TV industry frets over threat from skinny basic and pick-and-pay

It's been just over a week since the new skinny basic cable TV packages were introduced, and while consumers may not have been wowed by the offerings, many in the television industry worry a new era of consumer choice is going to hurt them.

Pick-and-pay cable is meant to benefit consumers, but content creators feeling the pinch

Business is slow for Canadian television production companies as a result of the uncertainty surrounding the effects of new CRTC rules (CBC )

It's been just over a week since the new skinny basic cable TV packages were introduced, and while consumers may not have been wowed by the offerings, many in the television industry worry a new era of consumer choice is going to hurt them.

Streaming services like Netflix are already hitting the traditional TV model and industry hard.

The work has dried up.– Guy O'Sullivan, president, Proper Television

"Canadian TV producers are, by and large, a very depressed bunch these days," said Guy O'Sullivan, who heads Proper Television based in Toronto. His company creates TV shows such as MasterChef Canada and Canada's Worst Driver and sells them to broadcasters.

On March 1 television cable providers were mandated by the CRTC to provide cheaper basic TV packages for consumers.

It's not just the cable providers that appear to be feeling the pain of this change. For program creators like O'Sullivan, even the lead-up to this new rule created a lot of uncertainty.

"The work has dried up. So that's been the short-term impact. And that's had a pretty dramatic impact on people in my industry," he said. "The last 12 months have been really quiet."

Guy O'Sullivan, president of Proper Television, says the pick-and-pay model is forcing the industry to be more creative. (CBC)

Anticipating a world with fewer channels and fewer shows on those channels, content creators are feeling the pressure to get even more creative.

"I think the opportunity for people like me is to make really big, bold shows that help define those channels in the big pick-and-pay universe. But overall our industry is shrinking," said O'Sullivan.

Cable will be fine, but program creators hurt

The international credit rating agency Moody's released a report last week looking at the potential effects of these changes.

"We think that the television content companies rather than the distributors will pay the price for greater consumer choice," wrote the report authors. "Eventually they would have had to do so to compete with internet streaming, but the pick-and-pay initiative accelerates this process."

Others who study the industry say it may be too early to judge the effects of the skinny basic and pick-and-pay options. Cable companies have until December 2016 to offer all channels on a pick-and-pay basis, and it's unclear how many people will switch their packages.

I don't think people will be using cable remotes in 10 years.–Irene  Berkowitz , Ryerson University

"I think it will be months, if not longer, years before we know the impact of pick-and-pay," said Irene Berkowitz, who teaches television regulation at Ryerson University's Ted Rogers School of Management.

What is clear is that the way people view content is shifting and the entire television industry is scrambling to keep up.

Streaming taking over

"The funding of our Canadian content system has been based for nearly 50 years on the health of the cable sector," said Berkowitz. "I don't think people will be using cable remotes in 10 years and I think online delivery is going to be the norm."

Leonard Asper likes the new pick-and-pay model. He is the president and CEO of Anthem Sports and Entertainment, which owns specialty channels like the Fight Network and the FNTSY Sports Network.

"For us the problem with the old cable system is a person had to buy $150 worth of cable in order to get to the channel they wanted," said Asper. With pick-and-pay, "you don't force the consumer to buy a bunch of stuff they don't want in order to get what they do want."

Leonard Asper, owner of Anthem Sports & Entertainment, believes that in order for channels to survive they must think globally. (CBC)

Asper, whose family built and then lost media giant Canwest Global, said that, as with the invention of the remote control or the VCR, pick-and-pay isn't the end of TV, but it will shake things up.

"Deregulation of the television industry plus the digital world is really making it so that finally the people who have great content are going to be the winners and people who don't won't be able to freeload along with the system," said Asper.

In order to survive in this quickly changing world of broadcasting, Asper and his company are thinking globally and going beyond borders and traditional ways of delivering content to viewers. His programming is also available on YouTube, social media, other digital platforms and on cable in the U.S. and Europe.

"You have to own global rights to your content, and not only the television rights, but the digital rights, and you can't be restricted by these territorial programming deals," said Asper.

Canadian content at risk

According to the CRTC, about $4.1 billion is spent on Canadian programming every year. Some comes from various government programs, but the bulk, $2.8 billion, comes from the broadcasting system itself.

All of that spending has long been designed to ensure that Canadian voices and stories have a prominent place in the TV industry.

A recent report by consulting firm Nordicity, which was commissioned by unions and advocacy groups, lays out concerns that these changes could mean less money to invest in Canadian content creation. The report estimates the new rules will cost the industry nearly 7,000 jobs and $400 million by 2020.

That's just an estimate. With the TV industry in the midst of historic change, neither broadcasters nor content creators can say what effect pick-and-pay will have. 


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