CRTC License Game Changer Afoot?

DURING THIS WEEK's WGC council meetings, we discussed various scenarios of what to do when the CRTC released its intentions for the upcoming license renewal hearings. Much of the speculation swirled around whether they would limit the scope of the hearings, or offer relief on CanCon regulations.

Well the CRTC released its brief late Friday afternoon, and I think it's safe to say that it wasn't something anybody was expecting. At first glance, this appears quite favorable to creatives, as it puts the issue of what obligations the broadasters should have front and centre in the proceedings. The other interesting change is the commission's intent to look at each broadcast group's entire holdings, ie: not just CTV, but CTV + MTV, Much, Bravo!, Newsnet, etc. The profit centre that is specialty will be figured into the equation.

This suggests and signals a big change. It's no wonder the broadcasters had 'no comment,' and to tell you the truth, I don't have one either right now. This one, you need to read the article yourself, and mull over what you think. I'm pretty sure we'll be getting into it next week.

Go read Grant Robertson and James Bradshaw's coverage in the weekend Globe and Mail. I've added emphasis to some of the more interesting excerpts below.

In a move that would reshape prime time television, the federal broadcast regulator is considering placing a cap on how much the country's biggest TV networks can spend to acquire hit U.S. shows, such as Grey's Anatomy, The Office and House.

The proposal, which came as a shock to network executives Friday, would require CTV, Global, CITY-TV and others to spend the same amount on Canadian programming as they do on U.S. shows. For every $1 spent on programs from outside the country, a dollar would have to be spent at home creating a domestic show.

The announcement by the Canadian Radio-television and Telecommunications Commission comes just days after new federal data showed the networks spent a record $775-million on foreign programming last year, with most of that content coming from major Hollywood studios.

There are concerns in Ottawa that runaway spending to lock up U.S. shows that do well in the race for ratings is now contributing to network television's financial woes in Canada.

“The commission, at first blush, finds a lot of merit in the idea,” the CRTC said in Friday's announcement, suggesting the proposal could be tested on a trial basis for one year.

Last year, spending on foreign shows hit a record $775-million, compared with $619-million to make domestic programs. The numbers include several commercial networks; CTV, Global, CITY-TV, and French networks such as TVA. Public broadcaster CBC is not included.

The networks refused comment on the CRTC announcement Friday, saying they need more time to study it.

It is also possible that such a move could spark a trade war with the U.S, one executive said, if American networks complained about government intervention in the TV market.

The changes affect licence renewal hearings being held in April. The major broadcasters have argued that the state of conventional network television is in decline, as audiences migrate to cable and the Internet. Most industry revenue growth now comes from specialty channels, which collect small fees on monthly cable bills. CanWest Global Communications Corp. and CTVglobemedia Inc., parent company of The Globe and Mail, have bought up dozens of specialty channels between them to take advantage of the steady revenue they offer.

The CRTC said Friday that it will hold licence renewal hearings that combine the big networks with their cable channels starting in 2010, rather than treating them as two separate businesses. The CRTC said it wants to view the broadcasting operations as a whole to determine their profitability, and whether major concessions are needed.

The regulator also decided to issue one-year licence terms for the broadcasters, citing the financial pressure on the big networks, after a steep drop in profits. Licences are usually issued for a seven-year period for the broadcasters, but the one-year term would allow the networks to come back and seek further changes if their situation worsens.

And the comments are the usual passel of right-wing populist idiocy: bomb the CRTC, sell the CBC, why are they so mean to Conservatives? Jeez Louise, everytime I think of how direct democracy would work I get hives.

Is There Anybody Alive Out There?

SORRY FOR THE light posting. The quotient of time I had for outside activity this week has been sucked up by WGC Council meetings. I've got one outline that I'm reworking, and another set to be writ when that ends -- and my little St. John's sojourn last weekend means I've been working something like sixteen days straight now, so I don't think it's likely we'll have much posting before Monday.

One addendum to yesterday's column in the name of fairness: one of my colleagues at the WGC pointed out that Grant Robertson from the Globe has frequently called the Guild to solicit angles, background, or info for stories. The Globe and Mail is also traditionally the best of Canada's newspapers when it comes to featuring and considering the arguments and positions of writers in the TV landscape.

I also received an email from somebody who tried to register to comment and had it not work for some reason. So I'll post it here:

I also want Canada’s private TV stations to do well. And it’s true their revenues are down 4% from last year. And it’s true that they will have to spend some money on converting to digital within the next few years. But TV revenues are directly tied to changes in GDP – and most Canadian banks (not just the Bank of Canada) are forecasting real economic growth within 12 months, so there is already light at the end of the tunnel, even if it is still somewhat dim. And a large chunk of every dollar spent on digital conversion will reduce the taxes broadcasters pay, saving them money and making their assets more valuable. And the writers’ strike has been settled. And once the three new TV stations that have launched in the last several years find their legs, their total revenues will start to offset their expenditures so we will see some recovery there too.

My problem is that as you point out, private TV broadcasters are setting the stage for the April TV renewals – the sky is falling! There are clouds and tornadoes and no silver linings! We are doomed, doomed, doomed, I say, unless you, CRTC Commissioners, cut us just a tiny bit of slack.

So this is now the argument: just drop those pesky requirements for local news and information and we will do great things for the broadcasting system. Lise Lareau posted a great clip from CHCH-TV which sets out the argument very clearly. We will put all the money we save by firing reporters, laying off technicians and closing down our local operations into … you guessed it, more and better drama. Trust us. Honest. The cheque’s in the mail.

Are Canadians really supposed to believe that after spending more than $5.2 billion (billions!!!) since 2000 to buy each other out, Canada’s media giants actually didn’t know what they were doing? Just why the heck did we all swan into the CRTC's hearing room in Gatineau so many times over the last three years to hear Ivan and Leonard and the Rogers' folk make their pitch to get bigger to be better?

But hey, I guess that once you’ve spent five BILLION on mergers and acquisitions, the prospect of putting one more dollar into the pathetic $86 million spent on Canadian TV drama in 2008 is so onerous you just have to cut … local news and information. It's obvious why: fecause if Canadians really want to know what’s happening at their local city council, or in their local hospitals, or in their local schools, or on their local streets, they will clearly tune into CSI: Toronto (every Wednesday night at 10 pm, subject to cancellation if a US election happens).

Too sad, really, because this pick-your-favourite-kid argument is likely to win. It won’t matter that because of incessant pleas of poverty from private TV broadcasters, the CRTC dropped all requirements for local content except local news in 1991, so cutting local news will pretty much end local programming altogether. Or that it has allowed media consolidation to the point where there are only 13 private TV broadcasters left in Canada (down from 60 or so in 1968). Or that the four largest of these broadcasters pull in 90% (!) of total private TV revenues. Or that beginning this fall ALL OTA TV advertising limits have been dropped. Or that internet income and dynamic ads are not even counted as part of private TV broadcasters’ income. Or that the writers’ strike ended. Or that the CRTC has been fighting access to information requests for annual revenue, expenditure and employment data for individual TV stations for more than two years, so that only it and broadcasters actually knows what’s really happening. Or that the economy will begin to recover in one or two years. Or that Parliament actually says it wants local news in the broadcasting system. Or anything else. (Did I mention the $5 billion in takeover costs? – Just watch me wave my hands and ignore that big elephant in the room, because it clearly has nothing to do with any problems private TV broadcasters are having now.)

No, private broadcasters are likely to win the day because they are putting time and energy where it counts. From July to December 2008, the CAB met with the CRTC’s Chairman, Vice-Chairmen or Secretary General 14 times and CTVgm and Canwest 6 times each. Not to mention another 10 meetings with Astral, Rogers and Corus. (Check out the Lobbyists’ Registry Search engine – easy to use: http://www.ocl-cal.gc.ca/eic/site/lobbyist-lobbyiste1.nsf/eng/h_nx00274.html) What were the meetings about? “Broadcasting”, usually.

I am sure the CRTC will listen to everyone who writes in about the renewals. It will listen to every party at the hearing. It will listen to its staff. And if enough people pull together at this coming hearing, just maybe the CRTC will decide that it does not have to see Canadian broadcasting as a zero-sum game – and that it doesn’t have to believe and should not believe those who say that it must choose between news and Corner Gas. Because that choice will pit everyone in Canada’s cultural sector against each other. Great, perhaps, if you’re a broadcaster. But if you’re not?

Thanks for the comment, M. You raise some excellent points. The link above that shows the extent of the broadcasters' lobbying efforts is worrisome to say the least, and almost raises the question as to whether we have even the appearane of a public consultation process anymore.

And the "choose between drama and news" dichotomy is a total false flag. Which is not to say that we're all not going to walk right into that fight. Sigh.

It is pretty shocking to think that ten years ago, the Nets got the CRTC to change the rules and we went from 12 drama series to 2 overnight, and spent a whole decade painfully rebuilding. Now, having been relieved of every local responsibility save news, they're looking to turf even that.

Depending on what happens over the next few days, and the rumblings that emerge from Hull, we might be having a discussion about why we have Canadian networks at all. Stay tuned.

I'll be back when I've shipped outline out the door.

Is Grant Robertson In The Tank for the Networks? (UPDATE: now with Mea Culpas Below!)

AN ARTICLE IN The Globe & Mail today paints an extremely gloomy portrait of the landscape for broadcast networks in Canada.

The financial decline of Canada's major commercial television networks accelerated last year, with profits falling more than 90 per cent amid the onset of a slowing economy and the migration of TV audiences and revenue to cable channels.

The national conventional TV networks, including CTV, Global, CITY-TV, and French broadcasters such as TVA, saw their biggest-ever drop on a percentage basis in profits before income tax. Those profits, which are reported each spring by the federal broadcast regulator, fell to $8.04-million from $112.94-million last year.

That drop comes after CTV and Global warned regulators last year that the financial model for network television was breaking down. Pretax profits were consistently above $200-million for the industry prior to 2005.

The networks argued to the Canadian Radio-television and Telecommunications Commission that they should be allowed to charge the cable companies fees for their signals, something specialty channels are allowed to do. Their proposed fee of 50 cents a month per customer was turned down by the CRTC.

Meanwhile, the cable industry argued that they would pass that fee onto consumers, who wouldn't stand for such price increases. Since then, Rogers Communications Inc., which told the CRTC its customers would cancel service if the fees were added, has recently announced several price increases on many of its channel packages.

The article continues, quoting representatives for broadcast networks.

Now, there's a whole lot that's scary and depressing in that article. But like a lot of Grant Robertson's pieces, what's most interesting is not what's in the article, but what's left out of it.

Specifically, the article seems to lay out the case for why the CRTC was wrong not to give the Canadian networks carriage fees. The point it makes about rising cable rates is silly; a carriage fee is not comparable to the fee charged for the service, no matter how you compare it.

But what's really weird is the essential context that's left out. Profits are falling because viewers are fleeing to cable channels -- which are owned by the same companies that own the networks. Also, no mention whatsoever of the fact that those figures reflect the fallout from the WGA strike, which caught Canadian nets flatfooted and without an alternate plan because they rely so heavily on American product. There would have been a dip anyway, but not that much of a dip. Nor does it account for the fact that there was a massive consolidation in that timeframe, with CTV buying Chum, and Global buying Alliance Atlantis.

Are the profit figures low because of the inclusion of those sales? I don't know. I don't have the context. But it sure makes me suspicious when I read a news article and realize that it's sourced from basically one set of stakeholders: the broadcasters.

I want Canadian broadcasters to do well. I really do. But doing well by demanding more money from your shrinking viewership base is not the way.

This article reads like a plant -- it couldn't be more broadcaster-centric if it had the CTV logo attached. And considering that the paper and that network is owned by the same company, it makes for seriously queasy optics. I mean, where's the standard disclaimer line about "we're owned by the same company" like Entertainment Weekly always does when it writes on issues or shows pertaining to Time Warner?

A few weeks ago, someone predicted (I forget who) that one of the three U.S. networks would cease to be in the next three years. That's a pretty dire prediction, but not totally out of line.

And those networks are all diversified -- they're all also in the content producing business.

Are we ever going to have a discussion about broadcasting in this country that involves all the real issues? And that posits new solutions? The failure of original thinking here is simply epic.

I thought I learned in basic Economics back in High School that raising your price was the last thing you did because it forced the consumer to look at your product anew and re-evaluate whether it was worth the cost.

I'm not sure Canadian nets want customers re-evaluating their worth right now.

Man, where are the outside the box thinkers? And why does Grant Robertson never, ever, ever interview them?

EDIT: it's been pointed out to me that "in the tank" is perhaps a bit strong, considering the focus is business. I concede the point.

A FURTHER EDIT: and a Mea Culpa -- Bill Dunphy upbraids me a bit below -- and I concede my haste in this matter. I went too far out on a limb on this one, and I apologize. But actually, Bill makes that case better than me so I'm just going to append his comment here:

Denis, Denis, Denis. Please do not slip into the easy comfort of carelessly impugning the motives of someone whose analysis you don't agree with or who fails to meet your standards.
"In the tank" (to take a dive) for the Networks" is more than "perhaps a bit strong" - to a journalist its defamatory.
And needless.
And factually incorrect.
Robertson does disclose who owns the Globe:
"It doesn't take into account what is happening now; 2009 is going to be even worse," said Paul Sparkes, executive vice-president of corporate affairs at CTVglobemedia, the parent company of CTV, which also owns The Globe and Mail "
He also brings in the profits of the specialty channels - although he doesn't stretch himself enough to detail the interconnectedness you mention.
But to leap to the conclusion that a dull, weak effort of journalism may be evidence of ownership interference in news is to demonstrate a deep failure to understand what goes on in newsrooms and the fierce and sometimes suicidal refusal by most good reporters to pay any attention to who owns them when they chase their stories. You don't need to touch on motives (conspiratorial or otherwise) to offer a sharp - and possibly deserved - criticism of his reporting.
And frankly, the slurs aside, I prefer your analysis to the flat and context-free reporting evident in that article.
It's just that you lower the tone so needlessly when you haul in the boogey men. Life is rarely that simple.

Mainlander Go Home

THANK YOU TO the several lovely people who wrote with invitations or 'Hey howareya's' on my news of coming to St. John's this weekend. Sorry I wasn't able to meet up or respond -- this was a working trip and the days have been filled with story breaking.

It's not my place to talk about the project, but let's just say that some people have speculated on it fairly recently.

Mostly, besides the old-fashioned head cracking of getting out the beats, there has been laughter. A whole lot of it. Sometimes so much I found it hard to catch my breath. Let's just say that I never knew Nfld. Premier Danny Williams could be so fierce or so funny. Mark Critch, your Danny is great, but it's nothing compared to the run I heard this weekend.

Several times over the last couple days, one or the other of us would stop and remark something along the lines of, "this is a really cool job." And it is. I've got to talk story with some great writing minds, and Actors and Producers who know their thing, and a creator with a clear intent, and the force of character in his head. And in between that, there's been the Ship and the Duke of Duckworth, and Indian food and the Trinity and a whole bunch of laughs and maybe even part of an old Rockford Files episode.

It really does beat working.

I had a three project week last week. Today I'll get on the plane after a few more hours firming up story details, and return to Toronto in time for a story call and notes on another script. And yeah, maybe that's a long day. But the laughs and the sheer joy of it keep you out of the muck of despair. And what more could you ask for in work or in life?

Would that everybody's working weekends gave them that kind of boost!

I have seriously got to get back to St. John's in the summer. We shall see. We shall see.

WGA Award Winners

COURTESY Nikki Finke