Spin

The propaganda is starting to get thick with the CRTC hearings coming in December. I came across a television commercial that was 30 seconds of speaking, with key phrases splashed across the screen as they were spoken. This is what it said:

Over the past five years, your basic cable bill has gone up over four times the cost of living. At the same time, the profits of the cable companies have almost doubled to 2.1 billion. These same cable companies want to charge you more for local television, even though you already pay for it. Don’t let cable raise your rates again. Be informed. Join the conversation. Go to localtvmatters.ca.

The commercial ended with the URL prominently displayed on the screen with the logos of the mail local television broadcasters in Ontario: CTV, CBC, Global, and A Channel.

This ad, and it is an ad, is a curious mix of misdirection and spin. So let’s begin:

Over the past five years, your basic cable bill has gone up over four times the cost of living.

The cost of living can be calculated in many different ways. They certainly didn’t explain how they calculated their numbers so I started my investigation with StatsCan and ended up using the Bank of Canada’s core consumer price index. According to the bank’s Consumer Price Index, 1995 to present, the August to August CPI increase for the last five years is modest:

  • August 2008–2009: +1.6%
  • August 2007–2008: +1.7%
  • August 2006–2007: +2.2%
  • August 2005–2006: +2.0%
  • August 2004–2005: +1.7%

This works out to a total increase of 9.5%. Have your cable fee gone up 38% since the fall of 2004? I didn’t think so.

Looking back at my own bills, Rogers was charging me $23.99 for basic cable in August 2004. The last full month I had cable this year was June, and the fee at that time was $29.99. This is an increase of 25%. I was surprised my increase was so great, but I’m left wondering what fairy-land the local broadcasters are living in where the cost of living increase was a full third less than the consumer price index in Canada over the last five years.

Yes, I realize that not everyone is with Rogers, and not everyone has the same cable plan that I did. But still, please.

Yes, their fees have increased. This is because the CRTC deregulated the cable industry between 2002 and 2006. Given that cable companies enjoy a monopoly in their geographic area, the only competition are the satellite TV providers, and over-the-air broadcasts. It’s possible that the cable providers were doing quite well and got rich after deregulation came in, but it’s just as possible that the CRTC restrictions made the cable business a difficult one, and they merely ‘caught-up’ since deregulation. I’m sure the truth is somewhere between the two extremes.

At the same time, the profits of the cable companies have almost doubled to 2.1 billion.

This figure is even more nebulous than the last. Is it the profit for the whole five years? What companies are included? Does ‘profit’ mean net income? Does this figure include only the cable portion of the companies? I don’t doubt that cable companies are making money, but this figure could mean many things.

These same cable companies want to charge you more for local television, even though you already pay for it.

This is a flat out lie. Cable companies do not charge for local television. The local broadcasters would like you to believe it, but it’s not true. As far as local television goes, the cable companies charge you for the delivery of the signal. Nothing more. They don’t pay for it so all you’re paying for is the infrastructure they’ve assembled to deliver it, plus profit. You haven’t paid for local television because it’s paid for by the sale of commercials.

Further, the local broadcasters would like you to believe that the cable companies are stealing the signal and charging you for it. The fact is, the CRTC requires that they deliver local stations. The cable companies have no choice in the matter. If you put up an antenna, you don’t have to pay for local television, so the cable companies have taken the same free signal and built an infrastructure to deliver those signals to you. You don’t have to worry about an antenna. Taking it a step further, it would be just as easy to argue that the local broadcasters owe the cable companies. Cable certainly carries local television to areas where the over-the-air broadcast signals do not reach. Yet the local broadcasters still claim cable delivery of their broadcasts is theft.

But it’s even worse than that. With Canada’s moving to digital-only over-the-air broadcasts in 2011, local broadcasters do not want to pay for the necessary equipment to make the transition. The CRTC had to legislate conditions under which local broadcasters are required to continue over-the-air broadcasts. The result is that the local broadcasters in 28 Canadian cities are legally required to equip themselves for digital broadcasting by 2011. And why did the CRTC need to do this? Simply because broadcasters were planning to set up digital transmissions only in the largest cities. Despite their cries of how important local programming is to smaller cities, some were going to abandon over-the-air (read: free) broadcasts in many markets. To get local programming you’d have to subscribe to cable or satellite.

So what are their choices? Pay for digital transmission, or stop over-the-air broadcasts and let the cable and satellite companies do it. Not only would they save the cost of the transmitter upgrades, but they’re demanding to be paid for the free distribution as well! What a racket.

Don’t let cable raise your rates again.

It takes cheek to claim the cable companies are at fault for the expected rate increases when it’s the local television broadcasters who have convinced the CRTC to allow fee-for-carriage. A lot of cheek!

I went to the URL offered in the ad and was immediately drawn to a page called The Facts. Sample this morsel:

Why are we facing a crisis in local television?

Although support from our viewers is strong, local television has been struggling financially for more than a decade, and now we have reached a critical point. Advertising revenues for local stations have decreased and the traditional model of free local television is unsustainable.

And there you have it. This ‘crisis’ has nothing to do with the economy or the cable companies delivering what is already a free signal. The problem is that television isn’t your only entertainment option at home any more. In the last two or three decades new options have appeared: movies you can rent and watch at home, specialty television stations, video games, and the big one: the Internet.

The traditional business model for television has been subject to a continuous erosion for the last 30 years and it cannot continue on as it is. So what are the options facing local broadcasters? Either innovate in some way to bring back viewers that have reduced their television intake, or cling to a failing business model while asking for subsidies … and for good measure, blame someone else.

I see no innovation, but there’s plenty of begging and blaming.

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3 Comments

  1. Cathy
    Posted October 4, 2009 at 09:36 | Permalink

    Very interesting and enlightening. I didn’t know how it all worked! Thanks for the easy-to-understand explanation.

  2. Shawn
    Posted October 5, 2009 at 08:25 | Permalink

    No matter what the truth, they are broadcasting all this crap to the sheep. scare enough of the ignorant masses, tell them they will lose Max and Caroline and they will jump off the cliff with little coaxing. Most of the masses have no clue, nor do they take the time to educate themselves. The even scarier part is the CRTC has not made a worthwhile or correct decision in years. The sad part is that the hearing will not fix or recommend anything, just increase our rates yet again.

  3. Rick
    Posted October 6, 2009 at 13:32 | Permalink

    I too believe the rates will increase. There’s money to be made and the local broadcasters are doing a good job of convincing the public that the cable and satellite TV companies are the bad guys. It’s going to be messy when people start receiving the larger bills.

    The rates will go up, but we can choose whether or not we’ll pay them.

    Those who will be lynched are excepted, Shawn. 🙂

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