CBC, CTV urge commission not to give Sun TV ‘preferential treatment’

CBC and CTV say a CRTC decision granting Sun TV News a limited-term “must-carry” licence would amount to “preferential treatment” and a move “backwards” as the broadcasters’ all-news channels prepare to lose their must-carry status and convert to competitive news services next year. In interviews with The Wire Report, Steven Guiton, vice-president and chief regulatory officer at CBC, and Paul Sparkes, executive vice-president of corporate and public affairs at CTVGlobemedia, said it would be unfair for the CRTC to grant Quebecor Media an application for a Category A (i.e., “must-carry,” or Category 1) all-news channel when the news genre is moving to a new, competitive regulatory environment next year. “I would have thought that considering a Category A application would be going backward in time,” Guiton said. “That’s not the way the commission wants the market to look. They’ve deemed this to be a competitive area. All of us, CTV as well as ourselves, are gearing up for that kind of an environment.” Next year, all-news services CBC NN and CTV News Channel will lose their must-carry status, so that cable and satellite distributors no longer have to offer the channels. The news services will instead have to negotiate with distributors for carriage like most specialty channels. But Quebecor’s Sun TV News, spearheaded by the company’s new vice-president of development, Kory Teneycke, has applied for a three-year, Category A licence, which are intended for non-competitive markets. Twice in the past year the CRTC has issued specific policy instructions suggesting that it is not accepting Category A applications—particularly in the more competitive areas of news and sports. In regulatory decision 2008-100, the commission said news and sports specialty channels will no longer benefit from guaranteed carriage. “As a result of that, CTV News Channel will lose carriage protection next year,” Sparkes said. “It’s all part of the negotiations with BDUs , but they could drop us, absolutely, next year.” Sparkes said CTV welcomes the Sun TV News Channel so long as it plays on the same turf. “We’re happy for competition, and fair competition, as long as we’re playing on the same soccer field,” Sparkes said. “I don’t think anyone should be getting any necessarily preferential treatment over another. That’s why the CRTC opened up competition in those two genres, sports and news. Let the market determine who succeeds. That’s what competition is all about.” In an interview on CBC Radio’s The House last week, host Kathleen Petty asked Teneycke how he planned to get a Category A licence when the commission has said it is not accepting them. Teneycke responded: “That may be your assessment, Kathleen. What you think about it is not as important as what the CRTC thinks about it.” He added that Quebecor’s application offers to “convert” Sun TV’s existing, local analogue licence, serving the Toronto market, into a specialty licence. “We’re looking to ask the CRTC on a question no one else has asked before, which is essentially converting to a cable licence,” he said. “We’re not looking to be a part of basic cable. We’re not asking the CRTC to tell cable companies which tier they should appear in, but it’s the CRTC’s decision, not yours or mine.” Although CBC NN and CTV News Channel will lose their must-carry status next year, Teneycke pointed out that, for now, they are not treated competitively and they are receiving “differential treatment.” Although distributors could potentially drop the all-news services next year, it’s seen as unlikely because they are well-watched. “We’re confident that with the value of our service—which we believe provides diverse news, lots of view points—we think that BDUs are going to be interested in carrying our service,” Guiton said. The commission is preparing to implement a new broadcasting framework by August of next year, and the broadcasters are expected to submit applications for licence renewals in November or December. A hearing is expected in the spring of 2011. As part of the shift to a competitive news genre, the all-news channels are expected change their licences, and as the August deadline approaches, the broadcasters will enter more serious negotiations with the distributors. Everything is on the table, from the news channels' place on the dial to subscriber rates. “We’re in negotiations with the carriers all the time on this,” Guiton said. “We’re going to enter into good-faith negotiations. We’re going to present, as we have in the past, information showing what we think is the value of our service, and how Canadians support it.” He added that the distributors will look at the marketplace, and if they see consumer demand for news, and more diversity of news, they will provide it. The CRTC has set the wholesale distribution rates at a minimum of 14 cents per subscriber for CTV News Channel and 63 cents for CBC Newsworld—but the actual rates are negotiated. In 2009, CBC NN generated revenues of $48.69 million from cable and $15.89 million from satellite, with a total of 10.648 million subscribers. The same year, CTV News Channel generated revenues of $11.13 million from cable and $3.54 million from satellite, with a total of 8.5 million subscribers. But CBC NN has benefited from its “dual status” designation, which it will also lose next year in the shift to a competitive designation. As a “dual status” channel, CBC NN must be distributed as part of basic cable and satellite packages, a special status CTV News Channel does not have. To remain on basic cable, CBC NN could apply to the commission for a special order under 9(1)(h) of the Broadcasting Act—a move that this is considered unlikely. Such an order from the CRTC would differentiate CBC NN from other services in a market it has identified as competitive. As one regulatory source also noted, “the commission has sparingly used the 9(1)(h) provision of the act.” Guiton suggested that, if the news channels' dial positions are changed, the distributors are likely to put them together because consumers want their genres in groups. Teneycke told The House that there are “many things” that need to happen—including regulatory approval—between now and January 2012, when Sun TV proposes to launch. He added that the planned launch date is “provisional.” “We are doing something that’s really unprecedented in the Canadian media world. We’re taking a print media company and we’re converting it into a multi-media company,” he said. Teneycke would not say how many broadcast newsrooms the channel plans to have nationally. “We’re obviously adding a lot of new resources. We’re making major investments in it to be able to do that. We’re confident that we’ll have the resources to make it a success.” sdoyle@thewirereport.ca -- CORRECTION: An earlier version of this story incorrectly reported that CTV News Channel generated revenues of $1.13 million from cable in 2009. The actual amount is $11.13 million.

CBC, CTV urge commission not to give Sun TV ‘preferential treatment’

Broadcast | June 28, 2010

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