After several months of interminable, fact free and boring ads, the CRTC has spent the last week and a few days trying to get Canada’s broadcasters and cable and satellite companies to come to some agreement on fee-for-carriage, in other words, allowing the broadcasters to get paid for what has always been a free service. As all Canadians know by now the public face of the battle is between the cable and satellite operators who claim they want to save us from the dreaded new “TV tax” and the country’s broadcasters who want to save local television.
Anyone who has paid even peripheral attention to the debate knows that both sides are, forgive the colloquialism, full of crap. The broadcasters have never shown any interest in local TV. The last time CTV cared was when it was a consortium of private owners like the Bassetts in Toronto and the Peters in B.C. who actually controlled the network. The shoe was on the other foot in those days. There was little interest in the network. Since Bell and the Globe Media bought out all the individual owners and centralized the running of the network local has been a bad word at CTV.
It’s even worse at Canwest/Global. Here, there has never been any interest in local TV. Before Izzy Asper got control, Global TV served all of Ontario from Toronto. There was never any coverage of Sudbury, Thunder Bay, Windsor, London etc. In Winnipeg the Asper station was a joke. When I was news director at Global and there were massive forest fires in Manitoba Izzy’s Winnipeg station refused to cover the fires. “Too expensive” they said. “We don’t have the manpower” they argued. We had to send a crew from Toronto.
In truth, and we all know this to be true, all CTV and Canwest/Global care about is the money. They have gone about making this abundantly clear in the past week. When Ivan Fecan, head of CTV, was asked if he would guarantee the fee-for-carriage money would go to local TV and local programming he said no. Canwest/Global said the same. So what was the point of all the advertising produced and aired by CTV and Global? Was it a false advertising? The only conclusion I can come to is yes, it was all a lie.
Further, to prove that money is the only motive, the networks level of greed showed no boundaries, they took their chutzpa to new levels demanding that on top of being paid for their free signals they want to expand simultaneous substitution. According to Michael Geist in The Globe and Mail:
“The broadcasters now wish to expand simultaneous substitution policy with program deletion…when a Canadian broadcaster purchases the rights to a U.S. program, they would have the right to air it whenever they choose within a seven day window. The hook is cable and satellite companies would be required to block the U.S. broadcast of the same program if it did not air simultaneously.
“The proposal, which would lead to millions of Canadians regularly encountering blank screens instead of expected programs, would perversely increase the attractiveness of U.S. programming…it would (also) send more Canadians away from broadcast television to the Internet…”
The broadcasters confirmed as well, they are not willing to invest in digital transmitters for all the local communities leaving residents in small cities like Kingston without any over the air signals, another slap at local TV. To add insult to injury the broadcasters are asking for an extra two years to make the switch to digital. In the U.S. that job was completed earlier this year. CTV and Global want us to wait another four years. You may wonder what difference that makes to you. Well, it means the new spectrum , 700 MHz, that was supposed to come available will not. That means Canada will lose billions of dollars in revenues from selling that spectrum and that new wireless and open internet innovation and competition will not be available to Canadian consumers.
In the face of all this, it should be a slam dunk for the cable and satellite operators. The broadcasters want everything and are willing to give back nothing.
Well that sounds like the real world. The CRTC has seldom, if ever, had close ties to the real world. The consumer is always at the bottom of the CRTC’s list of cares. The CRTC’s job, as they see it, is to protect Canadian TV. Not TV production as in new dramas and comedies, but TV distributors and stations. The reason: without a bunch of TV stations operating in Canada there is no need for the CRTC to oversee television. So they protect the millionaire owners. More important to the CRTC is cable. Every decision they make is to fortify cable. As long as most Canadians get their TV through cable the CRTC is powerful. You see, you cannot block over the air signals at the border, you cannot stop satellite feeds from entering Canadian air space, but you can control Canadian companies who distribute these signals over cable to millions of Canadian homes. Thus, over the years the CRTC has become the political arm of Rogers Cable. I have appeared before the CRTC five or six times and on each occasion at least half the commissioners were former Rogers employees. In many cases they went back to work at Rogers after their term was up at the CRTC. The connection is too obvious and has been going on for too long to call this a coincidence. CRTC decisions inevitably favour the cable companies first, the broadcasters second, the satellite companies third and I have to say it, the consumer never.
So where does this leave the entire debate? It’s impossible. The CRTC can’t hurt either side. It explains why Konrad von Finckenstein says he’s sick of the whole thing. He finds himself on the horns of a major dilemma: how to help the greedy broadcasters without harming the greedy cable companies or vice versa. To make it worse, signals from the government suggest they don’t want the consumer to pay. Tough luck Konny, you lose no matter what you decide. Here’s hoping you don’t take the rest of us with you.
Filed under: Media Commentary, Political Commentary , CRTC, CTV, Canwest, Izzy Asper, The Globe and Mail, Global, Ivan Fecan, Bell, Globe Media, Konrad von Finckenstein

December 2, 2009 • 5:16 pm 0
Bye Bye Network TV
With all the ‘bull’ being raised at the CRTC hearings in the National Capital District it amazes me that nobody has glommed onto the obvious. The great television networks of North America are a dying breed. CTV and Global are wasting their time and ours by arguing for a future that doesn’t exist. In fact if you read between the lines, subscription fees are another way of saying “we want to be a cable service.”
The greedy part of what they are doing is that they are attempting to keep all the perks of over-the-airways channels: must-carriage, simulcasting, the best spots on the dial, while charging the same sort of fees that TSN, Slice or W charge.
The real truth is that they cannot win these new fees without offering something huge in return. The most obvious is to promise greater amounts of Canadian content. It will be the CRTC’s job to make sure that the content they offer is in the form of drama, comedy and documentary production. The nets would far prefer to offer cheaper reality TV. The nets will offer the Canadian programs in dead zones like opposite hockey, Friday nights, outside prime time. It will be the CRTC’s job to get guarantees for a percentage of prime time and while I’m at it, an assurance that Canadian shows will have the same sort of promotion budgets that the big U.S. shows get.
I’m not holding my breath. The CRTC is toothless in dealing with the networks. Global seldom if ever lives up to its license guarantees. CTV uses every trick to shortchange Canadian production. The CRTC has always been silent on any transgression.
The bread and butter of CTV and Global is the big U.S. blockbuster series. That’s where they get their audience. That’s where they make their money. The U.S. shows are way cheaper to buy than spending $2 million and more per episode on Canadian drama. And here’s the rub: the U.S. networks are in as bad shape as CTV and Global.
Many American media experts point to two events in the past year as forewarning the end of the network era. First came Jay Leno’s new prime time talk show. It basically said NBC doesn’t have the money to produce three hours of prime time every weekday. More recently Oprah’s announcement that she is walking away from her hugely successful show that runs on network television. Everyone knows she will reappear on her own cable station that’s about to be picked up by cable and satellite companies in the U.S.
The writing is on the wall. NBC is trying to sell itself to Comcast, the biggest U.S. cable operator. What’s fascinating about this sale is that it’s General Electric’s cable channels: Bravo, USA, MSNBC, SyFy and CNBC, not NBC are what Comcast wants, not the fourth place broadcast network.
The experts agree that broadcast TV that relies on advertising may be a broken model. In a recent article in the U.S. Tim Arango and Bill Carter looked at the future of broadcast networks:
“The business model of the big three networks — which became four when Fox began prime-time programming in 1987 — has for decades relied on a simple formula: spend millions on original programming that will attract advertiser dollars and later live on as lucrative reruns in syndication.
But ratings are going down. In the 1952-53 television season, more than 30 percent of American households that owned televisions tuned in to NBC during prime time, according to Nielsen. In the 2007-8 season, that figure was just 5.2 percent.
The mass audience — the bread and butter of broadcast networks — has splintered into niches as viewers flock to alternative entertainment choices on the Internet, to video games and to cable channels dedicated to individual tastes, like Ms. Winfrey’s forthcoming OWN, the Oprah Winfrey Network.
And yet, programming remains expensive — a network drama costs about $3 million for one hour — and advertisers are becoming reluctant to pay ever-rising premiums for prime-time shows. All the networks have tried to adjust, putting on more reality programming, for example, that is cheaper to produce.
NBC made perhaps the biggest bet of all — moving Jay Leno to prime time each night at 10, saving the millions it would have cost to develop a scripted show in that time spot. The Leno move has been the subject of intense scrutiny by the media, because Mr. Leno’s ratings have lately fallen on several nights well below even the modest guarantees NBC made to advertisers.
While networks have found it difficult to charge ever-higher advertising rates in the face of declining ratings, big cable channels — like USA, TNT and TBS — have flourished with the millions of dollars in subscription fees from cable operators that they receive, on top of advertising.
“The cable players have a robust affiliate fee stream that allows them to better finance original programming,” said Anthony DiClemente, a media analyst at Barclays Capital. “The main structural issue right now with broadcast is that the vast majority of revenues are from advertising.”
Profit margins for cable networks are also much better than broadcast networks’. Derek Baine, a senior analyst at SNL Kagan, said big cable networks earned profit margins of 40 to 60 percent, while a good year for a broadcast network is a 10 percent profit margin.
Illustrative of this is a comparison of NBC to ESPN, one of the most popular cable channels. Last year, revenue for the two networks was roughly equal. NBC, according to SNL Kagan, generated about $5.6 billion in advertising dollars; ESPN generated a total of about $6 billion in revenue — $1.6 billion from advertising and $4.4 billion in subscriber fees. But ESPN was vastly more profitable. Its cash flow was about $1.4 billion, while NBC’s was $304 million.”
What does this mean for CTV and Global? It means the shows they have depended on to survive, the ones they want even better access to, may soon cease to exist. How long can a dying industry continue to produce $3 million episodes that get smaller and smaller audiences? Not long. Global without House and NCIS is dead. CTV without the CSI’s and Grey’s Anatomy is likewise in big trouble.
So, instead of looking at ways to save the dinosaurs shouldn’t the huge brains at CTV, Global and the CRTC be planning for a very different future? A future where all TV is either by subscription or pay-per-view. A future that includes on-demand TV and television via the internet and cell phone. If these guys are so smart why can’t they see what’s happening before their eyes right now? The stupidity of the Aspers, Fecans and von Finckensteins is frightening to me. How about you?
Filed under: Media Commentary, Political Commentary , Bravo, CRTC, CTV, ESPN, Global, Ivan Fecan, Konrad von Finckenstein, Leonard Asper, MSNBC, NBC, Oprah Winfrey, TBS, TNT, USA Network