November 17, 2009

Skinny Cable for Canada?

CANADA/ENTERTAINMENT - Canadian broadcasters are urging the CRTC to allow "skinny cable", essentially a smaller and dramatically cheaper variation of basic cable.

But cable companies don't like the idea, because it comes with a price tag attached: They will have to start paying for the right to distribute public broadcasters like the CBC, CTV and Global.

The industry's woes during the recession is the result of huge cutbacks in advertising by corporations "tightening their belts". The hope is that if broadcasters can offer a skinny cable package, more Canadians will sign up for cable.

Also at the center of the controversy is the issue of public television providers (CBC, CTV and Global) which provide their services for free and cable companies don't pay a cent for those channels, but still make a lot of money selling them as part of basic cable packages.

The cable and satellite companies (Rogers Communications, Bell Canada and Shaw) are still raking in the cash despite the recession, but say that if the proposed changes go through that its essentially a "TV tax" which they will then add to cable bills.

Both sides have since gone into ad campaign mode, promoting their sides of the argument on (where else?) television.

At stake is the future of local broadcasting in Canada. Canadian news, Canadian weather, Canadian culture, Canadian programming. If a public broadcaster goes bankrupt (egad!) the Canadian public will end up suffering.

Frankly the mere fact that public broadcasting is getting repackaged and resold as "basic cable", without a cent going to the broadcasters is grossly unfair.

Lets compare for example what some companies in the USA charge for cable stations per month (all prices USD):

  • $0.08 Cartoon Network
  • $0.15 MSNBC
  • $0.33 Nickelodeon
  • $0.44 CNN
  • $0.60 USA
  • $0.60 FOX News
  • $0.80 Disney Channel
  • $0.89 TNT
  • $3.65 ESPN

Lets say for example CBC, CTV and Global each charged 5 cents / month for their services. Thats $0.15 CDN / month or $1.80 per year. Rogers Cable alone has 2.25 million customers, which equates to $4.05 million per year that Rogers would have to pay to the CBC, CTV and Global ($1.35 million each).

[Or some multiple of that if they charged 10, 25 or 30 cents.]

Note: Rogers Cable made over $704 million in profits last year. Rogers profit margin is huge, having made $1.95 billion in revenue in 2008.

Bell TV has 1.8 million customers and made almost $600 million in profits in 2008.

Shaw Cable has 1.5 million customers and made over $500 million in 2008.

The proposed "TV tax" would be peanuts compared to the huge profit margins these cable companies have. It should NOT be passed on to customers. The cable companies should simply give up now and save themselves the cost of lawyers and advertising in what will likely be a lengthy legal battle.

Its the 21st century now. Isn't it time public broadcasters get paid for the services cable companies have been taking for granted? If cable companies want to repackage public broadcasting and sell it as basic cable, fine... but they should at least pay for it.

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