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BCE president George Cope announces Bell's takeover of Astral Media in Montreal, March 16, 2012. (Paul Chiasson / CP)
BCE president George Cope announces Bell's takeover of Astral Media in Montreal, March 16, 2012. (Paul Chiasson / CP)

Simon Houpt

Free network TV? Not if Bell gets its way Add to ...

Some days, it might seem as if nobody watches broadcast television any more. All you hear about are the buzzy shows on cable (HBO’s Girls, AMC’s Mad Men) and alternative distribution platforms (iTunes, Netflix). But then you glance at the ratings and realize that most of the top 50 shows are still on good old-fashioned network TV.

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Which is why a hearing that unfolded at the Supreme Court of Canada on Tuesday could hold a nasty surprise for millions of viewers across the country: the death of free television.

Bell Media, the vertically integrated TV Godzilla that already owns more than two dozen specialty channels and is on track to pick up another clutch of them if its parent company’s acquisition of Astral Media Inc. is approved, has asked the court for the right to charge viewers who want to watch its flagship broadcaster, CTV.

Canadians are so accustomed to paying money to cable and satellite companies (known in the industry’s bland parlance as “broadcast distribution undertakings,” or BDUs) that they may not realize that broadcast television remains free, just as it has been since TV first came to Canada about 60 years ago.

The system has served all the parties pretty well: In exchange for plucking the broadcasters’ signals out of the air and then sending them out to customers, BDUs help the channels snag eyeballs by placing them at the low end of the cable or satellite dial and offering them in their basic packages. BDUs also help the broadcasters by blocking the U.S. signals of shows whose Canadian distribution rights have been bought by those domestic channels. (That’s why we end up watching Canadian commercials during the Super Bowl, so the money from the ad sales flows to CTV rather than NBC.)

But when the recession started to dry up their advertising sales a few years ago, Canadian broadcasters began enviously eyeing the business models of their specialty-channel competitors such as TSN, Showcase and Bravo!, which have two revenue streams – ads and subscription fees – and harrumphed about being left out of the subscription game.

They asked the Canadian Radio-television and Telecommunications Commission for the right to negotiate fees from the BDUs – they called it “fee for carriage” or “value for signal” – and the CRTC gave them the green light. Rogers, Telus, Shaw and Cogeco – some of the country’s largest BDUs – pushed back, insisting that the commission had overstepped its jurisdiction. The last thing they wanted was to have to add new fees to already rising cable and satellite bills.

Which, in time, is how it came to be that Canadians learned on Tuesday that some of Madam Justice Rosalie Abella’s favourite shows air on CTV.

In a delicious follow-the-money case study, BCE Inc., which owns Bell Media, originally sided with the other distributors. Then it snapped up CTV and promptly changed its position on the matter. And everyone seems to have forgotten that the original justification for changing the system – that the broadcasters were in danger of dying – is no longer the case: Revenues are back up, as are profit margins.

In its court papers, Bell argues that fee for carriage would enable market forces to work properly, “to determine the fair value of programming services.” That’s a knee-slapper (all right, maybe a free-market enthusiast is the only type who would find it funny) because the Canadian TV industry is one of the most intensely regulated in the country. It is as much a creation of the federal government as the private sector, and it is now dominated by three massive players – Bell, Rogers and Shaw – which effectively form an oligopoly. Market forces have never been much of a consideration, and they still aren’t.

In the United States, where market forces have a little more sway, the system has spawned some riveting battles between broadcasters and cable companies, with viewers serving as pawns. A couple of years ago, millions of Cablevision customers missed out on the opening of the World Series after News Corporation pulled its Fox channel and took out newspaper and radio ads attacking the cable company. Cablevision responded in kind, but it caved in the end: Cable companies almost always give in, because they’re the ones taking the phone calls from angry viewers who just want to watch the goddamned game.

It could be even uglier up here, where Bell-owned CTV might snub a perfectly reasonable offer from the BDUs and then roll out a marketing campaign playing up the fact that – whaddya’ know? – Bell’s own satellite and FIBE services is still offering the channel. Timed right – say, just before the Oscars, or the Super Bowl – it could force the cable companies to accept outrageous prices just to secure those marquee shows, rather than deal with angry mobs. Rogers and the others aren’t going to have much luck explaining to customers that they’re just trying to keep their bills low.

“Try to imagine what would occur if a blackout occurred on the eve of the [Olympic]gold-medal hockey game,” a lawyer for one of the cable companies said on Tuesday. “You’re striking fear into our hearts,” one of the judges said.

Follow on Twitter: @simonhoupt

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