Media de Novo local avails application still in play as industry lobbies for and against it

Canadian broadcasting industry players are lining up on both sides of the local availability debate as the CRTC considers a Média de Novo application that’s still in play. Local availabilities, or local avails, are commercial time spots on American foreign channels during which Canadian distributors can advertise their own services--such as TV or Internet services--but they cannot insert commercial advertising. For years, distributors have argued for the right to sell local avails as advertising spots, suggesting that it would help boost industry revenues in an age of declining ad spends and enable distributors to spend more on Canadian programming funding. But broadcasters oppose the move, saying distributors should not be allowed to sell advertising directly to companies. Distributors would effectively take advertising dollars away from the broadcasters, they argue. The CRTC has repeatedly decided not to allow distributors to sell advertising on local avails. Last year, Média de Novo submitted an application that proposed inserting up to two minutes of advertising per hour during local availability time on American cable channels broadcasting in Canada. The company proposed to return 70 per cent of its revenue—generated from selling advertising spots across several channels—to Canadian broadcasting and production funds. Following a CRTC non-appearance hearing on the application July 7, CRTC commissioners are poring over 57 submissions on the application from broadcasters, distributors, content producers, researchers and analysts. Broadcasters such as Corus Entertainment Inc., the Aboriginal Peoples Television Network (APTN), and CBC-Radio Canada oppose the application. The broadcasters argue that advertising on local avails would stretch the already thin ad market by introducing new time slots. They say the application would make Média de Novo the only source to purchase advertising time on local avails across several channels, giving the company an audience reach that most broadcasters can’t achieve. In submissions to the CRTC early this year, distributors SaskTel, Rogers Communications Inc., and Bell Canada also opposed the application, pointing out that it was premature to consider it when the commission had yet to formulate its local avails regulatory framework. In March of this year, the CRTC released a decision on the matter, saying “that a net benefit from the sale of commercial advertising for insertion in local availabilities at this time has not been sufficiently demonstrated.” But that didn’t put an end to Média de Novo’s application. According to a CRTC official, the commission gave the company the option of withdrawing its application, or amending it to address discrepancies between the decision and the proposed business model. In April, Média de Novo submitted a letter to the CRTC, outlining the ways in which its application was still within the guidelines of the commission’s decision. The company said its application meets a CRTC requirement that any local avails advertising system should promote new forms of advertising, such as targeted ads. In light of a rebounding advertising market—Média de Novo pointed to Astral Media’s 11 per cent TV advertising improvement in its second quarter—arguing that its new business wouldn’t hurt broadcasters’ revenue opportunities. Following last week’s non-appearing hearing, the CRTC began the process of reviewing the application and the submissions. The CRTC official said it would be difficult to predict how long it will take commissioners to reach a decision. Teri Budd, regulatory affairs manager at SaskTel, said the company continues to oppose the Média de Novo application. “We believe the use of local availabilities is something that’s negotiated between BDUs and non-Canadian programming services,” she said. “That’s an item that, contractually, Média de Novo did not have the right to.” Budd said SaskTel hopes to monetize local avails in the future, but, for now, the company isn’t pushing to change the CRTC’s rules on that. “That would be dependent on the commission’s decision with the Média de Novo application,” she said. “We’ll assess that as the time comes.” Michael Schwartz, president and executive producer at Avion Film Productions Inc., a commercial producer in Toronto, said the industry would benefit from Média de Novo’s application, which would help boost Canadian commercial production. “The commercial industry has had a tough time of it, certainly over the last couple of years,” he said. “I think if anything happened to that industry, the infrastructure—the equipment companies, the studios, the crew guys—they’d be disappearing in droves … That’s why this was definitely worth supporting.” Schwartz added: “It was a win-win for everybody. It was great for the advertising production community and a way of getting money for the production industry in general.” Ian Collins, founder and CEO of Toronto-based digital screen media company Fifteen Degrees Ltd., said his company supports Média de Novo’s application. He said the application continues to have a good chance before the CRTC even though the regulator again decided against local avails advertising in March. “I don’t want to name names, but I’m familiar with the application, and there are some of the best minds in this area in Canada that are supporting it and driving it,” Collins said. “The people in authority, I think, hold all of the people involved in very high regard ... I do think they will give it review and consideration.” news@thewirereport.ca

Media de Novo local avails application still in play as industry lobbies for and against it

Broadcast | July 15, 2010

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