The Walt Disney Co. says Canada is a “valuable” market and it doesn’t want to pull out — but it’s paying close attention to the CRTC’s hearings on reforming TV regulations.
Disney’s VP for government relations, Susan Fox, told the CRTC Monday that it opposes the idea to unbundle channels and sell them on a pick-and-pay basis. That model didn’t work out for the Disney Channel in the U.S., and it wouldn’t work for Disney-owned ESPN either, she told the commission.
In doing so, Disney placed itself firmly on opposite sides of the issue from Prime Minister Stephen Harper, who on Monday came out in favour of pick-and-pay TV.
Harper said his government is “helping families, and all consumers” by “letting Canadians choose to pay for the TV channels they actually want,” the Globe and Mail reports.
The Harper government has worked to create an image of itself as a champion of consumers’ rights in the telecom field, pushing for a fourth national wireless company and now making the unbundling of TV channels a part of its agenda.
Its position is at odds with most Canadian broadcasters, who say pick-and-pay TV would lead to many smaller specialty channels disappearing, as they rely on the revenue from TV bundles.
Harper’s comments come as the arm’s-length telecom regulator, the CRTC, holds hearings into the future shape of Canadian broadcasting regulations.
At the hearings Monday, Disney’s Fox stood in solidarity with Canadian broadcasters, saying the media giant, which owns ABC, opposes ending the simultaneous substitution of Canadian commercials on U.S. channels. That’s a practice that sometimes annoys Canadian viewers, especially during the Super Bowl.
“We believe that repeal of simultaneous substitution would lead to the end of a separate and distinct Canadian market for U.S. programming,” Fox said, as quoted at The Financial Post. “That would be an unfortunate result of a well-intended regulatory measure.”
But her comments on the possibility that Disney or other U.S. TV brands could leave Canada if channels are unbundled got the most attention.
Rogers executives told the CRTC last week that some U.S. channels may choose to pull out of the Canadian market if channels are unbundled. They noted that U.S. broadasters now have other options, such as selling the rights to their channel to an online video company like Netflix or setting up their own online service.
“I wouldn’t presume to say we would exit the market,” Disney’s Fox told the CRTC. “We look at the overall arrangement and whether it makes sense for us. Certainly the regulatory environment is an aspect of that.”
Fox said Disney’s own experience with unbundled channels has been negative. The Disney Channel launched in the U.S. as a premium TV service in 1983 and struggled for years. Fox said the network sank big money into marketing the channel in order to gain subscribers. Had the channel been part of a bundle, that money could have been used to make better programs, she said.
Disney-owned U.S. sports channel ESPN also relies on mass distribution as part of cable packages for its survival, Fox said. She said sports leagues’ rights fees are so high the channel “cannot be sustained without the revenue generated from broad distribution."
ESPN’s distribution, however, is a matter of controversy. The channel charges $5 per month to cable companies, and that becomes a part of some 100 million U.S. cable subscribers’ monthly bill, whether they watch it or not.
As the Financial Post notes, even if Disney were to pull out of Canada, its programming would still be available on Netflix.
It’s precisely the arrival of services such as Netflix that convinced the CRTC the time has come to reform TV regulations.
The CRTC’s hearings continue through this week. Among the most anticipated speakers are representatives of Netflix itself, who will speak Friday and are expected to oppose proposals to regulate the streaming video service in the same way TV broadcasters are regulated.
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