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11/17/2009

Bloodsuckers vs. Parasites.

Here's an interesting concept.

You're a cable company, and you don't pay for the product you sell. CTV and Global provide their signals to you free.

You're a commercial TV broadcaster, and you don't pay the cable guys to distribute your product to your audience. But alas, your main source of revenue, advertising, is falling. Your viewership has been declining for years.

So you each go to the CRTC, whining about how neither of you is paying a dime toward each other's costs.

You propose that the CRTC mandate that viewers pay a surcharge - say, $10 a month - to bolster the broadcasters' treasuries. So they can continue providing signals with which the cable guys bolster their treasuries.

That's what it comes down to. Government deciding how much you have to pay to watch "Desperate Housewives."

Never mind the cable guys pretending to be champions of the consumer by balking at paying CTV a fee for its signal. If they end up paying a fee, which is likely, they'll just pass it on to their subscribers, and retain the monopoly profits they effortless generate. And never mind the broadcasters crying poor. They don't pay distribution costs, as noted, the way Loblaw, Rona and Tim Hortons do. And the commercial broadcasters chronically under-invest in Canadian news and drama, filling prime time with U.S. "culture" like "60 Minutes" and Canadian knock-offs of "Dancing With the Stars."

But here's the stone in my shoe. The CRTC, traditionally one of the most industry-friendly "regulators" on the planet, will ultimately cave to the effort by the cable guys and the broadcasters to shake more change out of your pocket. It will, by law, force viewers to pay more for content.

There's another medium enduring exactly the same woes. It's called print.

Newspapers and magazines are also losing audience, and also starving for the advertising revenue that sustains their newsgathering operations. Except the percentage of Canadian content in your newspaper or Canadian magazine - local news, national news, even world news for those papers that employ Canadians as foreign correspondents - is in most cases much higher than on CTV or Global.

And newspapers and magazines have no regulator to force readers to pay for content. If publications raise their subscription and newsstand prices, many readers will quit them. Publications even give their content away online because every time they've tried to charge for it, again, readers quit them. And there's no higher, legal authority they can call on to ram their costs down your throats.

I guess this is where I'm a free-marketer. The market is telling broadcasters, and the cable guys who rely on them for "product," that their business model doesn't really work anymore. This will become steadily more apparent over the next few years as the revenue decline reaches crisis point.

But before it gets that bad, the CRTC will tax viewers to ensure the broadcasters' survival. That's not an option for newspapers and magazines.

So the question becomes, why are we forcing one group of media consumers to subsidize commercial broadcasters whose primary function is to pipeline U.S. culture into Canada? And not subsiziding Canadian newspapers and magazines that devote most of their efforts to employing Canadians to tell Canadian stories? The stories that CNN, Fox News and BBC Canada will never cover, except for that one day when B.C. slides into the Pacific.

Of course I'm biased, I work in print. And I hope we never have to ask the government to impose a tax on our audience. For now, at least, we'll just keep experimenting with new business models until we find one that works. In which the market, not the state, determines that we can exist in some form or another.

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David Olive's
Everybody's Business

  • Commentary on business, politics and culture

    David Olive is a business and current affairs columnist at the Star, which he joined in 2001 after stints at the Globe and Mail, National Post and Financial Post.

    "If all economists were laid end to end, they would not reach a conclusion."
    - George Bernard Shaw

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