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Wednesday, May 27, 2009

The Thick, Black Line (Part 3)

Alrighty - just punched out that lil' voice in the back of my head, lets get rolling.

If you haven't had the chance, read: Part 1 and Part 2.

Annd right off the hop:

MS. WILLIAMS (Pg. 151-2): "...And, if anything, the more successful you are with that foreign budget, the more opportunity you have to fight later to grow that Canadian budget. And there are many of us in this business who are fighting all the time to make as much as we can, so that we can be successful with our Canadian. But the frustration that we have with the community is -- I don't think they believe how much people like Christine and me and our teams -- how hard we are trying." [REDACTED 1/3 page] "The whole success of the whole schedule is rooted in a handful of shows in prime time, and the Canadian community -- they need to be on our side for this." [REDACTED 1/2 page]

*** My Note: And you know, I'm sure there's a lot of people trying very hard - it's not one big jumbled bag of Anti-Canadian evil over there. At the same time, I wonder how many shows have been produced - money spent and gone - that are sitting there gathering dust on the shelves, unseen, simply because airtime can't be found - because House or Fringe or some other show is guaranteed to make more ad revenue. Here's an idea for Canwest, should they pull themselves out of the gutter/Danger Zone: Come back more Canadian than the CBC, buy up all those great unaired Canadian TV shows - shows like Sanctuary - and air the hell out of them. Give them a real push, be on the vanguard of showing the awesomeness that is Canadian TV when it's allowed to be seen. I will seriously come over there and hug you if I can see ZOS at 9 or 10pm on your station (talk to TMN, I'm sure they'll be friendly enough... right, folks?).

Interesting:

THE CHAIRPERSON (Page 161): "... Then let's turn to the "E!"s. I looked at them and I must say that I was absolutely shocked by the figures, and I guess I have two questions. Number one, when you originally bought them, you obviously thought this would be the second chain from which you could -- it didn't work out that way, but the numbers are so incredible negative and they keep getting worse every single year. Last year it was less worse in 2005, but then 2006 it went back. So I guess the simple question is: How come it took you so long to figure out that this is a sinking ship?"

MR. PETER VINER (Page 161-2): [REDACTED] You know, what happens, you get corporate attachments to things. You are optomistic, you think you can do it. It is very difficult and, you know, we have had -- it is sometimes very difficult to bring yourself to the conclusion that, you know, these things are never going to work. You know, we are hoping, you know, for other changes, but just -- you are right, it's been a long time coming.

THE CHAIRPERSON (Page 162): Even if we had given you fee for carriage the first time around, this wouldn't have saved the "E!"s, as far as I can see, given these numbers.

*** Personally, I've never watched any of the E! channels... and I don't know anyone who regularly does. I thought it was a weird brand when I first saw it - sure, I liked the E! True Hollywood Stories, but did it really deserve its own channel? At least Star! was somewhat Canadian (even though I rarely watched that channel either). That said, I do have somewhat fond memories of being in the audience for an episode of "Because I Said So with Maggie Cassella".

MR. AKMAN (Page 167): What you would see if you ran the same categories for 2007 would be a deeper loss for local news, which has been mitigated by some of the cost cutting initiatives Chris spoke to.

THE CHAIRPERSON (Page 167): Yes

MR. AKMAN (Page 168): You would see a similar position for national news. You would see a deeper loss for non-news Cancon because of the synergies that Barb has been speaking about, and you would see a higher profit for foreign. So what keeps us up at night is taht none of those first three categories will ever make a profit, and the only category that is making a profit is getting squeezed more each year.

THE CHAIRPERSON (Page 168): We, what assurance do we have, then, that if you get some help from us that you wouldn't spend that on foreign acquisition, because that is clearly where you get the biggest return for your money rather than reducing your losses?

MS. WILLIAMS: [REDACTED 1 1/4 pages]

MR. PETER VINER (Page 170): Yes. I think, too, you know, we will have to arrive at a -- mutually arrive at a mechanism that makes sense, whether it's local hours in the market, whether it's some other form, something closer akin to a specialty network. I think it is not an unreasonable request.

THE CHAIRPERSON (Page 170): Yes. I think you should put your creative minds to it, because you are telling me, look, if we don't get fee for carriage or something like that, we are dust. And if you convince me of that, sure you have to somehow give me some assurance that the money that you will get will not all be used for foreign purchases. That is the flipside, you know. If we buy your argument and we find a way of giving you relief, we have to be able to assure that, you know, it is being used for the objectives of the Broadcasting Act.

*** A whole lot of stuff going on here - probably the biggest being the not-so-subtle undercurrent of 'Hey, we're afraid we're going to give you money and you're going to blow it on American shows' coming from The Chairperson. I wonder where such a fear would come from? Surely that's never happened before, right? (I'm not even sure if I'm being facetious here or not... :S)

COMMISSIONER KATZ (Page 192): ... I think I heard, Mr. Viner, you say at the start of this, or maybe it was Ms. Williams, CTV is aligned with some studios, you are aligned with other studios for the most part, you are not aligned with Disney or whatever. Where is the competitive aspect of the purchasing?

MS. WILLIAMS (Page 192): It is not complete. We have a significant deal with FOX, but it's not that we own all the product from FOX. In fact, one of FOX's biggest shows, "American Idon," happens to be on CTV. So we tend to be a big buyer of FOX and we control, if you will, a lot of the FOX product but not all of it. Likewise, CTV has a big ongoing relationship with Disney but we still do buy "Extreme Makeover: Home Edition" and "Brothers & Sisters" from ABC. So it's not that they are exclusive.

COMMISSIONER KATZ (Page 192-3): So if you have the better relationship with FOX, do you have first right to the Channels?

MS. WILLIAMS: [REDACTED - also, a 1 page conversation between MS. WILLIAMS, MR. PETER VINER and COMMISSIONER KATZ]

COMMISSIONER KATZ (Page 194): So this notion that I keep reading about by other people saying that you and CTV and maybe City are bidding up the price of programming is not really true if you each have your own alignment with the studios?

MS. WILLIAMS (Page 194-5): Well, you see, when a new show comes, though, [REDACTED 1/4 page] So there is a lot of product still. Even outside of those bulk deals, there is a lot of product that we will all be vying for in the heat of the moment.

COMMISSIONER KATZ (Page 195): [REDACTED] do you each know each other's deals?

MS WILLIAMS (Page 195): No. But if you know theirs and you would like to tell me --

COMMISSIONER KATZ (Page 195): [REDACTED - 1/2 page conversation between COMMISSIONER KATZ, MS. WILLIAMS and MR. PETER VINER]

*** I wasn't sure how much of this to include, I was originally going to just start it off about them bidding each other up and all, but I figured it needed some semblance of context. Also, I was intrigued by the idea (yes, naive of me I know) that some studios would have certain American stations on lockdown. I know it makes sense that it would happen but it was so weird to hear it discussed openly like that. Also, since we're on the subject, I was intrigued by this little bit:

MS. WILLIAMS (Page 197): [REDACTED] Pete is exactly right, the real gain for the Canadian broadcasters happens after the U.S. networks have revealed their fall schedules, which happens just a couple of days ahead of the actual screenings, and it's only then you know where your simulcast opportunities are and those simulcast shows are what we really end up fighting over, especially if we both have the same hole in our schedule. [REDACTED - 1/2 page]

*** One positive thing about reading this document: I've realized that I'm really interested in how TV is run in this country; More from the perspective of a mechanic than a salesman. I'd be interested in learning how our system is supposed to work when everything's on the up and up - I mean, certainly the whole system wasn't designed broken, was it?

COMMISSIONER MOLNAR (Page 222): ... Forgive me if I cross the line here but we know that there are a lot of priorities for cash today within the Canwest family. You brought up the issue that there is a pretty thin cash flow margin with conventional television today. As we looked at these upsides and downsides, the potential cash flow margin going into next year gets tight and I would like to know how we could have assurance that commitments made for digital transition can in fact proceed. You mentioned they weren't approved yet.

MR. PETER VINER: Perhaps I can answer that. [REDACTED 1/2 page] in order for us to be competitive and in order for us to meet our licence commitments we will have to be HD and that will be factored in by the new capital, it I can call it that.

MS. DARLING: Perhaps I can just add that we are stretching our engineering minds to find all kinds of clever ways to save money with this implementation and do it really cost effectively. Certainly as I was speaking to the issue of contours the other day, that is a very important consideration for us.

*** This whole little bit jumped out at me purely from a techie perspective - in a 'red flag' sort of way. Very few people realize that, unlike standard video (NTSC, 480i) there really is no definitive 'HD standard' for broadcasting (yet! ATSC doesn't kick in here until August 31, 2011). Technically, 720p (instead of 1080i or 1080p) is considered 'HD' even though there's nothing saying that you HAVE to send it out at any particular resolution. Long and short of it: You may not be getting the 'HD' you think you're getting. Right now, the cream of the crop is 1080p - except that unless you've got a 50 inch or larger TV you're really not going to notice the difference between 1080i and 1080p.

SIDE NOTE: 'i' = 'interlaced' means your picture is broken up into two different pictures sent to your TV and deposited into 'fields'. This means lower bandwidth, but a less crisp picture. The 'p' = 'progressive scan' which means your picture is sent as one image and is deposited on your screen as is. It requires more bandwidth but results in a much cleaner picture. Essentially with 480i (regular TV) you're getting two 240 pictures that are slotted together. The 480, 720 and 1080 refer to the actual resolution of the picture, the amount of physical lines on of data that are displayed on your screen. 480 means there are 480 lines across your screen used in the creation of the picture you see. Same for 720 and 1080. The higher the number, the crisper/better the picture. You should also note that 720p is a better quality than 1080i (you're getting 2 pictures at 540, slotted together, compared to one picture at 720).

Aaaanyway, I digress.

*** Back from side note: All this comes around to say that if you're looking to save money as a broadcaster, the simplest and easiest 'engineering' route to take would be to send out the signal at a degraded quality. Most people with a TV of less than 32 inches - especially those with no idea of what their signal SHOULD look like - would be hard pressed to tell the difference between a digital 480p and 720p signal... unless they're side-by-side, I mean. (That being said, there's still a large swath of the populace that believes that just cause you've got an HD TV set, you've got HD TV). Now, to be clear, I'm not saying that THAT's what anyone is going to do... but hey, if you're looking to save money and make it appear like you're jumping over to the HD ball, that'd be one hell of a way to do it.

ANOTHER SIDE NOTE: Just so you know though, 480p is known as 'ED' - 'Enhanced Definition'. So if you see a TV being sold as 'ED compatible' stay the hell away from it, it's a sneaky ploy to get people to buy a cheap TV thinking they're getting HD.

Right. Sorry, got off on a bit of a rant there...

THE CHAIRPERSON (Page 240): "Okay. Well, thank you very much for these in-camera discussions. I think they give us a better idea of where you are going, what challenges you are facing. Ms Williams, I especially thank you for walking me through the intricacy of contract negotiations with Hollywood, which we were ignorant of. Now, when we started off this hearing you will remember I gave you these numbers here on fee for carriage and I expect to get something back from you just so we know we are all talking the same thing. You have put the fee for carriage forward basically as a panacea to everything. We haven't talked about it here because we twice went into it and it is becoming a bit of the dialogue of the deaf.

As I mentioned at the outset, the way the CBC looks at it, there are three different issues: like the subsidy for local programming, which would be done through LPIF or a mechanism like that, it is a subsidy issue; a system integrity issue, which obviously if you wanted to address it, it has to be through regulatory means; and then also the whole issue if you being compensated for the value of your product. The way you approach it is you want us to set a rate to solve your problems. That is what all the submissions have been so far and I wonder whether you shouldn't try to think of it differently.

This is really something that you have to negotiate with the BDUs and maybe you need regulatory help in order to do decent negotiations so that you approach the issue with equal leverage, et cetera. We can talk about that or it may be a negotiation which leads nowhere and winds up in arbitration before us and basically both of you come forward with a number and we pick one of the two. But I think we need a different approach to this whole issue. We will have to revisit it obviously before 2010 but I would encourage you very much to not try to come forward with a reiteration of the old, which we have now twice turned down, but look at it from in effect these are three different categories and how do we deal with them and how we view them as an industry solution and if necessary it will be sanctioned by us rather than as it is right now, basically asking us to find a rate and impose it."

*** I didn't know that the CRTC was unaware of how negotiations with Hollywood went... I'm not sure why, but I figured they would know/understant that process. That said, there's a lot of very strong language here - much of it of the 'why are you bringing us the same old crap we already told you no about' variety. I really wish that less of this document had been redacted - I do wonder how much of it truly needed to be.

All-in-all, I've found that a measured but palpable sense of frustration seems to be running through out this document - from all sides. Given the circumstances, I'm sure I'm stating the obvious, but it really is a weird sensation to be reading along, having to skip pages at a time, but still feeling the sense of tension carrying through.

I'm really interested in seeing the events that spring forward from this document - and while it is a bit of a slog a times (there's a fair bit of jargon in here), I highly recommend that any TV writer looking to work in Canada have a read through this as it's a peek into the window of what's coming down the line for our industry.

Anyways, has anyone else taken the time to read the full document? (or made it through all 3 parts of this post?) I'd love to hear your thoughts on all that's going on right now.

Cheers,
Brandon

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