Opinion: Those sick of ‘Save Local TV’ and ‘Stop the TV Tax’ are about to get a whole lot sicker

Where you end up depends on where you start. That’s the most important thing to remember as you parse the decisions released this week by the CRTC. The decision on consumer impact is a hoot too. We're going to have a lot of angry Canadians, quietly seething in their quiet, seething Canadian way. Time to buy the entire nation a mouth guard, methinks. The brief the commission had to consider was simply massive: revisit the entire framework of the Canadian broadcast system and figure out how the business needs of the various players should be balanced. Ignore people who talk about "market-based" this or that, because that's a canard. Like a lot of industries in Canada, broadcasting has always been very managed and protected. There's always been a thumb on the scale in one way or another. The problem is that the last time the CRTC changed the weight of the thumb, the domestic TV industry kind of died. Whoops. A lot of other things have happened in the 11 years since the CRTC shuffled the deck. The rise of the Internet offered a whole new way to distribute programming—much (not all) of it illegally. Cable’s power rose, as did the number of specialty channels, which profited from two revenue streams—traditional advertising and subscriber fees—and carved out dimes and nickels on your cable bill that flow back to the companies that own them. Broadcasting used to be a great gig in this country, a "license to print money," they called it. That's largely because of the CRTC. The CRTC had rules in place that allowed Canadian networks to substitute American signals with their own so long as they showed the same program at the same time. This simultaneous substitution—"simsub”—was very profitable, and locked Canadian private networks into the same kind of mindset you see from a zombie computer during a phishing attack: freed from the need to think or create, they became addicted to going South twice a year, buying whatever US product they could, and showing it at the same time. The problem is that while all this was going on there were warning shots on the horizon that presaged big changes. The US networks that they bought their product from started to see a tenuous future as middlemen—so they got more into owning and developing the product they showed. Seventy or 80 per cent of the shows you saw on US TV came from independent studios like Warner Brothers. Now that's down to about 20-25 per cent. Add in the Internet, streaming, cable channels’ growing audience base, as well as the shrinking relevance of the advertising model, and there are all sorts of canaries in the coal mine. But for the most part, the Canadian private networks were blissfully unaware of this. They'd outbid each other for shows—sometimes even paying to put a show on the shelf so that a rival wouldn't get it. The economic tsunami that hit in 2008 hit the Canadian networks much worse than their US counterparts. They’d gotten used to being easy middlemen. They didn't bother to care about having anything new and different of their own—viewing homegrown programming as a “tax” and an afterthought. Over the same period, cable became far more profitable and powerful. First there were all those cellphones that they were overcharging you for. Then there’s the Internet pipe that threatens the broadcast model, and all the video-on-demand and sweet, sweet porn money that comes with it. Twice before, hearings at the CRTC were consumed by the fight between cable (or the BDUs—broadcast distribution undertakings) and the networks. The networks wanted fees for their signals like the specialty channels get. Cable said “hell no.” The same fight happened in the United States, by the way, but there the channels had a much stronger argument: local news was a strong profit centre at most stations, and each of the networks had a passel of shows that millions of people like to watch. In Canada, the networks had to invent the whole "Save Local TV" thing to paper over the fact that: a) they'd pretty much dismantled anything local over the last two decades, and b) they didn't really have much to offer beyond the same US shows that Canadians got from the US network feeds already on their cable dials. By not diversifying, or reading the signs that the existing model was going away, the networks were fast becoming the first victims of that model. At the same time, cable co's like Rogers and Shaw got nice and fat, first by having protected monopolies in certain regions, and then by being protected from foreign ownership. But this fight—"give us fees" versus "stick it"—never got anywhere. Both sectors acted like children and refused to come to a deal. That's as past as prologue. Back to where you end up, depending on where you start. Employees at CTV got a terse email last week informing them that the "decision on value for signal was expected Monday." This is pretty funny, in a gallows way, because it although the decision was much wider in scope than that, and encompassed much more—it showed that's the only thing they cared about. When the decision came down—essentially, the CRTC punted, referring it to the Federal Court of Appeal and told the two sides to negotiate a fee—most of the broadcasters reported the news as if their little part of it was the only thing that happened that day. If you're actually, really worried about local TV, and continued vibrant reportage, it should worry you a bit. One of the most disturbing things through this whole period has been watching how the broadcasters had no compunction about blurring advocacy and editorial. The idea of "journalistic independence" does not apply. It's the biggest growing trend in Canadian broadcasting—and it's actually pretty terrifying. The cable companies, too, kind of got handed a bag of flaming poo yesterday. They face the prospect of angry customers getting mad at them not just because their cable bills are going up, but because now they're going to have to figure out a way to black out broadcast signals on the US networks if the networks show a program at a time other than when the Canadian rights holder wants it shown. “Simsub” has been transparent for the viewer, mostly—that's why the CRTC only ever gets complaints when people realize they can't see the Superbowl commercials. Just wait. Now you're going to have blue screens of death all over the dial. An audience moving to a "TV Everywhere" model is going to see more restrictions placed on how and when they can watch, restrictions that go against what they've had for 40 years. The audience reaction to this is going to be ugly. As for Canadian creatives? Well, that's a more complicated stew. First, I think it bears repeating that one of the problems in the past has always been that the Canadian networks have never really wanted to make Canadian programs. That's why they came up with photocopies of Entertainment Tonight when the rules allowed them to do that. That's why they ran cheap, low quality crap like Train 48 that nobody watched or cared about. That's why they used to whip Cancon shows around on the schedules, promote it poorly, and throw it on Saturday night at 10. Corner Gas became inconvenient, as did little cable successes like Trailer Park Boys, because they seemed to suggest that maybe there was a market for homegrown, just as there is in every other western country in the world. There’s stuff in the CRTC decision that shows that the commission is at least trying to incentivize spending on domestic stuff. There's a push for five per cent of revenues to be spent very narrowly on a designated set of programs—drama, kids, documentaries—and it looks like cheap and cheesy magazine shows won't qualify. There's a closed loophole where the nets won't be able to count money they get from the Canadian Media Fund as part of their contribution—so they'd have to spend more. There's also something in there the broadcasters wanted: some of the money they spend can be on stuff they produce in-house. Get off the teat of that US programming, they say. Diversify, at least a bit. But there are a lot of potential pitfalls too, like a reduction in Cancon levels, or removal of spending requirements for specialty channels. Seeing as the networks in the past have done everything they can to get around the rules, and use every loophole, the worry is that there's a whole lot here to find ins and outs. Maybe the problem is too complicated to solve, but the solution as proposed is Byzantine. Though ACTRA was confident enough to come out and blast the decision right away (God love them emotional actors!), the WGC posted a more cautious, "Ummmm...” response on its site. There's a lot to parse here. And one of the worst parts of it is that there's now another one-year delay on licence renewals as people figure out the rules. Hearings will happen next year. Which means that no changes will be concrete until 2012. Which means by that time the domestic TV industry will have endured about five years of complete and violent uncertainty. I don't know if there's anybody who can hang on that long. I'm in Florida right now, and four people in the last two days have emailed me real estate listings in Southern California. Ha ha. Where you end up on this depends on where you start. What about the observers, then? Well, a generation of viewers who feel entitled to get any program when they want, where they want, and on the screen they want, are probably going to shrug and keep doing what they're doing. Banks, which have been tough about gap financing TV producers, aren’t going to get much looser. This is not a confidence-building decision for them. Anyone sick of the "Save Local TV" and "Stop the TV Tax" BS is likely to get a whole lot sicker. Goodbye "Old Spice, I'm on a horse" guy, we hardly knew you. I guess Canadian TV will eventually drive you insane. There's no way around it. Not saying it's the end of anything. But I’m not saying it's not. Welcome to the age of uncertainty. Try to look natural. Smoke 'em if you got 'em. Denis McGrath is a television writer, journalist, blogger, and former television producer. The above article is an edited version of a March 23 posting on McGrath’s blog, and has been reproduced with permission. news@thewirereport.ca

Opinion: Those sick of ‘Save Local TV’ and ‘Stop the TV Tax’ are about to get a whole lot sicker

Broadcast | March 24, 2010

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