John Merli /
01.10.2007 12:00AM
Canada Mulls HD Dilemma
OTTAWA

While the steady transition to HD in America continues to accelerate, its northern neighbor is going through some serious soul-searching on its own transition that, in part, may sound familiar to U.S. broadcasters.

For two weeks last month, the Canadian Radio-television and Telecommunications Commission (CRTC) held annual hearings to examine the state of Canadian broadcasting. Unlike America, Canada has not yet set an official analog cutoff date, although some broadcasters are recommending the adoption of one.

The theme of the hearings was set on the first day when the head of the Canadian Broadcasting Corp. told the CRTC he can find no adequate business model for HD services, but stations are being forced to pay for the expensive transition anyway.

CBC President Robert Rabinovich said advertisers in Canada (as in the United States) are not willing to pay higher rates for HD commercials.

"So basically they're saying if you want to shoot in HD, that's your business [but] we're not going to pay you more," he told the review panel.

The CBC, which began 1080i programming in English and French nearly two years ago in Toronto and Montreal, is funded largely with tax dollars appropriated by Parliament.

American programming has always been a key scheduling component for Canadian broadcasters (including content that often features native Canadians such as Mike Myers, Michael J. Fox, William Shatner, Jill Hennessy, Dan Ackroyd, and the late Peter Jennings and John Candy, to name a few). U.S. imports are also popular with Canadian advertisers seeking to reach the largest Canadian audiences.

Canadian broadcasters were always required to air a certain percentage of Canadian shows, but the CRTC changed its rules several years ago to allow broadcasters to include reality TV and entertainment magazines, for example, in their quotas of Canadian shows (i.e., a Canadian interviewer talking with American movie stars in Los Angeles.)

Meanwhile, one Canadian investor signaled its interest in the burgeoning HDTV market in Canada last month by applying for a license to launch free HDTV broadcasts. HDTV Networks, a Vancouver, B.C.-based investment firm wants to deliver hi-def programming over-the-air to viewers in Canada's eight largest media markets, including Vancouver, Edmonton, Calgary, Winnipeg, Toronto, Montreal, Toronto, Ottawa and Halifax.

The company is a subsidiary of CSR Investments, which also controls Canadian Satellite Radio Inc. and XM Satellite radio brand in Canada.

Commercial Canadian broadcasters routinely air U.S. shows and insert local advertising in them, a practice known as "simultaneous substitution." Local stations say the often-lucrative practice helps subsidize the production of Canadian programs. The practice (dubbed "simsubs") is allowed by the CRTC as a means of protecting the commercial revenues of Canadian broadcasters and usually only occurs when both local and distant signals are carrying the same (or similar) programming simultaneously.

HIGH INTEREST IN HI-DEF

For its part, Canadian consumer interest in HD is high. At least that's according to Rogers Cable, the country's largest cable operator, which reported in late 2006 that in the past year, its HD subscribers more than doubled to over 200,000 households--from a population about one-tenth of its southern neighbor's.

(In 2006, according to Nielsen Media Research, there were less than 12.8 million TV households in Canada, compared to more than 110 million U.S. television households.)

Meanwhile, while several Canadian channels now air some HD content (TV Technology, April 6, 2005), the new format's overall growth may pose a less tangible, albeit more significant, dilemma than the lack of a business model.

According to Dr. Rebecca Sullivan and Dr. Bart Beaty, associate professors of media at the University of Calgary, HD also poses a serious threat to Canadian "cultural sovereignty," and for the most part, America inadvertently is to blame.

According to their new book, "Canadian Television Today" from University of Calgary Press, the Canadian viewer's heavy menu of American programs fed by Canadian cable (and U.S. signals penetrating the U.S.-Canadian border) would skew more American because most HD shows will originate in the United States.

COMPETITIVE ADVANTAGES

"Given that the shift to HDTV does not generate revenue or boost profit margins, or excite audiences, the only incentive for [Canadian] broadcasters to make this transition is competition--or more like cooperation or even collusion--with the United States," the authors charge in their book.

Beaty said once American broadcasters go fully HD in the next couple of years, "Then the product becomes different. Unless Canadian networks also go HD, they can no longer substitute the channel and block American commercials."

He said he believes the CRTC has become "obsessed" with HDTV. Sullivan said she does not think the new formats alone will attract viewers.

"To suggest the Canadian viewer will be drawn away from TV simply because it is not in HD is ludicrous. HDTV is the technological 'McGuffin' in this whole thing. It's not necessarily relevant to the bigger issue," she said.

Charles Angus said he believes it is relevant. A member of Parliament and Heritage Critic for Canada's New Democratic Party, Angus said his nation needs to get on with HDTV "to stay in the game" competitively.

"I agree [with broadcasters] there is no business plan right now for HDTV, and that we also have to have this discussion in Parliament to ask the question, 'Where do we want Canada's broadcasters to be in the 21st century?'" said Angus, who is a musician, writer and occasional contributor to CBC arts programs.

"The biggest problem for sovereignty would be if we don't produce quality shows in HD here in Canada," Angus said. "So much of [the] TV market here is along the Canadian border with the U.S. If the American market is switching over, we have to seriously think about it, too. Parliament has a commitment to a public broadcast system--a strong CBC for TV and radio--and without a plan that includes HDTV, the market is going to be seriously compromised. And the last thing we politicians should do is try to hold back technological change."

Some commercial broadcasters have suggested imposing fees on cable and DBS firms for use of broadcast signals to help pay for the transition--an approach that Rogers Cable told the CRTC in December is "a disastrous idea."

Cable mogul Ted Rogers testified that a lone exception for imposing a fee might be for the CBC. But he warned any fee imposed on cable simply would be charged directly to his subscribers via another line item in their monthly bills, according to The Globe and Mail newspaper.

As the debate continues, at least one Canadian group may have found a way to make money from HD. According to the CBC Web site blogger, the CRTC has already approved a license for "BabyHD."

The programming, which sounds a lot like the Teletubbies on the BBC and PBS, would offer ad-free HD shows "targeted to viewers younger than three."

As the CBC's blogger notes, "Welcome to the Earth, Suzie. Here's your credit card."


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