3 min

Shaw launches media blitz against TV tax

Broadcasters say fee needed for local programming

Shaw Communications, the largest cable and internet supplier in western Canada, has launched a media blitz to mobilize public opinion against the major broadcast networks’ push for a “fee-for-carriage” regime that would see cable providers charged for the right to carry signals from CBC, CTV, Global and other major networks.

Dubbing the proposed fees a “TV tax” and a “bailout” for the broadcasting industry, Shaw warns that any additional fees will be passed on to consumers, resulting in an additional $72 per year for most subscribers.

The major Canadian broadcasters have been lobbying the Canadian Radio and Telecommunications Commission (CRTC) for years for the right to impose such fees, which the commission has already twice denied. But given the strain that the current economic downturn has placed on the broadcasters’ advertising revenues, many suspect their renewed lobbying for the fees will bear fruit this time.

Shaw has launched a campaign against the new fees that includes full-page advertisements in major newspapers, including the Toronto Star, and a section of the Shaw website devoted to mobilizing people against the fees. The website includes a form letter that can be automatically mailed to members of Parliament.

The broadcasters insist that the fees are necessary to maintain local programming standards and maintain newsrooms across the country.

Shaw argues that broadcasters don’t need additional revenue for local programming, and points instead to $700 million that broadcasters spend on US programming annually.

“The broadcasters are asking Canadians to help ‘save local TV,’ but local TV doesn’t need saving,” reads the article on Shaw’s website. “They say they’re broke, but the truth is both CTV and Global TV are both very big businesses with a number of very profitable channels and assets.”

Shaw has long been opposed to regulation of the broadcasting industry, a view dubbed “hypocritical” by OutTV chief operating officer Brad Danks.

“Shaw is well-guarded and lacks competition in a regulatory system that allows it to exist,” says Danks. “If we allowed cross border competition they’d be wiped out in a day.”

Shaw holds a near monopoly on cable and satellite television services in most of western Canada.

“Shaw only has to compete with one or two other services, if they ever do,” says Danks. “On top of that, you get a consumer relationship and you can use that to develop other products like internet, mobile, phone services. It’s a tremendously powerful relationship.”

OutTV recently won a complaint against Shaw at the CRTC over the way Shaw carried and marketed the specialty channel. The CRTC found that Shaw hurt the channel’s business by moving it around on the channel lineup and refusing to offer or market it to its subscribers equitably despite its obligation to do so.

Despite the economic slowdown and in contrast to the weakening broadcasters, Shaw continues to post subscriber growth in all areas of its business, according to its latest quarterly report.

“Shaw thinks it’s a consumer-driven company and they operate that way,” says Danks. “The things they were granted require them to give some things back…. These are huge, huge companies with tremendous resources. Any company with that size will be in the position to get their message out. They are enormous and they get bigger all the time.”

Still, Danks says the cable providers and the broadcasters have to work together to maintain Canadian television.

“At the core of this we’ve decided that we’ll have a Canadian broadcasting system, and at the core we’ll have two businesses, the broadcasters and the carriers, and between them they will produce the content. Once you step down that path, you’re now in a regulatory environment and some of those choices are not free-market decisions.”

If the broadcasters get their way, however, niche digital specialty channels like OutTV could be the ones to pay the price. If carriers pass the fees on to consumers, some may choose to cut back their specialty channel subscriptions. Or the carriers may attempt to renegotiate their carriage fees with smaller channels in the wake rising costs of carrying the networks.

“Our biggest concern is whose hide this is going to come out of. It’s not going to be the cable companies,” Danks says.