U.S. Networks Threaten to Abandon Canadian Carriers for Online Platforms

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Viacom, A+E Networks warn they may abandon local carriers for online platforms

Faced with Canada unbundling cable offerings, major U.S. networks have warned the country's TV watchdog they may pull out of the regulated broadcast system altogether.

In an Oct. 3 filing to the CRTC, Viacom said it may forego Canadian distribution via local cable and satellite TV carriers and opt instead for unregulated video portals like Netflix Canada.

"For foreign services, a decision to impose mandated pick and pay will force a complete reexamination of the business rationale of the services being distributed in Canada as such services will have to weigh the costs of continuing Canadian distribution against the uncertainty of subscriber numbers and corresponding lower revenue," Keith Murphy, senior vp government relations and regulatory counsel at Viacom, wrote to the Canadian regulator in a submission following recent hearings on the future of Canadian TV.

Viacom's owned and licensed networks in Canada include BET, Spike, CMT, MTV, MTV2, Comedy Central and Nickelodeon. The blowback from Viacom followed Ottawa asking the CRTC to consider compelling cable and satellite TV providers to allow subscribers to pick and pay for TV channels they want to view.

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A+E Networks told the CRTC in its own Oct. 3 submission that it will consider "blacking out programming where the costs to clear Canadian rights are too high or possibly foregoing BDU distribution in Canada" if cable package unbundling was introduced.

Domestic cable carriers warned the CRTC during its recent Let's Talk TV hearings that Canadian TV viewers would be up in arms if U.S. cable networks denied them access to popular American TV shows.

A+E Networks distribution president David Zagin told the regulator he preferred "a modified pick and pay structure" that stopped short of a la carte cable packaging. "This structure would at least provide a better balance between greater choice in the broadcasting system and flexibility for broadcasters to be distributed only in bundles if business and market conditions warrant and would help to lessen the predicted adverse effects of mandating pick and pay," Zagin wrote.

The CRTC and local Canadian players behind the scenes are betting that American networks, while saying no to a pick and pay cable regime now, will accept new rules and requirements to remain in the Canadian market. But AMC Networks joined the chorus of U.S. networks, warning it too may abandon the regulated Canadian TV system.

"Non-Canadian programming may have no choice but to migrate to unregulated domains," Laura Van Soelen of Toronto-based law firm Gowlings said on behalf of AMC Networks in an Oct. 3 submission to the CRTC. "The disruption to the broadcasting system if AMC, and others, migrate to OTT (over the top) domains is a clear and present danger," she added.