It didn’t take long after Videotron started informing clients that it was dropping AMC as of Feb. 12 for those clients to start complaining.
I contacted Videotron and asked them why they’re dropping the channel, and their response was about what I expected: They just can’t meet AMC’s carriage demands.
I wrote a short story about the decision for Cartt.ca. For non-subscribers, the previous sentence summarizes Videotron’s reasoning.
It’s too expensive, AMC’s carriage demands (which aren’t just about the per-subscriber fee) are too onerous, and all this for a channel that most of its clients aren’t interested in and whose viewership has been trending downward.
We don’t know exactly what AMC’s demands are, because negotiations and carriage contracts are secret, but it’s likely there was something along the lines of a minimum penetration guarantee or penetration-based rate card, which effectively force a provider to make sure a large number of its clients subscribe to the channel.
For national providers like Bell (Videotron’s main competitor), Rogers and Shaw, AMC’s demands may be more acceptable (though I doubt any of them are happy with the conditions). But for Videotron, which operates in Quebec and has mainly a francophone audience, it looks like it just became too much.
We’ve been here before. Before Videotron finally added AMC in 2013, it was among the most requested channels by subscribers. This was back in the day when AMC’s original series were very hot: Mad Men, Breaking Bad, The Walking Dead. Because of AMC’s contract requirements, Videotron had to add it to its most popular large packages — Anglo, Telemax and Mega — despite its high cost.
Five years later, AMC’s biggest shows are The Walking Dead, a Breaking Bad spinoff and Mad Men reruns. Not terribly impressive.
Does it make sense for Videotron to jump through so many hoops to keep this channel in their lineup?
For some customers, this will no doubt be a deal-breaker. Combined with the usual price hikes, they’ll jump ship to Bell, which still carries AMC. Videotron has taken that into account with its decision, and it still makes more sense to let AMC go.
And don’t think this is some negotiation tactic, either. AMC has all the power in this relationship, with a billion dollars in annual revenue and more than 90 million subscribers to its flagship channel in the U.S. It won’t care that much about losing a few thousand subscribers in Quebec. And besides, subscribers will blame Videotron for this, not AMC, unless Videotron says exactly what AMC was demanding, which it can’t because of confidentiality agreements.
Ideally, it wouldn’t have to be this way. In 2015, with its Wholesale Code, the CRTC made it illegal for broadcasters to impose abusive penetration-based rates or minimum revenue guarantees. But AMC is an American channel, and doesn’t have to answer to the CRTC. Though the commission said it “expects” foreign channels to abide by the same rules, and said it could use its powers to, for example, make authorization for distribution in Canada conditional upon accepting the same rules, it has yet to step in when it comes to a foreign channel’s distribution agreement.
(AMC Networks also owns IFC and the Sundance channel, but the versions of those distributed in Canada are actually Canadian channels owned by Corus, which must follow the CRTC’s rules.)
It’s unfortunate that it’s come to this. We’ll see if other Canadian providers decide they too are fed up with AMC. The same year Videotron finally added AMC, Telus was so annoyed by their negotiation tactics that it sued in a U.S. court, and negotiations with Rogers got so bad that AMC started a campaign aimed at Rogers customers. If enough of them reject it, and AMC risks being shut out of Canada, it might change its demands. But what are the chances of enough Canadian providers being willing to alienate their own customers?