Canada b'casters urged to convert to cable

Analysts say more to gain in abandoning conventional TV

TORONTO -- Canadian broadcasters seeking a life raft during the current TV ad collapse are being told to convert their local TV stations into cable channels to secure subscriber fees from cable and satellite TV operators.

On Wednesday, a report from Canadian ratings agency DBRS added to the growing public debate over Canadian broadcasters by urging them to abandon conventional TV and turn major networks like CTV and Global Television into cable channels.

CTV and Global Television already have written down the value of their conventional TV assets by billions of dollars during the economic downturn and unveiled plans to sell or close local TV stations.

DBRS analysts said that broadcasters have more to gain by teaming up with cable and satellite TV operators as niche channels, rather than continuing to fight in the public and regulatory arenas for an elusive financial bailout.

CTV, Global Television and other conventional networks have so far failed to secure compensation from cable and satellite TV operators for carriage of their conventional TV signals.

The CRTC, Canada's TV regulator, has three times turned down their fee-for-carriage proposal, and most recently urged them to negotiate compensation from cable and satellite TV operators on their own.

Other bailout proposals include the creation of a local programming fund for broadcasters, and ordering cable and satellite TV companies to compensate local TV stations if they transmit their signal into another Canadian time zone via time shifting.

But a possible conversion to cable channel status also would mean the loss of key privileges by conventional broadcasters, which include exclusion from an obligation by domestic channels to spend up to 50% of their annual revenue on homegrown programming in return for subscriber fees.

At public hearings in April, CRTC raised the possibility of conventional TV stations converting to cable channels.

Ivan Fecan, CEO of CTVglobemedia, said in answer to CRTC questioning that he'd consider a revenue expenditure system for his CTV network.

But he added that CRTC has to factor in that conventional broadcasters operate a string of brick-and-mortar TV stations, while cable channels lower operating costs by maintaining one master control system.