Mr. Robert A. Morin
Secretary General
CRTC
Ottawa, ON
K1A 0N2

Dear Mr. Morin:

1. Friends of Canadian Broadcasting does not seek to appear at a Public Hearing.¹ This submission does not support or oppose the Média de Novo Inc. application but offers comments and poses questions which Friends invites the Commission to address in its consideration of the application.

2. Média de Novo seeks permission to sell the ‘local availabilities’ on “approximately seventeen” U.S. specialty channels² which it describes as averaging three minutes per hour. Assuming conservatively that there might be only two minutes of local avails per hour and that 25% of these availabilities would continue to be reserved for the benefit of BDU promotion as Média de Novo proposes, then the applicant proposes to sell at a minimum at least three thirty-second commercial units per hour.

3. Assuming also that these local avails were sold for only 18 hours daily (although each channel broadcasts 24 hours daily), then each of the seventeen channels would generate 54 thirty-second units per day, or 19,710 units per annum. This constitutes 335,070 new advertising units that Média de Novo proposes to introduce into the Canadian advertising marketplace each year.³

4. As selling out of ad space inventory will not likely be a big issue for Média de Novo, it is likely that the applicant will price this inventory below that of Canadian over-the-air and specialty channels, thereby depressing the overall price of television advertising in Canada.

5. This prospect will naturally be welcomed by the advertising community, as will their ability to purchase advertising in an enormous amount of popular U.S. programming that they are currently unable to access.

6. We note that there would be no negative income tax consequences from purchasing ads on this programming because the vendor would be a Canadian company and these are U.S. specialty channels rather than border stations.

7. Although the advertising community is on record as asserting that it would increase spending if U.S. specialty channel space became available, Friends urges the Commission to exercise appropriate skepticism on this point. With the exception of inflationary increases, the advertising pie would not likely grow.

8. What would change is the relative share of various media. This application, if successful, could be expected to migrate advertising revenue from conventional over-the-air channels and some Canadian specialty channels to the U.S. specialty channels.⁴

9. We also note that Média de Novo is a for-profit corporation and, should the Commission approve its application, it would be handed a very profitable, exclusive franchise.

10. If, notwithstanding the above considerations, the Commission were still disposed to approve this application, Friends recommends that the 70% commitment to finance Canadian programming be raised to a minimum of 80%.

11. Given that the Commission has issued Broadcasting Notice of Consultation CRTC 2009-732, Friends suggests that it might not be appropriate at this juncture to accede to Média de Novo’s request for 9 (1)(h) status.

12. Finally, we submit that an application with so much capacity to alter the audio-visual landscape should not be licensed without a Public Hearing which could evaluate thoroughly the projected benefit to Canadian programming against the disruption to other elements of the Canadian broadcasting system.

Yours sincerely,
Ian Morrison
Spokesperson

cc: Média de Novo (fax confirmation receipt appended)

*** End of Document ***

¹ Our reading of the Notice is that the Commission does not intend to hold a Public Hearing.

² In fact, it appears that there are eighteen channels currently: AMC, A & E, BET, Bloomberg, BBC, CNBC, CNN, Fox News, Golf, GSN, HLN, MSNBC, Military, NFL, Speed, Spike, TLC and TBS. And this list may be expected to expand in future.

³ We believe our estimate considerably underestimates Média de Novo’s proposed avails. We note that the applicant’s financial assumptions do not include amount of inventory, assumed cost per point, or cost per thousand. We imagine that affected licensees will be in a position to provide the Commission with a more detailed analysis of the full potential of this application to disrupt the television advertising ecosystem.

⁴ See Canadian Media Directors’ Council MEDIA DIGEST 09/10, pages 13 & 14.