Telus pushes for local ads on U.S. nets

CRTC has previously turned down similar proposals

TORONTO -- Canadian phone giant Telus Corp. has pitched selling local avails on U.S. networks to domestic advertisers to bail out struggling broadcasters.

Telus vp of wireless, broadband and content policy Michael Hennessy told the CRTC during public hearings that selling ads in the two minutes per hour set aside to promote homegrown shows on U.S. cable channel feeds would "create a new revenue stream ... to offset the need for fee-for-carriage."

The proposal to replace U.S. commercials with Canadian ones revisits a revenue-raising scheme twice turned down by the CRTC, but which has resurfaced as the TV regulator holds public hearings on possible carriage fees for broadcasters buffeted by a TV ad slump and increased competition from the Internet.

The local avails are embedded in the satellite feed Canadian broadcasters receive from U.S. channels like A&E, CNN, TBS, TLC and Spike TV, but they cannot be sold in Canada.

Instead, Telus and other domestic content carriers are compelled by the CRTC to use the local avails to promote homegrown shows or their product offerings, including mobile phones and Internet access.

Telus is supporting a bid by Glenn O'Farrell, a former head lobbyist for domestic broadcasters, to sell local avails on U.S. channels to advertisers, and to direct 70% of the revenue into Canadian programming, as part of a new venture, MediadeNovo.

O'Farrell insists the local avails would be converted into much-needed funding for Canadian programming without causing market or regulatory distortions that could harm broadcasters.

O'Farrell, as the former CEO of the Canadian Association of Broadcasters, opposed the last 2006 bid to Canadianize local avails on U.S. channels, arguing then that it threatened to add to the domestic advertising inventory and take advertising from broadcasters.

But domestic broadcasters have since been hobbled by a challenging economy, and have asked the CRTC to order domestic cable and satellite TV operators to compensate them for local TV station signals.

O'Farrell said Telus' support for the MediadeNovo application, now before the CRTC, is "one of the sensible measures required to move the industry forward by finding the middle ground."

Canadian cable and satellite TV operators oppose the current bid by broadcasters for carriage fees as amounting to a new tax on their subscribers.