Telus says Bell’s latest offer in carriage dispute is the right idea

OTTAWA—Telus Communication Co. supports a new penetration-based carriage model floated by Bell Media in a commercial dispute before the CRTC but the company must first see the rates that Bell is proposing, Ann Mainville-Neeson, Telus’ director of broadcast regulations, said Friday. Telus is among a group of independent broadcast distributors involved in a months-long dispute with Bell Media (a BCE Inc. subsidiary) as part of negotiations to reach a carriage renewal agreement to distribute Bell's 29 specialty channels. Those distributors formed a new umbrella organization called the Canadian Independent Distributors Group (CIDG) in January and have requested CRTC mediation to help resolve the dispute, in which programming flexibility is one of four key elements. In a Feb. 21 response to the CIDG’s request for CRTC mediation, Bell Media proposed a new penetration-based rate system, allowing distributors to repackage Bell-owned channels as they see fit so long as they pay a monthly fee to compensate Bell for any channels shifted to packages with lower penetration rates. Mainville-Neeson told The Wire Report Friday at the Prime Time conference, hosted by the Canadian Media Production Association (CMPA), that consumer demand for more flexible programming packaging is driving a need for carriage agreements that will allow channel owners to charge broadcast distributors based on penetration levels. She said it is important for Telus to have more flexibility and the choice to design its own channel “theme packs” for subscribers to ensure they have access to the channels they want without forcing them to pay for services they are unlikely to watch. “Ultimately, I think we have to be moving that way,” she said. Kevin Crull, president of Bell Media, suggested at the conference Friday that Bell's “penetration-based” model would increase distributors' flexibility to move and repackage popular services, including Category A channels, which according to CRTC regulations are carried on basic TV packages. “We have always distributed content to viewers in such a fashion that the popular channels, Category A channels, were in large packages where they had wide distribution,” Crull said. “That has served the system well because it puts your product … in a lot of households so that sampling can occur.” About two-thirds of broadcasting ad revenues come from specialty channels, Crull said, and about 90 per cent of that comes from Category A services. Examples of Category A channels include Food Network, History Television, and The Weather Network. Bell has 12 Category A channels, inlcuding CP24, Business News Network, and Bravo! Crull said Category A channels command the greatest advertising revenues and subsidize other operations that are not profitable, such as over-the-air broadcasts. “ are about 110 per cent of our profits, because if you look over the last 10 years at CTV, it has lost money,” he said, noting that other conventional broadcasters are facing similar situations. He said distributors historically paid for premium specialty channels at a fixed rate multiplied by the number of subscribers who would receive each of those channels. Scott Henderson, Bell Media’s vice-president of communications, wrote in a follow-up email to The Wire Report Friday: “I can confirm that the penetration-based rate card option provided to the CIDG is for analog Cat As and Cs.” Categoy C channels are mainstream sports and news services. Crull said broadcasters and broadcast distributors around the world are grappling with the need to redesign carriage distribution agreements as they face competition from over-the-top (OTT) services online and the possibility of cord-cutting. He said Canada could become “a world leader in moving the legacy industry of specialty distribution to a new a model” that supports increased flexibility “in a way that preserves the ecosystem of production, distribution and broadcasting.” He added: “That’s the alternative that we are asking distributors to consider.” Mainville-Neeson said neither Telus nor the CIDG objected to the principles of the Bell's proposed penetration-based rate model, but said Bell has not yet provided the distributors with the proposed rates it would charge distributors for moving those premium channels to lower penetrating packages. She said the CIDG’s requests were not “necessarily” about repackaging Category A channels but about removing the restrictions. “The CIDG (not just TELUS) is open to considering a penetration-based rate card,” she told The Wire Report in an emailed statement. “We are looking forward to receiving actual numbers from Bell and hope that their proposal is reasonable and we can all move forwards to face the great challenges of the industry which heard about at the CMPA conference over the past two days.” nkyonka@thewirereport.ca

Telus says Bell’s latest offer in carriage dispute is the right idea

Broadcast | March 2, 2012

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