Source : Globe & Mail

GATINEAU, Que. — Federal hearings in front of Canada's broadcast regulator Wednesday provided the clearest glimpse yet of how divided the television sector is over a proposal by the country's big television networks to start charging fees for their signal.

The hearings essentially pitted one company against itself, as Bell Canada appeared in front of the Canadian Radio-television and Telecommunications Commission to argue against CTV, the television network in which it owns a stake.

Executives with Bell Canada, owner of the Bell ExpressVu satellite TV service, told the regulator it "strongly opposes" the proposal, which has been submitted jointly by CTV and its rival, Global Television.

The networks want to charge cable and satellite distributors because they argue the distributors make billions of dollars off their services but give them no compensation for the feeds. The distributors say they provide access to millions of homes for the networks, which boosts the broadcasters' advertising revenues.

CTV and Global are seeking a fee of between 50 and 70 cents a month per subscriber, which is worth about $60-million a year to each network. The proposal has drawn universal opposition from the cable and satellite industry, including Rogers Communications Inc., Shaw Communication Inc. and Bell.

The Bell ExpressVu satellite service is owned by BCE Inc., which holds a 15 per cent stake in CTVglobemedia Inc., which owns CTV and The Globe and Mail.

But neither side is pulling punches. A day after a CTV executive characterized distributors such as Bell as freeloaders who regularly hike their own rates, ExpressVu lashed back, accusing the TV networks' claims of financial struggle as "crying wolf."

CTV fired back at ExpressVu later in the day, saying the network has to protect its own bottom line regardless of what the satellite company thinks.

"Nobody's crying wolf here," said Paul Sparkes, executive vice-president of corporate affairs for CTVglobemedia. "We're in a new reality. That's a fact, it's not rhetoric."

He said the satellite companies make money rebroadcasting network feeds, but don't support local television. The networks want the fees to cover the costs of such programming.

"The satellite companies are the worst offenders... Local TV is not important to them," Mr. Sparkes said.

CTV and Global have argued their financial fortunes are eroding amid competition from specialty channels, which do collect such fees, and the Internet. They want the cash infusion to help fund Canadian programming and news, which they are required to carry.

Bell ExpressVu suggested the claims by CTV and Global are overblown.

"We feel the broadcasters concerned simply haven't established that there is a problem here," said Gary Smith, president of the Bell Video Group, which oversees the satellite company.

"We think the broadcasters need to evolve their business model as we are evolving ours, and not come to the regulator for a regulatory fix."

Mr. Smith also noted that CanWest Global Communications Corp. chief executive officer Leonard Asper recently told analysts that network television should achieve profit margins of more than 10 per cent, even without the fees.

The cable and satellite companies have said they will pass any fees directly to consumers. If the proposal is approved, the fees would add between $2 and perhaps as much as $8 to a monthly bill, depending on how many networks are deemed eligible for the fees.

"We would have no choice but to pass this on to our subscribers," Mr. Smith told the CRTC.

He also suggested the cost to consumers could be higher than the fee itself, since the distributor would also need to recoup revenue from an expected loss of subscribers it predicts would happen if the fee is introduced.

However, as he did a day earlier with Rogers, CRTC chairman Konrad von Finckenstein questioned Bell whether its own price increases in recent years have led customers to cancel the service in significant numbers, as Bell argued the new charges would do.

Mr. von Finckenstein asked ExpressVu to provide data at a later date to support the claim.

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