Fees will harm consumers: Bell TV

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Bell TV's satellite television service has consistently lost money for more than a decade, but has not asked for regulatory changes to help change its financial fortunes, executives with the company say.

The comments came Tuesday afternoon at regulatory hearings as Canada's largest satellite television provider contested a proposal by the country's big TV networks to begin charging for their signals.

Arguing they can no longer stay viable on advertising dollars alone, CTV, Global and CBC want to charge cable and satellite distributors for their signals. The broadcasters say those companies make hefty profits selling the big networks' channels in subscription packages. Only specialty channels are allowed to charge monthly fees, since they have smaller audiences.

The cable and satellite companies are against the proposal, arguing the broadcasters are simply seeking to tap new revenue to which they are not entitled. If approved by the federal broadcast regulator, the distributors plan to pass those costs onto consumers.

Bell TV executives told the Canadian Radio-television and Telecommunications Commission at hearings Tuesday that its satellite TV business is not profitable, but has not sought similar financial help from the regulator.

Since 1997, the satellite TV business has racked up $2.2-billion in pre-tax losses and Bell TV is still losing money, the company said.

Bell TV's head of regulatory affairs Mirko Bibic said the networks have chosen to pursue the fee idea, and refused to discuss other proposals.

"They prefer to hold out for the big prize," Mr. Bibic told the CRTC.

In the past, the broadcasters have sought a fee of 50 cents a month per subscriber. At that rate, the fees would be worth about $70-million a year in new revenue to each broadcaster.

Mr. Bibic said Bell TV is concerned that approving the fees would hurt its business if consumers refused the cost.

"It will damage our financial situation, which isn't very good to begin with, and harm consumers," Mr. Bibic said.

Bell TV appeared at the hearings after the CBC argued earlier in the day that the business model for network TV has changed, and needs to be stabilized with subscription revenues, instead of relying solely on ads. The hearings are scheduled to last two weeks.

Despite getting public funding, the CBC told the federal broadcaster it is no different than its private-sector rivals CTV and Global when it comes to the challenges facing the conventional television industry.

"We are in the same position as any other private broadcaster that has come before you," CBC executive vice-president Richard Stursberg told CRTC.

CRTC chairman Konrad von Finckenstein asked the public broadcaster why it should be allowed to collect money from consumers, if the idea were approved, since the TV and radio broadcaster already gets more than $1-billion in federal funding for its various operations, and also collects advertising revenue on TV.

Mr. Stursberg replied that the cost of Canadian programming is high and can't be supported by existing funding levels or volatile ad markets, which have cratered in a recession.

"If we had the financing to be able to do it we would be thrilled to have 100 per cent of our programming Canadian," Mr. Stursberg told the CRTC, arguing that the public broadcaster is otherwise constrained on its production budget.

The cable companies argue consumers can get the big networks over the air for free with an antenna, so the fees wouldn't make sense. But Mr. Stursberg appeared surprised at that argument. He pointed out that more than 90 per cent of the country buys TV programming through cable and satellite services, and said the concept of collecting monthly fees has been around for decades with cable channels. The entire TV industry has headed in that direction, he said.

"This is completely consistent with the way the system has been regulated for the last 20 years," Mr. Stursberg told the hearing.

The hearings last two weeks and will see several polarized debates. CanWest Global Communications Corp., owner of Global TV, appears Wednesday. Shaw Communications Inc., which is opposed to the proposal, is scheduled to appear Friday.