CRTC decision on Super Ecran competition expected in next few weeks

The CRTC is expected to issue a decision in the next few of weeks on whether Astral Media Inc.’s Super Écran pay television channel should face competition in the French-language market. Quebecor Media Inc. has wanted to launch a pay TV movie channel for a number of years, but Astral’s Super Écran has regulatory protection as the only pay TV service in the Canadian French-language market. And Quebecor is laying the groundwork for a new station as it awaits a commission decision. Serge Sasseville, the company’s vice-president of corporate and institutional affairs, told The Wire Report by email that Quebecor recently submitted an application to the CRTC for a new French-language pay television licence. The proposed name of the service is unknown because the commission has not yet published the application. “You will understand that any strategy related to the launch of such a Pay TV service is confidential,” Sasseville said. He added: “If the CRTC decides to open this genre for competition and accept to put a limit on exclusive rights in order to have viable content, TVA would be able to launch its Pay TV licence in French.” In January, following a request from Quebecor to review the regulatory protection for Super Écran, the CRTC launched a consultation on whether the market should be opened to competition. Super Écran is a pay television service similar to The Movie Network—also owned by Astral—which broadcasts feature films and other premium programming. In a written submission for the CRTC proceeding, Quebecor argued that, based on other competitive genres such as sports and news, French-language pay television is popular enough to allow competition. Quebecor said the major Hollywood studios control the market for films and other premium content, and that Astral’s “monopoly” on pay television in the French market “assures that the majors cannot sell to potential new competitors.” Quebecor wrote that, according to information Super Écran has filed with the commission, the channel’s actual profits as a percentage of earnings before interest and taxes have been between 25.6 per cent and 33.6 per cent over the past five years, and that on average its revenues have grown annually by 4.6 per cent. According to McCarthy Tétrault’s 2010 Regulatory Guide to Canadian Television, Super Écran had 606,843 subscribers in 2009, an increase from 578,096 in 2008. The channel’s website says it is offering 30 new films every month and that programs are broadcast “in their original, uncut and commercial free versions.” “The creation of Canadian programming and other obligations under the Broadcasting Act would only be negatively affected if the revenues of the existing channel decreased in an abrupt and significant manner,” Quebecor wrote. “The addition of another general interest, French-language pay television service could not diminish the diversity of programming offered to the public. On the contrary, the addition of a competing service would force the two channels to make an extra effort to find more appropriate and attractive content than at present.” In an analysis submitted to the commission, which Charles River Associates prepared for Astral, the company said opening the market to another player would reduce Super Écran’s revenues, increase its costs and lower profits. “uch entry will reduce the revenues and profitability of the incumbent service, possibly very seriously, but will not improve pricing to subscribers or significantly improve the programming options available to viewers,” the analysis said. “Lower revenues and profitability will lead to reduced funding for Canadian programming by Super Écran since its funding for Canadian programming obligations is a fixed percentage of revenues.” Astral argued the experience of allowing a competitor to enter the English-language market hasn’t demonstrated the viability of competition among pay services. They referred to the entry of Super Channel into the English-language market to compete with Movie Central and The Movie Network, which did not result in a profitable service that could invest more in Canadian programming. It added that Quebecor’s “large media holdings and financial position will allow it to compete more aggressively for subscribers” than the Super Channel. In the end, the Astral analysis said, licensing another French-language general interest pay service would probably result in financial difficulty for one or both of the channels and “may eventually lead to the exit of one of the services.” The CRTC suggested in its notice of consultation the small size of the French-language market and limited number of players could necessitate “additional measures (over and above the current undue preference rules) in order to ensure that the French-language market is not excessively destabilized” by opening it up to competition. The commission also asked for comments on licence conditions that could be imposed on competing pay services if the genre is opened up through conditions such as nature of service and Canadian content exhibition and expenditure quotas. sdoyle@thewirereport.ca

CRTC decision on Super Ecran competition expected in next few weeks

Broadcast | October 15, 2010

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