Talking 'Can't Make The Business Model Work Cause We Paid Attention to the Wrong Crap' Blues

IT'S NOT LIKE Canadian media companies were alone in this -- remember how AOL TIME WARNER was going to do everything cause of "synergy?" Riiight. But U.S. media companies also invested heavily in Content by becoming their own TV studios: FOX now feeds FOX and F/X, NBC Universal, ABC Studios and CBS Productions also pump product.

I don't know Angelo Persachilli, but I do find it a little shameful that it's an op-ed columnist who puts forth the clearest explanation of Canadian broadcasting's woes. Then again, with the concentration at work in the Canadian media, maybe it's not so unusual.

To understand the problems broadcasting is experiencing it helps to compare it with the changes that took place 30 years ago in the computer industry.

At that time, the market was controlled by IBM, the corporate leader in producing hardware. In a few years, however, everybody was able to build computers and IBM became only one of several manufacturers. Then Bill Gates came along and software took over the industry.

The same has happened with broadcasting. Thirty years ago, the sector was controlled by the companies that owned the medium through radio or TV broadcasting licences. Then something happened. New technology – fibre-optic cable and satellites – came along and viewers were flooded with hundreds of channels, many from abroad, mainly from the United States. The sudden abundance of channels (hardware) and shortage of programs (software) changed the game. Quality content became the dividing line between success and failure.

Unfortunately – and contrary to what Gates did – broadcasters ignored the software, meaning programs, and tried to maintain their control of the industry by buying new channels and asking the CRTC for more. Imagine IBM trying to control the computer industry by buying clone computer makers and leaving the opportunity to fill them with content to others – that's what it was like.

Private Canadian broadcasters (the CBC is in a different category because of public financing and unique regulatory demands) increased their capacity to broadcast but reduced their ability to fill their outlets with quality Canadian-produced programs. They looked for easy profit by flooding Canada with American-produced shows and got around the CRTC's Canadian content requirements by airing cheaply produced ethnic programs and repeats of Canadian-produced shows to the point that viewers have memorized them.

But new technology allows us to bypass their stations and watch programs directly on foreign channels. It's the same with ethnic programs. There are so many channels from around the world broadcasting quality programs in every language that Canadian production, aside from some newscasts, is useless.

Broadcasters didn't invest heavily in production because, they say, we can't compete with American companies whose audience is 10 times bigger than ours. In this lame defence is concentrated the core of the problems affecting our broadcasters: They ignored the fact that new technology long ago crashed geographic barriers, and they have always seen the 300-million-strong American market as a threat rather than an opportunity. We speak the same language, after all.

Instead, the broadcasters cocooned themselves inside Canada's borders and chose the easy way out, asking the CRTC to tax their viewers while buying more American programs. They complained that their over-the-air channels were less profitable than specialty cable channels and asked for permission to charge a fee to cable companies carrying their programs. Why not improve the quality of their programs to woo viewers back from the specialty channels? Because they own most of the specialty channels and would have been competing against themselves. So instead of improving quality, they sought to subsidize their over-the-air channels by charging viewers for programs they don't watch. This request, denied by the CRTC, came last year when the economy was booming. I'm sure they will try again, this time blaming the recession for their problems.

In fact, you could argue that the conventional broadcasters are doubling down on their bad strategy right now. How? They're trying to get out of local news. It would be funny if it weren't so sad. Hey CRTC, are you listen...never mind, they're not. We know that already.

Meanwhile, later today, if my information holds up, another cavalierly disastrous decision for the Canadian creative industry is coming down. We'll return to that later. For now, I'm running my little Freedom app and unplugging for a few hours to get work done.

The sky can always fall later.