PARLIAMENT HILL, Ottawa—The Internet killed the video star.
Or it’s trying to anyway. The ground beneath the feet of broadcast media has turned to digital quicksand forcing companies to find footing in a shifting world. Gone are the days when cable was the only way to get TV and commercials the best way to promote a product. This seismic shift has forced business models to evolve, threatening entire species of companies along the way.
Parliament is looking at the issue, calling experts before the Canadian Heritage committee to paint the picture. Phrases like “life and death” and “David and Goliath” come up often.
At one time, big television networks would develop content or purchase it from others, including independent Canadian producers. Then companies like Shaw and Rogers would deliver that content to people’s homes through cable packages.
But as analogue gives way to digital content, opportunities open and threats emerge. Now everything can be sent over the Internet and to mobile devices like iPads and cell phones. The business model that held for decades—purchasing content through subscriptions, selling commercial time on network TV—is facing extinction. Why pay for cable when YouTube is free.
Of course, it is not as simple as that. The good content is produced by pros, not Fred Figglehorn and a Handycam. Nor is the end of cable TV imminent, but the times, they are a-changing.
Younger audiences grow up in a world with Netfilx and Apple’s iTunes, a couple of the notoriously few media companies—almost all of which are American—that have figured out how to make a profit online.
Canadian companies are trying to chart a course to the future, but there are already warnings about casualties.
The big players are consolidating. Vertical integration, they call it. Shaw and Rogers have bought up TV channels like Citytv and Showcase, and Bell grabbed CTV. They’ve also moved into the portable market with cellphone services. Online content might not generate much cash from advertising, but people pay a hefty monthly fee for Internet access and data plans on cellphones. Even better if you can lure subscribers with exclusive content not available on competitor’s platforms.
Oh, but what a giga-bonanza it could be.
The problem though, is that as those big players “integrate” they turn into monster companies that control the market. In all of Canada, four integrated groups control most of the game, three in English, one in French.
Smaller channels not owned by a big conglomerate say they can’t get a good spot on the TV dial and can even struggle to get carriage because the carriers give preferential treatment to the channels they own.
“It is not an understatement to say that the large networks have the power of life or death over affiliate stations,” Mike Keller a VP at Newcap Broadcasting, told the committee.
Independent producers say they’re getting shafted when they sell their content to broadcasters and have no choice but play along because there is no other game in town. Other content producers say that as their products, such as documentaries, start getting distributed primarily through the Internet, their traditional revenue streams disappear and copyright theft is common.
The other challenge is that Canadian companies have to compete against American behemoths and players from every country with an Internet connection. If foreign ownership rules are relaxed, as some suspect they will be, those behemoths could swoop in to buy up Canadian conglomerates.
With the Federal Court of Appeal recently ruling that the Internet is an unregulated realm, the CRTC, Canada’s broadcast referee, is left on the sidelines. It can’t make rules that apply to the Internet because Internet Service Providers (ISPs) are not considered broadcasters.
That means those independent producers, and others making original Canadian content, are likely to see their funding shrink. Cable and satellite distributors pay a portion of their revenues into a Canadian Media Fund, but ISPs do not. That fund provides critical support for Canadian producers, though they only qualify if they have a broadcaster ready to pick up their program.
Those independent producers say the integrated companies favour their in-house producers, making it even tougher to stay in show business.
CRTC Chair Konrad W. von Finckenstein said the commission is aware of the challenges and will begin hearings this May to see if current safeguards are enough to ensure a diversity of voices and ownership. That said, he prefers a hands-off approach.
“We do not intend to intrude into the commercial environment unless absolutely necessary to achieve the purposes of the Broadcasting Act,” he said.
But that approach isn’t working for the relatively little guys like Bill Roberts, president of Zoomermedia’s TV division with a lineup of channels that includes Gemini-decorated Vision TV.
He said the CRTC’s hands-off approach favours the big players who lobby hard for deregulation.
“I expect the CRTC to demonstrate leadership, not surrender and fold up shop and walk away.”
Roberts said if the CRTC wants to guarantee a diversity of ownership and voices, it must ensure there is still a healthy ecology of television business operating in Canada.
“But you can’t do that when the vessel that is supposed to lead this armada wants to stay safely anchored in harbour. If that is the metaphor, that vessel will just rot and be useless to everyone.”
It is a complex issue with as many problems as players, and the only constant is change. The CRTC faces a challenge of finding some way to protect the little guy while not hampering the big players from gearing up for international competition. Either way, someone is going to have to give a little, but Roberts is among those hoping there is some way to compromise.
“We have to figure out a smart way to pull together and not pull apart.”
Or it’s trying to anyway. The ground beneath the feet of broadcast media has turned to digital quicksand forcing companies to find footing in a shifting world. Gone are the days when cable was the only way to get TV and commercials the best way to promote a product. This seismic shift has forced business models to evolve, threatening entire species of companies along the way.
Parliament is looking at the issue, calling experts before the Canadian Heritage committee to paint the picture. Phrases like “life and death” and “David and Goliath” come up often.
At one time, big television networks would develop content or purchase it from others, including independent Canadian producers. Then companies like Shaw and Rogers would deliver that content to people’s homes through cable packages.
But as analogue gives way to digital content, opportunities open and threats emerge. Now everything can be sent over the Internet and to mobile devices like iPads and cell phones. The business model that held for decades—purchasing content through subscriptions, selling commercial time on network TV—is facing extinction. Why pay for cable when YouTube is free.
Of course, it is not as simple as that. The good content is produced by pros, not Fred Figglehorn and a Handycam. Nor is the end of cable TV imminent, but the times, they are a-changing.
Younger audiences grow up in a world with Netfilx and Apple’s iTunes, a couple of the notoriously few media companies—almost all of which are American—that have figured out how to make a profit online.
Canadian companies are trying to chart a course to the future, but there are already warnings about casualties.
The big players are consolidating. Vertical integration, they call it. Shaw and Rogers have bought up TV channels like Citytv and Showcase, and Bell grabbed CTV. They’ve also moved into the portable market with cellphone services. Online content might not generate much cash from advertising, but people pay a hefty monthly fee for Internet access and data plans on cellphones. Even better if you can lure subscribers with exclusive content not available on competitor’s platforms.
Oh, but what a giga-bonanza it could be.
The problem though, is that as those big players “integrate” they turn into monster companies that control the market. In all of Canada, four integrated groups control most of the game, three in English, one in French.
Smaller channels not owned by a big conglomerate say they can’t get a good spot on the TV dial and can even struggle to get carriage because the carriers give preferential treatment to the channels they own.
“It is not an understatement to say that the large networks have the power of life or death over affiliate stations,” Mike Keller a VP at Newcap Broadcasting, told the committee.
Independent producers say they’re getting shafted when they sell their content to broadcasters and have no choice but play along because there is no other game in town. Other content producers say that as their products, such as documentaries, start getting distributed primarily through the Internet, their traditional revenue streams disappear and copyright theft is common.
The other challenge is that Canadian companies have to compete against American behemoths and players from every country with an Internet connection. If foreign ownership rules are relaxed, as some suspect they will be, those behemoths could swoop in to buy up Canadian conglomerates.
With the Federal Court of Appeal recently ruling that the Internet is an unregulated realm, the CRTC, Canada’s broadcast referee, is left on the sidelines. It can’t make rules that apply to the Internet because Internet Service Providers (ISPs) are not considered broadcasters.
That means those independent producers, and others making original Canadian content, are likely to see their funding shrink. Cable and satellite distributors pay a portion of their revenues into a Canadian Media Fund, but ISPs do not. That fund provides critical support for Canadian producers, though they only qualify if they have a broadcaster ready to pick up their program.
Those independent producers say the integrated companies favour their in-house producers, making it even tougher to stay in show business.
CRTC Chair Konrad W. von Finckenstein said the commission is aware of the challenges and will begin hearings this May to see if current safeguards are enough to ensure a diversity of voices and ownership. That said, he prefers a hands-off approach.
“We do not intend to intrude into the commercial environment unless absolutely necessary to achieve the purposes of the Broadcasting Act,” he said.
But that approach isn’t working for the relatively little guys like Bill Roberts, president of Zoomermedia’s TV division with a lineup of channels that includes Gemini-decorated Vision TV.
He said the CRTC’s hands-off approach favours the big players who lobby hard for deregulation.
“I expect the CRTC to demonstrate leadership, not surrender and fold up shop and walk away.”
Roberts said if the CRTC wants to guarantee a diversity of ownership and voices, it must ensure there is still a healthy ecology of television business operating in Canada.
“But you can’t do that when the vessel that is supposed to lead this armada wants to stay safely anchored in harbour. If that is the metaphor, that vessel will just rot and be useless to everyone.”
It is a complex issue with as many problems as players, and the only constant is change. The CRTC faces a challenge of finding some way to protect the little guy while not hampering the big players from gearing up for international competition. Either way, someone is going to have to give a little, but Roberts is among those hoping there is some way to compromise.
“We have to figure out a smart way to pull together and not pull apart.”
