OTT pushes American broadcasters to consider ‘bypassing’ Canadian system: Report

Over-the-top programming services like Netflix could mean dire consequences for the Canadian broadcasting system, raising foreign programming costs for Canadian broadcasters and limiting their access to online rights, a CRTC-commissioned report released Monday said. The report said that broadcasters’ reduced power to secure multi-platform distribution rights for American programming in Canada would negatively impact their ability to support Canadian content, which is largely subsidized through profits from foreign content. Titled “Developments in the Canadian Program Rights Market 2011,” the report was produced for the CRTC by communications lawyer and engineer Peter Miller, who has held senior positions with Vision TV, CHUM Ltd., and the Canadian Association of Broadcasters. Miller wrote that foreign over-the-top providers will draw revenue and viewers from Canadian companies, even if they offer less content, through competitive pricing and convenience. “The more that viewing shifts to on-demand, the bigger the slice that OTT gets, the better able OTT is to get better programming, and the less revenue Canadian broadcasters will have to buy the foreign programming that is their competitive advantage,” he wrote. The CRTC released the report Monday following an announcement last week that the commission will hold a public consultation—what it called a “fact-finding exercise”—on over-the-top programming services and their impact on Canadian broadcasting. Online services like Netflix and iTunes provide streaming programming in Canada but they are foreign-owned and do not fall under the Canadian broadcasting regulatory framework. Miller wrote in the report that Netflix’s acquisition of exclusive content is the first bypass of the Canadian broadcasting system, which until now has required content providers to go through a Canadian broadcaster and distributor. The effect of this trend will be that Showtime, HBO and other content providers will start asking whether they’re better off launching their own over-the-top websites in Canada instead of going through traditional broadcasting channels. “While launching competing Showtime.com and HBO.com services available to non-cable subscribers in the U.S. may never make sense, bypassing third party Canadian broadcast partners and their economic rents in support of Canadian programming could become a rationale business decision far sooner,” he wrote. Miller predicted that the presence of over-the-top services will start to impact prices and the content rights of Canadian broadcasters by the start of the 2012 broadcast season. The report comes as Netflix representatives joined the major Canadian broadcasters in Los Angeles this month for an annual rights "buying spree." Broadcasters buy up rights to air U.S. content in the Canadian market at the annual meeting with major American studios. But in January a Scotia Capital Inc. report said that over-the-top services would have a difficult time securing content rights traditionally held by the major broadcasters. The report identified three central barriers in Canada “that offer a measure of protection to incumbent broadcasters.” It said those top barriers will be: difficulty securing sufficient content rights; “overcoming bandwidth caps” on Internet service plans; and an “evolving regulatory framework.” news@thewirereport.ca

OTT pushes American broadcasters to consider ‘bypassing’ Canadian system: Report

Broadcast | May 30, 2011

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