All Extortion is Local, Broadcast Television (2nd) Edition

The CRTC has come out with a decision regarding the transmission of broadcast television via cable, and it’s a complete mess.  First, they come out with new obligations that they are going to implement on broadcast and cable companies:

Group-based policy

In 2011, the CRTC will hold licence-renewal hearings for the largest English-language private ownership groups. The largest groups are: CTVglobemedia Inc., Canwest Television Limited Partnership and Rogers Communications Inc.

This approach will permit the CRTC to introduce new requirements to encourage and support the creation of Canadian programs.

The CRTC will propose that the three largest ownership groups spend at least 30 per cent of their gross revenues on Canadian programming. However, they will be able to shift resources among their English-language conventional television stations and specialty services to meet this obligation.

Then they have the audacity to claim that they are introducing a market-based system:

As part of its framework, the Commission has set out a market-based solution to allow private local television stations to negotiate with cable and satellite companies. Each television station would have the option of entering into negotiations to establish a fair value for the distribution of their programs.

Yes, because nothing screams “market-based” like a government agency deciding how a company must spend their money, and which party in a commercial transaction gets to decide whether they’ll negotiate or not.

As The Globe and Mail reports:

Under the new system, the broadcasters would have the choice every three years to negotiate value for their signals. If they choose to do so, they give up regulatory protections that require cable and satellite companies to carry all the conventional networks and to place them at a preferential point on the dial (on channel 8 instead of 508, for example). That three-year option was proposed by CTV at the hearings in November.

So, basically, cable companies will be given permission to carry over-the-air signals for free, if the broadcast television companies so choose.  However, if they are granted this privilege, cable companies will have to continue to provide preferential channels to broadcast television stations.  So broadcasters get to, essentially, make the rules.  The complaint against broadcast TV has been that no one seems to have a viable business model, but now the CRTC has solved that problem.  These corporations get to choose a business model, and then force everyone else to play along!  And if that doesn’t work, in three years they can force everyone to go along with a whole new business model (yeah, I have no idea why three years are so magical, either).

Of course, as pointed in the Globe and Mail article, consumers will need their cable providers to carry these stations in order to be able to watch a lot of the most popular American TV shows, as the parent networks own the rights to these shows.  This is the ace that the networks are holding; no cable company will want to deny its viewers the pleasures of American Idol, Glee or 30 Rock.  Of course, no one should pay attention to the chutzpah displayed by these networks, who were able to bid exorbitant sums for the rights to these programs precisely because they had the increased distribution and signal quality afforded by cable.  To think that a company like CTV has the audacity to frame itself as the little guy is pretty laughable.

Now, there is a bit of a dilemma in all of this.  Broadcast television is providing a resource to cable companies from which they can profit, and they have been doing so relatively free of charge.  (Sure, the value of this resource is declining, but let’s ignore that for now.)  It seems only right that they should be rewarded for their services.  As such, I propose the following solution.  The government should allow broadcast television stations to either sell their feed or give it away for free, whichever they choose.

That’s it.  That’s all that should be done.  Cable companies can enter into negotiations or not.  There are zero obligations imposed on either party.  From there, people can choose whatever television service they prefer.

One other thing I’d like to see (aside from the disbanding of the CRTC) – I’d like to see cable companies provide for their customers a cable receiver that doubles as rabbit ears for broadcast television.  I don’t see how this would be impossible, especially with the soon to be mandated digital broadcast of television signals.  This would solve everyone’s problems.  Cable companies wouldn’t transmit broadcast signals, but cable customers would still be able to watch So You Think You Can Dance Canada.

Of course, broadcast companies would have to provide a worthwhile service, and that’s the rub.

There’s a lot more going on in the CRTC’s decision.  Can you read their press release here, and the reference document here.

I first wrote about this issue here.

Failed Nortel Pensions = free lunches

Can somebody explain to me why the poor people of Ontario should foot the bill of the failed pension gambling that was undertook by past Nortel employees?

Economic Recession Looms while the Civil Service Booms

No big surpise here, when government’s go on uncontrolled spending sprees, the only one who benefits are those who work for and in government:

The highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, the most recent figure available.

When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more. Eighteen months later, 1,690 employees had salaries above $170,000.

The trend to six-figure salaries is occurring throughout the federal government, in agencies big and small, high-tech and low-tech. The primary cause: substantial pay raises and new salary rules.

What are the odds the same result isn’t occurring in Canada?

Loblaws’ Maple Leaf Gardens subsidy

Loblaws gets a subsidy for re-vitalizing their Maple Leaf Gardens from the federal government. Wow. I could not think of any poor business that was more deserving of a subsidy than the largest food retailer in the country.

All Extortion is Local, Broadcast Television Edition

Anyone else irritated by the fight that broadcast television companies have brought against cable providers?  For those who haven’t been introduced to their little campaign, here is the raison d’etre of Local TV Matters:

Local TV Matters is a campaign launched by local Canadian television broadcasters with a focus on the protection and preservation of local television for viewers across Canada. Members include CTV, /A\, Global, CBC, CHEK NEWS, V and NTV, with thousands of supporters across the country. The campaign encourages all Canadians to share their voice and support local television.

Their beef seems pretty straight forward.  They send their signal out for free, cable companies pick it up, bundle it with their other offerings and sell it all to us lowly consumers.  We pay the cable companies, but none of that money sees its way back to the local broadcast stations.  Seems pretty legitimate.

Ahh, if only ’twere so.

The broadcast giants are not looking to merely sell their product to cable providers; they are seeking a government agency to force cable providers to buy their product.  This isn’t about a free exchange of goods and services; this isn’t about proper remuneration for a service provided; this is about getting the government to bully your competition into giving you money.

Local TV Matters Media giants like CTV and CBC cry foul over the increase in revenues that cable providers have earned in recent years.  Understandably, they want their piece, but they seem unwilling to earn this windfall.  Cable providers have begun offering consumers greater selection of channels, more robust packages, time shifting and HD.  Broadcasters have offered consumers… umm… Little Mosque on the Prairie?

In response to the bullying, cable providers have set up their own little action committee, Stop the TV Tax.  They’re working hard to frame this issue as broadcasters asking the government to make consumers pay more for the service they are currently receiving.  Granted, this probably doesn’t equate, exactly, to a tax.  The organization should probably be called, Stop the TV Wealth Re-distribution, but their point is valid.  Broadcasters claim they are not asking for added fees to be levied against customers; they just want the government to force cable companies to give them money.  The fact that increasing the costs of cable service will exert a natural upward pressure on the price of the service seems lost on them.  Though, if they had a better grounding in issues regarding costs, revenues and profits, there’d be little need to run to the CRTC for a hand out.

Amusingly, their economic illiteracy is on full display on their web site:

Negotiation for Value (“NFV”) is a term used to describe a free market negotiation between cable and satellite companies and local television stations to establish the appropriate compensation to be paid by the cable or satellite company for the distribution of the local television station’s signal.  At present, your cable and satellite provider collects money from you each month for our service, but pays nothing to local television stations for the signals we provide.  This is not the same as “fee-for-carriage”, which is a term used to describe a regulated rate to be set by the CRTC for the distribution of local television signals.

I guess I forgot that bringing the weight of the government down on your competition is merely “free market negotiation”.  Silly me.

The whole ruse underpinning Local TV Matters is absurd:

You demand local TV, and local choice, and we want to continue to deliver it for you. It’s time to stop cable and satellite companies from charging you more for the local TV you’re already paying for.

It’s nice of broadcasters to have our best interests at heart, though it seems completely lost on them that if we really do “demand local TV”, there’d be no need to run to the regulator.  I have no doubt that the existing business model for local broadcast television is no longer viable, however, in most every other industry, companies are forced to change a failing business model lest they cease to exist.  Apparently, if you dabble in local broadcast television, you’re immune to such market realities.  It certainly takes some gall to seek out this form of corportatism and parade it about in the guise of the free market.

It takes even more gall to force an artificial increase to the costs your competitors must incur and then imply that they are simply being greedy for raising their prices.

Alright, so far it probably sounds like I’m advocating some form of digital free riding – that I think cable providers should just be able to take someone else’s service and re-sell it without passing along any of the revenue.  Such an analysis would be correct but for one annoying little fact: the government is forcing cable companies to offer broadcast television.  So Rogers and Shaw and Cogecco have no choice but to provide this service.  And, let’s not forgot, broadcasters have never passed along any of the increased ad revenue that they receive as a result of their increased audience to the cable providers who are responsible for the increased audience.

There is a pretty easy solution to all this.  Don’t let cable providers transmit broadcast television for free.  I’ll watch NBC, Fox, CNN, the Discovery Channel, Teletoon, the NFL Network, the History Channel, etc on cable, and then if I feel like watching CBOT, CJOH or ‘A’ Channel, I’ll pull out the ol’ rabbit ears.  Seems fair.

Maybe Charles Anthony was right.  Maybe the simplest solution is to just dissolve the CRTC.

Farming, Subsidies, and Government Pork

In response to Charles Anthony’s post, Let Canadian pork production sink, commenter “pigfarmer” writes:

We operate in a free-market economy, however, food production is not exactly the same as other industries. Affordable and safe food is vital to the health of the country – both economically and physically. In Canada, we adhere to high standards of production and use programs such as Canadian Quality Assurance, Nutrient Management Plan and Environmental Farm Plan to ensure that we are producing food that is not only safe, but is also promoting a healthy, sustainable environment. Farmers are not able to demand higher payment for their products in spite of the fact that these extra measures increase our costs of production. Canada currently imports meat that has been treated with drugs that are illegal for use by Canadian producers. So yeah.. hey.. we can all quit – Ontario can kiss 33,000 jobs goodbye (the national figure is 1 in 8, by the way) and we can import all our food from China and Brazil. Good luck knowing how it was produced and what is in it!

Sure, by definition, one industry is not the same as another; however, the food market is the same as pretty much every other market.  Producers, consumers and everyone in between respond to the same incentives and react to the same market forces as any other industry.  Even in terms of safety, the food industry isn’t that special.  Sure, I want to eat to safe food, but I also want to drive a safe car and have a reasonable assurance that my house won’t spontaneously burn down.

In all these markets, it is unreasonable to expect the consumer to be an expert in the product and safety standards.  Consequently, we rely either on producer/industry signals or government regulations.  If the former, then the hog industry needs no special protection.  Consumers will recognize that the higher prices are necessary to ensure the quality of the product.  However, if we, as a society, determine that certain safety standards must be met, governmental regulation can be used to keep untrustworthy meat products out of our supermarkets.  This will drive up the price of meat, but, again, if that’s a necessary cost, then so be it; the consumer can pay for it (or choose not to, if they don’t want the specific product that much).

Our problem seems to pop up once people decide they want local products (for both safety and protectionist reasons), but they don’t want to pay for them.  At this point, the government tends to start meddling, thus distorting the entire market.  Farmers are put in untenable positions, producing unprofitable products, and seeking government assistance.  Consumers have unreasonable demands, wanting safe food, not wanting to pay for it, and then getting upset when government spending goes out of control.

Food is relatively cheap in 2009.  The average family spends a far smaller percentage of their household income on food than they did 50 years ago.  Allowing food to align with true market prices, rather than governmental distortions, could drive up food prices, but that won’t impoverish the nation.  Even if we decide that the government needs to help people afford more expensive food, the best way to do that is with direct aid to the consumer.  If you want to help the poor, just give them money, don’t completely screw up the food and agriculture industry.

Our food and agriculture policies have done a lot of damage to both farmers and consumers.  The only people they’ve really benenfited are those who are paid to write them.  It’s about time we got the government out of the business of damaging the economy.

Let Canadian pork production sink

The Canadian pork industry should either sink or swim on its own. This is nonsense:

The federal package is a three-part plan: launch a $17-million marketing venture to sell Canadian pork internationally; offer government-backed loans to farmers with viable hog operations; and set aside $75-million to buy the worst-off farmers out of the business.

Spending money on an international advertizing campaign???? Good heavens! The stupidity continues! The only thing that international customers need to know is the price. If the price is right, people will buy. There is more than enough evidence and a track record to realize that Canadian pork producers can not meet the right price. The time to jump ship was long ago.

Ordinarily, I would have sympathy for many of them because the government encouraged them to invest in the pork industry. Many farmers were deceived by the government. However, by now, it is obvious that the farmers are displaying a sense of entitlement. Their work is just a form of work-fare and it needs to come to an end.

People do not want Canadian pork any more.

Obama Cuts Deal with US PhRMA – Supportive Ads and 80 Billion Taxpayer Dollars

John, at Powerline, points out an interesting exchange between Wolf Blitzer and Obama spokeswoman Linda Douglass

BLITZER: Did the White House make a secret deal with PhRMA, the pharmaceutical lobby here in Washington, that would limit how much cost reductions they would have going forward over the next 10 years?

DOUGLASS: Here is what — what happened. The White House, the pharmaceutical industry, the Senate Finance Committee agreed that the pharmaceutical industry would contribute $80 billion over 10 years — a very, very substantial sum of money that would lower the high cost of prescription drugs for seniors, who are paying exorbitant costs for prescription drugs. That was a crucial piece of this deal, as well as other steps that they would take to lower costs.

It’s an $80 billion agreement. That’s what the White House, the Senate Finance Committee and PhRMA have agreed to. And the final details are being worked out with the — with the Senate Finance Committee.

BLITZER: Did PhRMA, in exchange, make a promise of $150 million to pay for advertising to help the president’s plan go forward?

DOUGLASS: What — what you have, Wolf, is this deal that is $80 billion. And we are very pleased, obviously, that — that the pharmaceutical industry agrees with us, that there’s an urgent need for comprehensive health insurance reform that’s going to protect Americans from unfair rules, from rising costs. They agree with that. They’ve agreed with it from the beginning. That’s why they came to us and we worked out this agreement with the pharmaceutical industry. And they’re supporting health reform legislation. And that is good for the country.

BLITZER: So is part of the deal that they would support this legislation, go forward with $150 million in advertising?

DOUGLASS: You know, Wolf, part of the agreement here is that we’re all going to work together to bring comprehensive health reform. I mean, clearly, the pharmaceutical industry said we are going to support comprehensive health reform. And that’s what they’re doing.

Jim Watson is clueless in market economics, Nortel

Jim Watson, the Municipal Affairs Minister of the government of Ontario is an idiot:

“Nortel is the single largest employer in the city . . . and I was disappointed that there wasn’t more of a coordinated effort, really, from all three levels of government — not just the city — to deal with it,” Watson said.

and the irresponsible journalism that comes out of the Ottawa Citizen belongs in the high school newspaper club:

To be fair, the lack of leadership on Nortel is spread among three levels of government, a point Watson makes. The city should have been making enough noise that other levels of government had to respond. The distraction of Mayor Larry O’Brien’s trial on influence-peddling charges could have been a factor in the city’s failure to focus on Nortel.

Only a free-loading parasite would think that governments should play favorites in any industry. In our global economy, only a clueless buffoon would think that governments could have the ability to fight market forces and insulate a firm from international competition. A government official has no excuse.

Back to International Trade 101, my dear Watson.

Another day, Another Czar – Obama’s Appointment of Van Jones

It seems like everyday President Obama appoints another unaccountable czar to oversee his radical policy agenda.  Kathy Shaidle does a great job of highlighting the rather unsavory past of his Obama’s newest Czar: Van Jones, ‘Green Jobs Czar.’ Here is Jones in his own words:

I was a rowdy nationalist on April 28th [1992], and then the verdicts came down on April 29th. By August, I was a communist.

(…)

I met all these young radical people of color – I mean really radical: communists and anarchists. And it was, like, ‘This is what I need to be a part of.’ I spent the next ten years of my life working with a lot of those people I met in jail, trying to be a revolutionary.

And you think he’s a bit scary? Have a look at Obama’s pick for Science Czar – things are about to get a lot more “radical” in the Whitehouse.

On April 8, according to the Associated Press, Holdren said that “global warming is so dire, the Obama administration is discussing radical technologies to cool Earth’s air.” Holdren suggested that one option includes “shooting pollution particles into the upper atmosphere to reflect the sun’s rays.”

Next Page »