Broadcasting regulation nerdgasm

The CRTC got real busy last week making some big announcements/decisions/suggestions about television broadcasting regulations. Many of them are boring, minor or technical, but here are a few that aren’t:

Over-the-air carriage fees

The big one for broadcasting companies like Canwest/Global, CTV, TQS and Quebecor is the decision to reject the suggestion that “broadcast distribution units” (i.e. cable and satellite companies) should be required to pay fees to TV broadcasters who broadcast over the air freely.

This idea came out of the whole TQS saga, when the network’s owners decided that it needed the ability to somehow blackmail cable companies into giving them money. Since cable specialty channels get per-subscriber fees in exchange for their content, shouldn’t broadcast networks – whose budgets are supposedly higher because they need to produce local news – get money too?

The flip side of the coin is that these network broadcasters are broadcasting freely, using public airwaves. Cable and satellite companies are required by law to carry local broadcast channels on their basic packages. Subscribers don’t get any added value from getting over-the-air stations on cable (except, perhaps, not having to deal with rabbit ears), so why should they have to pay for them?

The CRTC’s decision was tough (emphasis mine):

CTVgm and Canwest proposed that any FFC only be made available if broadcasters meet monthly local programming requirements. However, they did not commit that the FFC, or any portion of it, would result in incremental spending on Canadian programming.

While OTA broadcasters have shown a recent decline in profitability, they, as other enterprises, might first look to their own business plans before making a request for increased revenue from the Commission. In the Proceeding, no business plans suggesting new sources of revenue were provided to the Commission. Neither the rationale for strategic initiatives by OTA broadcasters, such as recent major acquisitions, nor the basis for financing those initiatives or the impact of those initiatives on profitability were explained to the Commission at the public hearing.

The CRTC did cave on one point though: It said that so-called “distant signals” (e.g. CTV Vancouver for us Montrealers) should be able to “negotiate” carriage, in order to offset the trouble that this time-shifting business has caused. What that effectively means is that broadcasters can set rates for out-of-market broadcast stations and simply not allow their channels to be carried on other regions’ cable networks unless they pay their fees.

Broadcasters are happy with the parts of the decision that give them money, and unhappy with the ones that don’t. They’re for less regulation in the broadcasting industry, but they want corporate socialism for the “ailing” over-the-air broadcasting sector.

TV packaging

The CRTC wants to streamline rules for TV packaging to make it easier for subscribers to choose what they want to see. The basic rules would still apply: A basic package, which includes things like CBC Newsworld, RDI, CPAC, etc. would still be required, porn channels can’t be packaged with non-porn channels, and more than half of all channels in a subscriber’s lineup must be Canadian.

Another point of contention is over so-called “U.S. 4+1 signals”, which permit cable operators to carry four nearby stations of major U.S. networks (usually ABC, NBC, CBS and FOX) and a PBS station in their lineup. Recently, this was expanded to allow a second set of such signals for time-shifting purposes. Providers use this to offer east-coast and west-coast feeds of these networks.

Tellingly, the Canadian networks aren’t happy about U.S. stations being allowed to broadcast their U.S. programming when they’re trying to broadcast the same U.S. programming:

CTVgm and Canwest, in their final written submission, requested that the Commission simply prohibit the distribution of the second set of U.S. 4+1 signals.

A slight compromise would require subscribers to have corresponding Canadian stations to their out-of-market U.S. ones. For example, if I wanted to add the Seattle stations, I would have to also add the Vancouver stations to my lineup.

Local programming

The CRTC took broadcasters to task for the fact that they’re not investing in local news:

The Commission’s own data demonstrate that private broadcaster spending on local programming has been flat since 1998. Between 1998 and 2007, the spending on local programming by English- and French-language commercial broadcasters increased by 22.8%. However, as the growth in the consumer price index (CPI) during this period was 22.1%, there was no real increase in local spending. This contrasts with spending on non-Canadian programming, which, after adjusting for CPI growth, increased by 61%, as well as spending on other Canadian programming, which increased by 8.3% over the same period. The data indicate an inability or unwillingness on the part of OTA broadcasters to invest in their local stations.

The Commission has also examined broadcasters’ spending on local programming by market size. In the six metropolitan markets with a population of over one million, spending on local programming, after adjusting for the CPI, has increased by 11.8% since 1998. However, in markets with a population of less than one million, local program spending has declined by 15.6% since 1998.

In other words, CTV and Global have more money than God with which to buy simulcasting rights to House and American Idol, but are constantly tightening their belts to the point where weathermen have to be shared.

Their solution, naturally, is a new government-controlled fund that people are forced to pay into that will be used to subsidize local news in smaller markets.

In addition to the 5% of gross revenue they have to put toward community channels (like Videotron’s VOX network), cable and satellite providers would have to add an extra 1% which would go to a Local Programming Improvement Fund. This fund would be distributed to TV stations in small markets to get them to produce more local news.

This extra tax would be levied on the oil companies cable and satellite providers, whose profit margin the CRTC estimates at 40% and 17% respectively. Because they’re making so much money gouging customers with their monopolies with their efficient service, the CRTC expects that the oil companies cable and satellite providers will simply absorb the cost instead of passing it on to the consumer. Yeah.

The other problem is whether or not this fund could be used by the CBC. They have plenty of stations in small markets. But then, if the CBC could make use of the fund, the Canadian Association of Broadcasters (of which the CBC is not a member), which would administer said fund, would be in a conflict of interest. And then it gets complicated.

The idea for this fund sounds good-natured, but I wonder how much of it will actually go to local programming and how much will be used to line the pockets of the broadcasters’ parent corporations.

Despecialization of specialty channels

One decision that seems to be welcomed by all parties is a very common-sense one to lessen the regulations on two genres of specialty channels that have become competitive: news and sports networks.

Currently, all specialty channels have genre protection, which means we have one comedy network, one weather network, one history network and one science-fiction network (in each language). As the number of channels increased, these genres became more specialized. One science channel became different channels for health and nature. One sports channel became a national sports channel, regional sports channels and sports headline channels, as well as channels for individual sports. One news channel became a news channel, a headline news channel and a business news channel.

News and sports, even if they are not supposed to directly compete, have been effectively doing so for years now (TSN vs. SportsNet, CBC Newsworld vs. CTV NewsNet, RDI vs. LCN). The CRTC’s decision reflects reality, and opens up the field to more competition. New channels in these genres are more than welcome, as long as they play by the same rules (i.e. CanCon).

In addition, specialty channels will no longer have to apply to the CRTC every time they want to add a new programming category (like Discovery did in January to add game shows). These categories specify what kind of programming (news, sports, documentaries, dramas, comedy, etc.) each channel can select from (the subject of such programming should still fit the channel’s genre), and are usually specified with maximums and minimums as a condition of license. Generally, channels are severely limited in terms of things like feature films, sports and music unless they are meant to focus on those things, to prevent a channel from going to the cash cow too often.

Instead, the CRTC suggests a standard provision that channels be able to take up to 10% of their programming from these categories:

  • Long-form documentary;
  • Professional sports;
  • Drama and comedy;
  • Theatrical feature films aired on television;
  • Animated television programs or films; and
  • Music video clips and Music video programs

Taming the VOD squad

Video on demand is such a new technology that even the CRTC realizes the existing rules are way out of date. And because even the industry has no idea how it wants to do things, the CRTC is sending out an “anyone got any ideas?” public notice for comments. Among the issues are whether VOD providers should be able to include advertising, whether packaged “subscription VOD” should have CanCon requirements, and what kind of competition regulations VOD should have.

Honestly, there’s already a VOD service that has no regulation and a wealth of Canadian content. It’s called the Internet.

But still, the fact that my Videotron VOD library contains only TVA and VOX programming (Quebecor owns TVA, VOX and Videotron) kind of bugs me, and it would be nice if the effects of media convergence weren’t so obvious there.

You can read all about these crazy decisions in the CRTC’s massive public notice.

Elsewhere in the blogosphere:

5 thoughts on “Broadcasting regulation nerdgasm

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  4. Dave

    The argument for fee-for-carriage is that a Canadian network might fold without the fees, Yes Global, I’m looking at you. As far as I’m concerned, it’s a good thing. With the exception of news, Global does essentially nothing except retransmit simsub-butchered American programs. If Global disappeared because of lack of fee-for-carriage…
    there would be one less network bidding for Canadian rights of US programs. The reduced competition would also reduce the price of US programs that are bought, and CTV could meet the 1:1 Canadian:US limit.
    because fewer American programs would be bought by Canadian re-broadcasters, fewer American programs would be simsub-butchered
    because fewer American programs would be bought by Canadian re-broadcasters, and reduced competion would lower the price of those actually bought, the Canadian trade balance would improve

    On the other hand, if fee-for-carriage is allowed, and Global survives…
    most Canadians will be poorer after paying their cable bills
    their TV-viewing experience will be worse due to simsub-butchery

    The only “benefit” of fee-for-carriage would be that the Asper family would end up somewhat richer, and they can continue buying more yachts and expensive houses. That argument doen’t carry much weight with me.


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