Cable operator Cogeco Cable Inc. is promising it will fight any large fee increases that follow the NHL’s blockbuster agreement to sell its Canadian broadcasting rights to Rogers Communications Inc., an early sign of the friction the $5.2-billion deal could create.
Rogers is expected to charge regional cable companies substantially more for hockey game broadcasts to help pay for the 12-year pact announced this week. Those costs are likely to be passed on to consumers.
But the second-biggest cable company in Ontario and Quebec is warning that it is not prepared to accept sky-rocketing charges to carry specialty channels featuring hockey games.
“We fight tooth and nail for our clients, in difficult negotiations, to make sure that prices [for channels] don’t increase too much. And if someone makes an unreasonable request, then we will have a dispute, an amicable one,” said Louis Audet, president and CEO of Cogeco Inc., parent company of Cogeco Cable.
“And if that doesn’t work, then we will complain to the [broadcasting regulator] CRTC, which is now much more sympathetic to consumers,” he added.
Mr. Audet commented on the $5.2-billion deal on Thursday as he met informally with reporters in Montreal to expound Cogeco’s strategy, just as the telecom and broadcasting industries are undergoing a sea of of technological and regulatory changes. The Conservative government is now keen on putting consumer interests in front of industry interests in a populist electoral bid.
This shift in public policy has led in recent months to a number of clashes between Harper cabinet members and telecom industry executives. They have been disputing each others’ claims through newspaper and television ads.
Mr. Audet said the open conflict is “extremely regrettable,” but he didn’t pass on the opportunity to add his own two cents. “Obviously, the executives at Bell are much more aggressive these days. They adopted a strategy, and they got a reaction back, which shouldn’t surprise anyone,” the Cogeco leader said of his Quebec rival.
“It’s sad because the industry as a whole invests about 60 per cent of its cash assets in building networks, and now its people are coming across as a bunch of good-for-nothings,” Mr. Audet added.
The telecom industry always had a good relationship with Ottawa, Mr. Audet noted. “It’s unfortunate this collaboration deteriorated: This is bad for the country,” he said.
One such contentious issue is the prospect of a new “pick and pay” business model that could replace the current bundling system by which viewers are forced to pay for a group of television channels even if they dislike a number of them. The Conservatives have asked the federal broadcast regulator to prepare a report on how “pick and pay” would work after promising to consumers they would only have to pay for the channels they really want to watch. The CRTC has until April 30 to submit its findings.
But while Bell Media has warned Ottawa this might lead to “unintended consequences,” such as diminished funding for original Canadian programming, Cogeco Cable says it is embracing the change. The Montreal-based company intends to introduce cheaper “pick and pay” packages “quite in the near term,” Mr. Audet said. Those packages could even be offered before the new regulation is set in stone, given “we will know pretty quickly where they are going.”
“You can’t resist change, so you might as well take it head on and make something out of it,” Mr. Audet said.
Cogeco and other television providers such as Vidéotron have already introduced some form of à la carte programming in Quebec. However, analysts such as Dvai Ghose of Canaccord Genuity doubt cable providers can introduce cheaper television packages without hurting their bottom line. “Our margins haven’t been overly impacted,” Mr. Audet retorted.
Nonetheless, Cogeco Cable’s Canadian cable services, which account for two thirds of the company’s $1.7-billion revenue in fiscal 2013, are mature. And Cogeco is foreseeing its future growth in enterprise data services, where the company expects a 23 per cent annual growth rate through 2017.