Reluctantly siding with the cable companies

Ask Canadians to pick between broadcast conglomerates and cable companies and they're likely to throw up a little in their mouths and pick none of the above. Both sides are fighting for our affections at the moment, using money they don't have, to convince us of the righteousness of their sides. Ironically, we're funding both sides of this battle for our love.

Here's the latest salvo from the broadcasters, via CTV:

A majority of Canadians believe local television stations should receive a portion of what consumers pay monthly to their cable companies, according to a new poll.

Seventy-two per cent of those who took part in a Nanos Research study agreed, when asked whether "the government should force the cable companies and broadcasters to negotiate payment for local TV signals."

Fifty-seven per cent agreed when asked whether they believe local TV stations will close, "if cable companies don't pay for the local TV signals."

Due respect to Nik Nanos, but I'm skeptical. But then again, the broadcasters certainly have the resources to shape public opinion, don't they?

Anyway, I guess I'm in the minority according to those numbers but I'm siding with the cable companies on this one.

The business model is fairly simple: broadcasters purchase and produce content, and sell advertising to pay for it. Cable companies build a delivery infrastructure, broadcast the content and deliver the content to subscribers.

The two groups need each other, and the cable companies aren't leeching off the broadcasters as the broadcasters contend. If it wasn't for the cable companies, no one would be getting the content the broadcasters produce. No audience means no advertisers, meaning no revenue and therefore no business. The cable companies provide the delivery infrastructure to provide an audience for the broadcaster's content, and that requires significant investment.

So the broadcasters provide cable companies with content, and the cable companies provide the broadcasters with an audience. They need each other.

Now, it's easy to argue that, on one level, its unfair for the cable companies to get the broadcasters' content for free, and they should pay a fee. Sure, why not. One could also argue then that cable companies should charge a fee for carrying the broadcaster's content over their delivery infrastructure. Or how about higher fees for better placement on the dial?

Where will it end? Because, at the end of the day, the money all comes from the same place: Canadian television viewers.

And this is nothing to do with local TV, that's a complete red-herring. For broadcasters like CTV, local content is a mandated minimum by the CRTC that they grudgingly supply as cheaply as possible. None of this money they want will go toward local TV. It's just a convinient rallying cry.

This is about the changing business models that are impacting broadcasters just the same as it's impacting print media. It's about fragmented audiences in a 1000 channel universe sharing a shrinking advertising pie, and its about legacy broadcasters that haven't adjusted their business models from the days when TVs actually had dials.

Squeezing more money out of Canadians is not the answer. Re-thinking your business model is. Ironically, more local content may indeed be the answer. But pay for it not by tax increases, but by not spending gazillions on imported American programming. Get lean, get mean, know your audience and focus. That's the future.

There may not be room for legacy broadcast networks in the new television universe. They'll adapt and survive or they'll die, and the world will keep on turning.

In the mean time, I'm reluctantly siding with the cable companies on this one. Hands off my wallet

Recommend this Post on Progressive Bloggers