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Ottawa’s ‘pick-and-pay’ push spells trouble, Bell’s Crull warns

President of Bell Media Kevin Crull delivers his keynote speech November 18, 2013 at the International Institute of Communications conference in Ottawa.

dave chan The Globe and Mail

One of Canada's top media executives is pouring cold water on the notion that consumers will enjoy dramatically lower cable bills if the federal government makes good on its promise to introduce "pick-and-pay" television packages.

Kevin Crull, president of Bell Media, acknowledged that big TV bundles have become a "hot-button issue" for consumers, but warns there could be "unintended consequences" if Ottawa forces TV distributors to make dramatic changes to their business models.

Specifically, there could be less funding for original Canadian programming, which could deal a blow to the domestic television sector.

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"As we move forward in responding to consumers, we need to be clear that there is an inherent risk. When buying less, the unit cost is going to be higher and overall savings, if any, may be small. As well, variety and quality could decline – maybe dramatically," Mr. Crull said during a keynote address at the Canadian Chapter of the International Institute of Communications' annual conference on Monday.

"If we are only left with U.S. channels in Canada, don't expect unbundling. They don't allow it, they won't do it. That said, we are all working hard to find balanced ways to provide flexible options for consumers. So consumers can make the choice – pay a higher unit costs for fewer channels or pay a little bit more and get way more channels," he said.

Canadians watch about 28 hours of television per week at an average cost of $65 per month, Mr. Crull noted.

Like his industry peers, he is urging Ottawa to take a "balanced" approach to pick and pay, stressing that any new regulations would affect a slew of commercial agreements.

Last week, federal Heritage Minister Shelley Glover asked the federal broadcast regulator to prepare a report on how the introduction of "pick and pay" TV would work. That followed a government pledge in the recent Throne Speech to ensure that consumers only have to pay for the channels they want. The Canadian Radio-television and Telecommunications Commission faces a deadline of April 30, 2014, to submit the report. Separately, the CRTC has also launched broader consultations on the future of television in Canada.

Analysts say it is unclear how pick and pay could affect consumers' monthly bills.

"It depends how it's implemented, but while Vidéotron, Telus as well as Bell and Cogeco in Quebec already offer some type of à la carte, Shaw Cable, Shaw Satellite and Rogers do not, so they may have the most to lose," said Dvai Ghose, an analyst with Canaccord Genuity. "Shaw also has significant exposure due to Shaw Media, which owns some channels that may benefit from currently being bundled with more popular channels."

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Among privately held companies, Eastlink introduced "Personal Picks" in August in response to consumer demand for more flexible options.

Television service providers rely on "bundling," grouping popular specialty channels with more obscure ones, to spread out the cost of producing television programming. Specialty channels rely on subscriber fees.

As a result, there are simmering concerns about Ottawa's plans in the domestic film and television industry, which employed roughly 262,700 full-time equivalent workers and generated $20.4-billion in GDP for the economy in 2011, according to consulting firm Nordicity.

"As a labour organization committed to advancing the creative rights of Canadian filmmakers, the DGC echoes the concerns of Mr. Crull. We feel that very strongly that mandatory carriage for Canadian programming should not be compromised," said Brian Baker, national executive director for the Directors Guild of Canada.

Mr. Crull notes the U.S. Congress studied the pick-and-pay issue in detail during the mid-2000s and concluded that à-la-carte programming would result in higher consumer prices and reduce the number of channels.

"What the U.S. extensive review found is many channels will go out of business. Many ethnic channels will never get launched. You'll have more of a homogenous mass-market type of system," Mr. Crull said. "And in fact, consumer prices would go up because the bundling model … is actually spreading the [production] costs over a wide basis."

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Bell Media is part of BCE Canada, which owns a 15-per-cent stake in The Globe and Mail.

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