CCAU Opinion Piece in Playback, Oct. 10, 2005



Conventional Broadcasters - It’s Not That Desperate!


By Peter Murdoch
Chair of the Coalition of Canadian Audio-Visual Unions 

Ratings for the Canadian private TV networks are up.  And TV executives are happy.  All through the 1990s, Canadian TV stations in English Canada were losing share to the specialty services.  But this abruptly stopped in 2000.  And since then, their ratings have stabilized and even strengthened.  Neilsen Media numbers show that they continue to get about 40% of all viewing, the same as in 2001.  

Jay Switzer, CEO of CHUM Ltd., has noted that “some in the industry call that the Desperate Housewives effect.”   With the rush away from reality programming and towards  story-driven drama and comedy programming, ratings for conventional TV have firmed up.  People still want to watch big-ticket “discuss around the water cooler” programs, and that is what conventional TV networks can deliver better than anyone else. 

But the big-ticket dramas cost money to produce.  They typically cost more than $1.1 million an hour if they are Canadian and twice that (or more) if they are U.S.  The key to financing these kinds of shows is continuing support from the conventional TV networks.       

Happily, with the consolidation of TV ratings has come a gratifying increase in revenue.  In fact, Canadian network TV continues to get an outsize share of revenue because advertisers continue to value big audiences out of proportion to their size.  With input from Pricewaterhouse-Coopers LLP, Nordicity Group Ltd. has recently projected that the private English TV stations in Canada will have over $1.8 billion in advertising revenues to play with in 2008.   That compares with last year’s revenue of $1.61 billion.

All of which is bad news for those gainsayers who have been predicting the collapse of conventional TV in the face of “borderless” technologies like satellites and the internet.

Of course they have been predicting this for over a decade.  But increasingly, as these predictions fail to materialize, critics are realizing that conventional TV, far from being in a death spiral, is capable of doing very well.

The reasons for this are numerous.  First off, those borderless technologies are not so borderless after all.  

Remember deathstar?  Nobody died.  In fact, we have contained that threat and we have two successful Canadian satellite companies that provide a better and more affordable DTH service than any of the U.S. suppliers.  

And now we have the Internet.  According to a recent British report, “TV delivered into living rooms over broadband connections will completely change TV as well as the internet as we know it.”   Does that mean that we will soon have Desperate Housewives on the World Wide Web, available whenever you want?  And won’t that undermine conventional TV?  

Again we need a reality check.  Yes, the Internet will provide some new content. But it is not going to undermine the basic economics of conventional TV.  When it comes to programs like Desperate Housewives, it turns out that the Internet does have limitations – and borders. 

This is not rocket science.  It reflects a combination of law and technology.  On the technology side, it turns out that sending out shows to a mass audience by conventional TV networks is far less expensive and far more efficient than the Internet.   

And on the law side, remember iCraveTV?  That stood for the principle that big ticket audiovisual programs can’t be distributed on the Internet or across borders without the authorization of the copyright holder.   Knowing this, what is the chance that the producers of Desperate Housewives will authorize downloads of their program around the world when that would undermine the financing of the show by the broadcasters to whom they have sold exclusive rights?   The answer is obvious.  Borders do matter in the marketplace for audiovisual programs. 

So yes, the Internet will be used for trailers and promos.  And after a TV show has been run on primetime TV, it may become available in a paid-for download as an alternative to buying a DVD.  But none of this undermines the economics of prime time TV.

As we have seen, the TV networks have managed to confront the proliferation of pay and specialty channels.  The key is their success is good story-telling to a mass audience.  And they can still make enviable revenues and profits despite the audience fragmentation.   

What does this all mean for Canadian drama? 

Big ticket Canadian drama still largely depends on the conventional TV networks.  If their health is imperiled, so too is the engine that drives our drama. 

As part of the regulatory bargain, TV stations in Canada have an obligation to support and promote Canadian drama.  When that support is there, the results can be tremendous.  Corner Gas was not a fluke.  It came about because of regulatory obligations. 

The good news about Desperate Housewives is that times are not that desperate.  The Canadian TV networks have the money to do more drama – much more.  And if we put in the proper regulatory safety net, Canadian drama can finally come into its own.

Other members of the CCAU include:  ACTRA, the DGC, NABET and the WGC.


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