U.S. channels have ‘little bargaining power’: CRTC

Documents from the CRTC indicate its officials felt that if conventional television broadcasters from the United States had the right to negotiate their carriage by Canadian service providers, they would have "little bargaining power" due to their "marginal viewership" in Canada. "Since Canadian television stations acquire the rights and broadcast the most popular U.S. programs in Canada, simultaneous substitution significantly limits Canadian viewership to U.S. conventional stations," said an April 19, 2013, briefing note from Scott Hutton, the commission's executive director of broadcasting, to CRTC Chairman Jean-Pierre Blais. This memo and other documents were attained through an access-to-information request. The CRTC declined to comment further on the issue. The note includes a reference to U.S. conventional channels attracting 5.3 per cent of total TV viewing in Canada in the 2010-11 broadcast year. The latest data from the CRTC puts it at five per cent for the 2012-13 broadcast year. The memo is related to request to meet with Blais from Francis Schiller, a consultant with Ottawa-based Public Interests Research and Communications Inc., who represents a group of American broadcasters called the U.S. Television Coalition. The document noted how CRTC officials met with Schiller in June 2012, where he said his clients' goal is to receive compensation for their carriage in Canada, and was seeking the CRTC's position on this issue. "Commission staff was, of course, noncommittal," the briefing says, "but indicated it was difficult to see how diverting money to U.S. television stations would benefit the Canadian broadcasting system." The memo went on to say: "There is no question that access to U.S. stations is seen as a 'birthright' by many subscribers, and that any change to their distribution would be a loss of perceived choice. However, given their marginal viewership, most stations would have very little bargaining power with BDUs, possibly being placed on higher tiers or losing their distribution altogether. Ironically, an unintended consequence could ultimately be more viewing to Canadian services." When the U.S. Television Coalition brought its concerns to the CRTC's hearings on the future of television this month, Blais told the group that its concerns are more of copyright issue than something over which the CRTC has jurisdiction. Schiller told The Wire Report he disagrees with the CRTC's assertions of there being little viewership of U.S. over-the-air channels in Canada, given how many service providers pleaded with the CRTC during the hearings not to take these stations out of basic packages. "There's obviously demand for the services,” Schiller said in a phone interview. Broadcast distributors such as Rogers Communications Inc., Cogeco Cable Inc. and Manitoba Telecom Services Inc. urged the commission not to exclude the so-called U.S. 4+1, in reference to NBC, CBC, ABC, Fox and PBS, from the most basic Canadian television packages. Cogeco warned of an "adverse reaction" from consumers if they lost American channels in their basic packages, while MTS predicted such a regulation would result in an "extended basic package , and everything that's not in the extended basic package will go away." Schiller agreed that U.S. broadcasters have little negotiating power currently because Canadian service providers can distribute their signals without consent. He added that the CRTC's data on Canadian viewership of U.S. stations is questionable. Schiller noted that last year's Communications Monitoring Report contained a footnote that said differences in data between the 2008-09 broadcast year and 2009-10 — for which the proportion of viewing for U.S. conventional channels was shown to decrease from 10.9 per cent to 4.7 per cent — might be partially the explained by a change in measurement technology. Schiller said the new meters being used to measure viewing of U.S. channels in Canada are underestimating the viewership because many American stations have signals that are not picked up by the tracking technology currently in use. Schiller said U.S. broadcasters support the CRTC's proposal that U.S. stations not be included in basic TV subscriptions in Canada. He said U.S. broadcasters want the right to consent to their signals being picked up and to negotiate all the associated terms, such as payments and whether simultaneous substitution is permitted. He said the benefit for Canadian consumers of such an arrangement is that the broadcasters would have more control over how their signals are carried, and viewers would therefore get better quality. For example, Schiller said many broadcasters have digital over-the-air signals that include various layers of programming that are often stripped out by the distributors that carry the services without authorization. If U.S. conventional stations negotiated their carriage in Canada, Schiller said Canadians would also get relief from having to pay for a surplus of U.S. programming, much of which they don't watch. "I like to use the anecdote of on Thursday night you can watch Big Bang Theory 35 times, even though you might just want to watch it once," Schiller said. "You end up paying for all 35 airings whether you watch them or not." Schiller said the CRTC's recent Let's Talk TV hearings seemed like an ideal forum for the coalition to get its point across. He said U.S. broadcasters he represents — located in places such as Buffalo, N.Y., the Detroit area and St. Paul, Minn. — are waiting to see the conclusion of that process before they decide what other options to exercise. He said it is ultimately a "trade issue" and that "there are available mechanisms and forums to deal with these concerns." Schiller added: "We think that Canadian-U.S. bilateral relations will be sufficient to deal with these concerns." The concerns of U.S. broadcasters, which were expressed in a letter from the U.S. Department of State to the CRTC last year, caught the attention of Shaw Communications Inc. Documents attained from the CRTC attained show that company officials set up a meeting with Blais in March this year to discuss such issues. Shaw declined to provide comment on the U.S. broadcasters demands for compensation and consent rights for their signals in Canada, as did other broadcast distributors such as Rogers and BCE Inc. Cogeco spokesman René Guimond said in an email Friday that his company is "strongly opposed" to giving over-the-air U.S. broadcasters the right to negotiate fees for carriage because "compensation is already being made to U.S. broadcasters under the Canadian copyright retransmission regime in place." In June 2012, Rogers' senior vice-president of regulatory, Ken Engelhart, told The Wire Report it would be "disastrous" if U.S. broadcasters won the right to negotiate compensation for their signals. “Customers would end up paying more for exactly what they’re receiving today,” he said. “Not only you have money coming out of the cable systems, but money coming out of Canada.” — With reporting by Derek Abma at dabma@thewirereport.ca and editing by Peter Henderson at phenderson@thewirereport.ca

U.S. channels have ‘little bargaining power’: CRTC

Broadcast | September 26, 2014

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