Source: CBC

Story courtesy of Financial Post

Echoing similar calls made by the country's cable and satellite companies, Canada's three conventional television networks, Global, CTV and CBC, have arrived at a figure they feel is appropriate for consumers to pay to support local programming -- zero.

That compares to the $5 to $10 monthly rate increase that Rogers Communications Inc. and other major cable providers say will it cost subscribers if Ottawa approves a plan that forces consumers to pay broadcasters to redistribute station signals.

“There's a lot of money in their system over and above [capital expenditures],” said Bill Chambers, vice-president of communications at CBC on Tuesday. Those “are important, they have to invest, but there's a ton of money in their system to cover this without it coming from consumers' pockets.”

Try telling that to the country's cable and satellite firms.

“We don't have the flex to afford a fee for carriage regime,” said Phil Lind, vice-chairman for Rogers, the largest cable provider in Canada. “Our margins on cable are ... very slim,” he said, while satellite providers like BCE Inc.'s TV offering struggles to turn a profit.

However, with conventional over-the-air stations bleeding red and facing closures in some cases as the recession weighs and advertising dollars continue to slip away to specialty channels and other sources of content distribution, the country's regulator is set to weigh a new compensation system designed to protect the local content small-market stations produce.

On Nov. 16, broadcasters plan to ask the Canadian Radio-television and Telecommunications Commission to allow them have the right to negotiate with cable and satellite providers on new fees on the over-the-air signals they pick up and redistribute, currently for free.

Mr. Chambers said that with about $2-billion in profits in 2008, cable and satellite firms are in a position to ensure Canada's broadcast system as a whole remains viable.

Profits at the cable companies have steadily climbed over this decade in light of easing regulations, yet cable providers maintain it is not enough to justify added fees. They also point toward a brand new fund, called the Local Programming Improvement Fund, that takes 1.5% of the industry group's total revenues, or about $100-million annually, and uses it to support smaller-market programming.

Any added financial burden imposed by Ottawa on them will flow on to Rogers' subsrcibers, Mr. Lind reiterated.

“Any tax is automatically passed on, like any business,” he said.

Nine out of ten Canadian households subscribe to either cable or satellite TV services, so the implications for consumers are significant. This promptied the federal government to order the CRTC to hold public hearings on Dec. 7, at which consumers may table their opinions on how best to remedy the situation.

In response, the cable companies have blitzed newspapers, TV and radio with “Stop the TV Tax” ads, which have triggered a “Local TV matters” campaign from the networks.

A decision is expect ahead of next spring's license renewals.

Observers say that Ottawa may well take the course that the U.S. has, and allow broadcasters to negotiate a fee for their signals or be given the right to remove them from cable and satellite offerings.

CBS Corp. has struck fee deals in recent years. Other major U.S. networks have not, but that is changing as the downturn has weakened the conventional model further.

Last week, Rupert Murdoch, the chief executive of News Corp. which owns Fox, said he would begin seeking compensation for signals as advertising alone could no longer support over-the-air broadcasting.

© CBC