Sun News asks CRTC for ‘new entrant’ access to the broadcasting system

Quebecor Media Inc.’s Sun News Network should receive regulatory protection as a “new entrant” in Canada’s broadcasting market, said Kory Teneycke, vice-president of the specialty channel. “What we’re asking for is very similar with what happened in the wireless spectrum auction, which was an opportunity for new entrants to come into this market,” Teneycke told commissioners on the first day of the CRTC’s hearing to consider applications under Section 9(1)(h) of the Broadcasting Act, under which the CRTC can order broadcast distributors to carry important Canadian channels on basic television packages with a fixed, regulated wholesale fee. Teneycke and Luc Lavoie, Quebecor’s head of development for the channel, said the channel’s application meets all of the CRTC’s criteria for 9(1)(h) orders, such as being an exceptional TV service supporting Canadian expression. “The CRTC has invited all of us to be here and present arguments as to why a 9(1)(h) should apply to us,” Lavoie said. “All we’re saying is that make sure that people see our product, make sure they see it for five years at a reasonable and fair price, which is way below what the average is for the other all-news channels in Canada. Let’s do that for five years, and if in five years it hasn’t worked, we’re dead,” he said. Sun News applied for mandatory carriage on basic packages with a wholesale fee of 18 cents per month per subscriber, arguing that the regulatory protection is necessary for an all-news channel that has run into carriage issues with distributors MTS Inc. and Telus Corp. Teneycke acknowledged that Sun News, which projected a loss of $17 million for the 2012 broadcast year, received offers from MTS and Telus, though he said they were inadequate, and that the channel’s average wholesale carriage fee of 9.7 cents is a “death sentence” by competing broadcast distributors. CRTC Chair Jean-Pierre Blais and commissioner Candice Molnar questioned the Sun News officials on why they think TV consumers should pay for the channel as broadcast distributors are likely to pass the cost of carrying new channels onto their subscribers. “The rules of the CRTC, more and more over a 20-year period, are more marketplace driven, more consumer driven, more driven by choice of the ultimate beneficiaries of the cable system,” Blais said. Teneycke said the Canadian market is more consolidated than it was a few years ago. The marketplace is not functioning properly as established players use pricing and access in “an attempt to kill new entrants in the crib,” he said. Blais also asked Teneycke why, if the channel has run into carriage issues with large, vertically integrated competitors that own both broadcast content and distribution platforms, Sun News has not sought to use the CRTC’s dispute resolution processes to address those issues, instead of applying for mandatory carriage. Teneycke said the company would have to bring forward “many, many complaints,” and that “we’ve chosen this path as opposed to a series of undue preference complaints because we think we qualify for it.” The channel is seeking a 9(1)(h) order for both analog and digital TV systems because many of its potential viewers are on analog cable, he said. Teneycke said a “must offer” licence, under which broadcast distributors would be required to offer the channel to subscribers though not on basic packages, would not be enough. Many consumers cannot afford to subscribe to channel packages through which they can get Sun News, he said. In a filing with the CRTC for its application, Sun News said the average wholesale carriage fee for news channels CBC News Network, CP 24, BNN, CTV News Channel, is 33 cents, and that some broadcast distributors “only pay 6¢ for Sun News.” Blais also asked whether Quebecor’s cable subsidiary Videotron Ltée. carries Sun News on its basic TV packages. The Quebecor officials said they weren’t sure. According to the Videotron website, the company’s basic “classic cable” package includes the English-language Sun News on Channel 9 when searched under Gatineau, Que.-postal code J8X 4K2, though the channel does not appear in the basic package for Quebec City postal code G1B 1A1. In his opening remarks for the hearing on Tuesday, Blais said consumers are concerned about affordability in their TV services and that they want more choice in the channels they receive. He said the commission is required to examine the applications under the Broadcasting Act. The two-week hearing will consider 22 applications, including six renewals and 16 new ones, for mandatory carriage 9(1)(h). Tuesday morning, Stornoway Communications Limited Partnership discussed its proposed channel Fusion, whose programming would be all-Canadian and driven by social media videos and user-generated content. The channel has proposed mandatory carriage on basic TV packages with a wholesale carriage fee of 32 cents per subscriber per month in the English market and 16 cents in French markets. The company said broadcast distributors could add about 50 cents to the wholesale fee for their retail pricing. Martha Fusca, president and CEO of the proposed channel, said consumer objections to rising basic cable prices "are the result of feeling that they are not getting the value they should for their money, not because of decisions the commission has and may make in issuing 9(1)(h) orders for services deemed to be in the public interest." The channel would broadcast in French and English, Fusca said, which led commissioner Louise Poirier to question whether French-language viewers would be willing to accept paying for a channel on basic packages that broadcasts only 20 hours per week in French. If necessary, Fusca said, the channel would be willing to accept a 9(1)(h) order for mandatory distribution in English markets only. Fusca said the channel does not have another business plan if it does not receive mandatory distribution. “There’s absolutely no way that we could distribute some fraction of Fusion as, say, a must offer ,” she said. The CRTC also heard Tuesday from officials with Natural Resources Television Channel Inc. for mandatory carriage on basic for an existing specialty service called The Natural Resources Television Channel, with no wholesale fee for broadcast distributors. “We need your help in order to survive,” Ivor Barr, CEO of the channel, told commissioners, adding that the channel covers an industry of national importance to communities and the Canadian economy. “The commission is not in the business of dispensing help. We dispense decisions,” commissioner Stephen Simpson said. “You have not given us any research, detail or documentation that there is a consumer want or need out there. You’ve provided some industry support, but all pretty much from the resource exploration or development business, or communities that benefit from that activity. The only thing you have given us is an appeal that if we give you a licence for mandatory carriage, that it will improve your business plan.” “Give us a chance,” Barr said. “If you give us a chance, five years from now, you’re going to come to us to be sure that we’re on the air.” The CRTC said in a notice Tuesday that it added new deadlines for its consultation on the 9(1)(h) applications, and that it will accept final written comments until the deadline of May 9 and that the applicants may file final responses by May 2. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and copy editing by Nicholas Kyonka at nkyonka@thewirereport.ca

Sun News asks CRTC for ‘new entrant’ access to the broadcasting system

Broadcast | April 23, 2013

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