TV stations by large broadcast groups. A major problem with the deal, the three cablecos state, is that many DTH customers still won’t be able to watch their local TV stations. "The lifeblood of broadcasting is the audience. The DTH-CAB proposals require broadcasters to accept significant reductions in their local audience and the consequent impairment of the value of their stations. They are compensated for these losses from a central fund, but this is not the same as being allowed to compete for an audience," the cable operators warn. They further caution, "The broadcasters’ business model is being replaced by a compensation fund. This is a poor bargain that the broadcasters should be concerned about." The CAB and Bell ExpressVu have until January 17 to reply to the comments.

Opposition expressed to CAB-ExpressVu agreement on out-of-market TV signals

Broadcast | January 16, 2003

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