Sun News Network will fold without the help of Canada’s broadcast regulator, the fledgling news channel said Thursday as it made its last push for inclusion on basic television subscription packages across the country.
The channel’s executives told the Canadian Radio-television and Telecommunications Commission it needs both the revenue and exposure that comes with a so-called “mandatory carriage” order. It is losing about $17-million a year since it was founded two years ago, despite being in 40 per cent of Canadian homes which subscribe to a television service.
Anything less than approval would be a “death sentence” for the channel, vice-president Kory Teneycke said in his final statement.
“Let me be very clear,” he said. “[Rejection of the application] would inevitably lead to closure.”
The final pitch came on the last day of a CRTC hearing into mandatory carriage, where almost two dozen channels (both existing and not) have asked for the status. The designation is highly coveted because it comes with guaranteed monthly subscriber revenue, as well as the possibility of higher advertising rates because the channel is guaranteed to be in 12 million Canadian homes.
But to win the designation the channels must prove they provide a unique service. CRTC Jean Pierre Blais warned he would set a “high bar” for any new service seeking the designation, as well as those looking to renew.
Sun News is asking for 18 cents per subscriber each month, a fee that is typically doubled by television providers and then added to customer bills. The channel says it needs to get into every home to build its audience, and that it would give up the status after five years.
The CRTC could decide to give Sun News a status called “must carry,” which would mean the channel must be offered across the country but consumers would need to opt in to watch. That would leave Sun News to negotiate its rate with each television provider, something it said won’t work (it currently averages 9 cents per subscriber in the deals it has negotiated.”
Sun News argues the market is skewed by regulations that allow the television providers – which also own television channels – to give preference to their own channels and pay little for competing services while also pushing those competing channels high up the dial to make them harder to find.
“A must-offer licence is a death sentence,” Mr. Teneycke said. “We have applied for [mandatory carriage] we need that full status. It’s not theoretical – it’s based on real-world experiences with [television providers] in what is at best a deeply flawed market.”
CRTC chairman Jean Pierre Blais asked why the channel’s parent company Quebecor Inc. – which he said "some would call an empire" – wouldn’t simply fund the channel’s operations until it emerged as a profitable company. Sun News argued that funding is only half the issue – to survive it needs mandatory carriage to guarantee better placement on the dial so it can win the new viewers it needs to guarantee its long-term survival.
Mr. Blais urged Sun News to consider filing official complaints if it felt it was being treated unfairly.
“I take your point that it’s not a fully regulated market,” he said. “But it does involve a mechanism for undue preferences. I understand it being daunting, but in my experience if you choose one [case] you may be surprised how it cascades through the industry.”
Mr. Teneycke rejected the alternative, however, saying the company has spent $40-million in two years to develop the service and can’t sustain more losses as it waits for the appeals to work their way through the system.
“Spending another year or two on a series of complaints to try and gain access to the market in a fair and equitable way is not sustainable from a business standpoint,” he said. “If that’s the path the commission is going to take it’s not going to work for us. The net result will be no Sun News. I know that’s a tough message, but I don’t want to create a false expectation as to where we’re going and what we’re looking at.”
If the application is rejected, Sun News could appeal to the Federal Cabinet to intervene, or look to the Federal Court of Appeal if it felt the commission didn’t follow the rules it has in place to make decisions. Mr. Teneycke said the channel has no intention of pursuing either option.
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