By now you have probably seen the ads for and against a proposed "TV Tax" and the Local TV Matters campaign from all of the major TV Networks in Canada. As Cable and Networks battle it out - who's telling the truth?
Canadian broadcasters want you to believe they are hard done by - their billion dollar cash cow (Conventional TV Networks) are losing money and they say they will have no choice but to shut local tv stations down.
Canadian Cable and Satellite providers are raking in the dollars - in fact they are among the most profitable corporations in the land, right up there with banks and Insurance companies.
The Networks claim cable companies are in the wrong and the cable companies claim the Networks are misleading the public.
So what's the skinny on this situation and how does it affect you?
Are Cable Companies Stealing Network signals?
NO- Cable companies by law are required to carry any over the air signal in the area. The CRTC mandated this when cable TV started. In fact most Canadians watch the networks via cable TV only 10 percent of the population use rabbit ears to get tv service. The Cable companies actually helped the TV networks gain a larger audience.
Are Cable Companies really that rich?
Yes - Cable TV companies have built a very profitable business model. They pay for U.S. services and package them with the free over the air signals from Canadian TV stations. It's the service we all pay for to watch a multitude of TV channels on basic cable.
Are Canadian TV Networks really facing financial hardship?
YES- but it all depends how you look at the numbers. Conventional TV networks have huge bills to pay each month, they employ thousands of Canadians that work on bringing you news and entertainment. The networks also pay a bundle for U.S. programming - which have skyrocketed in price because the competition for programming has been narrowed down to only a few players. Canadian networks buy much more U.S. programming than producing their own to the tune of almost $700 million combined compared to only about $200 million on Canadian shows. In the last ten years the tv companies also spent billions of dollars buying up as many tv properties they could get. In fact most of the tv channels on Cable are now owned by only a few of the Canadian Broadcasters such as CTV and Global.
What is fee for carriage?
Fee for carriage is a newly proposed revenue stream endorsed by the networks. In essence, they want Cable TV and Satellite companies to pay the networks for their free over the air signals. Cable companies say any new fee forced on them will be carried over to their subscribers to pay. As with any company facing new costs, the consumer always ends up paying for it.
How Much Will This Fee cost Me?
In the Sault Ste. Marie market, the fee could collect about 1 million annually from cable households alone, that money would be forwarded to the broadcasters to help fund local tv.
What will I get in return?
Nothing. The same service, if not less
Shouldn't the Cable companies absorb this cost like the Networks are proposing?
Perhaps, after all, Cable companies make much more profit than conventional tv networks do - but the same could be asked of banks with service charges. Cable TV is a business - They charge for what the market can bare. If fee for carriage is approved by the CRTC, it could mean up to 6 dollars more a month for the exact same service you get now. Basically, the cable companies don't want the PR nightmare of being the bad guy with new fees.
Don't we pay enough for Cable TV service right now?
YES - Most Canadians pay a bundle for basic service (channels 2 to 20) Since the CRTC decided in the 1990's to de-regulate basic cable prices, consumers have seen their cable bill rise four times that of inflation over the last four years alone.
Why does Network TV need more money anyway?
They claim if rewarded with the fee for carriage, it will ensure local tv remains on the air. Trouble is, local tv stations have been closing across the country well before the current economic crisis. Furthermore, the Networks have not guaranteed the money would be funneled back to local programming. The Cable companies claim the new money will only finance more American TV programs. The staple that has built the Canadian TV networks since the 1960's.
How much money do specialty channels make?
Right now, specialty channels are the only broadcast outlets making money.
Most of these channels are owned and operated by CTV , Global and Rogers (Rogers is also a cable provider) These channels cost you a fee each month collected on your cable bill. Annually that adds up to about $1.9 billion. The money is funneled back to the broadcasters as one stream of revenue = the other is collected directly by the channels in the form of paid advertising, just like conventional tv does. Conventional tv however only has the advertising stream - they want the subscriber fee which is called "fee for carriage" by the industry.
Don't we already pay for local tv?
YES-This fall cable tv companies have had to pay a percentage of their basic cable rates to a local tv fund created by the CRTC to help Networks pay for local programming - the fund is expected to collect $300 million a year for stations with less than 1 million viewers.
Cable TV says their Community Channels fulfill local tv programming
TRUE- but it all depends what city you live in. Community channels were formed in the 1970's, mandated by the CRTC to allow the public access to the airwaves by producing content not found on conventional stations. In the 19990's the CRTC no longer required cable companies to do this - instead, they were made into "corporate channels" that helped promote cable services, the cable companies now produce their own content, albeit limited in most cities. Basically the community channels have locked out the community in the process. Locally in Sault Ste. Marie, very little programming is produced by a local staff - most of the content is now coming from other centres such as Vancouver and Calgary.
Why is the TV business model no longer viable?
As the tv networks grew, so did their appetite to own as many channels as possible and spending billions in the process. During the last 20 years, the same conventional networks continued to buy and launch specialty channels, in the process giving consumers much more variety in their television viewing. Back when tv started in Canada, it was joked that anyone rewarded the privilege of owning a tv station had a license to print money. Today, we no longer have only a few channels - but hundreds. Even though the digital and specialty channels are owned mostly by conventional tv, the audience is so fragmented that advertisers no longer pay big bucks to buy airtime like they used to on conventional tv. Most have shifted their ad dollars to other channels and or the internet.
Will Local TV really disappear if they don't get fee-for-carriage?
Local TV is deemed by a transmitter in the service area. For example CTV, GLOBAL CBC, CHCH TV, TVO and Two French Language stations all have transmitters in the Sault Ste. Marie area - they are all seen as "local tv" but only one produces any sort of local programming. CTV operates out of Sudbury Ontario, while the newsroom only feeds stories to the Sudbury newscast. They have editorial control on what makes the news or not. Conventional TV would not disappear - just as we now see CBC which does not have a local affiliate anymore - we still have access to CBC programming. The same will be the case with CTV, GLOBAL and CHCH.
Why don't the broadcasters just buy a cable service and have it both ways?
They can't. The CRTC forbids Broadcasters to own cable services and tv stations at the same time. There are some exceptions where both Shaw Cable and Rogers cable own a few independent stations though.
Where do I play a role?
Both sides want your support. They both want you to call or mail your MP to tell them how important this issue is. The TV industry is highly political - the more pressure each side gets, the better.
What will happen to local news if I don't support it?
The fact is, you already support it. You already pay a portion on your cable and satellite bill. You also pay towards the CBC and for all Canadian produced drama. Networks enjoy a wide variety of subsidies and grants to produce top Canadian drama and entertainment. As for local news, the CRTC this year allowed conventional tv stations to REDUCE local programming requirements - fee or no fee.
What should I do?
Pay close attention to what is being presented - untimely, your cable bill will go up regardless of who wins this battle. Conventional Broadcast TV is a business - it's interested in their bottom line. Local stations such as Sudbury, Barrie, London, and others across the country will see their stations close after 2011 when the Canadian digital transition occurs. The networks have already said only 29 major markets will transition to digital signals. Most others will go black. Including all of Northern Ontario.
