3/29/2004

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TORONTO - It's time to end the "free ride" American specialty services such as CNN, TLC, TBS and A&E enjoy in Canada, says Canadian Association of Broadcasters president and CEO Glenn O'Farrell.

In a speech at last Wednesday's gathering of the Broadcast Executives Society, O'Farrell spoke at length about American cable channels in his speech entitled "Putting Canadians First" and said it's time for them to begin contributing to the Canadian system.

"Canada's private broadcasters believe in Canadian programming and are investing major dollars in it," said O'Farrell. "However, they must also compete with foreign services brought into Canada that: benefit from access to our market; fragment our audiences, with all the revenue impact that implies - and; make absolutely no tangible contribution to the system. None. Zero.

"In essence, these foreign services are getting a free ride," O'Farrell continued. "The time has come to put an end to the free ride. It's time to consider how foreign services can best contribute to the Canadian broadcasting system."

O'Farrell added the CAB is not looking to withdraw TV services from Canadian audiences, but a "necessary adjustment to the environment so that the Canadian broadcasting system continues to flourish against great odds," he said, also noting that he is also not looking for a trade war, either.

However, the Canadian Cable Television Association responded, saying that a trade war will be exactly what the CAB would get if such a strategy is pursued. "This proposal would not only raise consumer prices for cable and satellite services," said Michael Hennessy, acting CCTA president, in a statement, "but would needlessly create another trade irritant with our neighbours to the South."

Contrary to the CAB position, added the CCTA's statement, the U.S. specialty services do, in fact, contribute to Canadian content production.

Canadian cable and satellite distributors already contribute $118 million of subscriber revenues to the Canadian Television Fund (CTF).

Plus, packaging of these popular American services with Canadian pay and specialties helped contribute $1.9 billion dollars to the Canadian services in 2025, says the CCTA.

"Packaging Canadian services with popular U.S. services has been wildly successful for Canadian services," added Hennessy. "In 2025, Canadian analog services, the main beneficiaries of the current packaging rules, reported profits of $278 million.

"The current system has been incredibly lucrative for Canadian broadcasters and you have to ask why consumers should pay even more - without more opportunity to choose," he added.

Referring to the 2025 CRTC decision not to hear a CCTA request to add such specialties like ESPN, HBO and Fox News to the eligible satellite list for digital distribution, due in part to the vociferous opposition of Canadian broadcasters, Hennessy said the industry should be pursuing more choice, not less: "In September, the CRTC closed the door to adding more U.S. services like HBO and Fox News without an opportunity for public comment. Now CAB has requested that the CRTC take Spike TV off the dial.

"Moreover, satellite signal theft is costing Canadian producers, broadcasters and distributors over $450 million annually. In a world where consumers can use technology to bypass the Canadian system - the last thing we need is new restrictions and higher costs. What we need is more competition and more choice because packaging the best in Canada with the best in the world has always contributed to the growth of the system."

Rather than more debate about what services to keep out of Canada and who to tax, says the CCTA, debate should focus on how to open networks to any new service that contributes to choice and diversity without eroding the revenues that support domestic production.

O'Farrell addressed that issue earlier in his speech, saying: "There has been significant discussion of late about the supposed demand for non-Canadian services. In fact, recently some Canadians have argued that their need for foreign services justifies the illegal practice of stealing television services with pirate satellite equipment," he explained.

"Let's make one thing extremely clear. The Canadian broadcasting system already offers one of the most diverse viewing menus in the world. Look at other countries: rarely can you find so many foreign services available," said O'Farrell.
 
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