gunsmoke2
May 1st, 2002, 09:10 PM
Matthew Fraser
Financial Post
Media mogul Rupert Murdoch famously declared that satellite television represents an "unambiguous threat to totalitarian regimes everywhere."
Mr. Murdoch -- whose satellite TV systems span much of the planet -- was right. The world's most detestable tyrants, presidents-for-life and ayatollahs rail hysterically against the onslaught of free-flowing information sprayed down on their populations from high-power satellites.
Mr. Murdoch could not have predicted, though, he'd be proven right by the West's last remaining authoritarian regime in broadcasting: Canada.
Friday's Supreme Court's ruling against "grey market" satellite TV operators has put Canada in the fine company of North Korea and assorted neo-medieval Islamic theocracies. Yet, while Ottawa is cracking down on foreign satellite signals, even Iran has reformed its Mad Mullah ban on satellite dishes.
Canada's satellite TV saga provides a textbook case study of how, in the closed Ottawa world of regulation-protected broadcasters, whenever commercial stakes clash with cherished principles, economic interests invariably win.
It's worth decoding these Byzantine intrigues, for this tortured saga has yet to run its course.
First, it's necessary to distinguish the so-called "grey" market from the "black" market. There has been a deliberate, and clever, blurring of the two by powerful lobbies.
The "black" market is the sale of "hacked" encryption cards that allow consumers to pick up signals from any satellite service without paying. The "grey" market is the purchase of dish-receivers for foreign satellite TV services -- notably DirecTV -- by resident Canadians who pay a monthly subscription fee.
Legal issues about the "black" market are not unique to Canada. Techno-savvy hackers are always two steps ahead of TV encryption technology. Most jurisdictions have asserted that using "hacked" cards constitutes theft.
In this respect, the Supreme Court's ruling was not egregious. It's the court's ruling on the "grey" market that is contestable, for it offends fundamental freedoms.
DirecTV finds itself in a curious conflict over the "grey" market controversy. DirecTV has a financial interest in closing down the "black" market -- in the United States and Canada. Which explains why, in Canada, DirecTV made common legal cause with a clique of large-scale Canadian firms, including Bell ExpressVu and Star Choice.
But DirecTV also has a compelling financial interest in growing its "grey" market subscription base in Canada. DirecTV knows, moreover, that Bell ExpressVu and Star Choice discreetly promote their own "grey" markets by selling services in northern American states.
Thus, the commercial hypocrisy is bilateral: They are all publicly against the "grey" market, but none shuns "grey" market revenues.
DirecTV first attempted to operate legally in Canada in the early 1990s, but got sandbagged by the Canadian Radio-television and Telecommunications Commission. DirecTV later partnered with Power Corp. of Canada, but Power DirecTV also met CRTC resistance.
Why? Because DirecTV carried a number of banned U.S. channels, such as MTV and Home Box Office. The CRTC banned HBO because it had authorized a Canadian-based channel, The Movie Network, as a monopoly middleman for HBO product. TMN, coincidentally, was owned by Astral Media Inc., whose president, André Bureau, happened to be a former CRTC chairman.
The CRTC's rationale for its HBO ban is that TMN owns Canadian "territorial rights" for HBO programs. DirecTV -- which like all satellite systems is transborder -- is allegedly violating those rights by beaming HBO to its Canadian subscribers. But what if HBO and Hollywood studios simply stopped selling product to TMN, or sold non-exclusive rights? There would be no Canadian commercial rights to violate.
But the CRTC, unable to counter that argument, falls back on a "cultural" rationale for TMN's monopoly: TMN kicks back cross-subsidies for Canadian content -- monopoly rents that, in theory, cannot be extracted from U.S.-based DirecTV. Yet that rationale, too, is without foundation: Hollywood studios invest more in movie production in Canada than the CRTC will ever extract from Astral Media.
Canadian cable barons, meanwhile, have discreetly supported the CRTC's anti-DirecTV posture because DirecTV poses a more powerful "death star" threat than ExpressVu and Star Choice. But the cable industry's position contains one telling nuance: If DirecTV is allowed into Canada, they will also demand the right to carry HBO, Showtime and other banned American channels. Goodbye, TMN. Goodbye, CRTC.
In this complex saga of hardball politics, major Canadian broadcasting interests easily co-opted Ottawa's complicity, because their political clout far outweighs that of unsophisticated mom-and-pop dish retailers. Still, the retailers kept winning legal challenges before provincial courts. On Friday, however, they finally lost before the Supreme Court of Canada.
Yet the Supreme Court ruling was guided by statutes -- the same laws whose drafting was heavily influenced by the cabal of powerful lobbies that boast direct pipelines into the Heritage and Industry ministries.
Now it appears there will be a constitutional challenge on the grounds that the law inhibits fundamental freedoms.
Canada's Constitution, it can reasonably be expected, will prevail over commercial interests of powerful lobbies who, defending their quasi-monopoly privileges, have shrewdly exploited regulatory and statutory levers to tarnish with the stigma of illegality the mundane gesture of subscribing to a foreign satellite TV service.
If the constitutional challenge fails, however, totalitarian regimes everywhere will praise Canada as a model for the world.
mwfraser@rogers.com
GS2
Financial Post
Media mogul Rupert Murdoch famously declared that satellite television represents an "unambiguous threat to totalitarian regimes everywhere."
Mr. Murdoch -- whose satellite TV systems span much of the planet -- was right. The world's most detestable tyrants, presidents-for-life and ayatollahs rail hysterically against the onslaught of free-flowing information sprayed down on their populations from high-power satellites.
Mr. Murdoch could not have predicted, though, he'd be proven right by the West's last remaining authoritarian regime in broadcasting: Canada.
Friday's Supreme Court's ruling against "grey market" satellite TV operators has put Canada in the fine company of North Korea and assorted neo-medieval Islamic theocracies. Yet, while Ottawa is cracking down on foreign satellite signals, even Iran has reformed its Mad Mullah ban on satellite dishes.
Canada's satellite TV saga provides a textbook case study of how, in the closed Ottawa world of regulation-protected broadcasters, whenever commercial stakes clash with cherished principles, economic interests invariably win.
It's worth decoding these Byzantine intrigues, for this tortured saga has yet to run its course.
First, it's necessary to distinguish the so-called "grey" market from the "black" market. There has been a deliberate, and clever, blurring of the two by powerful lobbies.
The "black" market is the sale of "hacked" encryption cards that allow consumers to pick up signals from any satellite service without paying. The "grey" market is the purchase of dish-receivers for foreign satellite TV services -- notably DirecTV -- by resident Canadians who pay a monthly subscription fee.
Legal issues about the "black" market are not unique to Canada. Techno-savvy hackers are always two steps ahead of TV encryption technology. Most jurisdictions have asserted that using "hacked" cards constitutes theft.
In this respect, the Supreme Court's ruling was not egregious. It's the court's ruling on the "grey" market that is contestable, for it offends fundamental freedoms.
DirecTV finds itself in a curious conflict over the "grey" market controversy. DirecTV has a financial interest in closing down the "black" market -- in the United States and Canada. Which explains why, in Canada, DirecTV made common legal cause with a clique of large-scale Canadian firms, including Bell ExpressVu and Star Choice.
But DirecTV also has a compelling financial interest in growing its "grey" market subscription base in Canada. DirecTV knows, moreover, that Bell ExpressVu and Star Choice discreetly promote their own "grey" markets by selling services in northern American states.
Thus, the commercial hypocrisy is bilateral: They are all publicly against the "grey" market, but none shuns "grey" market revenues.
DirecTV first attempted to operate legally in Canada in the early 1990s, but got sandbagged by the Canadian Radio-television and Telecommunications Commission. DirecTV later partnered with Power Corp. of Canada, but Power DirecTV also met CRTC resistance.
Why? Because DirecTV carried a number of banned U.S. channels, such as MTV and Home Box Office. The CRTC banned HBO because it had authorized a Canadian-based channel, The Movie Network, as a monopoly middleman for HBO product. TMN, coincidentally, was owned by Astral Media Inc., whose president, André Bureau, happened to be a former CRTC chairman.
The CRTC's rationale for its HBO ban is that TMN owns Canadian "territorial rights" for HBO programs. DirecTV -- which like all satellite systems is transborder -- is allegedly violating those rights by beaming HBO to its Canadian subscribers. But what if HBO and Hollywood studios simply stopped selling product to TMN, or sold non-exclusive rights? There would be no Canadian commercial rights to violate.
But the CRTC, unable to counter that argument, falls back on a "cultural" rationale for TMN's monopoly: TMN kicks back cross-subsidies for Canadian content -- monopoly rents that, in theory, cannot be extracted from U.S.-based DirecTV. Yet that rationale, too, is without foundation: Hollywood studios invest more in movie production in Canada than the CRTC will ever extract from Astral Media.
Canadian cable barons, meanwhile, have discreetly supported the CRTC's anti-DirecTV posture because DirecTV poses a more powerful "death star" threat than ExpressVu and Star Choice. But the cable industry's position contains one telling nuance: If DirecTV is allowed into Canada, they will also demand the right to carry HBO, Showtime and other banned American channels. Goodbye, TMN. Goodbye, CRTC.
In this complex saga of hardball politics, major Canadian broadcasting interests easily co-opted Ottawa's complicity, because their political clout far outweighs that of unsophisticated mom-and-pop dish retailers. Still, the retailers kept winning legal challenges before provincial courts. On Friday, however, they finally lost before the Supreme Court of Canada.
Yet the Supreme Court ruling was guided by statutes -- the same laws whose drafting was heavily influenced by the cabal of powerful lobbies that boast direct pipelines into the Heritage and Industry ministries.
Now it appears there will be a constitutional challenge on the grounds that the law inhibits fundamental freedoms.
Canada's Constitution, it can reasonably be expected, will prevail over commercial interests of powerful lobbies who, defending their quasi-monopoly privileges, have shrewdly exploited regulatory and statutory levers to tarnish with the stigma of illegality the mundane gesture of subscribing to a foreign satellite TV service.
If the constitutional challenge fails, however, totalitarian regimes everywhere will praise Canada as a model for the world.
mwfraser@rogers.com
GS2