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Posts Tagged ‘crtc’

Who Wants to Pay for Something that’s Free?

May 4, 2009 Leave a comment

Critical move by M2 Universal (one of Canada’s largest media planning companies) to explore the fee for carriage issue facing the Cdn television industry.

“According to M2’s April 2009 online survey of 1,000 Canadians, 42% said they would cancel their conventional channels rather than pay any more for them”  (http://www.mediaincanada.com/articles/mic/20090505/feeforcarriage.html)

 Of course consumers would have this reaction when asked to pay for something they’ve been getting for free for so long. What I feel is missing here is the reaction that respondents would have when asked if they would SHARE in the costs for Cdn programming (i.e. local news) with the DISTRIBUTORS of television in Canada.

Cable and satellite service providers like Bell, Rogers and Videotron are those distributors – they (like many industries) take a product, package it and serve it up to consumers for profit. But in the case of Canadian television, cable and satellite distributors have been given a free pass that has protected them from having to pay for the Canadian programming like CTV and Global that they distribute to paying customers. They also can choose to carry or not carry local stations at their discretion (i.e. Montrealers on Bell do not have access to Global Quebec)

Let’s look at this from a different industry’s POV – the sale iPods (in Canada, not that it matters). Apple produces iPods and sells them to retailers like Best Buy. So what happens if Apple goes through a rough patch, profits dip and production costs eat up more of the company’s sales revenue? Apple would then have to raise the price that it sells iPods to distributors like Best Buy. And we all know what Best Buy would do – raise shelf prices in a way that would aim to achieve maximum profit by balancing price and promotion. That’s marketing 101.

Now ask iPod owners if they would be willing to pay $25 more than the same iPod they bought a month ago. The answer would be “NO”. This is exactly the problem that the Canadian broadcasters, cable / satellite service providers and TV viewers in Canada are in. And to make the situation even more tense, cable service providers have sworn to pass on any fees for carriage directly on to the end-consumer… this from the distributing industry that just LAST MONTH reported double digit revenue growth.

What do you think? Do Canadian broadcasters like CTV and Global should have the right to charge service providers like Bell and Videotron for Canadian television? And what should these distributors do in terms of subscription prices?

Cable Co’s getting their Cake and Eating it too!?

April 27, 2009 Leave a comment

 

Does it surprise you that Canadian cable companies reported a 16% increase in revenue in 2008? It surprised the hell out of me. Although I am somewhat biased because I do work for a broadcaster, I just can’t wrap my head around double digit growth from players within an industry that is facing unprecedented economic pressure, billion dollar write downs and sweeping job losses. It’s like Domino’s Pizza being on the brink of collapse while their pizza delivery guys are making money hand over fist! Something doesn’t compute.

Media companies like Canwest and CTV are shedding jobs, cutting costs and lobbying the CRTC for fee-for-carriage in an effort to remedy what many are calling a broken business model. The CRTC has prevented media companies from charging cable companies like Videotron and Cogeco for Canadian television that is distributed to households. Which means that the “manufacturer” is receiving nothing for its product or the syndication of its product. OK, but now factor in some of the other stakeholders affected by the situation. Marketers, ad agencies, productions firms, journalists, editors… all feeling the pinch of today’s economic recession. But yet the cable co’s are growing at 16%!! Wow.

I’m not suggesting we send a lynching mob after the cable companies. After all, what would television be without cable service providers? They go hand in hand and so should the CRTC’s approach to its regulatory structure.