Rogers VP predicts end of TV broadcasting, as we know it

GATINEAU, Que. — You can’t assume that young people who have never had subscription-TV service will eventually get it, Ken Engelhart, Rogers Communications Inc.’s vice-president of regulatory affairs, told the CRTC on Thursday. In the past, the number of subscribers increased at the same rate as the number of homes passed, though for the last four or five years, it has stayed flat and has now started declining, he said during Rogers’ appearance during the commission’s two-week Let’s Talk TV hearing into the future of television. “When digital technologies replace older technologies … it happens really fast,” he said, giving the example of Rogers’ video stores; despite the growth of video-on-demand and other alternatives, sales kept growing —until the day they leveled off. “And when it started to fall, it was like a roller-coaster. So what makes your job so hard is that by the time you’re sure that the online world is replacing the conventional world, it’s too late,” Engelhart said. “And yet you don’t want to move too soon.” He told the CRTC that while the broadcasting industry will move to Internet delivery over the over the next 20 years, he is unsure whether that means “the TV system we recognize has two years to go or 19 years to go.” “We tend to exaggerate the short-term and underestimate the long-term. I think we’ve got another five or 10 years,” he said. CRTC chairman Jean-Pierre Blais responded that a recent CRTC report showed that people are only watching about two hours of online video content a week. Engelhart said that figure is much bigger for youth in the millennial generation. “We are seeing more than 50 per cent of total video consumption for youth and young adults is occurring off the television set. It’s occurring online, on-demand, on mobile devices,” he said. Engelhart added that historically, the thinking has been that when they move into their own homes and buy bigger television sets, “they’ll somehow convert to the traditional broadcasting system.” “I don’t think we can count on that,” he added. Engelhart said creating products for this market is very important to Rogers, an endeavor he described as “a huge uphill battle.” In recent weeks, Rogers has launched, with Shaw Communications Inc.,a Netflix-style, over-the-top (OTT) service, available to those who subscribe to their Internet or TV service. On its own, Rogers recently announced an NHL hockey streaming service, available to anyone for $200 for the season. Rogers executives touched on a number of other issues during their appearance on Thursday. Phil Lind, the company’s executive vice-president of regulatory affairs, urged the CRTC not to remove the U.S. “4+1” channels from basic service. He said it is “a major problem and a fundamental flaw in logic,” and a “wrong, wrong method.” Rogers agreed with BCE Inc., which presented Wednesday, that the practice of simultaneous substitution shouldn’t be eliminated. It noted that most of the complaints around the practice are focused on the Super Bowl. Engelhart said the one program that “people want to watch the American commercials on” is the Super Bowl, and seemed to suggest eliminating simultaneous substitution for that one event. “If that’s the problem, let’s solve that one problem,” he said. Yet, Rogers Media president Keith Pelley said: “The importance of simsub on that Super Bowl is very critical,” describing its value to the Canadian broadcaster that gets its rights, which is usually Bell Media’s CTV. In contrast to Bell, which argued Wednesday that local TV needs a second revenue source, Pelley said conventional television is viable with one revenue source, but not if simultaneous substitution is eliminated, and only if the channels are given additional regulatory flexibility. Shaw,which also spoke on Tuesday, also warned against removing simultaneous substitution and the removal of the “4+1” channels. Barbara Williams, senior vice-president of content at Shaw Media, in response to a CRTC question about whether making the 4+1 channels discretionary services might benefit its conventional channel, Global, said that it wouldn’t as long as they are available in the country. “As long as those U.S. services are in this country, we’re stuck. We must adhere to their schedule, we must play their game,” she said. Williams said local TV can be viable under current conditions, though she added that a pick-and-pay regime would harm the company’s specialty channels. “Even our strongest services like Food Network, History and Showcase will be immediately weakened. In competition with targeted online advertising, reach is the most important thing we have to offer,” she said, adding that advertisers might leave if audiences shrink as little as 10 per cent. She added that channels like BBC Canada, DejaView and IFC might not be viable under pick and pay. Officials with Cogeco Cable Inc., which followed Shaw, told the commission it should focus more on vertically integrated conglomerates that own Canada’s biggest TV distributors. The CRTC “must refocus its regulatory framework on dealing with and disciplining” those companies to prevent them from abusing their power over content, said Louise St-Pierre, president of Cogeco Cable Canada. Cogeco, St. Pierre said, has only seven per cent of the broadcasting distribution market, and has “no opportunity or incentive to game the system at the expense of Canadian consumers.” Cogeco CEO Louis Audet said he agreed with the CRTC’s proposals for pick-and-pay, affiliation agreements and distribution of non-Canadian programming services, though the regulator needs to use its power to ensure the largest companies actually implement these ideas and allow smaller service providers like Cogeco to offer flexible services to their consumers. Audet said his company is in favour of making a small basic service available to Canadians, as long as it includes the conventional U.S. broadcasters customers are used to seeing. American channels have been a part of basic television service for 60 years, St-Pierre said, do not add to the cost of the basic service and are available over the air to many Canadians. “When Canadian consumers will actually realize that they will have to subscribe to a basic tier that does not include major American conventional television networks and to separately subscribe to have access to them through their BDU, there could be an adverse reaction,” she said, adding that customers will blame the government, the regulators and the distributors for the absence. — With reporting by Anja Karadeglija at akarad@thewirereport.ca, Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Rogers VP predicts end of TV broadcasting, as we know it

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Rogers VP predicts end of TV broadcasting, as we know it

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