It’s going to be a hot fall for Canadian broadcasters – and not just because of the new season launch. Additional heat will be generated by a furious debate over three new proposals before the CRTC that could turn Canada’s broadcast marketplace upside down.

The newest proposal, recently filed by the Canadian Cable Television Association (CCTA), requests the addition of 29 U.S. specialty services to the list of eligible non-Canadian services carried in Canada. This would be a big blow to the many Canadian broadcasters and specialty services that already buy a lot of their programming from the channels on the CCTA list.

CCTA filed applications with the CRTC earlier this year to have other foreign and HDTV services added to the list of services available to cable operators. Along with the recent applications, that’s a total of almost 50 new channels.

The two other proposals, one filed by the CCTA and the other by Toronto’s 49th Media (a new venture helmed by broadcast veteran Kevin Shea) are designed to provide more advertising avails to the Canadian marketplace. These proposals are expected to be open for public comment and interventions early this fall.

In particular, the CCTA is looking for a policy change that would allow cable operators to sell local and regional advertising on American specialty channels in the two minutes per hour they currently use to promote Canadian services and programming. This would open up a lot of new inventory if the proposal allowing 29 more U.S. specialties into Canada were approved.

Janet Yale, president and CEO of the CCTA, says the cable industry gets the two minutes per hour avail time when the affiliation agreements with U.S. services are made. What is at issue is the CRTC policy with respect to how those avails are used.

‘There are no commercial issues. We’re just not free to take full advantage of the minutes we purchase when we negotiate with U.S. services. We think it’s a good proposal and we think it’s time to change the policy.’

Yale adds that if the proposal is accepted, it will benefit not only the broadcast distribution undertakings, but the whole Canadian production community. ‘We think there will be benefits in terms of our ability to use these additional revenues to upgrade our plants [and] make investments in the system which is a benefit to consumers. Similarly, to make a contribution to the Canadian Television Fund (CTF) is a benefit to the broadcasters and producers who are complaining about cuts to the fund this year.’

Meanwhile, 49th Media is applying for a licence to operate a satellite relay distribution undertaking (SRDU) to downlink the satellite feed of five of the top U.S. specialty channels, insert national Canadian advertising, and then uplink back to the satellite for program delivery to Canadian cable and satellite broadcast distributors.

Both advertising applications include a component allotting 25% of the revenue earned from ad sales to the Canadian Television Fund to help compensate for $25 million in government cutbacks.

Shea says 49th Media, in preparing its submission, contracted an extensive analysis of Canadian advertising that indicated if you introduce more inventory, the total advertising pie would grow.

‘The [Canadian] broadcasters are going to say this will cause disruption, but the upshot here is that one day the rules may change, and the Americans will simply create a separate feed for Canadians and directly sell advertising in Canada. If we look around the world, that’s exactly what some satellite providers have done. There are now separate feeds of the top five cable channels that carry separate advertising to Ireland, Italy, and Spain, so the model already exists.’

The U.S. specialty channels the company is hoping to work with are: CNN, TLC, TBS, TNN, and A&E. Shea hasn’t signed any of them as yet but says the channels are definitely interested in partnering.

The Association of Canadian Advertisers (ACA) gives a thumbs up to the 49th Media submission, but will not support the CCTA application. Bob Reaume, the ACA’s VP media and research, says the channels in 49th Media’s proposal all have large Canadian audiences and that Canadian advertisers should have access to those audiences.

‘The plan has a lot of merit and allows us to reach a lot of Canadian viewing that slips through our hands and goes south. We like this proposal because we would like more advertising opportunities. The Sunday movie on TBS averages a half a million Canadian viewers. Larry King Live [on CNN] averages almost a quarter of a million and Biography [on A&E] is about 330,000. Canadian broadcasters have chosen not to purchase Canadian rights to these shows. Why shouldn’t we have access to that wholly Canadian audience?’

On the other hand, Reaume says the CCTA application asks the CRTC to make a fundamental shift in policy, one that may not be in the best interest of Canadian advertisers.

‘Up until now, the CRTC has treated cable companies more like utilities – that is, they are distributors and not the content producers or sales agents,’ he says. ‘For the CRTC to grant that [application] would be a policy change.’

But according to the Canadian Association of Broadcasters (CAB), if any of the submissions get CRTC approval, there will be serious consequences for the Canadian broadcasting system overall.

Glenn O’Farrell, president and CEO of the CAB, fears the CCTA is viewing the future of the cable business as one of selling advertising minutes rather than fulfilling the original obligations of their licences as broadcast distributors.

As for the 49th Media concept, O’Farrell believes the market would be totally disrupted by the sheer magnitude of the flood of new advertising inventory, and worse, siphon more money into the coffers of U.S. signal owners that already take $200 million to $250 million out of the Canadian broadcast system each year via cable and satellite fees.

More importantly, O’Farrell says 49th Media’s proposal will open the door for a North American broadcasting system based out of the U.S.

‘Assume that the CRTC approves the submission, despite our objections. What then is stopping all the other American services distributed in Canada from demanding the same treatment?’

O’Farrell says there would then be nothing stopping any U.S. channel from directly selling Canadian airtime to Canadian advertisers – including any of the new services the CCTA wants to bring in – and broadcasting a separate Canadian signal, thus avoiding the taxes and costs of setting up an operation in this country. (Currently all CRTC-approved U.S. channels must be broadcast in Canada as they come from their source.)

‘If you look at the audience numbers of the total Canadian audience watching American programming on cable or satellite, and if all of a sudden those inventory minutes were available for direct sale, there would not be an awful lot left for a Canadian broadcasting system.’