CRTC’s compromise on Sun News is a positive step forward

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.

More coverage of Sun News decision:

11 thoughts on “CRTC’s compromise on Sun News is a positive step forward

  1. It's Me

    The biggest issue here which seems to be slipping everyone’s mind here is that if the CRTC was to force all BDUs to carry every licensed national news channel, where does it end? How many channel’s will this result in? Admittedly, sure, in reality, one would presume there will not likely be that many channels licensed as not many companies seem to want to launch a news channel unless they are a BDU-owned media company, but the matter still remains is how is the CRTC going to go about this, otherwise, the potential is there for a huge mess to ensue. Currently, other than CTV News Channel, CBC News Network, and SNN, there is only one other yet-to-launch national news channel that was licensed, that being Glassbox News (owned by Blue Ant Media). It doesn’t appear they are looking to launch this service, however, if this new rule were to take affect, this might be their incentive to launch. And how many other companies out there will see this as an opportunity to launch a channel they never thought of launching before because the barriers were to high. This will level the playing field, and who knows how many other channels will come out of the wood works.

    This whole situation seems incredibly rushed and unthought-out. They seem to have been pressured by SNN and are giving in to them in some respect and tossing them a bone because granting mandatory carriage would be even too ridiculous even for the CRTC to consider. So this is what we get instead, a nonsensical load of rubbish that will cause more headaches than anything, something only the CRTC could dream up.

    1. Fagstein Post author

      The biggest issue here which seems to be slipping everyone’s mind here is that if the CRTC was to force all BDUs to carry every licensed national news channel, where does it end? How many channel’s will this result in?

      Probably just the current five. Maybe a sixth if Global decides to launch a national news channel. I don’t see anyone else with the resources to try this. We might see specialized news channels (like BNN) or more regional news channels (Alberta seems ripe for a regional all-news channel), but I don’t see this resulting in some explosion of new channels.

      And how many other companies out there will see this as an opportunity to launch a channel they never thought of launching before because the barriers were to high.

      The biggest barrier to launching isn’t carriage, it’s programming. You have to fill 24 hours a day with news.

      This whole situation seems incredibly rushed and unthought-out.

      The CRTC took three and a half months to come to a decision on this case, and has just put out a call for comments on a proposed policy. I don’t see how that can be considered either rushed or unthought-out.

      But by all means, if you think this will result in some huge disaster, write to the CRTC and propose changes to the policy. That’s why they’ve called for a public consultation.

      1. Its Me

        When you have guaranteed carriage and everything is set up whereas you are all on a level playing field (such as placement on the dial and packaging) programming will not be the hard part. You can do what many of the other speciality channels do, fill up the schedule with filler programming and cheap faire. Add some foreign content, talk shows, and air some basic headline news for hours on end (and do what some channels do where they tape an hour of live content and rerun it hour after hour unless something else pops up and tape some segemnts in between). That will be the easy part. None of this has to be incredibly expensive either, specially when you already have an existing infrastructure in place such as a Postmedia with their countless newspaper reporters across the country, CHCH which has a good news team in place and if they were to make some strategic alliances with CHEK, NTV, local papers, CBC, foreign agenices, they could have it covered, then there’s Global of course. Blue Ant with their minority owner Torstar, and the list goes on. This could all be their chance to launch and where does it end after that. Programming is easy when everything else is a guarantee. There’s always the chance of lower ratings if you do it cheaply/poorly enough, but if you stick to the basics of news and just give us the straight facts and do it cheaply enough, it may not matter as much because the costs will be low enough to sustain it.

        1. Fagstein Post author

          You can do what many of the other speciality channels do, fill up the schedule with filler programming and cheap faire.

          The licence conditions for mainstream national news services are actually pretty strict. They include a minimum of 90% Canadian content. Sure, you could do something really cheap and still call it news, but if it’s clearly trying to game the system the CRTC will see through that.

          None of this has to be incredibly expensive either, specially when you already have an existing infrastructure in place such as a Postmedia with their countless newspaper reporters across the country

          If Sun News has shown anything, it’s that having newspaper reporters across the country doesn’t make you a great television network.

          There’s a serious, legitimate concern as far as packaging, whether people who want foreign news channels will be forced to carry all Canadian news services. Expect the distributors to bring that up at this hearing. But otherwise, the thing that will prevent poor-quality news channels from popping up is the simple fact that nobody will be forced to subscribe to them.

          1. Its Me

            When I say filler, I don’t mean reruns of Lois and Clark, I mean documentaries, call in shows, foreign shows from such broadcasters as SKY News, endless reruns of a taped hour of news, or even other programs that are not even news, such as Sun News Network airing Canada in the Rough, a hunting show. It isnt that hard to fill a 24/7 schedule of news. They are not live 24/7.

            And yes, having a pool of newspaper reporerts doesn’t necessarily make good television network, but that’s not to say it couldn’t either. Every channel is marked by individual choices they make and their success or failure is likely dictacted by many factors, not necessarily one element. SNN’s ideology, style, stunts, likely have more of an impact on ratings than the fact that they have newspaper reporters reporting news/discussing news.

            1. Fagstein Post author

              I mean documentaries

              Documentaries are more expensive than newscasts, unless you run the same one every day.

              call in shows

              If that’s what the people want…

              foreign shows

              Again, the 90% Canadian content rule limits that.

              endless reruns of a taped hour of news

              Many news and sports channels basically do that overnight because they don’t have any live programming.

              other programs that are not even news

              The CRTC requires that programming on specialty channels abide by the nature of service. This means that, at least in theory, all-news channels have to be all news (or at least news-like). There might be tolerance for some non-news programming, but in a very limited way.

              I’m not saying you don’t have legitimate concerns here. There is a danger of people getting free money with poor quality news services. Fortunately the CRTC has a month-long open comment period so people can express exactly those concerns about the rules and propose any amendments they feel are necessary.

              1. Its Me

                When I say documentaries, I’m speaking of documentaries a channel would acquire (a la The Passionate Eye on CBC NN), not something they produce themselves (a la Doc Zone on CBC). That is less expensive.

                Foreign shows can only make up 10%, but spread over a broadcast day, that’s a good couple hours.

                When I say reruns of taped news-hours, I’m speaking of that practice during the daytime, not overnight. Yes, pretty much from 11pm to 5 or 6 am, everythign si a rerun at that point. I’m speaking of a channel taping an hour of news at 1pm, then running that same news hour at 2, 3, 4, etc. with some new new segments thrown in here and there when somethign pops up in the news. That’s an easy way to fill a broadcast day. And if you have guaranteed carriage, you can more easily get away with doing that.

                For anyone who follows the Canadian broadcast system, they know, or should know, all to well the CRTC pays little attention to whether channels are following their nature of service unless it is a complete bold-face turnaround which we’ve seen with OWN or bold, and even then, the CRTC seems to do little. They finally gave in to bold’s request for a change in nature of service in which they still kept doing as they always did as bold. And so far, nothing has changed with OWN; we’re still waiting for something to happen there. And as a broadcaster, you can always justify and find loopholes to argue your case and the CRTC does give a lot of leg room and room for interpretation when it comes to this. Think MucMusic as one example. Little of what they air is music-related other than the music videos. It seems as though the CRTC only cares that they air 50% music videos, everything else is up to them to do with what they please and the CRTC seems complacent with allowing somethign like Pimp My Ride simply because the host is/was a rapper. And I’m not speaking of literal bold-face programming tricks where a news channel would air Lois and Clark, I’m speaking of possibly airing ET Canada, CityLine, AP Cantral (which actually airs on two “news” channels – CP24 and BNN), and things of that nature. Something they could argue as news-like. And if course there is things like airing hour-long shows of celebrity gossip, sports news, etc. and repaeating them endlessly.

  2. William

    I doubt SNN survives.

    It’s a small audience and big advertisers want bang for their buck. That favours the big networks,and then social media.

    When I see the ads on specialty channels, it’s almost non stop crappy KFC ads.

    SNN’s best hope is to try and stop the bleeding but it won’t turn a profit…and that’s the point.

  3. Dilbert

    “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.”

    Talk about simplifying the matter and attempting to play down any value in the content or desirability of the channel itself. The CRTC seems to be completely ignoring what they are dealing with.

    Let’s look: One side you have CNN, the other you have “Sun News”. I don’t know about you, but I know which one I am more likely to watch (and watch all over the world when I travel,I might point out). CNN has been around for 20+ years. Sun? A couple… Basically CNN defined the gendre, and everyone else has been playing catch up. If you actually look a the products and the public’s demand for them, it’s clear that CNN is WHY you buy the package, and others are the tack ons you end up paying for to get it.

      1. Dilbert

        Jenny, the point is that even with reduced ratings, they are still orders of magnitude ahead of Sun News. If you ask someone if there was only one news station they could have out of a list, I doubt too many would pick ONLY Sun. Further, even with wide availability, it hasn’t been that many people have intentionally picked the channel either.

        Nobody in the US buys a package just for CNN, because for most Americans, CNN is just a normal part of any basic package, like we would consider having CTV or CBC. It’s a given – Sun news isn’t wanted by many Canadians, even if it was a given… and it’s not!


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