Local TV needs another revenue stream: Bell

GATINEAU, Que. — BCE Inc. executives asked the CRTC Wednesday to put in place a “local specialty” model for local television stations, which it said are no longer financially sustainable. “The economics of an advertising-only revenue stream can no longer pay for the costs,” Bell Media president Kevin Crull told the CRTC during the third day of its two-week Let’s Talk TV hearings into the future of television. Crull said that while viewership of local news has risen over the past five years, it’s “not generating the revenue to pay for the content” despite the aggressive cost-cutting the company has done. “I think we’re out of cost ideas that don’t dramatically damage the delivery of the product.” “We, like all others in this space, need a second revenue stream to fund the continuation of local programming,” he said. Under Bell’s proposal, that revenue stream would come from wholesale fees paid by the broadcast distributors to carry those channels, and would involve taking down over-the-air transmitters. CRTC commissioner Candace Molnar said the proposal amounts to conventional television without over-the-air transmissions, with no additional local programming. “You would charge BDUs, who may pass those costs onto customers,” she said. She asked whether Bell has a Plan B if the commission decides customers shouldn’t have to pay for conventional channels that have always been free. Crull said the company doesn’t have an alternative, and that it has, over the years, tried to "improve the cost side of the business, because the revenue side of the business has run out of steam.” Even exiting some of the 30 communities in which Bell operates local channels “doesn’t alter the economic situation," Crull said. “It would be terrible to abandon any of these communities, but if I thought it would make local TV sustainable, I would,” he said. BCE chief regulatory officer Mirko Bibic told the CRTC hearing that “some may have to lose that over-the-air access so the rest of the consumers … continue to get it.” When speaking to reporters afterwards, he declined to elaborate on the potential consequences should the CRTC not adopt Bell’s “local specialty” model. “The consequences are that businesses don’t operate to lose money long-term,” he said. “We didn’t want to come forward to the commission and have a debate about ‘if you do this, we shall react with that,’ because that’s not the nature of this discussion.” In response to a question about why Bell seems to be the only company saying a second revenue stream is necessary, Bibic said “you’ll have to ask them.” Rogers Communications Inc., which has sounded the alarm in previous hearings about the dangers facing conventional TV, is scheduled to appear Thursday, the same day as Shaw Communications Inc. During Bell’s appearance, Molnar asked the company how much longer conventional television can operate under current conditions, to which Crull responded that “we’ve lost money for the past four of five years. I think our management has been extremely patient.” Crull said that shutting down the transmitters by itself, without allowing broadcasters to negotiate wholesale fees from service providers for local stations, would “actually make a dire situation even worse,” since the savings the company would gain from shutting them down “would be more than offset by lost revenues from advertising revenue from over-the-air viewers and copyright payments under the distant signal retransmission regime. “ He also warned that eliminating simultaneous substitution, as the CRTC has proposed, “would be immediately devastating for local TV.” The fewer-than-500 complaints the CRTC received last year do not justify stopping a practice Bell estimates to be worth more than $450 million annually, Crull added. Under the company’s local specialty model, simultaneous substitution would continue, the executives noted. “I get worried here because we know what the financial impact of simsub is. It’s at risk. We need to convince you not to eliminate simsub in whole or in part,” Bibic said. “If we convince you of that ... all we’ll have convinced the commission to do is to maintain the status quo, when what we want is to have a discussion about how to sustain local TV in the years ahead, because status quo won’t do it.” Molnar pointed out that one of the arguments made in favour of eliminating simultaneous substitution has been to give broadcasters more programming flexibility. Crull responded that scheduling flexibility “is a small benefit compared to the lead-in audiences and the promotional audiences you get from simsub.” During the hearing, Crull addressed a question posed by the CRTC panel Wednesday, when it asked Quebecor Inc., which was expressing worries about the danger posed by Netflix Inc., why it doesn’t just go over-the-top only. On the first day of the hearing, Google Inc. urged the CRTC to keep OTT platforms unregulated. “I think an important part of that message is, that’s not our business model, and we can’t meet our objectives or our passions of producing local content and supporting Canadian programming in that way,” he said. With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Local TV needs another revenue stream: Bell

Broadcast | September 10, 2014

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Local TV needs another revenue stream: Bell

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