Finance

Canadian Skinny TV Experiment Kicks Off

Skeptical Reviews Greet Mandatory Sub-C$25 Packages 3/01/2016 6:00 PM Eastern
Image from Canada's television regulator's page explaining the new programming rules.
Canadian Radio-television and Telecommunications Commission
TakeAway

Phase one of Canada's move toward real a la carte programming choices in pay TV begins before a skeptical audience.

The Canadian government’s mandate to force pay TV providers to offer a sub-$25 (Canadian) monthly skinny bundle to consumers was expected to lay the groundwork for a full a la carte offering. But on day one, the slimmed-down TV packages have drawn a skeptical reaction in media reports. 

 

Last year the Canadian Radio-television and Telecommunications Commission (CRTC) ruled that cable and satellite TV providers had to offer a slimmed-down package of programming priced at a maximum of C$25 (about $18.75 U.S.) per month. The providers also had to offer some channels a la carte and through smaller bundles at various price points.

 

The deadline for offering these packages was March 1. By December, providers have to offer a full a la carte offering.

 

But according to reports in the Canadian press, the so-called skinny packages are laden with over-the-air broadcast networks and scarcely watched channels. Viewers who are looking for slimmed down packages of their favorite channels are probably better off sticking with their current packages or paying more for additional programming packs.

 

The Canadian skinny bundle situation is being watched by U.S. providers eager to create more flexible programming packages to appeal to cost-conscious consumers. Cable providers in the National Cable Television Cooperative and the American Cable Association -- the ACA is holding its annual policy summit in Washington, D.C., this week -- have said they hope a current inquiry by the Federal Communications Commission will address programmer-contract terms that the providers say makes it harder for them to create (or maintain) low-cost TV bundles. 

 

At a Morgan Stanley conference in San Francisco Tuesday, Charter Communications CEO Tom Rutledge said about 95% of new connects take the full expanded basic package. While he agrees that programming has become too expensive for some consumers, he said that is largely due to programmers who have become used to placing their more desirable channels in bundles with less watched fare. Breaking up that bundle would mean taking in less money in carriage fees. “Because of where they sit, it’s not easy for them to embrace their packages falling apart,” Rutledge said.

 

U.S. pay-TV providers for years have offered so-called family tiers of programming that typically have not been popular with consumers because of the programming that's absent from them. Those offerings also typically aren't heavily marketed -- and CBC News reported that Bell Canada has told employees "do not promote" the new C$24.95 Starter TV package. "There will be no advertising, and this package should only be discussed if the customer initiates the conversation," the story quoted an internal document at the company as stating. Reuters also reported a critic said Canadian big telecom companies were "trying to strangle the C$25 package at birth."

 

All the major Canadian pay TV operators have complied with the mandate: here is a CBC News breakdown of the various offerings. The article opined, though, that many consumers could end up paying more for the programming they want, once other channel packages are added on to include sports networks and other content not included in the skinny base bundle. 

 

In an article Tuesday, the Vancouver Sun critiqued the skinny packages, coming to the conclusion that they would appeal mainly to people who only watch traditional network television. The Sun pointed to Shaw Communications so-called Limited TV skinny bundle which offers 44 channels for C$25 per month. Included in that package are the four U.S. broadcasters (ABC, NBC, CBS and Fox) and Canadian and French channels including CBC, CTV, K: and Unis TV.

 

Sports fans will have to shell out another C$14 per month for TSN (the exclusive carrier of the Canadian Football League) and  Sportsnet (which carries National Hockey League games).

 

Shaw and Quebec's Videotron were the only two major Canadian pay TV providers to promote the mandated skinny bundles prior to the deadline. In a statement, Shaw said it posted the new packages on its website in mid-February, including the Small Theme Packs that can also be combined with its existing TV packages

 

“Limited TV and the new Small Theme Packs have been available since February 17, 2016,” Shaw said in a statement. “In all cases, pre-existing packaging has been maintained and there is no need for current customers to make any decisions or changes to their subscription.”

 

Canada’s other major cable provider, Rogers Communications, began offering its Starter TV package on March 1. It includes about 30 channels. "While it’s too early to comment on any numbers, we are pleased to be offering people even more choice, on top of the dozens of bundles and individual channels we already offer,” Rogers Communications senior director of public affairs Aaron Lazarus said in a statement.

 

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