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Canadian media & the CRTC

CRTC Ownership Policy Permits Big Players to Get Bigger--CEP Union

Today's decision by the CRTC on media ownership "allows the big players to become bigger, and does very little if anything to limit media concentration in Canada," says Peter Murdoch, Vice-President, Media, of Canada's largest media union, the Communications, Energy and Paperworkers Union.

"While the CRTC decision seems to put up some kind of gate to stop the concentration of media ownership, it still allows big broadcasters such as CanWest or CTV to own even more media outlets," he says.

"The Commission has taken the smallest step possible to limit local media concentration, while allowing in some areas, increased concentration. The new policy does nothing about media empires that currently have a stranglehold on some large markets, such as Vancouver, or about what happens on a national level.

"That does not spell diversity to me.

"As for the Journalistic Code of Independence, CEP has always maintained that codes of conduct should be set by the professionals who work in the field, not by representatives of employers.

"Hospital administrators do not make up a code for physicians. Lawyers make up their own code, as do teachers, and other professionals. A
journalistic code should be a matter for journalists."


CRTC Preserves Media Concentration in Canada--Media Guild

The CRTC has blown a chance to address Canada's highly concentrated media landscape. With its decision today on media ownership, the regulator is allowing Canada's three dominant media companies to control an enormous amount of what Canadians see on TV, hear on the radio and read in their daily newspapers.

"The CRTC is preserving the current unacceptable levels of concentration and is not even adopting meaningful measures to stop it from getting worse," says Lise Lareau, president of the Canadian Media Guild. "By their own admission, they are legalizing the status quo since they admit that their new rules are not being contravened anywhere in Canada."

The Canadian Media Guild has raised the alarm on media concentration across the country and particularly in cities such as Vancouver and Victoria, where one company - Canwest - owns two regional TV stations and three daily
newspapers. The CMG urged a ban on the same company owning both a daily newspaper and TV station in the same city/region.

Thousands of Canadians wrote to the CRTC in advance of the diversity of voices hearing to urge new rules that would change the existing landscape. They expressed concern about the existing quality of their local and national
media.

"The inaction on media concentration follows closely the CRTC's approval of the sale of Alliance Atlantis to CanWest and U.S. investment bank Goldman Sachs," Lareau adds. "There is a clear trend toward giving media companies and their shareholders what they want, regardless of the views of Canadian audiences. Canadians and federal politicians should not stop pressing for real measures to limit concentration of media ownership."
 
Poll Shows Majority of Canadians Support Made In Canada TV

At today's CRTC hearings on the future of the Canadian Television Fund, actors joined producers, writers and directors to release results from a new poll showing that a strong majority (71%) of Canadians believe it is important to have access to Canadian television programming distinct from American programs. The poll also reveals that an overwhelming majority of Canadians feel the government and cable and satellite TV companies should invest resources to help ensure that Canadians have access to television programs that reflect Canada and its people.

The Harris/Decima poll shows that not only is it important to Canadians to have access to Canadian programming that distinguishes itself from foreign programs, they also want to be able to choose programming that reflects
national identity. Over three-quarters of Canadians (78%) say that it is important to them to have a choice of television programs that reflect Canadian society, values, and perspectives.

The CTF plays an important and ongoing role in the funding of Canadian television programming. Respondents were informed via the survey that the
"federal government spends a fraction of a percent of its budget on the Canadian Television Fund, which is a national program that helps finance the production of Canadian television programs." When asked their views after
being provided with this information, fully 86% agree that the government should make this investment to help ensure that Canadians have access to Canadian TV programs that reflect Canada and its people. Respondents were also informed that cable and satellite TV providers are required to contribute a small percentage of their revenues to the CTF in return for certain
protections and benefits they receive as part of their broadcast licenses.

More than three-quarters (82%) of Canadians agree with this policy. These results demonstrate that Canadians strongly support the investment the Government of Canada and cable and satellite TV providers make towards the
CTF.

"An overwhelming majority of Canadians want and support Canadian television programming that reflects their lives," said Guy Mayson, President
and CEO, CFTPA. "As producers, we work with Canadian actors, directors and writers to bring to life Canadian stories - stories that would be impossible to be told without the assistance of the Canadian Television Fund."

"The poll reveals what we've always known: given the chance, our industry makes great television that Canadians watch - from Little Mosque on the
Prairie, Slings and Arrows and ReGenesis, to Annie et ses Hommes, Les Lavigueur, and Ramdam. Canadians want our stories reflected on their
television screens, and with a little help from the CTF they can become huge successes," said Richard Hardacre ACTRA National President.

"We have our own stories, our own perspectives, and a sense of humour that is world- renowned," said Maureen Parker, Executive Director, Writers
Guild of Canada. "Canadian writers and Canadian programs succeed by telling stories that speak to and captivate our own national audiences. These stories also resonate with audiences internationally. We achieve this with thanks in part to the essential funding support the industry receives from the Canadian Television Fund."

"Television has great power to communicate meaningfully and directly with Canadians and, as we've established here today, that communication runs both ways," said Alan Goluboff, President, Directors Guild of Canada. "Canadians want to hear their own voices, see their own faces and share in their common experiences. With CTF support and the tremendous talent in our production community we are able to deliver that programming and offer audiences more choice."

Representatives from the Canadian television production industry are in Ottawa to voice their support for the continuation of the public-private partnership that is the Canadian Television Fund. The CRTC is holding hearings
on the future of the Fund. The CTF is funded in part by the Department of Canadian Heritage and in part through a small percentage of revenues from cable and satellite providers. The CTF allocates funding envelopes through a
specific funding formula to Canadian broadcasters. Television producers then
apply for funding to create and produce their programs.

The Harris/Decima poll was commissioned by DGC, WGC, ACTRA, and CFTPA. It was conducted between January 10 and January 21, 2008 via Harris/Decima's weekly teleVox omnibus survey. 2,038 people were surveyed across Canada over a two-week period. A sample of the same size has a margin of error of 2.2%, 19 times out of 20.
 
I think Aurora may have been the last hold-out in the GTA as far as independent cable companies went. Not for long though, they are soon joining Mr. Roger's neighbourhood...

Rogers to Acquire Aurora Cable
Broadcaster Magazine

Rogers Communications Inc. has finalized a deal to acquire Aurora Cable TV Ltd Aurora Cable operates in communities on the northern edge of the Greater Toronto Area, which is the heart of the Rogers cable empire.

Aurora Cable founder Jim Irvine, who started the business 43 years ago, described the agreement to sell to Rogers as "a tremendous opportunity for our customers and for our companies alike."

Besides cable television service, Aurora Cable offers Internet and telephony services in the Town of Aurora and the community of Oak Ridges, in Richmond Hill, Ont.

The purchase price was not disclosed and is subject to CRTC approval.
 
Sudbury has a small cable operator out of there called Persona, that has a niche of serving small markets. They offer much more for less than what Rogers charges - my brother gets a deluxe package including TMN, for less than I was paying Rogers for the "Personal TV Pack" which had fewer timeshifting channels and little premium channels.

My cable still works even though I don't pay for it, but only get Global, TVO, CBC and whatever CHCH is calling themselves now (surprisingly, no CFTO).
 
Ottawa looks at putting HBO, ESPN on cable
GRANT ROBERTSON
From Monday's Globe and Mail
March 31, 2008 at 4:27 AM EDT

A controversial plan that would let top-rated U.S. cable networks such as HBO, ESPN and Nickelodeon into the Canadian market, ending decades of protectionism for domestic television channels, will be considered by broadcast regulators next week.

In the first major review of the cable and satellite TV industry in roughly a decade, federal hearings set to begin a week from tomorrow are expected to ignite a fierce debate over the future of the business.

Documents circulated to the industry in recent days indicate the notion of getting rid of "genre protections" for Canadian channels will be a key topic of discussions between regulators and the industry.

Genre protections give Canadian specialty channels exclusivity over their respective formats to prevent head-on competition from other broadcasters - including U.S. networks with bigger budgets. The rules were introduced in the 1980s to help Canadian specialty channels get off the ground.

But with specialty television now raking in annual revenue of nearly $2.2-billion - a number that is growing by about $100-million a year - regulators are questioning whether such protections are still needed, and whether they are otherwise stifling competition.

For example, since the Food Network has the rights to that niche in Canada, an upstart broadcaster could not launch a similar food-focused channel here, even if they are Canadian.

The Canadian Radio-television and Telecommunications Commission now wants to look at loosening such rules in order to bring new players into the industry after a recent wave of consolidation. If that happens, the regulators ask in documents circulated to the industry whether it would be "appropriate" to continue shutting out U.S. specialty networks as well.

Such proposals come as the CRTC has stated publicly it wants to let market forces increasingly guide the TV industry. As an indicator of how contentious the coming hearings could be, the process is scheduled to last at least three weeks - making them one of the longest industry debates to be held in recent memory.

The idea of eliminating genre protections sends shivers through the broadcasting sector.

For example, channels such as TSN and Sportsnet would find themselves competing with ESPN (although ESPN also happens to be a minority investor in TSN).

It could also change the structure of Pay TV services in Canada, which buy new episodes of HBO and Showtime programs such as The Wire and Dexter exclusively from those U.S. networks, then charge a premium for Canadians to subscribe.

A report commissioned by the CRTC last fall to probe the state of the TV industry suggested genre protections be eliminated in order to spur new competition.

Those findings, from communications lawyers Christian Leblanc and Laurence Dunbar, infuriated the broadcasters.

Glenn O'Farrell, president of the Canadian Association of Broadcasters, said such suggestions were "off the cuff" and did not respect the negative impact they could have on the domestic TV industry. Small specialty broadcasters and the production industry that supplies them with programming fear competition from U.S. cable networks could push some Canadian channels out of business.

Cable companies are the biggest proponents of such a move, arguing they constantly hear from customers who demand access to U.S. cable channels, such as the USA Network, the Tennis Channel, VH1, and the American versions of HGTV and the Food Network.

Such rules drive away potential subscribers, the cable companies argue, while satellite providers suggest the protections are an incentive that pushes tens of thousands of customers into the black market for U.S. satellite signals.

Last year, cable distributor Shaw Communications Inc., which also owns the StarChoice satellite TV service, applied to carry the USA Network, which airs U.S. dramas such as Monk and Dead Zone. The bid was turned down because similar programming ran on Canada's Mystery TV.

After that ruling, Shaw president Peter Bissonnette lashed out at the CRTC, accusing it of "protectionism for the benefit of certain Canadian programmers at the expense of Canadian television customers."

In the documents sent to industry members ahead of the debate, the CRTC is careful to note that it has raised the issue only in hopes of "guiding discussions at the hearing," and that it has not yet decided on the matter.

========================================================================================

Interesting, but this article doesn't deal with a few issues, namely:

1. Most shows on HBO, ESPN, USA, etc. already have their distribution rights in this market owned by Canadian players. Therefore these channels wouldn't be able to air a lot of the programs they are known for in the Canadian market (at least for the first while).
2. Does opening up the market to U.S.-based competition really do anything for media concentration in this country? While some might argue it's more consumer choice, won't it really mean that Canadians will have to subscribe to even more speciality channels in order to find the shows they like as there will be more outlets fighting for the same product?
3. Most of these covetted HBO shows end up on terrestrial (a.k.a. "free tv") TV in Canada (ie. Sopranos on CTV, Sex & The City on City-TV) after having their first-run on a premier channel (ie. TMN). This won't necessarily be the case anymore.
 
GIVE ME SCIFI, HBO, Showtime, USA, TNT, and a few others and I will be satisfied.

Allow me to subscribe legally to DISH Network/DirectTV and we might have some real competition in Canada....

But right now, I want Bell Canada to be broken up!
 
CRTC HEARINGS
TheStar.com | Business | TV rules in Canada set for shake up
TV rules in Canada set for shake up

High-stakes showdown on television's future pits broadcasters against the cable companies
Apr 05, 2008 04:30 AM
Rita Trichur
Business Reporter

If the medium is the message, then stay tuned. The rules governing TV in Canada are poised for a major shake up.

The federal broadcast regulator is about to embark on a sweeping review of the cable and satellite television industry that experts say has the potential to revolutionize the dial, while pushing consumers to their limits on the prickly issue of higher fees.

Most of the regulations controlling what Canadians watch on TV are up for grabs, as are those dictating how industry players can make money.

The sheer scope of that assessment by the Canadian Radio-television and Telecommunications Commission has left stakeholders girding for a high-stakes showdown when three weeks of public hearings begin on Tuesday.

And while a nondescript conference centre in Gatineau, Que., is the official battleground, the fight for public opinion has raged for weeks. Newspapers have been ground zero for debate on the most contentious issues, including fee-for-carriage, simultaneous substitution and genre protections.

Industry heavyweights such as Rogers Communications Inc. and CTVglobemedia are among those jostling with rival views, each purporting to champion consumer interests.

Canadian-content advocates, meanwhile, are crying foul over the upcoming hearings, arguing CRTC efforts to structure the debate suggest it is predisposed to "big cable's" push for deregulation at the expense of cultural protection.

The CRTC may seem enigmatic to average Canadians, but observers say these hearings could reshape the television landscape.

"This has the potential to directly impact people's pocketbooks as well as their television viewing experience," said Michael Geist, a law expert at University of Ottawa. "At the end of the day, it comes down to what people will pay, what their cable bill looks like, and what their choice of channels will look like."

The CRTC's proclivity is to "rely on market forces wherever possible." Its objectives for these hearings include developing "forward-looking" regulations, ensuring diverse Canadian services and providing consumers with "the greatest possible choice" at reasonable prices. To frame the debate, it outlined an "assumed distribution model." Its guiding tenet is that a preponderance – meaning 50 per cent plus one – of services offered by cable and satellite companies must be Canadian.

Currently, the Broadcasting Act requires them to "make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming." Critics say the proposed model implies a "lessening" of Canadian-content obligations. "Predominant implies far more than 51 per cent," observed Maureen Parker, executive director of the Writers Guild of Canada.

The CRTC will examine other thorny issues, including whether cable and satellite companies should be forced to pay a fee to carry conventional broadcasters whose over the air signals can be pulled in for free with an antenna.

Broadcasters, such as CTVglobemedia and CanWest Global Communications Corp., say they need carriage fees to stay viable amid sharpening competition from speciality channels. In a joint submission to the CRTC, the companies claim their industry is in "crisis."

They point to projections from the Canadian Association of Broadcasters suggesting that private conventional television stations will fall to a collective "profits before interest and taxes level" of -6.2 per cent by 2011.

"This ever-worsening picture makes it clear that the OTA (over-the-air) business model is broken, and the viability of the sector is at risk. It is clearly time to recalibrate the regulatory bargain," their submission says. The fee-for-carriage proposal is "a small price to pay for the continued provision of local television service."

The CRTC, however, reported in March that private conventional stations improved their profits, before interest and taxes, to $112.9 million in 2007 from $90.9 million a year earlier. That's prompted cable companies to argue that fee-for-carriage amounts to a "cash grab," warning the end result will be higher fees for viewers.

Phil Lind, vice-chair of Rogers Communications, bristles at the suggestion that broadcasters need money: "It seems outrageous." The proposal, he added, is merely a guise to "tax" viewers to pay for expensive American shows.

Cable companies are obligated to carry local signals and give them priority placement on the dial. They must also provide domestic stations with "simultaneous substitution," to allow the insertion of Canadian advertising in American shows. Rogers and its peers have said their ongoing support for priority placement and simultaneous substitution is "conditional on the absence of a fee-for-carriage mechanism."

Broadcasters, meanwhile, are worried about another controversial issue – the possible elimination of so-called genre protections that prevent popular American networks such as HBO and the USA Network from broadcasting in Canada. The rule, originally intended to succour our fledgling specialty sector, is now back on the table with the CRTC questioning the need for such protection in today's market.

Cable companies have pushed for its elimination as a matter of consumer choice. Last year, Shaw Communications Inc. sought approval to carry the USA Network but was turned down in an effort to protect domestic channel Mystery TV. Shaw accused the CRTC of "continuing on a path of protectionism for the benefit of certain Canadian programmers at the expense of Canadian television customers."

The Canadian Association of Broadcasters worries significant relaxation of genre protections would hurt broadcasters already coping with audience fragmentation. "Such a change would result in Canadian services having to compete unfairly with competitors in their own genres of programming and put the Canadian rights market in serious jeopardy," its says.

Alan Sawyer, a strategist with Two Solitudes Consulting, wonders if consideration of the issue is too little, too late. This week, Bell Mobility launched an "on-demand service" to bring full episodes of HBO series to clients via cellphones.

"That's just the tip of the iceberg," Sawyer said.

"The commission will spend the next three weeks grappling with its role in the conflicting world of TV 2.0 . . . but TV 3.0 is on the horizon already and that will change everything."

Canadian-content advocates worry the CRTC's stated intention to streamline regulations is already tilting the hearings in favour of big cable. That's because the regulator has noted those companies need flexibility "to respond to the evolving expectations, tastes and demographics of Canadian viewers."

The advocacy group Friends of Canadian Broadcasting says Rogers, Shaw, Cogeco and Vidéotron operate as "territorial monopolies," making their push for more deregulation troubling.

Spokesperson Ian Morrison also points out that a key Rogers lawyer, Robert Buchan, provided guidance to two communications lawyers hired by the CRTC to prepare a study of broadcast rules.

The Dunbar/Leblanc report, as it is known, has helped shaped the review's agenda.
 
CBC Radio achieves record ratings
Posted: 08 Apr 2008 08:34 AM CDT

CBC Radio One and CBC Radio Two together captured record spring share of 13.3%.

  • Radio One now reaches nearly 3.2 million Canadians

  • Radio Two reaches 1.1 million listeners (consistent with past spring reach levels)
Ratings records were also broken in Calgary, Vancouver and Victoria. Seven CBC Radio morning shows now rank #1 in their markets and 13 of 18 morning shows now ranked in the top three in their markets.

  • Calgary is ranked #1 overall with a 9.8 % share up from its 7.3% share captured a year ago. The morning show, CALGARY EYEOPENER, which continues to boost listenership significantly, is also ranked #1 with an impressive 14.6 % share, up four share points from S1 2007.
  • Vancouver’s overall ratings jumped two full share points to its current 10.7 % share and maintained its #2 ranking in that market. The morning show THE EARLY EDITION maintained its #1 ranking and also saw a year-to-year share jump from 13.8 % to 15.4 %. The noon hour show achieved a 7.8% share… in both cases this represents the highest this decade.
  • Victoria continues to achieve phenomenal growth reaching an 11.7 % share overall, up nearly three share points from last spring. ON THE ISLAND ranks #1 with a 17.1 % share, up close to seven share points from a year ago. In the afternoon drive period, Victoria has nearly doubled its share.
Also, CBC’s traditional high performing markets of Toronto and Ottawa have maintained their #1 rankings in the morning time period.
 
Writers Guild Tells CRTC--Must Ensure Canadians Have Choice In Programming
Broadcaster Magazine
Friday, April 18, 2008.

The Writers Guild of Canada appeared before the CRTC today to remind all parties that, as broadcasters and cable companies battle for power and payment, their responsibility to support and offer Canadian programming to the Canadian people remains primary.

Maureen Parker, Executive Director, Writers Guild of Canada, says "foreign genre protection helps keep the 'Canadian' in the Canadian broadcasting system. If competing U.S. broadcasters are allowed in, Canadian broadcasters will be forced out – forced out of acquiring rights to programs the U.S. channels will offer directly, and forced out of the revenues those rights generate. Because their revenues are tied to their contribution to Canadian programming, if Canadian broadcasters lose rights and revenues, we lose Canadian shows."

Rebecca Schechter, President, Writers Guild of Canada, says "allowing Canadian cable companies to import U.S. channels directly would not mean more choice for Canadians." Research shows that of the top 200 cable telecasts in the U.S. by audience in the first half of 2007, fully 97% were already available in Canada. "In fact," says Ms. Schechter, "Canadians, abandoned to 'market forces' in the interest of even greater profits for the cable companies, would experience a diminished offering because there would be less money in the system to make Canadian TV shows."

Appearing with the WGC was Rent-a-Goalie head screenwriter Graeme Manson. Canadian specialty channels like Showcase, which broadcasts Rent-a-Goalie, would be particularly vulnerable if the market was opened fully to U.S. channels.

The WGC reinforced the importance of genre protection as a valuable safeguard to the Canadian broadcasting system and a contributor to diversity of choice for consumers. Ms. Schechter added that "without genre protection, broadcasters – to reduce the cost of programming and increase profits – will air programs they licence across every channel they own. The result will be common denominator TV: multiple channel schedules full of the same shows."
The WGC also called on the CRTC to put in place enforceable rules to ensure genre protection, with fines and penalties set out for infractions. Ms. Parker added, "as a union, we understand that regulations are difficult to enforce but we also understand that respect for those rules only comes when there are practical consequences for breaking them. Right now, the CRTC's only recourse is to pull or shorten a licence – the hammer's so big they almost never bring it down. The result is that broadcasters are pushing the limits of their licences to maximize profit and minimize original programming."

The WGC also appeared before the CRTC today as part of the Coalition of Canadian Audio-Visual Unions.
 
Astral and Corus To Launch HBO Canada

Astral Media's The Movie Network (Eastern Canada) and Corus Entertainment's Movie Central (Western Canada) today announced the launch of HBO Canada, a channel that will deliver a full slate of HBO's award-winning, boundary-pushing, genre-defining series, films, comedies and live events.

Launching on Thursday, October 30, 2008, HBO Canada is a multiplex channel that will be offered at no additional charge to customers who subscribe to The Movie Network or Movie Central.

"HBO is one of the most successful and sought-after entertainment brands in the world and we are thrilled to be expanding upon our long-standing relationship to launch this unique new service," said John Riley, President, Astral Television Networks. "For years, HBO's dramatic programming has been available on The Movie Network and Movie Central. But even with all of the HBO titles we offered, Canadians still wanted more. They wanted the comedy series, the live specials, the sporting events and the behind-the-scenes content that went into the HBO viewing experience. In launching HBO Canada we will be in a position to offer Canadians this additional content, together with the current signature series that HBO produces, to create an entertainment and value proposition that promises to set a new standard for premium television viewing in Canada."

With its launch in October, HBO Canada will be home to new and returning marquee series such as True Blood, Entourage, Big Love, Flight of the Conchords and In Treatment, airing day-and-date with HBO in the U.S. The service will also offer more than 200 hours of library titles and first-run HBO original films, comedy specials, documentaries, live concerts and sporting events which were previously unavailable in Canada, including Real Time with Bill Maher, Def Comedy Jam and Chris Rock: Kill the Messenger. Library titles available on HBO Canada include such series as OZ and Da Ali G Show; original movies Gia, The Late Shift and If These Walls Could Talk; acclaimed miniseries From the Earth to the Moon and Angels in America; and comedy specials from the likes of Dane Cook, Tracey Ullman and Ellen Degeneres. HBO Canada will round out its offering with Canadian films and series including The Movie Network and Movie Central's award-winning original series such as Durham County and Terminal City.

"We are thrilled that HBO Canada is going to be available to our subscribers this fall," said Paul Robertson, President, Television, Corus Entertainment. "Canadians see great value in HBO's distinctive brand and compelling programming and we have responded to this with a channel that offers a full complement of HBO programming that meets our audience's demand for world-class entertainment – delivered in standard definition, high definition and on demand."

HBO Canada will include a standard definition and high definition offering. HBO Canada programming will also be offered on demand through The Movie Network OnDemand and Movie Central On Demand where available by service provider.

Astral Media and Corus Entertainment have expanded on the long-standing programming output deal that each has with HBO in order to launch HBO Canada. HBO will not hold an ownership stake in HBO Canada.
 
Most HBO programming has been available on TMN and then on over-the-air TV in Canada (Sopranos, Sex & The City, Curb Your Enthusiasm, etc.) for years now. There are a few select programs that aren't though and this should rectify that.
 
CRTC Rules

TV networks dealt blow by CRTC
CTV, Global denied bid to charge fees to cable companies and satellite carriers

GRANT ROBERTSON

MEDIA REPORTER

October 31, 2008

GATINEAU, QUE. -- Canada's biggest television networks will be forced to take a hard look at their business models in the months ahead after federal regulators blocked a proposal to collect millions in new fees.

The broadcast networks, led by CTV and Global Television, wanted to start charging cable and satellite carriers for their signals, which would have been worth $300-million to the big broadcasters as they confront a deteriorating economy.

But a decision by the Canadian Radio-television and Telecommunications Commission to deny the move will inevitably leave the networks with some tough decisions to make, said Leonard Asper, the chief executive officer of CanWest Global Communications Corp.

"We're going to have to go back and look at our business models once again," he said yesterday.

"Nothing is too outrageous to consider."

With the TV industry concerned about an economic downturn, CanWest is in a precarious spot with $3.6-billion of debt and limited financial flexibility.

Ratings service Moody's yesterday put CanWest's rating under review.

Moody's said the move was "prompted by the likelihood that rapidly deteriorating general economic conditions will suppress advertising revenues while simultaneously causing business enterprise values to fall."

The fees would have been worth about $75-million in annual revenue for Global TV, at a time when the networks have already started to see their profit margins erode.

While CTV is privately owned, CanWest is publicly traded, and is reliant on the advertising market for about 85 per cent of its revenue. Though Mr. Asper said he wasn't specifically referring to drastic cost-cutting measures such as layoffs, he said the big TV networks would have to start thinking hard about their operations in light of the fee proposal being refused.

The networks argued they should not be forced to give their signals free to distributors who turn around and offer them as part of their subscriber packages, and earn a healthy profit doing so.

The CRTC, however, said the networks failed to make a convincing argument that they needed the money.

"I'm trying to find a word that is sufficiently diplomatic here," Mr. Asper said after the decision was handed down. CTV executives declined to comment, saying they were still reading the decision.

However, the CRTC did make a key concession to the networks to collect new revenue another way. The regulator said it would allow the networks to negotiate with cable carriers to charge for so-called distant signals, or time shifting. The networks estimate this is worth about $93-million for the industry.

But the signals fees were what the networks were really after. Unlike specialty channels, such as TSN, MTV and Showcase, which do charge monthly fees, customers don't pay for the national networks.

Arguing that the financial fortunes of network TV were are being eroded by competition from cable and other media sources, CTV and Global were proposing a fee of 50 cents per cable and satellite subscriber, which the distribution companies said they would pass onto consumers. The big networks rely solely on advertising revenue and have seen their profit margins drop to roughly 5 per cent, while cable margins - fed by those monthly fees - are as high as 20 per cent.

"While [the major networks] have shown a recent decline in profitability, they, as other enterprises, might first look at their own business plans before making a request for increased revenue from the commission," the CRTC said in its decision.

"Neither the rationale for strategic initiatives by [over-the-air] 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 broadcasters had hoped to win the argument this time after they were turned down in their bid to charge fees in 2007.

Analyst Carl Bayard of Genuity Capital Markets said CanWest stood to gain the most if the fees were approved. "If fee-for-carriage is implemented in some form," Mr. Bayard wrote in a research note before the ruling was released, "it could be a defining moment in CanWest's history."

CANWEST (CGS)

Close: $1.02, up 3¢

ROGERS (RCI.B)

Close: $35.75, up $3.55

*****

The big picture

Other elements of the CRTC

decision on TV:

Packaging of TV channels

Basic cable is being scaled down to 12 to 15 channels at a lower cost. Cable operators now have the option to do away with channel bundles, provided a customer selects at least 50 per cent Canadian channels.

Competition

Rules that protect cable channels from competing with each other are being relaxed. News and sports will now be open to competition, meaning any new broadcaster that wants to start a sports network can apply for a licence. Other genres could be opened up in future based on whether they are financially viable and can withstand new competition.

Advertising

Advertising can now be sold into video-on-demand programs offered on cable. The CRTC will determine how cable distributors and broadcasters will share the revenue.

Local news

A new fund will be set up to support local news programming in markets under one million people, with cable and satellite distributors required to contribute $60-million a year.

----

The CRTC News Release - http://www.crtc.gc.ca/eng/NEWS/RELEASES/2008/r081030.htm
 
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