‘Neighbourhooding’ to create better business case for all-news channels, experts say

A CRTC proposal to group national all-news channels in “news neighbourhoods” and to more closely regulate how they are carried by broadcast distributors will make Canadian news channels a more viable business opportunity, industry experts said. “I think that those two things combined do have the potential to give a better business case for Canadian news organizations,” Gregory Taylor, a broadcasting expert and post-doctoral fellow at Ryerson University, said in a pair of telephone interviews. “It’s a way to access more eyeballs.” The CRTC launched a consultation this month on proposed new regulations to support all-news channels, after Quebecor Media Inc. said during a commission hearing this spring that its Sun News Network lost $17 million in 2012 and would not survive under the commission’s current regulations. Among other things, the commission said it will consider requiring broadcast distributors to carry Category C all-news channels on a “must offer” basis, and to group them in “close proximity” to each other on the dial in “news neighbourhoods.” Under the proposed changes, broadcast distributors would be required to offer their customers the opportunity to subscribe to Canadian all-news services, though they wouldn’t have to include them in their basic service packages. Distributors would also have make those channels available in a TV channel package—the “best available package consistent with their genre”—as well as on a standalone basis. Broadcast distributors would also have to file with the regulator any carriage agreements they reach with Category C channels so the regulator can see the rates, and would have to consider a number of factors when negotiating those wholesale rates for all-news channels, including historical rates and subscriber numbers. Talyor said the creation of news neighbourhoods, in particular, would help increase viewership numbers for some news channels by making it easier for consumers to find those channels on the dial. Increased viewer levels, he added, will allow the broadcasters to charge more for advertising spots on those channels, and to demand higher rates from the broadcast distributors during carriage negotiations. “I think the CRTC is now questioning what it did in 2008 when it declared all of the news channels financially robust and allowed them to stand on their own,” he said, in reference to the commission’s decision to allow competition in the previously protected mainstream sports and mainstream news programming genres. “I think they’re recognizing that may have been premature.” CRTC spokesman Guillaume Castonguay said in an emailed statement Wednesday that there are currently five national all-news channels that would be impacted by the proposed changes, including CBC/Radio-Canada’s CBC News Network and its French-language station Réseau de l'information (RDI), BCE Inc.’s CTV News Channel, and Quebecor’s Sun News Network and La Canal Nouvelles (LCN) French-language service. Sun News Network was the only one of those stations that recorded a pre-tax loss in 2012, according to CRTC data released in April. The other four recorded a combined $41.4 million in 2012, led by CBC News Network which had $15 million in pre-tax profits that year. Third-language new services, regional news services and "niche" business news services like BCE’s BNN and Quebecor’s Argent services are not part of the CRTC review. Richard Paradis, president of media and consulting firm Groupe CIC in Montreal, said in a telephone interview that the commission wants to play an active role in supporting Canadian news services. He noted that the commission’s call for comments said American all-news channels “were getting twice as much in terms of subscriber fees as were Canadian services.” “The commission’s more or less asking the question: should we not attribute more value to our own services and making them available?” he said in a telephone interview. Quebecor, which launched this year a failed bid to gain a CRTC order that broadcast distributors place its Sun News Network on their basic service packages, complained to the commission that some broadcast distibutors place the channel in the dial’s “stratosphere,” making it harder for viewers to find. Paradis said the CRTC is unlikely to move a service such as CBC News Network, which now sits lower on the dial, “to an area within the service options that would actually reduce their reach to consumers.” Michel Arpin, a Montreal consultant and former vice-chair of broadcasting at the CRTC, said the proposed changes would help support existing news channels, though won’t necessarily lead broadcasters to roll out new ones. Taylor agreed, saying that “this might be a strategy by the CRTC to support those that are already in place, first off, is to make sure we don’t lose a lot of them." Arpin said specialty operators looking to be put together in the dial goes back “to the first days of cable.” He said Videotron currently places French over-the-air channels together on the dial, as well as Canadian over-the-air English stations and American over-the-air stations. In the U.S., the Federal Communications Commission imposed “news neighbourhoods” as a condition in its 2011 approval of Comcast Corp.’s acquisition of NBCUniversal in 2011, requiring news or business news channels to be carried in adjacent or nearby channel positions on the dial. The U.S. Federal Communications Commission (FCC) later ordered Comcast to include Bloomberg Television in its news neighbourhoods, after the 24-hour business news channel complained to the U.S. regulator. Gregory Babyak, Bloomberg L.P.’s head of government affairs, said in an interview that U.S. all-news channels have benefited from being grouped together on Comcast’s services. “Within the industry, it is understood that neighbourhooding is particularly important for independent programmers to ensure that they have an audience,” he said. “Certainly in the news context, where independent news channels are neighbourhooded, they benefit from that neighbourhooding.” Arpin said other types of specialty services could also benefit from being grouped together in Canada, and could soon ask the CRTC for similar regulations for their services. “My suspicion is that the same request will be made by the sports channels, the documentary channels, the nature channels,” he said. Taylor said it is difficult to determine how successful any such request could be. “Right now, I think this is the CRTC recognizing the particular significance of journalism within the wider broadcasting context here,” he said. “So it’s possible that those others will want something later, but right now I think the CRTC is rather explicit in saying ‘no, we’re talking news right now.’” Arpin said broadcast distributors are reluctant to impose neighbourhooding on their own, which would require them to change their channel line-ups and could result in increased customer service costs if consumers object to the move or have a hard time finding their favourite channels. The commission, Taylor noted, appears determined to introduce neighbourhooding for at least the national, all-news channels. “They’ve presented a policy structure that they already have in mind,” he said, agreeing that broadcast distributors may push back against some of the commission’s proposals. “It will be interesting to see what does not go ahead out of that.” —With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Nicholas Kyonka at nkyonka@thewirereport.ca

‘Neighbourhooding’ to create better business case for all-news channels, experts say

Broadcast | August 21, 2013

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