You’re at home watching TV, surfing past endless channels you never watch, grumbling: “Why do I have to pay for all this junk?”
Fortunately, you have one of those magic remote controls, like in the Adam Sandler movie Click, and you fast forward to 2016.
Canada now has pick-and-pay TV. Well, sort of.
You still have to pay for French language channels, even though you don’t speak French.
Your cable TV bill didn’t go down. In fact, it went up a bit because some of the channels you subscribe to aren’t all that much cheaper than when they are bundled with seven or eight other channels.
But at least the channels you pay for are the ones you want to watch. Too bad some of the channels you liked have vanished from the airwaves.
Some niche channels couldn’t survive outside the cocoon of bundling, and some American media companies just stopped licensing popular programs to Canadian broadcasters when told they could no longer group them with their less popular ones.
The above scenario is, of course, pure speculation. No one knows yet just how the pick-and-pay TV model announced by the Harper government in a recent throne speech will work.
One thing industry insiders agree on, however, is that Ottawa is not likely to move to a pure à la carte model.
It is unlikely, for example, to scrap the “must-carry” rules that oblige cable and satellite TV providers to provide certain channels considered key to maintaining Canada’s identity and culture, like CBC (both English and French).
Nor would cable TV bundles likely disappear – it’s just that consumers would no longer have to buy them to get the one or two channels they want. What might disappear, however, are niche channels that won’t survive unbundled.
“It’s a sticky situation for marginal players,” said David Fuller, chief marketing officer for Telus (TSX:T), which supports the move to à la carte programming.
Liz Shorten, managing vice-president for the B.C. branch of the Canadian Media Production Association (CMPA), said her industry accepts that some form of pick-and-pay TV is inevitable.
But she warns that Canadians need to know what that means. They may assume, for example, that there will still be the same number of channels to choose from under pick-and-pay, including niche channels, like BookTelevision.
“They would think those channels will still be there – actually they won’t,” Shorten said. “The cost per subscriber will be so prohibitive, they won’t exist. If there isn’t enough of a subscriber interest in [BookTelevision], it may disappear. Some would say that’s the market dictating.”
Vancouver has two specialty TV channels that serve niche markets: OUTtv, which specializes in programming for the LGBT community, and BBC Kids, which is owned by the Knowledge Network – B.C.’s publicly funded broadcaster – and BBC Worldwide.
Knowledge Network declined to comment on what pick-and-pay could mean for channels like BBC Kids.
OUTtv COO Brad Danks thinks pick-and-pay could benefit some niche channels like his, if the TV dial loses some of the channels that contain little original content.
“The business case of the larger companies is that they can get paid for services that either people don’t watch or that they don’t feed with programming,” he said.
“What we may end up seeing is the broadcasting system trimmed down to a lot fewer channels than we have now. I think, in that case, the ones that provide diversity, like OUTtv, will do well.
“I’d like to see a sustainable system that addresses the biggest problem facing the Canadian broadcasting system, and that is that people under the age of 35 in particular aren’t signing up for it. If that’s the case, eventually it’s going to whither and die.” •
Viewers increasingly tuning out cable TV
Thanks to video on demand and Internet TV – Netflix, Apple TV, Youtube – Canadian consumers are increasingly cutting the cable TV cord.
According to a Convergence Consulting Group report earlier this year, 2.2% of Canadian cable TV subscribers (255,000) had cut the cord between 2011 and 2013. It is expected to rise to 390,000 (3.3%) by the end of this year.
Based on his company’s Internet and TV subscription numbers, Doug Holman, co-president of Vancouver’s Novus Entertainment, suspects cord-cutting among Canadians could be much higher than that. His company has 15,000 subscribers in the Vancouver area, only 10,000 of whom subscribe to cable TV.
“So there’s 5,000 customers that have opted not to [subscribe to] TV – they’re Internet only,” Holman said.
While he supports the pick-and-pay model, Holman agrees with some analysts that it may not shave that much money off the typical cable TV bill.
Given the option of subscribing just to HBO for $12, or a bundle of movie channels that includes HBO for $15, many consumers might end up right back in 2013: paying for channels they don’t necessarily want.
Media companies give pick-and-pay mixed reviews
Canadians who want to know what pick-and-pay TV might look like can spend some time in Quebec, where Quebecor Inc. (TSX:QBR) and Videotron – the telecom, Internet, cable TV company that it owns – has been moving toward a more à la carte approach to cable TV.
Other Canadian media-cable TV giants have been less enthusiastic about it.
Television media ownership in Canada is concentrated among a few players: BCE Inc. (TSX:BCE), Rogers Communications Inc. (TSX:RCI), Shaw Communications Inc. (TSX:SJR) and Quebecor. They also own cable TV businesses. Telus is the only major telecom and TV provider that does not own media assets.
Not surprisingly, Telus favours pick-and-pay, while companies like Shaw – which declined to comment for this story – are said to have opposed it in the past.
Media companies in both Canada and the U.S. typically only license channels to cable and satellite TV providers in groups. The more popular channels essentially subsidize the less popular ones.
Moving to a pick-and-pay model will require a lot more than handing the Communications Radio-television and Telecommunications Commission (CRTC) new marching orders. Ottawa will also need to take on Canada’s media companies.
“[The federal government] laid this at the doorstep of the cable companies and IPTV (Internet Protocol TV) providers like Telus – as to us having to change our lineups to give people more choice – without realizing that the real constraint sits with the media companies,” Fuller said.
“I can’t, today, move to pick-and-pay any more than I have already without contravening many of my licensing agreements. Some of them outright bar pick-and-pay altogether.
“The American channels, unlike the Canadian ones, aren’t even mandated by the CRTC, and none of them like pick-and-pay.”
