Local TV's dirty little secret

The way Canada’s broadcast networks tell it, Canadians want local TV, and they are willing to pay for it, no matter how much it costs. Carried by this belief, the TV networks have been lobbying the federal government and its regulatory arm, the CRTC, to allow for special fees to be paid by cable-TV companies to the broadcast networks. They argue that cable companies merely “steal” their signals and sell them on to subscribers. Cable companies, however, have balked at the proposition and promised that any fees, if implemented, would be passed on directly to cable subscribers.

Seeing their support from the general public dwindle, TV networks have launched their campaign Local TV Matters. In TV and print ads, they raise people’s awareness about the cable companies’ “dirty little secret”: cable companies, the broadcasters claim, have had a free ride and enriched themselves on the backs of local TV.

Various cable providers across Canada have fought back valiantly, also in TV and print ads. But they should not expend too many of their resources on this fight, because the broadcasters find themselves on extremely shaky ground, not least because of their constant fibbing and distortions of facts, which is why the majority of the general public is clearly siding with the cable companies on this one.

Make no mistake: cable companies have had a rather checkered past. For example, they once tried to trick subscribers through what was known as “negative-option billing”, a way of adding extra services to the cable bill without waiting for the subscriber’s specific order for such services.

But compared to the situation in the US, Canada’s cable-TV companies provide better services at much better prices. While a major cable channel like Showtime in the US can cost a cable subscriber as much as US$9 a month (and that is through a limited special offer), equivalent channels in Canada can be added for as little as C$1.50 or, perhaps, $2. No wonder that so many Americans are still without HBO, Showtime or AMC, thus missing out on Mad Men or the Seinfeld reunion on Curb Your Enthusiasm, while the majority of Canadian cable or satellite subscribers have relatively easy and inexpensive access to these programs.

Most Canadians are probably not aware of this either, but most US cable providers do not offer the “timeshift” option, i.e., the main networks from various time zones across the country. In the US, timeshifting is therefore the satellite providers’ strong suit, but in Canada, every cable company does not only deliver all the major Canadian networks spread out over the various time zones, but the American networks as well. It may not sound like much, but the timeshift option gives subscribers a lot of freedom and flexibility in how they consume their favourite shows even if they do not own a PVR.

But there is more that distinguishes Canadian from American TV. In most locations in the US, at least where yours truly happened to find himself at various stages in his life, people could easily forgo cable-TV and watch regular off-air channels using their rabbit ears. If they were not interested in specialty cable channels, they could at least get all the main broadcast networks such as ABC or FOX – and totally free. Now that America has gone digital, which allows networks to piggyback two, three or more channels onto the same channel frequency, Americans could soon find themselves with thirty or forty channels, free-to-air, courtesy of their “rabbit ears” (and a digital converter or digital TV-set). This will make paying extra for cable a less attractive option, especially if Americans continue to be strapped financially for years or decades to come.

In Canada, however, TV reception has been a problem, especially in big cities where most of the viewers live that advertisers deem valuable. Blocked by the concrete and steel that make up our cities today, it is nearly impossible to receive a half-decent picture in, say, Toronto or Calgary. I remember that in Toronto I would be lucky to get a very snowy CBC Toronto and an almost unidentifiable CityTV with almost no audible sound whatsoever. But that feat required placing one finger on the antenna’s tip while performing a continuous sequence of Arabian cartwheels.

In other words, Canadian broadcast networks – CBC, CTV, Global and CityTV – would instantly lose at least 70 to 85 percent of their viewers if cable companies were to drop them from the line-up. Or, put differently, the cable-TV companies provide the backbone of the broadcasters’ transmission and distribution infrastructure. Except for the guy sitting directly on top of or underneath a broadcast tower, most Canadians would not be able to see any of their homegrown networks and programming if it were not for the cable companies making them so easily accessible.

Losing basic cable carriage would mean sudden death for all Canadian broadcasters (including the CBC). In fact, the broadcasters should be paying a fee to the cable companies, instead of the other way round, as no Canadian network would be viable without cable. Besides, the federal government only recently forgave $450 million in outstanding fees that the broadcasters had failed to pay. They should take that money now and invest it wisely. Apart from that, they may soon have one competitor less, following the filing for bankruptcy protection by CanWest, the owner of Global TV. This would leave only three major networks, or two commercial ones, and if they still could not make ends meet, they would deserve to go under as well.

Canada’s cable companies have invested steadily in the latest technology and launched digital and high-definition channels at a time when these innovations were only a wet dream in most other countries. When cable subscribers can get the “whole package”, including HD channels, for as little as, say, C$130 a month, one is almost tempted to wonder how the cable companies can still turn a profit and keep upgrading their networks. In most other Western countries, consumers pay a lot more a month for a lot fewer channels, and often in addition to a government-imposed, expensive licence fee.

Canadian broadcast networks must finally wake up to the reality of the TV market, with the emphasis being on market. The real decisions are made by consumers. The main reason why so many local stations have had to shut down is that Canadians have not been satisfied with the quality of programming. Unless CBC, CTV, Global and CityTV realize that they must produce for the marketplace, rather than around or behind it, they will all disappear over time – cable fees or no cable fees. Consumers of TV are no longer a captive audience. They have access to a variety of other media, both domestically and from abroad, and they will quickly vote with their feet, um, remotes.

Comments

[Will Munsey]

Werner,

Thanks for that. I was having a real hard time understanding this conflict.

Will

[BC]

The only reason cable hasn't been fully regulated by the CRTC is because they are mandated to carry networks that already are forced to carry Canadian content. If cable wants to be free of that, they would then find themselves drawn into full regulation and into the same Canadian content rules as the networks. At that point, they *need* the Canadian networks like CBC, CTV, CityTV, etc. to make up the content rules anyways. While it's true TV networks would cease to exist if not on cable, the same is true of cable networks if networks withheld their Canadian content....the door swings both ways and each relies on the other (despite what anyone would try to say to the contrary).

Besides, cable companies pay US networks a fee for carriage so why not Canadian networks? Seems a little unfair to me. As for all the perks Canadian cable offers that US cable doesn't, that's a direct product of the fact that our cable companies have been allowed to not pay for the major Canadian networks that make up the bulk of their viewing content. Hell, if I didn't have to pay any utilities or for food, I could afford a much better apartment but that's not how it works in the real world. Of course cable companies are striving to continue living in a fantasy world where you can take things without paying compensation. If you or I were to tape a show off TV and try to sell it like cable does, we would have the RCMP throwing us in jail....we should demand the rules be the same for cable companies as they are for all other Canadians.

[M]

Either way, he said, she said, the point is why now??? With the recession still in effect, how much more do they think we will tolerate?? Yes our t.v. costs might be lower but then again our taxes are quite high so tit for tat I guess.

My beef is why should we have to pay extra on things that were there to begin with??? Honestly....hmmmm a billion dollars just went poof and we are supposed to sit down and say o.k. slap us with more. Ya lets burn another whole in our wallets!!!

Bottom line is WE have to do something about this or it will continue. Heck Canadians won't care as long as we tell them they have to pay then they will. NOT!!!!! And they wonder why people went with the free satellite. Honestly if it wasn't being blocked left right and center I would buy the darn box myself and get free t.v. channels!!

[JP]

I would gladly pay for local programming from local stations... if there was any left other than the evening news.

Gone are the days of locally produced talk shows, kids shows, variety shows, high school sports, afternoon movies, City Council updates, or Sunday religious services. Where most local programming used to be we now find half hour advertising for everything from the Slap-Chop to Real Estate planning.

I get more local information on my Cable Community channel!

The ONLY programming left that appears to be locally produced is the nightly local news... and that could easily be replaced with a regional feed from the Network broadcast centre. And I could live with that... easily.

[Calvin]

I've heard a lot of crying out about the consumers having to pay, calling it greed on the part of the cable companies.

Really? People lacked the foresight to see that coming?

I've watched this war with great interest. From what I've observed it's primarily the networks, in the process of billing themselves as the arbiters of local television, using the channels provided to them by distribution networks like Shaw, Rogers and Videotron, to beat up on said distribution networks.

They went cap-in-hand to the CRTC, they told the public that they would lose their local programming if the CRTC didn't tell the oh-so-mean distribution companies to give them money. Canwest filed for bankruptcy protection and god knows if CTVgm is going to do the same. All this at a time when the ad revenue that had been sustaining the networks for so long has been going down the crapper.

The networks should give their head a real shake before pulling this crap. However, they've got the airtime and people that they can waste the money they're whining about losing so that they can beat up on the "greedy" cable companies.

[Bob]

TAKE ME OUT TO THE BALL PARK - ROGERS

From Canadian Press:

On another ethical front Friday, a non-partisan group asked the ethics, lobbyist and elections commissioners to investigate a fundraiser organized for Tory MP Rick Dykstra.

Democracy Watch said Dykstra hosted 60 "friends" last month in the owner's box at Toronto's Roger's Centre for a Blue Jays baseball game. The donors got tickets to the game, access to the owner's suite, food and drinks, an opportunity to attend batting practice and meetings with unidentified federal cabinet ministers and Blue Jays players.

The group wants to know what, if anything, Dykstra or the party paid for the various perks - particularly the owner's box which can't be rented and is only used with permission of owner Rogers Communications Inc., a company which lobbies the federal government.

Copyright © 2009 The Canadian Press. All rights reserved.

[G. Lubianetzky]

Wow, what a fabulous summary, a lucid and concise explanation of the issue. Having spent 16 years in the private broadcast industry, I watched and listened as this misguided "you owe us" attitude persisted. I could never understand it, since without cable, a massive part of my employer's viewer base. These viewership numbers of course directly relate to advertising revenues.

In fact, it always seemed to me cable providers would have been prudent to charge the broadcasters a fee to dispense their signal to wider and wider audiences.

I personally believe that "Local Matters", but LOCAL is the key. Our local networks and stations have over the years stripped local productions, eliminated funding for local productions and have done so with the permission and blessing of the CRTC. These cuts have come insidiously and cumulatively over the last 30 years or so. Excluding news and current affairs, show me *one* Canadian station that does *any* of its own home-grown production of any kind.

Bottom line for me, let cable providers divide up the Canadian dial (which is primarily populated by US shows anyway) and allow us to opt out of paying for these local channels. They no longer offer us anything Canadian or Local anyway.

[KD]

First off CityTV is owned by Rogers and have nothing to worry about. The local community cable channel in London already is receiving carriage fees from Rogers so I imagine that City is also recieving some kind of financial help.

I laughed so hard when not one but two cable companies couldn't afford $3 to buy 3 local stations (Windsor, Wingham and Brandon) because in the end it was too expensive to run them. Even cable is admitting that local television can not be run without some kind of financial help.

What many people are not realizing is that if cable and satellite do not carry the Canadian network channels they also can not air the American programming that those Canadian networks own the rights to. Say good-bye to Grey's Anatomy, Survivor, House, etc. Why pay to watch American stations that you won't be able to watch much programming on. Why don't they just pull the American stations and start paying for the Canadian stations. Yes you can watch those shows online for free. So really if you're already watching online why on earth would you want to pay for cable.

I really like the idea of being able to pick and choose which channels you want and just paying for that instead of the packages where many of the channels I don't watch. But then they wouldn't be making such a large profit if people could choose what channels they wanted to pay for.

[P Watt]

It is a good article, Canadian broadcasters should be upgrading their transmissions for premium FREE HD viewing. One thing I believe the article come short on is "time-shifting"; it just is not allowed in the US. Therefore local US TV still has the advantage of not having their audience split up between other "distant" stations. Example: a legal US satellite subscriber in Presque Isle Maine can not receive FOX or CBS on his dish because WAGM-TV offers both networks (DTV) over the air and WAGM is not carried on satellite. If local Canadian stations had that kind of protection that the FCC gives US stations we would have a stronger local TV business model.

If a TV station can exist in a small town like Presque Isle Maine there is no reason CKX-TV in Brandon or any other local Canadian station would have to go off the air.

[Fred Masterson]

Wow. Are you retarded? "As little as 130$ a month" and "the broadcasters should be paying a fee to the cable companies, instead of the other way round, as no Canadian network would be viable without cable." That's ridiculous! TV was alive and well for many decades before cable came around. If anything, it's cable that is killing Canadian Television.

Do cable companies pay the american networks for their services? Yes. They do.
Do they pay foreign networks to broadcast those signals? Yes they do.

So how is it that when they broadcast Canadian network content without paying for it you think that fair?

Also, I don't know who you think you are to say 130$ a month is such a little sum. You sound strangely like a bad viral marketing campaign and I wonder if my comment will even be posted.

[LC]

"Ask not what you can do for your government but rather what can your goverment do for you" LC
The government is demanding too much from its citizens! Ever since it started charging for service charges! Why do you think we pay taxes ? Income tax, property taxes & the big LIE the gst! This is not to mentioned ALL the other prexisting taxes! Time has come for people to realize and do something about this!
A few years back I became aware of a troubling fact while working for the city of ottawa. I learned that the federal government was stealing water from the city of ottawa, in the order of millions of dollars. It never appeared in the newspapers since it was settled out of court! This goes to what extent the government has gone corrupted and at all levels. The buck is just passed from one hand to the other( one party in power to the other). This is factual ! Astounding?
Let us not forget that a government that operates in a surplus implies that it is profiting from its citizens! This is the major reason come at the end of each fiscal year the government is in a frenzy to spend all of its budget in order to justify replenishing itself. But in the meanwhile it finds ways to find new taxes, increase prexisting ones & have the audacity to add service charges and then slap you with the BIG LIE the gst. When are people going to realize that time has come for ACTION!
While the 2 most important aspects of society
(Education & Medicare) are being are being overshadowed by government fallacies or better known as PROPAGANDA such narcotics and the war overseas!
pay the tv tax, I THINK NOT!j