Shaw says it’s losing online, VOD rights to American online distributor

OTTAWA—An American broadcast network is refusing to sell Shaw Communications Inc. the online rights to its content for 2011, the company told the House heritage committee Thursday. “We were told last week by a broadcaster in the U.S. that they would not sell us broadband rights. Somebody with deeper pockets is going to be buying those … rights, and so they won’t even be available on our ,” Shaw president Peter Bissonnette told reporters following his appearance at the committee. “We couldn’t put it on our VOD , because we don’t have the rights to it.” Bissonnette would not identify the broadcast network, but said its online rights, including mobile, will be sold to an American online distributor in a deal that prevents Shaw from getting the online rights in Canada. It’s unclear whether the online programming offered in the U.S. will be geo-blocked in Canada. If it is, Canadians could use special blockers to hide their IP addresses and access the content. Canadian viewers could continue to watch shows from the broadcaster when they air on television, but Bissonnette said the rights deal will prevent customers from accessing the content through the company’s online and video-on-demand offerings. “Customers who now go to VOD for those or movies are going, ‘Maybe I should get my movies from Netflix , maybe I should get Glee from in the U.S., because you can spook your address now so that you don’t look like a Canadian,” he said. “We’re losing the benefit of having those programs that actually generate revenues for the local broadcasters.” Bissonnette said the CRTC can do little to ensure American companies sell online rights to Canadians, but a positive step would be to regulate online broadcasters such as Netflix. He said Canadian audiences are increasingly turning to unregulated services online to watch television shows and movies. Netflix launched its Canadian online streaming service in September, and Bissonnette said the service already makes up about five per cent of download traffic on Canadian networks. “If they don’t want to sell us the rights, then that’s their prerogative. But if they are using our network to get Canadians out of the system, that creates a concern for us. That should create concerns for the government because people are abandoning the system,” he said. Shaw told the committee Netflix is using the company’s networks to distribute its service and should compensate it. “It’s something we have to provide for when we’re scaling our network. We invest probably $300 million a year in our networks and infrastructure, and for that we should be getting a return,” Bissonnette said. The digital media space is now unregulated, but in 2009 the CRTC said it would review its regulatory exemption for new media in 2014. “We think that we can ,” Bissonnette told reporters. But he added that enforcing new media regulation may be more difficult than it appears. He acknowledged that regulating online services could lead to some American content being blocked north of the border. “We don’t want to block our customers from accessing those programs,” he said. Bissonnette told the committee he is concerned that online distributors provide content to Canadians but do not pay into the Canadian system in the form of contributions. “There should be some kind of contribution because they are in fact riding over our Canadian system … We pay $150 million a year as part of the Canadian system, to do what we do, and maybe those are the kinds of things they should do.” Bissonnette told the committee Canada should adopt a system that would create symmetrical rules for domestic and foreign content providers. “We need the government and the CRTC to simply ensure a level playing field,” he said. Ken Stein, Shaw’s senior vice-president of corporate and regulatory affairs, said Canadian players and the government should work with foreign, online unregulated platforms to ensure the services are consistent with the Canadian broadcasting system’s regulations. “We’re not trying to say they shouldn’t be here. We’re basically trying to say they should come in and be here on terms as any other company operating in this country—that it accepts the terms and conditions and the legislation that exists in Canada,” he said. Stein added that one of the challenges to regulating online players is that the CRTC can’t licence non-Canadian services under the Broadcasting Act. Conservative MP Dean del Mastro, the parliamentary secretary to the heritage minister, said he was “eager” to work with Shaw for a solution that would bring audiences to Canadian services. The heritage committee is holding a study on the impacts of vertical integration in the private television industry and the move to online and mobile platforms. Last week, Rogers Communications Inc. and BCE Inc. told the committee unregulated online content providers are contributing to growing competition in the broadcasting industry. The companies said vertical integration puts Canadian broadcasters in a stronger position to compete. Rogers also suggested the commission consider regulating online content providers in its hearing on vertical integration next year. kfournier@thewireport.ca

Shaw says it’s losing online, VOD rights to American online distributor

Broadcast | December 3, 2010

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