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.

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.

New Brunswick Brews it’s Own Beer, Undercuts Private Competition

No, this isn’t a joke. The left-wing Liberal government of New Brunswick has started to brew its own beer and is selling it at a lower price than private breweries can sell.

New Brunswick is rolling out its government-brand suds across the province on Thursday in a strategy to keep people from heading across the border in pursuit of discount beer.

The new brand is designed to staunch the bleeding of beer sales in border communities, but it is infuriating local brewers and at least one Quebec business owner.

How the hell can they sell it for a lower price than their private competitors? Regulation, regulation, regulation!

New Brunswick’s policy of socially responsible pricing means that the lowest allowable price for 12 cans is $18.67. That policy is designed to set a floor price for beer in the belief that any lower prices would lead people to buy too much and develop drinking problems.

[...]

The new Selection brands will be sold throughout the year for $18.67 for 12 cans. Other beer companies have to apply to sell at the minimum price for a limited time and can only do that a certain number of times each year.

Perhaps someone should point out that removing price controls on liquor would likely win back cross-border shoppers away from the more competitively priced US and Quebec liquor stores. However, that would entail less regulation, not more. And for ignorant bureaucrats and do-gooder politicians, whose jobs rely heavily on perpetuating the growth of intrusive government, it simply isn’t good policy to remove regulation. [Via: Dust My Broom]

Canadians do not need national food safety standards

I am appalled to hear Michael McCain, the head of Maple Leaf Foods Incorporated demanding national food safety standards and the dismantling provincial standards. There are so many things wrong with this. First of all and most importantly, the best meat comes from small producers. Small producers are being squeezed enough by absurd over-regulation already. Second, an inspection standard is just a bureaucratic hurdle. If things go awry, a producer can pass on the blame to the government. Third, under the duplicitous guise of consumer safety, national standards reinforce monopoly control for shamefully disgusting trash that is being peddled as “food” by such mega-factories.

Take a look at this nonsense:

He said most Canadians probably aren’t aware of the differences in standards.
“That’s actually the travesty. If they were aware and they made a conscious choice that’s acceptable to them, everybody is free to make a good choice. But I think the travesty here is they’re probably not even aware of different standards out there.“

So, Michael McCain is petitioning to reduce those free choices??? Shame on anybody who would lobby for such national standards.

I would never trust pre-packaged shrink-wrapped garbage over freshly cut meat from a local farm — ever. My free conscious choice to trust a local producer has nothing to do with government oversight. It has to do with the fact that the producer delivers his produce by hand himself. In other words, he can not afford to mess things up. He governs himself accordingly because he needs me as a repeat customer. I could buy cheap luncheon-meat at the grocery store any time I want.