French-language Pay-TV competition: cancelled due to lack of interest?

November 21, 2011

French-language television viewers hoping for the option of a second national pay-television channel will not be getting their wish anytime soon, as the CRTC recently announced that it would not open up the French-language general interest pay television service genre to competition due to a lack of applicants for a new service.

However, while closing a proceeding due to lack of applications seems understandable, the more interesting question may be why no such applications were forthcoming.

Currently, Super Écran is the only French-language general interest pay channel. It broadcasts primarily films and premium television series, making it comparable to English channels like The Movie Network and Movie Central, except that these English-language services are already subject to competition.

Following a long period of regional monopolies, the CRTC introduced competition to the English-language pay sector in 2006, by licensing SuperChannel, a new national general interest pay television service.   In licensing the new competing service, the Commission cited both the health of the existing pay licensees and the increase in support for Canadian programming that would result from competition.

Subsequently, in 2008, the CRTC also permitted competition between specialty services licensed for the genres of general interest sports and national news, including French-language services like Le Réseau des sports (RDS), Le Réseau de l’information (RDI) and Le Canal Nouvelles (LCN). 

However, at the same time, the Commission indicated that it would generally maintain its policy of programming genre exclusivity for most other pay and specialty services, unless convinced that a competitive environment would not significantly reduce either the diversity of services available to subscribers or the contribution of such services to the creation of Canadian programming.  To help determine the ability of a programming genre to sustain competition, the CRTC indicated it would consider the economic health of the existing services, the popularity of services, the availability of programming suitable for the genre, the existing diversity within a genre and other consequences that might result from relaxing genre exclusivity.

In 2010, the CRTC received an application to open the general interest pay television genre to competition in the French-language market.  Following a public proceeding, the Commission ultimately determined that the applicant had not demonstrated that opening up the genre to competition would serve the objective of providing consumers with greater diversity.  Although the Commission considered Super Écran to be both financially health and popular, the regulator expressed concern that the library of Canadian feature films was not large enough to support more than one service focused on recent box-office hits, and that two competing French-language services might needlessly compete for the rights to foreign - and particularly U.S. - feature films dubbed in French, driving up the amounts paid to foreign rights holders without benefitting Canadians.  Finally, the CRTC expressed concern about undue preference in favour of the proposed new licensee, which would have belonged to the same ownership group as the dominant broadcasting distribution undertaking in the French-language market.

At the same time as it denied this application, the CRTC announced that it would consider opening up the airwaves and allowing a second French-language pay channel to operate, on the condition that the potential new channel would provide programming complementary to, but not directly competitive with that provided by Super Écran – although the new service would also have been authorized to broadcast feature films. Applicants were also required to address a number of other issues, including how their proposed new channel would help achieve the objectives of the Broadcasting Act, particularly with respect to the production and exhibition of Canadian programming. 

In February 2011, a few short months after the CRTC’s initial call for applications for a “complementary” service, a lack of response to its initial call led the Commission to extend the application deadline and announce that it would even entertain applications for channels that would compete directly with Super Écran – despite its rejection of the idea only 3 months before. Unfortunately for the French-speaking television fans, even the CRTC’s more generous approach to potential applications was not enough to spark the interest of any broadcasters.

Observers can only speculate as to why there were no takers to either of the Commission’s calls for applications.  The “completition” approach initially proposed by the CRTC may simply not have been attractive to potential operators, particularly when targeted to Canada’s smaller French-language market.  Moreover, the Commission’s strong statements in its rejection of the 2010 application likely still resonated within the French language broadcasting industry, notwithstanding the CRTC’s apparent openness to reconsidering direct competition only a few months later.  In this regard, the concerns about undue preference that the Commission had expressed in 2010 may have been particularly off-putting to entrenched interests in the early part of 2011, as the CRTC was in the midst of a public proceeding to consider whether new safeguards and other requirements should be imposed on broadcasting ownership groups operating in both the programming and distribution sectors.  Those new safeguards were introduced earlier this fall.

Whatever the reason, the CRTC has now closed its consideration of the issue and Super Écran will remain the only French language pay-television channel for the time being.     

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