CRTC calls for 'market-based' regime

Opens the way for imposed charges on local TV signals

TORONTO -- Looking to end Canada's bitter retransmission fee feud, the country's TV watchdog on Monday opened the way for Canadians to be forced to pay to watch U.S. series-rich local TV signals.

The Canadian Radio-television and Telecommunications Commission (CRTC) also approved U.S. programming blackouts here if broadcasters that own the Canadian rights to the American shows cannot secure negotiated compensation from domestic cable and satellite operators for carriage of those signals.

With an eye to the U.S. market, the CRTC called Monday for a "market-based" regime that will see private local TV stations choose to bargain with cable and satellite companies to establish a fair value for the distribution of their signals.

"The current dispute between conventional broadcasters and distributors threatens the overall integrity of the broadcasting system," CRTC chairman Konrad von Finckenstein said in a statement that accompanied his decision.

"Broadcasters and distributors have a symbiotic relationship. The time has come for them to put their differences aside and work together to ensure the continuation of conventional television, which Canadians clearly value," he added.

The CRTC stopped short of ordering carriers to pay to carry over-the-air TV signals, and instead argued the "system should be such that privately-owned broadcasters that own programs or have paid for the exclusive right to disseminate programs can negotiate for payment" with cable and satellite operators.

Despite earlier threats from broadcasters that they will black out popular U.S. shows if they are not compensated by carriers for their rights, the Canadian broadcast system has so far experienced no disruption from a long-running retransmission fees fight.

But the CRTC's ruling Monday opens the way for the "deletion" of programming a broadcaster owns, including U.S. shows, if they fail to negotiate compensation from carriers.

The CRTC added compensation for local TV signals can either be monetary or could come in the form of preferential treatment of channels that a broadcaster places with a carrier.

The CRTC decision on retransmission fees follows domestic broadcasters, facing a deep TV ad slump, aggressively lobbying Ottawa for so-called fee-for-carriage compensation, and domestic cable and satellite TV operators fighting back against what they consider a new tax on TV viewing.

Canadians currently pay for cable channel signals, but watch local, over-the-air TV signals for free.

Cable and satellite TV operators opposed any fees for carriage as a cash-grab by broadcasters that will be passed onto consumers.

The CRTC added it will require a go-ahead from the Federal Court of Appeal before it allows a TV tax to be imposed on Canadians for over-the-air signals as it has received conflicting opinions on whether it has jurisdiction to order broadcasters and carriers to hammer out a solution between themselves.

In return for receiving compensation for local TV station signals, the CRTC re-imposed homegrown programming spending requirements on the country's three largest broadcast groups: CTV, Canwest Global Communication and Rogers Media.

The three networks will have to spend at least 30% of their gross revenues on Canadian programming, whether for their English-language conventional TV stations or cable channels they own and operate.

Other measures ordered by the CRTC to rebalance the highly-regulated Canadian TV system include imposing "quotas for the exhibition of, or expenditure on, Canadian programming," and mandating wholesale fees for the carriage of certain cable channels.

The CRTC will either set carriage rates in some cases, or order negotiations between broadcasters and carriers to set a rate.

The regulator also gave its blessing to first-time paid advertising on domestic video-on-demand programming to give broadcasters an added revenue stream in hard times.

The federal government is expected to consider Monday's CRTC decision on retransmission fees before offering the final word on the industry spat.
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