Price hikes for sports in pick-and-pay ‘big concern’: CMPA lawyer

OTTAWA — The CRTC would be unlikely to intervene if a move to pick-and-pay television caused price increases, said Reynolds Martin, chief negotiator and chief legal officer at the Canadian Media Production Association. “I wonder what remedies would be available to the commission, because my supposition is that it’s going to be extremely reluctant to engage in any kind of rate regulation exercise over and above what’s been contemplated done in the past,” he said during a panel discussion at a communication law conference in Ottawa on Thursday. That means it will be up to broadcast distributors to “structure packages and pick-and-pay services in a way that retains consumers as best as they can.” He said the possibility of prices increasing for sports channels is a “big concern for everyone, especially given the very sizeable deals that have recently been concluded by certain broadcasters for certain sports rights.” Rogers Communications Inc. reached a $5.2-billion, 12-year deal for the broadcast and multi-platform rights to National Hockey League games earlier this year. Industry analysts said at the time that the move was a bet Canadians will pay to maintain access to NHL games if they’re forced to choose between costly sports specialty channels in a future pick-and-pay environment. “It reminds me a little bit of the bidding wars that broadcasters got into for Hollywood studio content in the past, and I think the outcome of some of those wars was not necessarily favourable to any of the parties concerned, at the end of the day,” Martin said. “Whether we’ll see a repetition of that in sports is an open question.” Martin added that if sports ends up being a “very costly bet” for some broadcasters “and their overall margins and revenues get squeezed, that’s bad for everybody. … It’s pressure all the way down the system.” He made the comments as part on a panel discussion on changes in the Canadian television system in the wake of the CRTC’s ongoing review of television, as part of the New Developments in Communications Law and Policy conference held by the Law Society of Upper Canada. On April 24, the commission officially endorsed a move toward pick-and-pay TV. Sylvie Courtemanche, vice-president and associate general counsel of government relations and compliance at Corus Entertainment Inc., said that a pick-and-pay model will make it more difficult to launch new channels. “Launching a new service is going to be very, very difficult,” she said. “Traditionally, the way we did it in the past is that we had new services piggyback on more important, popular services in a package.” Yves Mayrand, a former vice-president of Cogeco Cable Inc., said during the session that the CRTC has the regulatory “wiggle room to manoeuvre the morphing of the system into a really, totally, unbundled, on-demand, largely consumer-driven environment.” He said the only potentially “troublesome spot” where the CRTC could bump into limitations in the Broadcasting Act is a stipulation that broadcast distributors “shall make maximum use and in no case less than predominant use of Canadian creative and other resources … in the creation and presentation of the programming.” In its report to government recommending a pick-and-pay system, the CRTC noted that those distributors who currently offer flexible packaging must ensure that the majority of the channels their subscribers receive are Canadian, though it said it will explore the possibility of eliminating the current preponderance rule during the hearing it will hold this fall as part of the Let’s Talk TV review. Mayrand said Thursday that in his view, the stipulation around “predominant use” in the law does not necessarily mean that “predominance must be ensured in every package or tier or every combination of services.” Also on Thursday, the CRTC released results of its Let’s Talk TV survey, which collected responses from about 7,500 Canadians on the future of television. The regulator split the results into two categories: the responses from a representative panel of 1,200 people who were asked to take the survey and the responses a further 6,300 that voluntarily filled it out. The CRTC said the voluntary group was 70 per cent male, younger and of higher income than the representative panel, yet they still agreed on several ideas, including a majority who said only those who want sports programming should have to pay for it. Fifty-five per cent of the representative panel and 54 per cent of the public group agreed that “as sports broadcast rights become increasingly expensive, only those that are interested in watching should pay,” the CRTC said. The majority of the panel chose pick-a-pack — where subscribers can build their own packages —as the best option for adding channels to their TV service, while only 36 per cent of the public respondents said the same, with 51 per cent of the public preferring pick-and-pay, which allows subscribers to subscribe to only the individual channels they want. Less than 10 per cent of both groups said large, pre-assembled packages were their preferred option. Two-thirds of both the panel and the public said basic cable should be just that; a basic, limited service at the lowest possible price point. Majorities in both groups also agreed they want direct access to U.S. channels, that online services shouldn’t be compelled to contribute to Canadian programming funds, yet a small charge for online services in order to access more Canadian programming would be acceptable. A 50-cent charge for Canadian content on online services was the most popular new idea in the survey, with more than 85 per cent of respondents from both groups supporting it. More than 70 per cent of the representative panel said they want local news to be a part of their basic package, while a little more than half of the self-selected respondents said the same. The CRTC said the margin of error for the panel responses was 2.8 per cent, and was weighted based on age, gender and region. — With reporting by Anja Karadeglija at anjakarad@thewirereport.ca and Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Price hikes for sports in pick-and-pay ‘big concern’: CMPA lawyer

News | May 1, 2014

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Price hikes for sports in pick-and-pay ‘big concern’: CMPA lawyer

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