Consumers won't accept higher cable fees, CRTC told

Corus Entertainment Inc. warned Canada's federal broadcast regulator Tuesday that consumers may not accept a hike in rates if conventional broadcasters demand subscription fees from the cable companies.

"The commission should not underestimate the negative reaction of basic subscribers and consumer groups to a price increase," Corus president and CEO John Cassaday told the Canadian Radio-television and Telecommunications Commission at hearings in Gatineau, Que.

On Monday, CBC president Robert Rabinovitch proposed that traditional broadcasters receive fees from cable companies for the transmission of their programs, similar to the fees that specialty channels receive.

Private sector broadcasters such as CTV and Global CanWest backed Rabinovitch's call for subscription fees from the cable carriers on Monday.

Quebec broadcaster TVA, owned by Quebecor, came before the CRTC Tuesday and also demanded a share of the fees from cable and satellite for the conventional broadcasters.

But Corus said new fees would drive consumers to buy grey-market satellite dishes or force cable firms to reduce the number of specialty channels.

When Rogers Cable charged an extra $3 a month to add second-tier cable service a decade ago,there were thousands of consumer complaints, Cassaday said.

The federal broadcast regulator is reviewing television policy for the first time in seven years.

All the broadcasters are looking for ways to make up for declining advertising revenues and increased costs.

"We're proposing an approach that would allow conventional broadcasters to operate on the same financial footing as specialty services," Rabinovitch said inhis brief to the federal broadcast regulator.

More TV ads proposed

But Canada's private sector broadcasters went one step further,proposing more TV ads in the futureas a way of generating more revenue for conventional broadcasting.

Right now, the broadcasters are permitted 12 minutes of ads per hour, but that includes promotions, often for U.S. shows.

"So we actually don't get 12 minutes per hour in any hour where we advertise U.S. programming," said CanWest Global president Leonard Asper.

CanWest Global says it doesn't want promotions for U.S shows to count as part of the 12 minutes.

CTV is asking that the time restriction on ads be eliminated altogether, in return for more promotion of Canadian programs.

Distant signals

CTV is alsoconcerned about time shifting or what's known in the industry as distant signals, which allow the local Toronto station, for example,to be seen in other parts of Canada on digital cable or satellite.

Cable and satellite companies offer distant signals as an incentive to sign upsubscribers.

CTV president Rick Brace says the network is not fairly compensated for the service, although it is popular among consumers.

"It's something they put at the top of their list in any discussion on what is the value of digital," he said.

CTV warns if it's not compensated, it will try to withdraw those distant signals.

Increased competition for ad dollars

The networks are keen to find new sources of revenue because the traditional business model for television, in which money is raised from advertising, is at risk.

There is increased competition for ad dollars from a larger number of channels and the internet, and consumers now have the option of skipping ads altogether with PVR and other new technologies.

Rabinovitch said it is essential for conventional broadcasters to have new sources of revenue to pay for new technologies such as high-definition TV and for better programming.

"The weakening advertising market will make it impossible for conventional broadcasters to advance the commission's goals for original Canadian programming, including local programming, HD programming, drama, etc. The future does not look promising if conventional broadcasters continue to rely on ad revenues as a major source of funding," he said.

Rogers Cable opposes theproposal for subscription fees for the networks, saying that any increased costs to cable companies will result in higher costs to consumers, possibly as much as $5 a month.