Canadians Growl over Broadcast Network Carriage Fees
TORONTO -- In an unusual display of ire, Canada’s dueling broadcast and cable industries have taken a long- running battle over monthly carriage fees for local over-the- air TV stations directly to Prime Minister Stephen Harper’s office.
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Shaw Communications and CTVglobemedia, one of Canada’s largest national broadcasters, have appealed to Harper as the Canadian Radio-TV and Telecommunications Commission wraps up three weeks of hearings on pay-TV distribution (CD April 21 p10). Instead of waiting months for the commission to rule, the sides went over its head with harsh letters to Harper laying out their cases and criticizing each other’s stances.
Shaw started the letter duel by urging the Conservative prime minister this month to bring his “misguided” regulatory agency to heel. The cable operator denounced the CRTC for unexpectedly reopening consideration of the broadcasters’ fee-for-carriage proposal, which the commission had rejected last year. Under the proposal, CTV and fellow national broadcaster CanWest Global Communications seek monthly carriage fees of C50 cents per subscriber from cable operators and satellite TV providers, arguing that they need the estimated proceeds of $295 million Canadian to stay profitable and properly finance local programming. Cable operators and satellite TV providers said the fees merely would subsidize higher broadcaster profits at subscribers’ expense.
“The CRTC review does not mark a movement toward a light at the end of the tunnel, but rather a fumbling toward deepening darkness,” Shaw CEO Jim Shaw wrote. “It is not the job of the CRTC to guarantee profitability for the broadcast industry or develop taxes and subsidies that determine winners and losers in the marketplace… In short, Prime Minister, your policies are being derailed. We hope that your government will restore your policy direction, refocus your departments and agencies to pursue this policy and regain the confidence of the industry in the wisdom of your decisions.”
In response, CTV wrote last week to Harper, asking that he not intervene in the independent federal agency’s sweeping review. Citing “fallacies” in Shaw’s letter, CTV disputed cable’s claims that broadcasters want unfair subsidies. The cable and satellite industries seek their own unfair breaks, it said. “Canada’s cable and satellite companies, like Shaw, are trying to shield themselves from foreign competition while seeking new regulatory concessions that will deny real choice and diversity for Canadian consumers,” wrote Paul Sparkes, vice president of CTV. He urged the prime minister to “allow the CRTC to complete its review.”
The prime minister’s office has passed the letters to Heritage Minister Josee Verner, whose department oversees the CRTC, a spokesman for Harper said. The government usually answers such letters within 40 days. But it’s not clear how urgently letters are being handled.
A simmering personal feud between CRTC Chairman Konrad von Finckenstein and Jim Shaw also heated up last week. Shaw -- irate at last-minute inclusion of the fee-for-carriage issue in the agency review agenda -- boycotted a hearing at which he was to speak, instead sending senior executives to testify on his behalf.
“Given his vociferous views on these hearings, I thought he would have done us the courtesy of appearing in person,” von Finckenstein said. “Since we have been subject to his criticisms, I would have appreciated the opportunity to deal with him on some issues one-on-one.” Von Finckenstein called the Shaw officials who appeared “a ‘B team,'” the same term Shaw applied in February to CRTC commissioners at a hearing that the chairman didn’t attend.
The senior Shaw Communications officials lambasted the CRTC for again considering the fee-for-carriage matter, calling it “totally inappropriate.” They said if the agency granted the Canadian broadcasters’ request, it would open the door for big U.S. broadcast networks to demand fees from cable and satellite providers. If that happened, Canadian cable and satellite subscribers could pay C$570 million more per year, they said. “A decision with this kind of impact on the system and consumers should, in our view, only be considered by Parliament,” said Shaw President Peter Bissonnette.
CTV immediately challenged Shaw’s estimates, discounting the threat of U.S. networks seeking Canadian carriage fees. Von Finckenstein, who has shown sympathy for broadcasters’ cause, also seemed to dismiss the idea.