The future of television in Canada
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by L. IAN MacDONALD
National Post, Saturday, March 7, 2009
It was Bill Gates who famously predicted that one day everything would be on computers. Thanks to the Internet, that day has arrived. More people watched the inauguration of Barack Obama online on their desktops than saw it on television.
In Canada, you can watch Question Period live on CPAC, or you can watch it streaming online at your desk without ever getting up to turn on the television. You can watch Don Newman live but you can also catch up with his show when you get home by clicking on the CBC Web site. Appointment television is a thing of the past. At CTV, a senior manager said a few months ago that they were taking television sets off desks in the working newsroom behind Lloyd Robertson because there was no longer any need for them.
"What does this tell you about the future of television?" she was asked.
That's where we're going, and it's not a good place for the television industry, which is faced with the worst cyclical downturn in its history in the midst of sweeping secular change. The 500 channel universe may have fragmented TV audiences, but at least specialty channels were largely owned by mainstream broadcasters, and at least people were still watching television, not the Internet.
It's now very clear that conventional over-the-air television as we know it is in irreversible decline, which is not to say it can't be viable again, provided it isn't killed off by the regulator, the Canadian Radio-television and Telecommunications Commission.
The cries for help are very apparent in the announcements coming from the networks, and their regulatory filings to the CRTC for a licence hearing next month that looms as a watershed event for the Canadian broadcasting industry.
Last week, CTV's parent forecast a $100-million loss this year and took a $1.7-billion writedown, discounting the value of its own business by 75%. It closed stations in Windsor and Wing-ham, Ont., cancelled its local newscasts on its A channel in Ottawa and offered its station in Brandon, Man., to the CBC for a dollar. It has also laid off employees across the country.
Global Television has put its five-station secondary conventional network, including a major market station in Montreal, up for sale. So far, there are no takers. Deep programming cuts and layoffs have also been announced at the broadcasting division of Canwest Global. The CBC, even with its $1-billion operating subsidy from the feds, is in the midst of a cash flow crisis generated by an advertising shortfall and needs another $60-million just to finish out its fiscal year to the end of the month. It is on the verge of announcing major layoffs -- the inside buzz is 700 employees out of 10,000 across Canada.
Clearly, the television industry in Canada is in the middle of an existential crisis, and the response of the regulator will absolutely determine outcomes.
"At a time of serious contraction, when the industry is in trouble, the regulator should be attuned, asking what it can do to help," says an industry authority on government relations. "Instead it is asking us to do more."
More precisely, it is CRTC chairman Konrad von Finckenstein who is asking it to do more. Not to put too fine a point on it, at a time when he should be throwing the television industry a lifeline, he is tossing them an anchor.
There have been three flash-points in the looming showdown between the industry and the regulator, who is very much personified by von Fincksenstein.
The first was his decision last year to deny conventional television networks access to carriage fees charged by cable companies for specialty channels such as TSN and the Weather Network and passed through to them. While both CTV and Global own profitable specialty channels, they have diluted the market share of the conventional Over the Air (OTA) channels, which are free. The 500 channel universe is, among other things, an unlevel playing field.
The solution was obvious: Give the conventional channels access to the same guaranteed cash flow, which, by some estimates, could inject as much as $300-million into the industry's top line. Von Finckenstein said no last fall, at the very moment TV advertising revenues began plummeting at the onset of the economic crisis. The industry's response has been to put the cat among the pigeons with layoffs, cutbacks, losses and writedowns.
Second, von Finckenstein wants to force conventional broadcasters to spend a dollar on Canadian programming for every dollar they spend on acquiring foreign (read U. S.) programs. This undoubtedly endears the regulator to the Canadian production industry, but its financial implications for the broadcasting industry are ominous. At the very moment of the industry's worst financial crisis, the CRTC wants to add the further burden of even more losses. Canadian programming is already subsidized-- it generally loses money.
And third, the CRTC wants to have an existential conversation with the industry about whether professional content on the Internet constitutes broadcasting. In other words, whether it should be subject to the regulator.
This just in, the networks already post their programs, particularly their news channel content, to their Web sites. Regulating the Internet? It would be a Maginot Line in cyberspace.
The overall impression is that the regulator is disconnected from economic imperatives and technological realities.
Thirty-five years ago, as a young TV-radio columnist, I was privileged to cover the CRTC in the time of its first chairman, Pierre Juneau, and vice-chairman Harry Boyle.
They were both fierce Canadian cultural nationalists, who set high Canadian content standards for the industry, but who also won the respect of broadcasters by understanding their business.
They expanded the network universe by licensing Global TV. They required a majority of Canadian content in prime time. But they also adopted the prime time simulcast rule, which allowed Canadian broadcasters to substitute their commercials on shows broadcast simultaneously on U. S. border stations (a sore point to this day with American broadcasters).
In other words, when they asked the industry to do something, they usually gave something back to the industry.
That isn't happening on this regulator's watch. Not yet anyway. To this day, Pierre Juneau set the standard for creativity by the regulator. I knew Pierre Juneau. This guy is no Pierre Juneau.