News

TV Tax not the answer

From today’s Woodstock Sentinel-Review:
Canadians are closely watching the battle between the providers of cable and satellite television service and the media companies that provide domestic broadcast content.

It’s hard not to. This a full-blown battle for public opinion, one waged over the airways and through full-page ads in major newspapers.

The subject is “fee for carriage,” a monthly charge that media giants CTVglobemedia, CanWest Global and the Canadian Broadcasting Corporation want to impose on cable and satellite companies. No one will say precisely how large this charge would be per subscriber. Estimates range from $5 to $10. Both sides are waging vigorous propaganda campaigns because the Canadian Radio-television Telecommunications Commission (CRTC) has the final say on the matter. If we accept that politics is about who gets what and how much, then few decisions are more political than this.

The CRTC has already turned down broadcasters twice on this count. And why shouldn’t it? At issue are signals that have been available over the airwaves free of charge since the inception of television. Canadians smart enough to have kept their TV towers continue to receive these signals at no cost. Canadians who subscribe to cable or satellite are simply paying for a more elaborate, reliable antenna system. Why should they be discriminated against financially because of it? The answer depends on who the CRTC and its political masters choose to believe. It also depends on where the latter decide to place their priorities.

The private broadcasters, while still profitable, claim they are losing money on local programming. The CBC is just along for the ride. If there is money to be had from fee for carriage, it wants a piece of the pie. For its part, CanWest Global last week went into bankruptcy protection, largely because of an ill-considered growth strategy that included overpaying for key assets. With $4 billion of unmanageable debt, the CanWest axe looms over regional stations and local programming. And CTV over the past year has cut small TV affiliates, radio stations, and local news programming. The question for Ottawa is whether this content is worth saving. And if so, who should pay for it?

As Canadians watch this battle unfold — including local subscribers of Nor-Del Cable in Norwich township and Rogers elsewhere — most have a firm hand over their wallet. The major broadcasters are being insincere when they say that cable and satellite providers earn enough to absorb any surcharge. Someone needs to tell the broadcasting community that – even though Canadians are avid television watchers – that doesn’t necessarily mean they are stupid. Rest assured – every penny levied as fee for carriage will be passed along in its entirety to subscribers. This is simply how business works, and this is what the big broadcasters are really proposing.

Should Ottawa go for it? No. New media and the increasing fragmentation of the audience is changing the broadcast landscape so quickly that the local station business model is irretrievably broken. This function should be allowed to migrate to the Internet – its new home – on its own. Fee for carriage or any other subsidy merely postpones the inevitable.

Read the story here.