Source: Toronto Star
THE CANADIAN PRESS
Canada's conventional television broadcasters are renewing their calls for a carriage fee in light of a report that shows the biggest private broadcasters' profits plummeted by almost 93 per cent last year.
Last fall, the Canadian Radio-television and Telecommunications Commission rejected a request by conventional broadcasters such as Global and CTV to charge cable and satellite distributors for carrying their channels.
The fee-for-carriage charge would have added anywhere from $2 to $10 to a subscriber's monthly bill and brought in an estimated $300 million in revenues to the broadcasters. However, the CRTC said the networks failed to prove they had enough economic need for the higher revenues.
But broadcasters say a CRTC report this week that shows the profits at private-sector conventional TV stations plunged to a 13-year low in 2008 proves the industry needs a carriage fee more than ever.
Canwest Global Communications Corp. (TSX: CGS), which owns Global Television, has been lobbying hard for the carriage fee ever since the proposed measure was rejected by the CRTC last fall.
Canwest spokesman John Douglas said Wednesday he believes broadcasting is in worse financial shape today than the CRTC report indicates. The report examines the fiscal year between Sept. 1, 2007 and Aug. 31, 2008, but the economics of the industry have weakened since then as the recession deepens.
"If you look at the timeframe of that report, believe it or not, that report is probably an optimistic view of where things sit," Douglas said. "It was before the real challenges in advertising really began."
The CRTC said recently it's looking for ways to narrow the focus of its hearings when the private conventional TV stations go before the regulator to seek licence renewals. The commission said it hoped to address "the challenges of the broadcasting environment, as well as the current economic climate."
Douglas added that the CRTC is currently reviewing Canwest's licences and the Winnipeg-based media company will continue to push for a carriage fee along with other ways to help conventional broadcasters.
"The industry is challenged and the model has to be reconfigured, and clearly there needs to be change on the regulatory side to reflect the economic realities of the industry right now," Douglas said.
In a release early Wednesday, Quebecor Media (TSX: QBR.B) described the CRTC's current regulations as "unfair" and said general-interest television in Canada is "seriously threatened unless it is freed from the straight-jacket of obsolete regulations."
The company, which owns the TVA network in Quebec, called on the CRTC to allow conventional private broadcasters to collect carriage fees, but said consumers shouldn't be forced to pay for "the system's glaring inability to adapt to the new media environment."
Isabelle Dessureault, Quebecor's vice-president of public affairs, said producers, distributors and broadcasters should be able to sit down and negotiate how the industry's profits are distributed without penalizing consumers.
Currently, specialty channels collect money from subscribers but conventional broadcasters don't get a cut when their shows are aired on cable or satellite TV.
Dessureault said there's a risk in asking consumers to pay more for their TV services.
"This is dangerous because if there are cheaper alternatives like the Internet, like other on-demand types of TV, this is not good for the industry," she said.
Dessureault added that the conventional channels employ far more people than the specialty channels and therefore have a much bigger impact on the Canadian economy as a whole.
The CRTC did not return calls Wednesday, but one industry watcher said the commission's mandate may force it to reconsider introducing carriage fees.
"The CRTC is required under the Broadcasting Act to ensure shelf space for Canadian programming and to encourage the viability of the broadcasting industry in Canada," said Ian Morrison, a spokesman for industry watchdog Friends of Canadian Broadcasting.
"Sometimes those two goals are in tension, but at this stage there's a real danger that at least local or regional Canadian programming might be threatened, and in some markets the only television news source might be threatened," Morrison added.
"I think this puts pressure on (the CRTC) to reconsider fee-for-carriage."
Morrison said the fee could make a huge difference to struggling broadcasters like Global, who would suddenly find themselves with an additional $100 million or more a year if they received just $1 from every English-speaking cable and satellite subscriber in the country each month.
The economic slowdown, combined with competition for advertisers and viewers from specialty channels and the Internet, led to the Canadian broadcast industry's worst performance since 1995.
The financial outlook for the conventional broadcast industry has been dimming in the last year or so, with job cuts and rising losses that threaten the future of some stations.
Last week, Canwest announced it is exploring the sale of five conventional television stations across Canada, part of the company's Canwest's E! network.
Canwest recently cut 560 jobs, or about five per cent of its workforce, including 210 at Global Television and its other TV operations.
CTV, a unit of CTVglobemedia (TSX: BCE), also recently cut jobs, as have other broadcasters.
The CRTC report said private-sector conventional TV stations employed 7,402 people last year, down from 7,873 people in 2007. Meanwhile, profits before interest and taxes fell to a mere $8 million from $112.9 million and revenues dropped 1.5 per cent to $2.1 billion.
© Toronto Star
