Angry in the Great White North

Twice in the last few years, the CRTC has refused to implement fee-for-carriage, in which cable and satellite companies would pay private broadcasters for carrying their signals in the cable and satellite systems.

The CRTC has consistently shot down the idea.  Why?  To protect the television viewing public from having our cable and satellite bills from going up a few bucks?

Heck no.  The problem for the CRTC is that the private broadcasters would spend the money on the wrong thing - less Canadian content and more American shows:

MPs asked Mr. von Finckenstein whether a proposal made last year by CTV and Global to charge cable and satellite companies fees for their signals would help stabilize revenue in the industry, since the networks would be less reliant on ad dollars. The fees, proposed at 50 cents a month per subscriber, were controversial because cable and satellite carriers said they would pass those fees on to subscribers. The CRTC has turned down the proposal twice.

Mr. von Finckenstein said he did not receive enough assurances from CTV and Global that the revenue from the fees would go toward helping small-market stations. Instead, he said the CRTC fears the money would be used to boost spending on U.S. shows.

Ironically, at the same appearance in front of the Heritage Subcommittee meeting, Finckenstein told the MPs he was considering allowing the private broadcasters to reduce the amount of revenue draining Canadian content they are required to carry.

So he was worried that they would spend money on American TV programs, which is what he is suggesting they do to save themselves.

Some things just don't make any sense, and you just have to move on...so moving on.

What justifies Finckenstein's concerns that CTVglobemedia and CanWest won't spend money on local stations?

Last year, CTVglobemedia and CanWest submitted jointly to the CRTC on the question of fee-for-carriage, in an attempt to avoid what has now happened, and that is a financial crisis that is forcing them to close down local stations.

So Finckenstein was worried that local stations wouldn't benefit from fee-for-carriage, and so refused to allow it, which has resulted in several local CTVglobemedia stations being closed down.  Good move!

But at those hearings last year, CTVglobemedia and CanWest made it clear that supporting local stations was definitely part of the plan for fee-for-carriage revenues.

In their written submission, they wrote:

BDUs [ed, cable and satellite companies] would compensate all private conventional OTA [ed, over-the-air, that is, broadcast] television stations for carriage where those signals are carried pursuant to the priority carriage requirements in the BDU Regulations if certain original local programming targets are reached.  The amount of original local programming required will be linked to market size.  If local programming targets are not hit in a given month, no subscription fee is permitted.

So CTVglobemedia and CanWest envisioned rules in which getting that fee-for-carriage revenue was contingent on sufficient support for local content on local stations.  

When Ivan Fecan (CTVglobemedia) and Leonard Asper (CanWest) appeared in front of Finckenstein, they repeated this commitment:

9279 MR. FECAN:  And the crack is spreading.  We need to stabilize that first before we put another story, another floor on that foundation.

9280 And that's how we are approaching it.  The money would go towards local programming and local reflection.  Our licences all come up -- our local licences come up within a year and it was -- I thought that when we understood the other decisions that you would make that would affect potentially very seriously our local businesses that then we could come forward with each of us separately, because we will be applying separately for our licences, with what the regulatory proposed bargain is for that particular term being talked about.

9281 MR. ASPER:  I think, Mr. Chairman, you know the local licences are quite a patchwork of different obligations sometimes relating back to historical circumstances.  But there are some stations that have 40 hours or 30-some odd hours of local programming.  Others have 10 or 12.  You know, obviously, the smaller the market usually it ratchets down but it is not always the case.

9282 So I think, you know, it comes back to the issue of what is the entire package of regulatory reform that comes out of this hearing that will factor in your decision?

9283 But I would just say we are not closed to the idea entirely of incrementality.  I think we just have to see where all the chips fall from this hearing and we can, I think, have that discussion in more detail at a subsequent hearing.

9284 THE CHAIRPERSON:  I notice the qualifiers both in your and Mr. Fecan's answer.  So I gather the net result is going to be partial incrementality.

9285 To use Mr. Fecan's words, part of the funds you would use to fill the cracks and the rest you would use to augment the base, is that the idea?

9286 MR. ASPER:  I think, you know, if we were to state just on principle what our view is, our view is that we have been wronged for a long time and we would simply like to have that wrong righted and we shouldn't have to do something extra to right that wrong.  However, you know we understand that the Commission has a number of interests to balance.

9287 THE CHAIRPERSON:  Yes.

9288 MR. ASPER:  There is a Broadcast Act you are regulating us under and there are other constituents.  And that's why I say I think we are willing to have a discussion given we are -- later on as to where -- and whether there is a discussion about incrementality.

9289 THE CHAIRPERSON:  Is it only local content that we are talking about or is there more to it?

9290 MR. ASPER:  Yes, yes.

9291 THE CHAIRPERSON:  So the fee-for-carriage would be in effect to ensure there is local content?

9292 MR. ASPER:  Yes, we agreed on that, yes.

So fee-for-carriage would ensure local content?  Yes, yes.

Of course it would.  If it didn't, they wouldn't get the money.  The private broadcasters were building in their motivation.

Leonard Asper makes the point that as far the broadcasters are concerned, they've been cheated of revenue that was rightfully theirs, and morally, it is a wrong that needs to be addressed, no strings attached.  But realistically, the CRTC is not going to do that ("a number of interests to balance") and instead is going to use its power to control how the money is spent.

Ivan Fecan and Leonard Asper aren't enthusiastic about being told what to do, but they accept it, and they are committed to spending money on local stations if only the CRTC could come up with regulations everyone could live with.  Regulations the they accepted would include local content targets tied to the fee-for-carriage revenue.

That would have been easier at the beginning of 2008, before the finances of the companies started to tumble.  Now things are a mess, and Finckenstein is still prevaricating, even as local stations are being closed, or are in danger of being closed.  Stations that might still be open if Finckenstein had taken Fecan and Asper at their word.

Yet despite the written submission and despite the verbal commitment during the 2008 hearings, Finckenstein doesn't feel like he's been provided with enough assurances.  Unbelievably, he wants to spend another year studying the matter:

He said the CRTC wants to spend the next year figuring out how to restructure the industry. However, MPs representing the major parties questioned whether the regulator was moving fast enough to prevent small stations from being shut.

Finckenstein has had several years to sort this out, and apparently all that was holding him back was the fact that Fecan and Asper didn't jump up and cheer during the discussion about supporting local stations with fee-for-carriage revenue.

Perhaps Finckenstein can define just what constitutes "enough assurances".  Putting it in writing and stating your agreement in a hearing is lacking something, it seems.

Or maybe people will realize that Finckenstein just doesn't like fee-for-carriage.  Period.  I suspect he doesn't even like television.  Nothing in his bio suggests he gained any special knowledge of the industry through any of his thirty-odd years as a bureaucrat.

If Finckenstein lacks the motivation to solve the problem, replace him.  If he's moving too slow, replace him.  If he's being obstinate and unreasonable, then just ignore him.  The legislature can put in new rules and compel the CRTC to regulate according to those rules.

Correction: I accidently named David Asper as representing CanWest at the 2008 hearings.  It was in fact Leonard Asper.

Check out other stories from the CanWest archive.