In February both CTV and Canwest Global reported massive financial write downs. They joined Rogers Cable as money losers. Rogers shocked the markets by losing over $100 million in just one quarter. CTV expects to lose $100 million this year. Canwest is losing $28 million per quarter.
The CBC is also reporting a deficit for the year at $30 million, but it is a fraction of what the private broadcasters have reported.
Over the past 10 years, CTV, Canwest Global and Rogers have embarked on an ambitious national expansion, buying what they call "properties" for inflated prices, and then trying to integrate these "properties" into unrelated businesses. Instead of sticking to the fundamentals of their TV business, they have been building newspaper businesses, radio station business, Internet, satellite TV and telephone business.
Do all these businesses actually have enough in common to be managed together? Have they converged as the experts suggested they would?
No they haven't. With the single exception that one piece of wire can bring telephone and television and the Internet into the same home, there is no convergence. Radio for instance is a highly fragmented, local business, for which all revenues come solely from local advertising and with the exception of talk stations, all content is imported from other sources. The technology of radio hasn't changed much in 80 years. Newspapers are also local businesses. Network television is national in scope. And mobile telephony is unrelated to local and long distance land-based telephone.
A cell phone that can browse the Internet, send e-mails and take photos is sexy, especially when the bill is being paid by the employer or the bank of mom & dad. However the number of people using devices such as an iPhone and that are paying their own bill are negligible.
The really big stumble is the attempt of regional companies to remake themselves as national organizations by cobbling together vastly different businesses and cultures. The Canwest Global network, for instance, is a bizarre combination of completely unrelated local channels.
So how are these companies proposing to cover their losses. They want the regulator, the CRTC, to require the countries 4 cable operators to charge their clients fees to receive Canadian network television. The problem is that, with the exception of news and sports, nearly 100% of the content carried by CTV and Global are simply simulcasts of US television programming, for which we are already paying the cable company to receive.
Why would I pay an additional $10 per month to watch US shows on Canadian networks?
With respect to the Canadian networks, I watch absolutely nothing on CTV and Global except for US shows which I am also paying to receive on cable.
Please don't get me started on Rogers. I started off as a Rogers cable subscriber in 1985, paying $18 per month for cable TV and pay channels that did not carry commercials. Exactly the same service now costs $55 per month, and the pay channels carry commercials!!
What would I do?
1. Merge Global and CTV and require them to produce local content while divesting themselves of radio and newspaper assets
2. Regulate mobile telephony
3. Treat Rogers cable and other cable companies as utilities, with a business solely devoted on carrying signals, but producing content, not producing services.
By the way, in some places in Canada, nothing needs to be done. Shaw Communications, for instance, is in solid financial shape. Shaw's approach is simple. Its focus is on carrying content, not selling phones, nor producing television content, nor running radio and newspaper. Videotron in Quebec is also in solid financial shape.
No comments:
Post a Comment