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CRTC report a hot potato
GRANT ROBERTSON

MEDIA REPORTER

September 14, 2007

Canada's broadcasters are livid about a controversial new report calling for significant changes to the television industry, and several of them are left wondering what federal regulators plan to do with the findings.

The report, commissioned by the Canadian Radio-television and Telecommunications Commission in April to determine whether existing regulations need to be changed or updated, said several of the rules in place no longer work as intended.

Written by communications lawyers Laurence Dunbar and Christian Leblanc, the report takes aim at simulcast provisions that let the major Canadian networks insert commercials into shows that run at the same time on U.S. stations. It also recommends dropping genre protections that give cable channels exclusivity over their formats, and eliminating packages of cable channels, to allow consumers to choose which ones they would like to buy.

While the CRTC is not obliged to implement any of the recommendations, the study was commissioned by its new chairman, Konrad von Finckenstein, who has indicated the rules may need revamping.

"Now that we've had a better chance to go through it, we find very little in this report of any merit," Canadian Association of Broadcasters president Glenn O'Farrell said yesterday. Speaking on behalf of the broadcast industry, he said the authors lacked sufficient time to fully explore the issues raised. "They don't appear to be recommendations that have had the benefit of being thought through carefully. They seem to be whimsical and off the cuff."

The CRTC has said it won't comment. Some broadcasters were dismissive of the findings yesterday. But several are wondering why Mr. von Finckenstein would commission the report - a potentially costly endeavour - if he had no plans to implement some of the recommendations.

"It might be premature to come forward with recommendations," said one industry source, who asked to remain anonymous. "Clearly this is going to require a series of more public processes to drill down into some of these issues."

The mere mention of changing the simulcast regulations has sent shivers through the Canadian TV sector. The right to insert Canadian commercials into U.S. broadcasts when shows air at the same time on both sides of the border is worth more than $200-million to the industry.

Such provisions were initially contemplated to give Canadian networks revenue that could be used to fund Canadian productions, including news, drama and comedies. But the report argues simulcasting has instead created overwhelming financial incentives to run U.S. programs in prime-time, since the networks can earn more ad revenue from American shows, which draw much higher ratings.

As a result, Canadian content is being marginalized to Friday and Saturday nights, or to the summer, when audiences are smaller. The report doesn't suggest killing simulcast rights, but the authors wonder if networks should be required to show a certain amount of domestic programs on weeknights.

"It's a great example of an unintended consequence of a regulation," Mr. Dunbar said in an interview. "We have all kinds of incentives for producing Canadian content, all kinds of subsidies for producing Canadian content, and then it's not really getting shown at a time when Canadians are watching television in large numbers. ...We are not saying abolish the rule. We're saying look at it and try to assess the net benefits to the system."