CRTC relaxes content rules to help Canadian TV broadcasters compete with digital media

Friday, Mar 13, 2015

Canada’s broadcast regulator is relaxing the rules that govern the programming Canadian television stations can air in a bid to help them compete with the unlimited choice offered by online video.

In a speech to Ottawa’s Canadian Club Thursday, Canadian Radio-television and Telecommunications Commission chairman Jean-Pierre Blais announced several decisions that came out of a hearing into the future of television last fall, dubbed Let’s Talk TV. Mr. Blais said the decisions, including a major reduction in the number of hours of Canadian content broadcasters must air, are meant to help Canadian television compete and thrive in a world of intense competition from foreign online providers like Netflix Inc.

“It will be disruptive. It may even be messy. But we have no choice,” Mr. Blais said in an interview following the speech. “We’re not in the middle of a crisis. We’re ahead of that crisis. But let’s get ready for it.”

Canadian content quotas are practically synonymous with the CRTC, but once the new rules come into effect, Canadian daytime TV viewers will see a lot less of it. The goal of the change is to encourage broadcasters to take the money they were spending on mediocre daytime programming, created simply to fill the quota, and spend it on high quality shows with the potential for international appeal instead.

The decision eliminates the daytime Cancon quota for local channels, which used to have to find Canadian programming to fill 55% of their daytime slots. Those channels will still have to find Canadian content to fill half of their prime time schedules, from 6 p.m. to 11 p.m.

In a bid to encourage big-budget hits, the CRTC is also launching pilot projects that broaden the definition of certifiable Canadian content. Shows based on adaptations of best-selling novels authored by Canadians or productions with budgets of at least $2 million an hour will be eligible for Canadian content certification, as long as they meet other criteria.

The CRTC is also eliminating genre protection, which requires specialty channels — such as MuchMusic or HGTV — to broadcast a set amount of certain types of programming in exchange for shielding them from direct competition. Maher Yaghi, a telecommunications analyst with Desjardins Securities, said the elimination of genre protection likely means many Canadian specialty channels will go off the air.

“The removal of genre protection for specialty channels is quite significant,” he said. “There will be some winners and some losers. We’ll have to see which channels survive and which channels die.”

In a separate statement providing additional information on the CRTC’s changes, the regulator is offering incentives to services such as Bell Media’s CraveTV and Shomi (owned by Rogers Communications Inc. and Shaw Communications Inc.) to make their video services available to all Canadians over the Internet, rather than tying them to cable subscriptions. Video-on-demand services will be allowed to offer exclusive content, but only if it is available online to everyone, regardless of whether they have cable and who their providers are.

Spokespeople for Bell and Shaw, two of Canada’s major cable providers, said they needed time to review the decisions before commenting. Patricia Trott, a spokeswoman for Rogers, had positive things to say about the announcement in an emailed statement.

“We suggested relaxing the Canadian content rules, and the CRTC did just that,” Ms. Trott said. “Today’s decision will enable us to fund more compelling and high-quality programming. This is a win for all Canadians.”

Greg MacDonald, a telecom analyst with Macquarie Capital Markets Canada Ltd., said the changes were inevitable given the pressure from the abundance of choice online. He said the CRTC decisions that will have the biggest impact on the profitability of Canada’s major cable companies are still to come – those related to unbundling cable packages and allowing viewers to pick and pay for only the channels they want.

“Those are the more important ones, the ones that could really drive an unbundling of the distribution services for television,” he said.

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