Corus aiming for more favourable carriage terms for its pay channel Encore

Corus Entertainment Inc.’s pay service Encore Avenue Ltd. (formerly MovieMax!) is asking the CRTC to allow it to be carried on discretionary analog tiers in an effort to turn around its sagging fortunes (Broadcasting Public Notice 2004-35). Encore, which is distributed in Western Canada, complains that it is currently at a competitive disadvantage because the pay movie channel licensed in June 1994 can only be carried on an encrypted basis. The CRTC, however, seems to want to extact concessions from Encore in return for the carriage flexibility. In interrogatories, the CRTC asks the pay movie channel if it would increase its Canadian content levels, and Canadian programming expenditures if it was granted permission to be carried on unencrypted tiers. Encore states that it would be willing to increase its Canadian content requirements to 25% overall from 20%, if it is granted permission to air dramatic series and comedy series copyrighted at least five years before the year in which they are broadcast from 2005. However, the channel notes that it doesn’t consider that "any increase in the requirement for expenditures on Canadian programming would be warranted." Encore is currently required to spend 25% of revenues earned on Canadian content. "If approval of the application results in MovieMax! achieving higher revenues, the current formula will of course result in higher expenditures on Canadian programming," Corus notes in response to the CRTC questioning. Corus argues that the licensing and launch of specialty channels that broadcast movies since its debut has resulted increased competition and falling subscriber numbers. The way to reverse the declining subscriber base is to allow Encore to be distributed on an unencrypted analog basis in a package, for example, with TBS and the Family Channel. The pay channel notes that its total revenue is expected to have dropped 25% from $11.4 million at Aug. 31, 2001 to a projected $8.5 million at Aug. 31, 2003. It had forecast revenues of $23,264 by year seven of its licence term in 2007, but now estimates that figure to more likely be around $9,074. Corus attributes the downturn in the channel’s fortunes to an explosion of specialty services with a heavy concentration of movies that don’t have to adher to such stringent carriage restrictions. Corus points out that of the 19 analog English-language services licensed since 1994, eight are authorized to include movies in their schedules, and of the 16 Category 1 services, 13 are authorized to broadcast movies in varying quantities. As well, 19 of the 23 Category 2 channels that launched are authorized to air movies. It further notes that the analog services that broadcast substantial quantities of movies that are similar to those on Encore’s menu are distributed on unencrypted tiers. Services such as Bravo, Showcase, History and Space had subscriber counts respectively, at the end of the 2002 broadcast year respectfully of 5.9 million, 6 million, 4.8 million and 4.8 million, As well, Corus notes that the Family Channel, a pay TV service that is carried on the third tier of cable systems across Canada, had 4.5 million subscribers at that date. Encore, then operating as MovieMax!, during that same broadcast year had just 298,000 subscribers, and that numbers have dropped to about 311,000, or by 22%, in the subsequent two years. Corus also states that Astral Media’s pay service MoviePix, available in eastern Canada, has more than one million subscribers, or three times that of Encore. MoviePix was also not supposed to be carried on unencrypted high penetration tiers, but Astral added its channel to unencrypted tiers of certain Ontario cable systems owned by Cogeco Cable and Mountain Cablevision in the late 1990s. In March 2000, MoviePix sought and received permission from the CRTC for continued distribution on the unencrypted tiers of those cable systems. Comments on the proposal are due by July 2.

Corus aiming for more favourable carriage terms for its pay channel Encore

Broadcast | June 4, 2004

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