CTV threatens to close local stations
Broadcasting giant tells cable companies to pay or else
Iain Marlow
Business Reporter (TheStar.com)
Published On Tue Nov 17 2009
GATINEAU, QUE.–The opening salvo in the latest battle of Canada's television war was stark and unequivocal: CTV, the nation's largest private broadcaster, will black out signals and continue to shutter local television stations if it can't get paid by cable companies for local programming.
At crucial hearings that began Monday, the broadcaster appeared before the Canadian Radio-television and Telecommunications Commission and explained how the company would cease to exist if there weren't radical changes in Canada's regulatory regime.
"We need to collect what is ours or we need to walk away," said CTVglobemedia president Ivan Fecan. "We are not going to be here operating conventional TV unless we can make a business of it."
The broadcaster vowed it would black out popular shows, such as Desperate Housewives, and that it would be forced to continue to close small-town TV stations if it wasn't given the right to negotiate a fee for unprofitable local signals.
"The television station has the right to withhold its signal," said Paul Sparkes, CTVglobemedia's executive vice-president for corporate affairs.
The suggestion that carriers should have to pay for the broadcasters' local signals was scoffed at by executives from Rogers Communications Inc., which also appeared before the commission yesterday during the first session in two weeks of hearings for the latest chapter in the so-called fee-for-carriage debate.
"They do not need a bailout," said Rogers president and CEO Nadir Mohamed.
Rogers vice-chairman Phil Lind, who said that anyone can buy a pair of rabbit-ear antennas and get those signals for free, said his company would never negotiate any fee.
"Why would we negotiate for over-the-air signals that have no value for us? The CRTC's realized they're in a bit of a corner here."
The federal agency is indeed stuck, but not in a corner: they are right in the middle of a bitter and protracted, high-stakes dispute that could radically alter the future landscape of Canadian television.
On one side are the nation's big broadcasters, such as CBC and CTVglobemedia, which claim a broken business model is forcing them to sack staff and close local television stations. On the other are Canada's cable and satellite companies, corporate behemoths like Rogers and Bell Canada, who say broadcasters are trying to make consumers pay for near-sighted business decisions.
The CRTC's chairman, Konrad von Finckenstein, grew exasperated with executives from both CTV and Rogers as the hearings dragged on with the two sides restating familiar positions and refusing to budge. He buried his head in his hands several times and repeated questions sternly when they were dodged or not answered.
Throughout the day, von Finckenstein kept asking why the two sides couldn't negotiate and then come to the CRTC with a proposal, which it could either approve or reject.
"I must say I find your responses not very helpful," he told Rogers executives. "You're taking a very dogmatic stance rather than trying to understand what I'm asking from you. ... I'm sure anything we impose will be worse than what you can negotiate."
At one point, he simply sighed, and said: "I am very frustrated."
The CRTC's dilemma is simple: neither the broadcasters nor the cable and satellite providers want to appear like the bad guy, the one who threw the extra charges at consumers.
By foisting the key decision-making on to the CRTC and being ornery about forging a compromise with each other, the two sides are effectively challenging the federal regulator to step in and make a bold, and potentially very unpopular, move.
The cable and satellite providers are betting the CRTC doesn't have the guts to make such a decision; the broadcasters are hoping the federal regulator can find the strength to do so. Though history doesn't give much hope, since the CRTC has twice rejected the now-renamed fee-for-carriage suggestion at two separate hearings in 2006 and 2008.
Lind spoke plainly about von Finckenstein's predicament.
"He doesn't want to have his hands on it. He wants us to be the culprits," Lind said at a break in the proceedings, gesturing toward where the CRTC commissioners were sitting.
"Well, we're not going to be the culprits. He's going to be the culprit. They're going to impose the fee. We're not going to impose a fee on our customers."
Broadcasters say the fee is necessary because of what they frequently call a "broken" business model. With the recession's downturn in advertising, the local stations are even less profitable than they were previously. But von Finckenstein seemed confused by a contradiction in CTV's argument.
The corporation wanted to negotiate a distinct fee on a station-by-station, market-by-market basis, based on a mutual understanding between it and the carrier on what the station was worth, yet CTV said the problems of the broadcasting industry were structural.
The CRTC chairman and the other panel members also seemed frustrated by CTV's inability to say where money from a fee would go, since it is unclear whether the money would be sunk back into local stations. At a break, Sparkes would only say money accrued from fees would go into Canadian programming expenditures.
The hearings will continue, with other broadcasters, carriers, interest groups and ordinary citizens appearing over the next two weeks. Several analysts have hinted that the CRTC will try to seek a delicate compromise, rather than make any sort of controversial decision.
