GATINEAU, Que. - Media giant Quebecor Inc. (TSX:QBR.B) says the rules that govern Canadian television no longer make sense and have wildly distorted the market, helping the strong and punishing the weak.
Executives of the Montreal-based conglomerate, whose media holdings include broadcasting, cable TV and newspapers, testified Tuesday before the federal regulator on the future of Canadian television, calling for a relaxation of several hundred rules and regulations they contend were designed for a world that no longer exists.
The previous weak sisters of the TV industry -- specialty channels -- now are in a formidable position because they are allowed both to carry advertisements and to charge cable and satellite operators for their signals, said Quebecor chief executive Pierre Karl Peladeau.
Meanwhile, he said, conventional broadcasters are being squeezed between the fragmentation of advertising spending and regulations that force them to bear the brunt of paying for costly domestic programming, including local news.
Peladeau came down on the side of private broadcasters on the issue of whether conventional networks such as CTV and Quebecor's TVA should be allowed to charge cable operators, such as Quebecor-controlled Videotron, for the right to carry their stations.
"We have to try to square the circle and survive without carriage fees, with falling advertising revenues and an unchanging regulatory burden," he said of the broadcasters' plight.
Peladeau kept some of his sharpest comments for Radio-Canada, saying he was "shocked" the public broadcaster is seeking money from cable subscriptions.
"How can we not be shocked when we learn that the public TV broadcaster doesn't have enough and is now clamouring for fees for its two main networks on top of of all the other benefits they have been given," Peladeau said.
Currently, only specialty channels have access to such money. In 2006, these fees represented 63 per cent of total revenue for these channels, compared with advertising money which accounted for 35 per cent.
Peladeau said he believes it is possible for private conventional broadcasters to get money from cable subscriptions without consumers' bills going up.
"Cable and satellite bills are already high enough that asking consumers to pay more for this service, without offering any added value, would amount to encouraging people to circumvent the current system."
One of the key disputes at the hearings has been over a controversial proposal by Canada's main television networks for new fees of between $5 and $10 on monthly cable TV bills.
CTV and Global Television want cable TV operators and satellite TV companies to pay for their signals. The networks argue that the distributors make money off their programming without paying anything for their signals.
Rogers (TSX:RCI.B), Canada's largest cable TV operator, has vehemently opposed the move and has warned it will take the battle to the Supreme Court of Canada to stop any proposed new fees.
The three weeks of hearings represent the first major review of Canada's broadcasting system in more than a decade, igniting turf wars and challenges among the players, from the networks to the cable operators, specialty stations, and program producers.
Some cable operators are asking the national regulator to take the chains off their ability to bring Canadians the foreign specialty networks they say their customers want, such as HBO and USA Network, or ESPN. a big U.S. sports broadcaster.
