CCTA vows to continue fight to get more U.S. specialty channels added in digital

Dean MacDonald, executive VP and COO of Rogers Cable Inc., says the cable industry will continue efforts to have more foreign channels authorized for carriage in Canada, despite the CRTC’s decision last week to turn aside the cable industry’s request to change its policy and allow HBO and other popular foreign channels into Canada. "As an industry, we’ll take the advice that was provided to us from the commission and go back to the drawing board. I think that they left us a whole bunch of really important bread crumbs to draw on to be successful," he said during a media scrum at the Canadian Association of Broadcasters (CAB) convention this week. "You know I appreciate the fact that (the commission) was guided in their response to us because I think it really helps us. I don’t regret the application. I think it was really necessary and timely." Asked to elaborate on the crumb comment, CRTC chair Charles Dalfen was taken aback. The CRTC responded last week to the Canadian Cable Television Association’s (CCTA) request in June to hold a hearing on its policy that prohibits the authorized entry into Canada of foreign channels that compete with existing Canadian services with an emphatic "no." MacDonald said that the cable industry’s future strategy includes proving consumer demand for the addition of more U.S. channels in digital, and getting broadcasters onside. "We’ve drawn much more extensive research since we launched the (June) application that shows clearly a really strong demand for these services, and we’ll demonstrate why adding these services won’t hurt the Canadian broadcasting system, but in fact help it. So there is some financial modeling that we can do," he added. In June, the CCTA asked for a rule change so that 17 U.S. channels, including HBO and ESPN, could be authorized for carriage in Canada on a digital basis only (CCR, June 30/03). The move outraged broadcasters, and CAB president and CEO Glenn O’Farrell labeled it a "thinly disguised cash grab." MacDonald would not say whether the CCTA’s next step would involve operating within existing CRTC rules, but he noted that the cable industry would consult more with the broadcasters. "We’ve shown in the past (that U.S. services can increase the penetration of Canadian specialty channels). We did it on basic, and in tiered analog services. It’s the same story again, so I think we have to lock ourselves in a room with them (broadcasters) and say, ‘okay guys if we did it this way, and we added these services and we packaged them with you, we could drive penetrations of x amount,’" he told Canadian Communications Reports. "We never went through that exercise. We just kind of came out and drew our guns and started firing. I think we need to sit down at the table (with the broadcasters)." During a session on the future of TV at the CAB convention, MacDonald referred to the CCTA’s application as "a bit of a hand grenade with no plan behind it." In a November 7 letter to CCTA acting president Michael Hennessy, the CRTC rejected the association’s request to change its policy over concerns that allowing competing U.S. and other foreign specialty channels into the country would make it "more difficult for Canadian services to obtain the Canadian rights to broadcast foreign productions." The CRTC noted that a change in the policy prohibiting competing foreign specialty channels from being distributed in Canada could result in higher programming costs for consumers, and also less Canadian programming being subsidized through profits made from the broadcast on Canadian specialties of high-end U.S. programming that draw audiences and advertising dollars. "In the commission’s view, a non-Canadian service competing with a Canadian service would have little incentive to sell programming rights to the Canadian service, and indeed would likely have an incentive not to sell such programming rights," the CRTC stated in the letter. "Further, independent program rights holders may be more likely to sell rights for the entire North American market to the non-Canadian service, rather than selling Canadian rights separately to a Canadian service. …Furthermore, because Canadian services may not be able to acquire rights to certain programming, consumers might be obliged to subscribe to additional non-Canadian services in order to gain access to programming previously available on Canadian pay and specialty services. This could result in an overall increase in the charges consumers pay." MacDonald would not state precisely when the cable industry will proceed with its next move to see some U.S. services added in digital. "It’s kind of like asking me how long is a piece of string. I can’t tell you. We’ve got some homework to do. But it’s obviously something really important to us, so there will be a certain sense of urgency," he said. Broadcasters received other good news on November 7 when the CRTC stated that it would not move ahead with 49th Media’s application requesting a licence to operate a new satellite relay distribution undertaking to distribute U.S. channels in which the U.S. advertising would be replaced with Canadian advertising. The CRTC noted in a letter to Kevin Shea, president and CEO of 49th Media, that the application did not include evidence of permission or support from the U.S. broadcasters for the proposal. "We felt that if we were going to go ahead with a costly hearing, at the end of the day, since there was no evidence of support or permission, he might say, ‘sorry, but I just can’t go ahead (with the plan).’ So we needed something that was equivalent to showing that if he succeeded - and that’s a big if - that he could carry out the plan," CRTC chair Charles Dalfen tells CCR. The commission stated that 49th Media could resubmit the application if it included evidence that the U.S. specialties supported the plan.

CCTA vows to continue fight to get more U.S. specialty channels added in digital

Broadcast | November 14, 2003

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