Rogers fighting for parity with DTH in distributing out-of-market Canadian signals

Rogers Cable Inc. is lashing out at the Canadian Association of Broadcasters (CAB) over its push to treat them differently than direct-to-home satellite TV distributors when it comes to compensation for time-shifted signals. "We are seeking parity with DTH," Rogers Cable VP of regulatory affairs Pamela Dinsmore tells Canadian Communications Reports. "There’s no reason that the CAB should be getting Rogers to pay a monthly rate, the equivalent of $2 per month per subscriber, for its carriage of distant Canadian signals when DTH is paying 30 cents or less." The two sides agree that the cableco should pay 25 cents per subscriber receiving a second set of U.S. 4+1 signals – the same amount as DTH. But they are at loggerheads over compensation over the carriage of time shifted Canadian TV signals. Rogers has applied to the CRTC for a licence amendment that would grant it compensation terms similar to those negotiated last year by the satellite TV distributors (Broadcasting Public Notice 2004-66). The satellite TV distributors were given CRTC permission to divert 0.4% of revenues paid into independent production funds – but not the Canadian Television Fund (CTF) – for the right to carry out-of-market Canadian signals without having to perform simultaneous substitution (CCR, July 31/03; Jan. 16/03). The amendment that Rogers is seeking to its licence would allow it to divert 0.4% from its community channels and independent funds, other than the CTF, and contribute that into the CAB local programming fund that was established last year for the satellite TV distributors to pay into. Rogers negotiated a deal in December 2001, while discussions between the CAB and the satellite TV operators had not been resolved, that saw it pay $1 for each Rogers subscriber receiving distant Canadian signals (CCR, Jan. 18/02). That deal was renegotiated in June 2004, so that Rogers pays 0.4% of its revenues for the Canadian distant signals directly to the CAB, which reallocates the money as it sees fit to its members. Dinsmore says that works out to be about 28 cents per subscriber, about the same amount as that paid by the DTH operators – but that in the case of Rogers it is incremental rather than a diversion from other funds. The CAB counters that "Rogers’ approach with respect to the compensation for the carriage of distant Canadian signals, which entails payments to a programming fund designed to support local television broadcasters in markets not served by Rogers, has no basis in logic and should be rejected." The private broadcasters argue that if Rogers paid into the fund, it would be supporting small-market broadcasters outside the territories served by Rogers. Dinsmore, however, counters that Rogers chose the local programming fund because it is already set up, and that the cableco wouldn’t be contributing enough to justify the establishment of a new fund. She also says that it’s sour grapes on the part of the CAB, because the organization was unhappy that the CRTC ruled that its large broadcast members couldn’t access that fund. Currently Rogers is paying its money to the CAB, which can disburse it with no strings attached. "The CRTC ruled in setting up the local programming fund that there wasn’t sufficient harm being done by DTH in the large markets, so why should that be different with cable?" she asks. The CAB instead argues that the amount that Rogers pays in compensation should be based on the level of damage incurred by the local broadcasters to the cableco’s discretionary carriage of nine to 10 Canadian distant signals on a digital basis. The CAB hired Strategic Inc., which completed a report entitled The Impact of Distant Canadian Signal Carriage by Rogers Cable, that determined the impact in the range of $1.66 to $2.49 per subscriber per month. The CAB tells the CRTC that a rate of $2 would be appropriate in the short term. In a November 15 submission to the CRTC, Rogers discredits the Strategic. study on a number of fronts. It calls the study flawed because it attributes all of the loss in viewership to local TV stations in Rogers’ markets solely to viewing to distant Canadian signals, without taking into account audience fragmentation in the multichannel universe. Rogers also contends that the study fails to consider distant signal viewing in DTH homes in Rogers’ market area. Research by Canadian Media Research Inc. (CMRI), conducted on Rogers’ behalf determined that digital cable accounts for only about one-fifth or less of the audience lost to distant Canadian signals, and that in Atlantic Canada, 98% of viewing to distant Canadian signals is derived from DTH. The CMRI report also points out that the Strategic report compared viewing levels in different months of the broadcast season, which exaggerated audience losses of local TV stations in 2004. CMRI also noted that the variables used in calculating revenue/viewing per hour exaggerated the value of distant signal viewing, and that the analysis failed to account for advertising revenue that distant Canadian signals generated outside their home market. Dinsmore further stresses that the outcome must be fair, as she charges that the CAB is pushing Rogers to pay higher amounts so that it can eventually squeeze more out of other cable operators as well. "Negotiations are on hold with other cablecos until this gets resolved," she notes.

Rogers fighting for parity with DTH in distributing out-of-market Canadian signals

Broadcast | November 22, 2004

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