HELP SAVE LOCAL TELEVISION CAMPAIGN MAY 21 2009 DAY 5

I totally agree very well said , the machine of capitalism needs to be shut down at some point before it destroys our way of life entirely.  I will definately sign that petition thanks for this post.

A great story again my friend excellent job!

It's a shame when the little guys get hit hard all the time, that is what it boils  down to the big corps killing  the small fries.  Great post.

This is a great thing you are trying to do , hopefully it will help the cause

First, a declaration: I work for an association that represents small cable companies across the country. Nonetheless, I'm responding not out of self-interest but because this is just SO WRONG!

Some facts:

- We're talking about CTV and Canwest here, not little, defenceless local stations; CTV and Canwest are huge and they run both money-losing convential TV stations ("off-air") AND most of the highly profitable "specialty" television properties (e.g. TSN, TVTropolis etc.). CTV alone has over 20 such specialty services.

- A big part of the reason these companies have financial problems right now is because they spent billions of dollars to buy those specialty services at the top of the market and leveraged themselves heavily to do so. That's why Canwest is fending off its creditors right now. Most of the debt is owed to US financiers.

- Those media conglomerates bought the specialty TV properties precisely as a hedge against the weakness of their conventional TV stations - a good strategy. However, they got into the specialty game too late and are now paying the price of the debt they incurred to do so.

- Conventional stations make much of the claim that their audiences and the advertising dollars they can command have been fragmented. Where does that fragmentation come from? Why, from the very specialty television services that they, themselves operate! So the money is going out of one pocket into the other.

- By far the bulk of the operating costs of these groups is US programming acquisition (ER, House etc.). This is not about protecting Canadian culture. Their US media buy is rising dramatically year-over-year. That is why the CRTC briefly considered imposing a $1CDN to $1US spending limit on these guys.

- When cable and, then, satellite distribution became a reality, the conventional stations begged to be carried on those platforms. The resulting increased viewership enabled them to command much higher advertising revenues.

- Distribution of those stations on cable and satellite is not cost-free. In fact, the cable and satellite companies have made huge investments in their networks and continued analog carriage of the conventional stations continues to chew up a sizable portion of the cable and satellite system capacity. That capacity costs serious money to create, maintain and operate.

- System capacity that is occupied in that way cannot be used to distribute new digital services. So the continued obligation to carry conventional TV is now holding the small cable companies, in particular, back in terms of what they can offer to their customers. By the way, mandated fees could actually kill off a number of the smaller cable companies.

- Understand that the cable and satellite companies are required, by law, to carry these conventional stations. In exchange for that regulatory support, the conventional stations have a whole host of regulatory protections. One of the most important is the right to have their signal substituted over US signals. That's why you can't see Superbowl ads. Again, a huge revenue boost to the TV stations and a big cost to the cable and satellite companies.

- Cable and satellite would be OK with paying fees to these stations if they did not have regulatory privileges that the specialty services don't have. But the conventional TV stations want the fees AND the privileges.

- If conventional TV stations were willing to operate under the same rules that apply to specialty services (again, e.g. TSN, TVTropolis), the cable and satellite companies would do that. They negotiate agreements like that all the time. This is different. Conventional TV wants to eat its cake and have it too.

- Conventional TV broadcasters have steadily pulled away from local coverage. Where I live, in NB, we get our information mostly from Halifax now. This will continue.

- Many cable companies, on the other hand, operate local community channels that do an excellent job of local coverage, in addition to providing on-air access to community groups. The cable companies would love to grow those community channels and increase the scope and quality of their local coverage.

So there are some facts.

Consider this. CTV and Canwest are publicly traded, for-profit companies. The first question is why should they be rescued at all? Should Canadians put money into their shareholders pockets? Should we permit a massive transfer of wealth from one set of for-profit companies to another just because one group yelled long enough? Note that the main reason that the CRTC chose not to mandate these fees is that the conventional stations would not commit to ANY improvement or increase to local programming if they got the money (about $350 million this year).

The next question is, why should cable and satellite companies bail them out of financial difficulties that cable and satellite did not cause? If fragmentation of audience is the problem, why should cable pay to fix it?

The next question is, if cable and satellite customers are to be charged an extra few dollars on the monthly bill (which is, in all probability, where the money will come from) why should only cable and satellite customers pay to save an over-the-air broadcasting system designed to push signals to the remaing 8% of Canadians who do not pay for TV at all?

If the system truly needs fixing, isn't that something that ALL Canadians should decide and then pay for? Isn't that a matter for Parliamentary debate and, then, amendment to our cultural and taxation policies?

And a final note: do not think for a moment that this is a one-time payout. First, the fees would be charged monthly, forever. Second, if the conventional broadcasters succeed in getting fees authorized, the next step will be incessant requests for increases to those mandated fees. Customer pays!

So . . . check the facts before you jump on that bandwagon.

I forgot one of the main punchlines:

Cable companies haver NEVER charged conventional TV a nickel for access to and distribution on their systems. In a number of European countries, TV stations pay the distributors for access and signal delivery (and would not even think of charging fees).

Against that reality, the Canadian conventional stations are essentially accusing cable and satellite of stealing their signals by distributing them to Canadians with paying fees.

It's all just SO WRONG!

Check the facts and then spread the word.

So now my "blather button" is really pushed. Honestly, the more I think about this, the angrier I get, as a cable representative, as a cable customer and as a Canadian television viewer.

First, a correction: of course I meant to say "without" instead of "with" in the last three-line paragraph of my previous post.

So, here's "Part 2" of the story.

As you may know, the US broadcasting system, by legislation, must go digital on June 12. That means that all over the conventional stations in the US must build digital transmitters (towers) for their signals.

As you can imagine, the US broadcasters balked at the cost of doing that. However, after some struggles, most, if not all, of the US conventional stations have now spent the money, gotten the job done and are broadcasting digital signals. On June 12, the analog over-the-air signals will shut down. Basically, the US is ready and it shouldn't be a huge issue.

In Canada, the digital cut-over is scheduled for August 2011. Under existing CRTC regulation -- that is, the law -- the Canadian conventional television stations must have digital transmission facilities built and ready for the cut-over at that time.

However, pleading poverty, the conventional broadcasters are now saying, regardless of their regulatory obligations, that they simply ARE NOT GOING TO DO IT.

So, at this time, the digital transition in Canada is pretty much up in the air. The conventional broadcasters will not divulge whether or where they intend to build any digital transmitters. Instead, they want the cable and satellite companies to solve their problem by distributing their signals for them.

However, despite the fact that they will again save hundreds of millions of dollars by avoiding their existing regulatory obligations, they refuse to contribute any funding to that solution or, for that matter, even to commit to delivering their signals at their cost to the cable and satellite companies.

Canada is beginning to lag the rest of the world with respect to digitization of its broadcasting system. The conventional broadcasters are not helping us to catch up. Meeting the CRTC's August 2011 cut-over deadline appears less and less likely.

So with "Part 2" added, wee now have these propositions:

- despite decades of free, mandated distribution, together with other valuable regulatory privileges, the conventional television stations accuse cable and satellite of stealing their signals;

- despite saving hundreds of millions of dollars by avoiding their regulatory obligations to invest in digital technology (something cable and satellite have already done), the conventional broadcasters want cable and satellite to solve their problem of how to distribute their signals digitally; and

- they want cable and satellite to pay a fee of $0.50 per subscriber per month for the right to distribute their signals.

So, does that sound even modestly out of whack?

OK. Here's the last instalment. Then I'll shut up.

Part 3 - The Pressure Negotiation

On the topic of "saving local TV", consider the following:

- twice in the past couple of years, the conventional stations have gone before the CRTC with their proposals for a new "fee-for-carriage". That is the fee they want to charge cable and satellite;

- twice in the past couple of years, the CRTC has rejected that proposal. The basic problem has been the the television broadcasters would make NO commitments regarding Canadian or local content in exchange for the CRTC's support;

- the conventional stations' licence renewal hearing at the CRTC was scheduled for April 27, a couple of weeks ago;

- the CRTC basically said that the broadcasters' fee-for-carriage proposal was "off the table" for that hearing and that it intended to issue one-year "administrative renewals" to the licences pending a full hearing of the fee-for-carriage matter one more time this fall;

- a few weeks prior to the hearing, CTV announced that it would close three of its local Ontario stations because it could not afford to operate them;

- at the hearing, CTV underlined that those stations were operating at a loss, that it had been unable to sell them and that they would have to be shut down;

- the next day, Shaw Cable said "We'll buy them!" And they did.

Guess what the major topic of discussion was at the hearing? That's right, fee-for-carriage.

Once again, the CRTC said, "No." So, by now, we are now up to "No, No and No!" This time, the CRTC added, "Why don't you stop flogging a dead horse?"

However, the CRTC has established an industry working group to address the problem of conventional television in Canada's future. We will hear about fee-for-carriage again in the Fall. That is, if the politicians don't tell the CRTC what to do first.

There are a few points to be made here:

- Without saying that the Ontario stations do not have real financial issues and might have been closed anyway, it certainly fit very nicely with CTV's PR campaign to announce the closures when they did, just before the CRTC hearing. Coincidence?

- The CRTC is the expert regulatory body charged with supervision of Canada's broadcasting system. The CRTC knows the history;

- The CRTC has now heard the conventional broadcasters' proposals three times and has not seen fit to accept them;

- That is, the broadcasters have not carried the day at the CRTC;

- So what would you do next? You would mount a SERIOUS public relations campaign to win the hearts and minds of two groups, Canadian politicians and Canadian consumers. The conventional broadcasters spin this campaign as, "Canada, help us save YOUR local television!";

- Parliament's Heritage Committee is now examining the issue;

- Canadian consumers and politicians are not industry experts and, make no mistake, this is a complex issue.

- The politicians CANNOT spend the time required to understand it all. Generally, consumers WILL NOT spend the time required to understand the issues (Are you still reading this? You are the exception.);

- So the "Save Canadian TV" emotional appeal is MUCH more likely to succeed with politicians and the general public than it is with the CRTC, who know better;

- Consider who owns the television stations and the papers ; CTV's owner, Bell GlobeMedia and Canwest. You have to admit, the TV ads are brutal;

- The politicians have a broad enough authority under the Broadcasting Act to direct the CRTC to implement a fee-for-carriage regime;

- What about those Ontario stations? Shaw bought them for a song but think about it and you will realize they are expensive to run: jobs, equipment, programming rights etc. After all, that is why CTV said they had to be closed.

- The Shaw guys may be cowboys but they're SMART cowboys. Of course they bought the stations partly for the PR value. It shot CTV down very nicely.

- But the point is that Shaw intends to make money running those stations. Similarly, Rogers Cable recently bought a number of conventional television stations with the expectation that it will turn a profit on them;

- I'll say it again: these folks are not dumb. They are in the business of making money;

- Some other folks, on the other hand, may have gotten a little too comfortable with decades of airtight regulatory privilege and may have lost the pencil sharpener somewhere behind the Genie Awards.

So, at bottom, the dollars involved in these issues are HUGE. There is a very brutal, very cynical game afoot, as there so often is when the stakes get very high.

As a Canadian and as a cable customer, it will absolutely make me hurl if I am forced to pay an additional few dollars each month on my cable bill to support a cynical cash grab that I know well to be so fundamentally wrong.

In fact, like many others, that might be the time when I finally decide to be done with the whole thing, equip my TVs with wireless cards and load everything I want to see, and more, directly "over the top" from the Internet for free; copyright be damned!

The broadcasters say that the conventional television model is "broken" and "crumbling". If you want to see an entire broadcasting system crumble, just take yourself to that day when you, I and all of our neighbours decide that we just don't want to pay anymore for this crap or pay for this crap any more.

I don't think we want to go there. The system we have now works just fine!

In that respect, note that fewer than 8% of Canadians now watch any TV outside of the cable/satellite distribution system. A fair portion of that 8% is stealing signals from the US, not using an antenna to watch CTV. My point is that very few Canadians are truly reliant on conventional television any more.

It is intensely galling to me to hear these broadcasters say, in one breath, that they are the "cornerstone" of the Canadian broadcasting system and, in the very next breath, that they are dying because so few Canadians are watching them now. That's really true! - both statements in a single paragraph in one of their regulatory submissions to the CRTC.

To my mind, that just does not fit together.

If the conventional broadcasters go down, a prospect that I believe is overstated, other services will inevitably rise up to fill the gap. Watched your local weather lately? The Weather Network is a specialty channel that does local across the nation (and strongly opposes fee-for-carriage for the conventional broadcasters).

It's possible and may, in fact, be desirable. Again, these broadcasters are for-profit enterprises. If they fail, so be it. The system will fill the gap very quickly.

Again, check the facts before you leap.

There. I think I'm actually done. Thanks for reading along.

(not so fast) is worth reading.  Very well stated!  It's nice to see someone actually understanding what their standing up for.

Kados to you my friend, And yes, I'm one of the few that read all.

Very well stated NotSoFast...