Sun News Network lives. And you won’t be forced to pay for it through a mandatory tax.
On Thursday, the CRTC issued a series of decisions about applications for mandatory distribution on basic cable and satellite TV services. Most of the new applications were denied, including that of Sun News Network, which argued it should be placed on basic cable across the country so it can get the same regulatory boost that its competitors CBC News Network and CTV News Channel once enjoyed themselves. (They don’t anymore, though CBC News Network is mandatory in French-language markets and both are on most large providers’ basic packages.)
The reason was simple: Sun News is not exceptional, and hence does not qualify for an exception. Though it is certainly different from the other Canadian all-news channels, it is not significantly more Canadian nor does it serve a goal of the Broadcasting Act that the other services don’t.
It said it couldn’t continue to operate at seven-figure losses without the distribution order. But with the announcement of the new proceeding, it says it will keep operating.
This denial was predictable. It was only in 2009 that the CRTC officially opened the genre of mainstream news channels to direct competition, allowing all of them to be treated equally and allowing the free market to dictate carriage and pricing. To then turn around four years later and start re-regulating this genre makes no sense.
But Sun News had some important and valid points to make in its favour. It argued it was being treated unfairly by competing distributors (notably Bell, which owns CTV News Channel). It said it couldn’t come to deals with certain distributors, and that as a channel that provides 100% Canadian content and more than 90 hours a week of original programming, it should be treated better than channels that air reruns of Lois & Clark.
So the CRTC did what it usually does with controversial issues: It struck a compromise. No mandatory carriage, but it is proposing that all digital television distributors be required to offer all Canadian news channels to their subscribers, that they be required to group Canadian news channels together on their channel lineups, and that they be required to package Canadian news channels together.
In its call for comments on the proposal, it notes that, though older news channels don’t enjoy the kinds of regulatory perks they used to, their incumbency gives them an advantage:
Due to incumbency, non-Canadian services are distributed for the most part in packages that enjoy high penetration and therefore significant access to potential viewership by Canadians. These services have also secured more lucrative wholesale fees when compared to their Canadian counterparts. On average, non-Canadian news services receive a wholesale fee of $0.73 per subscriber per month, whereas English- and French-language Canadian news services receive on average a wholesale fee of $0.36 per subscriber per month.
Specifically, the proposed rules are as follows:
- Distributors must make all licensed Canadian Category C national news channels available to subscribers. (Currently the only channels licensed under this category are CBCNN, RDI, CTVNC, LCN and Sun News.)
- Distributors must place new and existing national news channels “in close proximity to one another (so as to create news neighbourhoods).”
- Distributors must make Canadian national news channels available in a package and on a stand-alone basis, and require the inclusion of Canadian news services in packages that offer non-Canadian news services.
- Distributors must make Canadian national news channels available in “the best available package consistent with their genre and programming” unless the channel agrees otherwise.
- Distributors should file carriage agreements for Canadian national news channels and non-Canadian news channels with the CRTC within five days.
- When a carriage agreement with a Canadian national news channel has not been renewed within 120 days of expiring (or agreed to within 120 days of launch for new channels), the agreement should go to the CRTC for dispute resolution unless the news channel no longer wants to be carried.
- Wholesale rates for Canadian national news channels should be “based on fair market value”, considering previous rates, penetration rates, volume discounts, packaging, rates paid by unaffiliated distributors, rates paid for “services of similar value to consumers”, interest in the channel, and retail rates for packages or the channel by itself.
Note that these rules would apply to national news channels under Category C, not to regional news channels like CP24, or to news-like Category B channels like BNN or Argent.
As it stands now, Sun News is carried by most major television providers in Canada, including Bell, Shaw, Rogers, Videotron, Cogeco, Eastlink and Sasktel. The largest holdouts are Telus Optik TV and Manitoba’s MTS.
But getting an order requiring distribution would give Sun News a leg up on negotiations. It would no longer have to beg for a spot on the dial. And submitting the channels to automatic dispute resolution would give distributors (and Sun) additional incentive to come to a deal.
The packaging requirement would give Sun News its biggest boost, requiring distributors to distribute channels like Sun News in their most popular news packages, and possibly force people to subscribe to it if they want non-Canadian channels like CNN, MSNBC or Fox News.
The exact details of how that would work will probably be worked out through this process.
Sun News made a big deal about channel placement, and this proposal hopes to address that, but as I’ve written previously, that’s not such a huge issue for most distributors, which already place Sun News with other news channels. The exceptions are Shaw Cable and Rogers Cable (admittedly the most popular cable systems), which had Sun News as an outlier among Canadian news channels. The Rogers case was often cited because it put its own regional news channel CityNews on Channel 15 in SD. (That channel has since been shut down.)
One thing this won’t do, though, is put Sun News on analog cable, which is still used by about 20% of Canadian television subscribers. The CRTC says it made it very clear that it will not add new services to analog cable, and it won’t make an exception here. So despite Sun’s arguments that its competitors are on analog cable and its viewership skews toward older Canadians who are more likely to have analog cable, it won’t have access to them unless (or, likely, until) they upgrade to digital.
Expect this proposal to meet opposition, both from Sun News opponents and from distributors who oppose more rules about how they should package and number channels.
But though I have issues with forcing Sun News onto subscribers who might want CNN or MSNBC (assuming this is a result of this process), the proposal strikes a balance between the desire to encourage new Canadian news channels and the desire for consumer choice.
Remember that this policy would apply to all Canadian national news channels. If Global decided to launch one or expand its BC1 service nationally, or if a channel like BNN decided to convert to this category, it would have the same obligations and benefits.
Open to comments, but only on details
The CRTC is accepting comments on this proposal, and has not set it in stone yet. It has not called a hearing to discuss it, and generally proposed policies presented in this way have already been decided on and will be approved. It will be up to interveners (in this case, the cable and satellite distributors or other broadcasters) to bring up any issues the CRTC may not have considered and to recommend minor changes to the policy, but the commission is unlikely to be swayed to abandon it entirely.
The CRTC is accepting comments until 8pm ET Sept. 9, and those that file comments may reply to others’ comments by Sept. 24. After that, the commission will consider a decision, and the new rules could take effect within 90 days of a decision on a new policy. “The Commission intends to act swiftly on this matter,” it says.
Comments can be filed by clicking here. Note that all information provided, including contact information, is placed on the public record.
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