Mr. Chairman, members of the committee, and staff, my name is Chuck Allard, and I am the chairman and CEO of Allarco Entertainment. With me today is Malcolm Knox, Super Channel’s president and CEO, and Richard Paradis, our business and government affairs representative.
The three of us have each been involved in the television and/or pay television industry for over 30 years. We'd like to extend our thanks to the committee for allowing us to attend this meeting and provide our views and observations on how Canada’s television industry is evolving in the face of tremendous economic and regulatory challenges under the edict of an aging Broadcasting Act that dates back to 1991.
Today we wish to address the main issue your committee is currently looking at, and also to share with you some insights on how difficult it can be these days to launch, as we have just recently experienced, a new English language national pay television service, Super Channel, within the confines of existing regulations and industry consolidation, particularly in the area of broadcast distribution.
We have all witnessed Canada’s television industry go through dramatic changes over the last 30 years, from a universe with 10 channels to one with over 200 channels, where we first saw significant fragmentation, and then in the last 10 years, significant consolidation and concentration. Conventional television broadcasters, who are at the source of our broadcasting system, now find themselves in serious financial difficulty for a number of reasons, including the tremendous growth of specialty television services that are eating up not only audience shares but also advertising revenues. In addition, such conventional broadcasters now have to compete for advertising budgets with the Internet, which has seen its share of advertising revenues increase significantly over the last couple of years.
We believe your committee should recommend the introduction of a reasonable subscriber fee for Canadian conventional broadcasters to ensure the regulatory system is equitable for all television broadcasters, whether they are specialty services or conventional services. We also believe the cost of such a subscriber fee should be fully assumed by the broadcast distribution undertakings that have had the nerve to come before you and strongly object to such a fee and suggest it would just be passed on to the consumer.
It is our strong conviction that BDUs have amply benefited financially for a number of decades from the sale of their basic service package, which has included conventional television services since the beginning and for which the BDU pays nothing to use. Such a subscriber fee should be directed by conventional broadcasters towards the production of Canadian content and local programming over and above their existing Canadian content commitments. In no circumstances should it be used to subsidize the increasing cost of acquiring American programming in a bidding war.
With regard to the BDU positioning, we found it quite instructive when the representatives of Rogers and Shaw came back before you two weeks ago. My relationship with BDUs goes back some time, and I can tell you, as a prior senior officer of the western pay television service licence, we strenuously objected approximately 15 years ago to the granting of pay-per-view and subsequently VOD licences to BDUs, especially terrestrial BDUs, because of the obvious conflicts we could envisage that would arise from the BDUs competing with existing broadcasters, giving them an undue preference and advantage over other independent programming services.
Unfortunately, our objections were denied at that time, and the rest is just history, with BDUs, or the company controlling the BDUs, now owning and controlling broadcasting entities that often benefit from in-house, priority carriage, additional marketing opportunities and other tangible advantages. All of this notwithstanding, there are supposed to be “Chinese walls” to give the illusion that conflicts do not arise and that BDUs are being fair with everyone.
On February 12, 2009, we sent to the chairman of your committee and some members a copy of a letter to the heritage minister requesting much needed changes to the Broadcasting Act to provide a stronger regulatory regime. Why do we need such changes? Because we are a living example of how present regulations are outdated and have allowed BDUs over time to wield excessive power over our broadcasting system.