News channels face funding challenges after CRTC decision

Canada’s national news channels face new obligations from the CRTC even as the regulator is taking away their place on basic cable, raising questions about their future finances. Last month, as part of the CRTC’s wide-ranging review of its television rules, the regulator detailed a new basic package of cable channels that excludes the national news channels from BCE Inc. and Quebecor Inc. and any future entrants into that market. At the same time, the CRTC is ordering broadcasters to unbundle their offerings and offer channels on an à la carte basis in 2016, putting the onus on consumers to actively seek out and subscribe to national news services such as CTV News Channel and Le Canal Nouvelles. Peter Miller, a communications lawyer and broadcasting consultant, said in a phone interview that news channels, like all specialty channels, will see a drop in subscriber revenue. "There's been an acknowledgement from the CRTC that this will create some losses in the TV sector," Miller said. "There are going to be losses. The question is: Where do they hit? Certain services will lose more, certain services will lose less." When the unbundling plan was announced, CRTC Chairman Jean-Pierre Blais told The Wire Report that the regulator isn’t responsible if some channels can’t compete in an unbundled world. “The commission can’t be in the job of protecting everybody’s business case, including bad business cases,” he said. “It’s our belief that a healthy ecosystem requires some companies to go under and just face the market reality.” A spokesman from BCE declined to comment for this story, and Quebecor did not respond to a request for comment. Although TV providers are allowed to augment their basic packages with American over-the-air networks and, in some markets, with non-local Canadian over-the-air stations as long as it keeps the cost at $25 a month or less, CRTC spokeswoman Patricia Valladao said in an email that TV providers would not be able to add specialty channels such as national news services to the basic package. CBC’s two national news channels, she added, will only be mandatory in the second language of a given market, meaning that CBC News Network will be part of small basic in all francophone markets while RDI is a part of small basic in all anglophone markets. In an email, CBC spokeswoman France Belisle said it was “too early to speculate” about changes to the revenues for CBC News Channel. “It is reasonable to expect that many subscribers will stay with the status quo,” she said. The Let’s Talk TV ruling that came on March 12 eliminated many genre requirements for specialty channels but added new rules for national news channels. Effective at the time of their next licence renewal, national news services will have to broadcast an average of 16 hours a day of original programming seven days a week, including reruns; maintain a live broadcast facility as well as news bureaus in at least three other regions; and 95 per cent of their programming must be news, analysis, documentaries and “reporting and actualities.” The CRTC’s intervention in news, the regulator said, is demanded by the importance of Canadian news. “National news services play a vital role … by helping Canadians participate fully in the democratic, economic, social and cultural life of their country, their regions, their provinces and their neighbourhoods,” the CRTC said in this decision. “The Commission considers that the national nature of these services must be better reflected in the criteria used to license these services.” In its March 19 decision that introduced the requirement for skinny basic packages, the CRTC said service providers must continue to offer national news channels to subscribers across the country. In September, Shaw Communications Inc. applied to the CRTC for a licence to operate a new all-news specialty channel called Global News 1. Miller said Shaw’s proposed news channel, and those from Quebecor and BCE, make business sense even if they don’t pull in the same revenue as before the CRTC’s decision because those channels raise extra money from subscribers and feed content to the companies’ ad-supported, over-the-air news broadcasts. “If the business case is a break-even, then they do it anyway,” he said. In an email, Shaw spokeswoman Rishma Govani said the company would not comment on the planned news channel as the CRTC has yet to approve its application. Gord Hendren, president of Charlton Strategic Research Inc., said in a phone interview that news channels face the general challenge of a post-bundle world as well as obstacles specific to the news industry. "News is going to face many of the same challenges as other channels, in terms of competing in the new world," he said. "They'll also be challenged in terms of: Will the consumer want to have more than one news channel in a world where you can access information digitally and by mobile or computer very quickly?” Hendren said news remains an important part of broadcast television for many Canadians, and noted that the CRTC, in its decision, quoted a Harris/Decima survey that said Canadians view news as the most important kind of television programming. “They will still seek it out,” he said. “However, they might draw a line. Do they really need CBC, CTV, CNN and others? I think there’s going to be a culling of the herd, a trimming of the channels.” The national news channels will have to specialize in order to maintain their audiences, he said. “They will really have to push for defining their relevance and their differentiation,” he said. Hendren added that Quebecor’s Sun News Network, which was shut down earlier this year, attempted to differentiate itself through analysis and comment but did not survive in the face of the “trusted brands” of CTV and CBC. “The existing brands are very strong,” he said. “Global has some history with building a news brand. They would have a shot; it’s not like they’re new. But having said that, it’s like they’re all fighting for a shrinking pie.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

News channels face funding challenges after CRTC decision

Broadcast | April 1, 2015

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News channels face funding challenges after CRTC decision

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