A dose of reality in the TV debate

Half-page ads from Global Montreal appearing in The Gazette

Half-page ads from Global Montreal appearing in The Gazette

CKMI, Global Montreal (formerly Global Quebec) has been heavily advertising the fact that it’s now finally on the Bell TV (formerly Bell ExpressVu) network, on channel 234.

Station manager Karen Macdonald says that after 12 years on the air, CKMI finally got added to the dial in late August. CFCF and CBMT have enjoyed places on the dial for years now, and this absence has always been a sticking point for the station. So, she says, “we are very happy.”

The reason is obvious: Quebec has a large number of satellite TV subscribers, and this move will give the station a much broader reach, which would translate into higher advertising revenues.

Bell TV isn’t paying them a dime to “sell” their signal. They’re stealing it. And Global couldn’t be happier.

I bring this up to point out the ridiculousness of the argument from the Local TV Matters people, led by CTV, that cable and satellite companies are “stealing” the signals of conventional broadcasters. In fact, the CRTC requires them to carry those signals, and many (especially satellite) would love nothing better than to get rid of conventional television stations from small markets whose spaces on the dial could be given to more lucrative specialty TV programming.

CTV et al argue what they want is “negotiation for value”, which is different from a mandatory fee for carriage. Supposedly, this means that the cable and satellite people would get in a room with each broadcaster and hammer out a fee for their signals. For such negotiation to work, each side would need a bargaining chip. So CTV seems to have accepted that cable and satellite companies could choose not to pay for TV stations if they find the price demand too high.

I’m highly skeptical of this. If the Global ad at the top of this post shows anything, it’s that being on cable and satellite brings in a lot of money. Are we seriously supposed to accept that they would just sit there and accept if cable and satellite companies decide they don’t want to pay and cut the stations off from 90% of their viewers?

There is little incentive for a cable or satellite company to carry a local conventional television signal. Hook up a pair of rabbit ears and you can get it for free. And since cable and satellite companies don’t charge for conventional television (and CTV wants to make sure that they couldn’t if this system were put in place), there’s every reason to believe that the negotiated price for carriage will be zero or close to it. If broadcasters balk, it’s no skin off the cable companies’ backs. They can simply delete the station from their lineups and add another specialty channel with non-stop Seinfeld reruns they can charge $2 a month for.

But, you argue, this negotiation system works in the U.S. And it does. Broadcasters there have the option of getting mandatory carriage for free or negotiating a price with cable companies. But U.S. conventional broadcasters have original programming you can’t get anywhere else. Canadian conventional broadcasters buy U.S. programming and rebroadcast it. Unless blocking U.S. channels is part of this plan, Canadians could tune into stations from Burlington, and all we’d miss aside from local news are shows like So You Think You Can Dance Canada.

I have sympathy for conventional broadcasters. They’re stuck in an unfair situation, competing against specialty channels that have no local programming requirements and provide the bare minimum of original programming, while being able to charge a fee and collect ad revenue. According to the CRTC, their profit margins sank from 5% ($113 million) in 2007 to 0% ($8 million) in 2008, a 93% decrease. They’re right when they say that the model is broken.

But the arguments they’ve been making are ludicrous. This latest one suggests that cable companies take 70% of cable bills and “pocket” it as pure profit. That’s ridiculous on its face.

According to the CRTC’s latest communications monitoring report, which is a far more reliable source than industry press releases, telecommunications companies’ profit margins are about 40%, but the margins from television broadcasting distribution are much lower than that. Cable made 28% profit in 2008, and direct-to-home satellite made 19%, both increases from the previous year. Those are very healthy profits, but not nearly as healthy as those from the telecommunications sector – telephone, Internet, wireless and other non-broadcasting activities that bring in a lot more money.

Like the broadcasters, the cable and satellite companies have banded together and launched a campaign filled with half-truths. They say that conventional broadcasters made $400 million in profit last year, which is about 50 times more than what the CRTC says the industry made. When asked where those figures come from, the Stop the TV Tax people point to a quarterly report from Canwest and an opinion piece about CTV, neither of which corroborate the figure. They also argue that their own margins are “very slim”, which is total bullshit.

Of the two campaigns, CTV’s is definitely more active, slicker, and probably better funded. (Imagine if they took all the money they’re sinking into these campaigns and used it to improve programming – maybe Canadians would start watching again.) CTV’s campaign is also much more ridiculous and juvenile. They literally have a guy in a cow costume touring the country. They’ve created two professionally-produced music videos and five hard-sell TV ads and they’re airing all of them on their networks, particularly CTV’s specialty channels (note the irony there). When Dave Carroll’s music video launched, they took five minutes out of local newscasts to play it in its entirety, with no analysis, no opportunity to respond, and no commentary. An infomercial during a newscast.

CTV’s latest “PSA” gives you an idea of just how delusional they’ve become. It compares the actions of broadcasters and broadcast distributors to a carrot and a stick. The broadcasters want to keep local TV and bring happiness to bunnies, while the cable and satellite companies are “threatening punishment” by saying they’ll pass on charges to the consumer and strangle those bunnies.

But threatening punishment is exactly what CTV is doing. Their latest threat is to shut down 10 of 11 stations in Ontario, leaving only their profit-making station in Toronto. They’ve already shut down CKX-TV in Brandon, something they’re reminding us about over and over again. Makes you wonder if CTV might have wanted to shut down that station in order to improve its bargaining position.

I agree the model is broken, and that cable and satellite companies are making too much money (because there is insufficient competition, not because they’re stealing signals). We need to re-examine the entire system, and come up with a structure that’s fair to all parties, rewarding local and original programming. But this debate is too serious to be done via advertising campaigns featuring guys in cow costumes.

The deadline for comments to the CRTC on this issue is Nov. 2. At least we can take some comfort in the fact that the campaigns should end after that.

21 thoughts on “A dose of reality in the TV debate

  1. JS

    What the CRTC needs to do is impose ownership restrictions like they have in the US. The fact that CTV owns 11 stations in Ontario in the first place is disturbing.

  2. ASTC

    Good to see someone in the media pointing out how stupid this whole arguement really is. But it is for certain that if CTV and it’s broadcast comrades get their way, Montrealer who have Cable and Sat subscriptions can expect their bill to go up by $4.50 a month. We have 9 Over the air stations (CBFT, CBMT, CFTM, CFCF, CIVM, CFTU, CFJP, CKMI, CJNT). The Save Local TV gang wants 50¢ per local channel. So 9 x 50¢ = $4.50 before taxes. You can sure as hell expect the cable and sat companies will not absorb this cost. Greed, greed, greed.

      1. ATSC

        Wheather it’s 50¢ or 10¢. It’s the principle idea behind it that is just wrong. As you pointed out in your article, Cable/Sat services help in distributing their signals. Yes, it’s very true that they also help fragment the audience as well. But, put some worth watching and I’ll watch. One other point that needs to be looked at is local stations that have low power transmitters. CKMI, CFTU, and CJNT all have such lower power on their transmitters that some parts of the island you actually need cable, or a exterior TV antenna, just to get them. That of course is on purpose. They very well know that by CRTC rules, local TV stations must be carried by the cable company, thus they use cable as a form of distribution of their signals, while saving on transmitter operational costs. Who is actually taking advantage of who?

  3. Anonymous

    Global knew when it came to Quebec back in the late 90’s exactly what the situation was. It would get a license based in Quebec City, with its promise to maintain a bureau in Sherbrooke and Montreal.
    Now, there is no Quebec City office, there is no Sherbrooke bureau, and there is basically no news produced in Montreal.(1 anchor and four reporters spread over 7 days, with Toronto weather and sports and all show production from Vancouver.
    This tells me that local TV doesn’t matter to Global.
    So: Global @channel 234 on Bell TV= waste of bandwith
    Yeah I’ll sign that letter!

  4. Heather

    So based on your logic, History Channel, Home and Garden TV, Teletoon, TSN etc should be just happy to get their signal on the dish and shouldn’t be asking for a fee on top of it? Your understanding of the concerns of local TV is laughable.

      1. Neville A. Ross

        Except that only Teletoon Retro shows reruns: Teletoon doesn’t, History Channel just a little bit, YTV a little bit (some people complain not as much as they used to)-ditto for all of the others. Most local TV channels show reruns, or at least used to.

        1. Fagstein Post author

          Discovery Channel is showing a rerun of Mythbusters as I write this. History Channel has scheduled M*A*S*H for later. And these are the analog cable channels. The digital stuff is even worse. Most importantly, these channels show very little original programming.

    1. ATSC

      Local TV is based on local TV stations. Stations with a license to broadcast on the public airways. They can run ads. They must be carried on local Cable systems. Plus, they have the added advantage to have SimSubs as directed by the CRTC. That means that if they are running the same program on a US station, then the signal of the Canadian station is placed over the US station. You know that thing that upsets so many fans during the Super Bowl.

      Specialty Channels have another type of license. They run less ads. Their programming must be speciality type based on their license. They cannot broadcast over the air. They must be distributed only by Cable/Sat services. And they are allowed to obtain a subscription fee for every Cable/Sat subscriber that their signal is distributed to. This fee is determined by the CRTC. And the fee for each station is not the same.

      Now, in most cases, those specialty channels are owned by the current complainers such as CTV, Global, CBC/SRC. Basically they are collecting subscriber fees on those speciality channels. Now, they want their Broadcast channels to be allowed to do the same. Even though those broadcast channels are suppose to be made available free over the air.

      If CTV and Global no longer want to run broadcast stations. Then they should return their licenses to the CRTC so that the CRTC can open the door for new applicants. And as for the CBC/SRC. If the current management seems to think that they are going the double dip into the publics pockets with this demand for another fee through cable subscribers, then Ottawa should look at replacing the current management.

      As for Fagstein’s point about speciality channels charging a fee and then running repeats. This as well needs to be looked at. Those channels have become worse and worse since the original CRTC rules. Plus, plenty of those channels are forced upon the consumer with no choice. By both CRTC rules and by the Cable/Sat companies grouping then within packages.

      The real concern about this whole situation should be about allowing the consumer to decide what they want to watch, and what they want to pay for. Not about greedy companies pretending to do us a favour.

      1. Fagstein Post author

        Actually, the fee for most new digital specialty channels are not determined by the CRTC, but are set by agreement between the provider and the broadcaster. The CRTC only regulates the fees of channels it forces cable providers to add to their basic packages, like RDI and CPAC.

        If CTV and Global no longer want to run broadcast stations. Then they should return their licenses to the CRTC so that the CRTC can open the door for new applicants.

        That’s exactly what happened in Brandon, Man. Now western Manitoba has no commercial television station. It’s easy to think that without CTV and Global a bunch of entrepreneurs would be banging down the CRTC’s door for broadcast licenses to replace them, but in small markets that’s just not happening.

        1. Neville A. Ross

          Mostly because TV costs way too much to operate-there should be a fund or some kind of law that allows a local entrepreneur to buy a TV/radio station and run it if a larger company doesn’t want to, with the government putting up half of the cost.

          1. Neville Ross

            This is not the same thing; this is a local entrepreneur and local investors/the community buying up a station and continuing it by focusing on local news, sports and whatnot, and featuring local community programming-much like a low-power UHF station, but in high-power instead, and much like how most TV stations in Canada and the USA started in the late ’40’s/early ’50’s.

            What we all truly need in Canada is some trustbusting of these media oligopolies, so that TV and other media can really flourish again.

  5. Fassero

    I think I alluded to this earlier – CTV has some major debt convenant problems about to kick in (if they haven’t already) and I expect their particular level of desperation to escalate more still. In fact, I think it will be inevitable that the next “threat” will be to shut down the entire “A” network which, of course, they’ll had argue that they were “forced” to take as part of the CHUM purchase while being “forced” to sell the better OTA stations that CHUM had to Rogers. Never mind the money they’re wasting on “LocalTV Matters”; I bet that PALES to the money they flushed in what has turned to be a huge number of very poor new US TV show acquisitions and what looks like a disastrous year for their “So You Think You Can Dance Canada” franchise (partly caused by Fox’s last minute decision to squeeze another season of the US edition which ended up competing with the Canadian one.)

    The problem with Local TV is how much is worth saving I’m sorry to say. The penetration of cable and satellite signals into even the most rurual of locations have allowed Canadians literally a window to the world which, in the giant scheme of things, is really what they want from TV. I look at the A station in Barrie, Ontario as a great example. Even 20 years ago, that was really the sole TV station available to Southern Ontario cottagers. Now with the extension of cable and sat signals, cottagers now have full services and the TV packages that go with them so they only thing they might need “locally” now is a traffic report which they can get from radio.

    I love the idea of having local television from various local markets if only because it’s nice to see how the rest of Canadian culture lives. The problem is I don’t want ALL of them but the CRTC forces it on me. And worse, I like specialty but the cable and satcos set up their packages to stick me with crap like 16 CanWest “speciality” channels that all seem to have “Family Guy” fit within their milieu. So, yeah, I don’t like what either side is putting forth in their propaganda campaigns. Unfortunately, the biggest problem is the tiny handful of representatives from both sides bascially combine to run the entire industry here and that’s the biggest problem of them all. I don’t know if we could go back to the old days of families running local channels but watching the way they have become so diluted and irrelevant since being run by large broadcasters, I sometimes wonder if the CRTC should just let the networks surrender their local licenses and let foreign buyers take a crack if local buyers can’t be found. Surely there has to be a way to, for instance, deliver true local news at reasonable costs and even pad it when locally-relevant investigative news shows or game shows or whatever.

  6. Pingback: CTV wants the right to prevent you from watching Grey’s Anatomy – Fagstein

  7. Geevis

    I thought this quote from 1991, during another crisis in conventional broadcasting, would be interesting:

    Douglas Newell is the outspoken senior vice-president of media buying for Harrison Young Pesonen & Newell Inc. of Toronto, an increasingly influential player in determining where Canadian advertising dollars are spent. He says:

    “The problem is not that the broadcasters do not have enough revenue. It’s that their expenses are too high. They have been so protected that they have been unable to manage their business efficiently or productively. . . . They have never really had to compete.”

    The Globe and Mail
    8 June 1991

    CTV and Global are crying that the system is broken again, but NONE of the major players are lifting a finger to turn it around, to DO SOMETHING, to fix something that is broken, to get their viewers back on their respective networks.

    Instead, they are complaining. They cancel news and replace them by HGTV fillers in order to keep viewers away, they send out a friggin cow cross-country, they want to extort money from the cable/satellite providers and want to re-write the broadcasting act in order to allow them to add more protections which will allow them to continue to exploit their broken model.

    This is what CTV and Global wants:

    – Attack viewers with potential cable/satellite price increase
    – Attack viewers with increasing simsubs
    – Piss off paying customers with blackouts on US networks
    – Punish viewers in small markets by eliminating news segments because… they live in a market too small!
    – Punish OTA viewers by threating to shut down local stations considering they are not enough of them using rabbit ears
    – There is no mention of going digital in all markets
    – Provide NO local programming at all except for the minimal amount of news just because it’s in their CRTC licence requirements
    – Our Canadian culture is Hollywood thanks to CTV and Global.

    Nice plan.

    None of those stations have a personality, a unique name, a presence in their community. Their only way to tell viewers “hello, we are here!” is with a simsubbed channel. No effort is deployed to attract new advertisers. No effort is deployed to take risks and schedule an original Canadian show in primetime where people are home (Sunday to Thusday), and they’ll possibly like it – no, instead we only see American Idol, House, CSI, Survivor, The Office… and it’s only getting worse. God Bless America.


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