Canada to consider letting in US cable

Local broadcasters concerned by competition

MONTREAL The Canuck broadcast regulator is set to look into the possibility of allowing U.S. cable channels to operate directly in the Great White North — a concept the Canadian pay TV channel owners don’t like one bit.

The entire Canadian broadcasting system is built on the foundation of keeping the main U.S. cable channels out and allowing the homegrown broadcasters — like Astral Media, Corus Entertainment and CTVglobemedia — to run Canadian pay channels that flourish by airing American fare.

Astral-owned pay channel the Movie Network, for example, garners boffo ratings with HBO hits like “The Sopranos,” “Entourage,” “Six Feet Under,” and “The Wire.” Similarly, Astral’s the Family Channel has an output deal with the Disney Channel that gives the Astral outlet all the top Disney Channel series, including “Hannah Montana.”

Regulator the Canadian Radio-Television and Telecommunications Commission (CRTC) is starting hearings start this week into potentially deregulating the Canadian TV landscape, opening the door to U.S. channels and more competition amongst the Canadian players.

And the Canuck broadcasters are crying out in opposition.

“We’re strongly opposed,” says Rick Brace, president of business planning at CTVglobemedia, which owns over 20 Canadian pay channels, including TSN, MuchMusic, and the Canadian Discovery Channel. “It brings competition into the marketplace and really presents an unbalanced playing field. Canadian specialty (feevee) operators are obligated to operate under conditions of license that guarantee a certain amount of Canadian programming and Canadian programming expenditures.”

The Canadian channels have to spend about 40% of their revenue on Canadian programming, per CRTC rules.

“U.S. services come in with none of those rules,” Brace says. “They don’t have to make any contributions to Canadian programming and also have the ability, unlike our services, to change format at will. Isn’t it kind of counterintuitive that a U.S. service would come into this country and would have conditions of entry far less ominous than what Canadian services face? The issue is that we’re trying to protect the Canadian broadcast system here. It’s fragile, being in the face of the giant.”

There are some U.S. cable channels that have been operating in Canada for years, including CNN and A&E, but many of the top U.S. channels — notably the USA Network, HBO, the Disney Channel, MTV, and ESPN — have never been allowed entry. (There is the CTVglobemedia-owned MTV Canada, but it is a Canadian channel with some MTV programming rather than an actual MTV offshoot.)

Cable operator Shaw Communications had petitioned the CRTC last year to let it bring in and carry the USA Network, but the bid was rejected by the regulator because two or three of USA’s shows run on Canadian networks.

The cable operators — like Shaw, Rogers and Videotron — say consumers are begging them for these U.S. channels.

“Vis-a-vis the American or foreign services that want to enter the system, we think that as long as it can be proven that they will not bankrupt a Canadian service, that should definitely be an option,” says Rogers veepee Jan Innes. “Customers want choice and if we don’t allow it on the Canadian broadcasting system, there are other alternatives. More and more people are going to the Internet to get their content or they’re going to illegal dishes.”

Rogers faced this issue a couple of years ago when it wanted to bring in Italy’s RAI to appeal to Italian-Canadians and faced opposition from Canadian multicultural network Tele-Latino, which had an output deal with RAI. The CRTC finally ruled in Rogers’ favor and let it carry RAI.

The CRTC is also looking into loosening the rules governing the Canadian channels. Right now, the regulator has strict rules that essentially allow only major player in each genre. The one exception is sports, one of the most popular genres, where there are several competing players, including TSN, Sportsnet and the Score.

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