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Posts Tagged ‘media company’

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?

G&M TODAY: We still watch TV. So why are stations going out of business?

March 11, 2009 2 comments

This was the title of an article appearing in today’s Globe & Mail, written by TV critic John Doyle (http://www.theglobeandmail.com/servlet/story/LAC.20090310.ADOYLE10/TPStory/Entertainment).

I agree that TV viewership is not as much of a problem as is advertising. TV shows reach larger audiences than any other medium, hands down and that is not going to change for a long time. Advertisers have lowered their ad spending due to economic pressure; however this will be a temporary problem with little impact on the long term profitability of private broadcasters. I also agree with Doyle in that the owners of media companies like CTVGM and Canwest have corporate balance sheet problems that need solving, but that this is independent of business units’ P/L performance. But in this crappy economy, sacrifices are needed and whether we like it or not – local TV is invetably going to be the sacrificial lamb. And that signals a much deeper problem that Canadians seem to be reluctant to digest.

The CRTC’s regulation of the Canadian broadcasting is hurting more than it is helping at this point. Technology is the culprit and there’s no turning back. Private broadcasters no longer have incentives to produce local content and so, small and unprofitable stations are going black. I started my career in local TV and never would have come to this point had it not been for CJNT Montreal – a station now on the market for sale. I was saddened by the news last month but from a business POV, you can’t argue with it.

Sadly, I fear that chopping the local TV station is going to continue long after the economy recovers from the recession – largely because of the growing convenience and acceptance of the internet. It’s simply becoming too expensive to sustain a local TV station’s operations. Don’t agree with me? Ask 5 people where they went go get their news today. Depending on who (and when) you’ve asked, I don’t think the local evening news will be as popular of a choice as it was a few years ago. And nor will print versions of newspapers. So why invest in the local evening (or morning) news if viewers today have 24-hour news channels, online information updated 3 times per minute and access to all of it on their mobile phones? The answer, in my opinion is obvious but hard to swallow because we are proud of our local culture.

Is local TV doomed? What will we do without it? Or is there something that can be done to ensure local communities are represented on Canadian airwaves?