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Why Many Canadian TV Channels May Be Headed for the Chopping Block

Michael Geist Law RSS Feed - Thu, 2015/06/25 - 09:25

Appeared in the Toronto Star on June 20, 2015 as More Canadian TV Channels May Be on the Chopping Block

Rogers Media’s recent decision to slash 110 jobs and end all newscasts at OMNI, its multicultural channel, has sparked outrage among many ethnic communities, who have lamented the cancellation of local news programs in Italian, Punjabi, Cantonese, and Mandarin. Supporters argue that OMNI programming is essential to those communities and worry that the cancellations will mean that viewers become less politically engaged.

Last week, a House of Commons committee held a hearing on the OMNI cuts as members of Parliament from each party took Rogers executives to task. Rogers was unsurprisingly unapologetic, noting that the decision was based on simple economics as it pointed to declining advertising revenues that made the programming unsustainable.

Although MPs offered up a series of suggestions to stave off the cuts, the reality is that the changes at OMNI foreshadow a far bigger upheaval within the Canadian broadcasting world. Indeed, both the government (with its emphasis on pick-and-pay channels) and the Canadian Radio-television and Telecommunications Commission (with its TalkTV decision) have embraced change with the full knowledge that many channels will face elimination under the emerging framework.

Canadian broadcasters face at least three simultaneous pressures, creating a perfect storm that is likely to lead to many more cutbacks and cancellations.

First, channels reliant on highly profitable U.S. programming are finding that the audiences for reruns of previously popular shows are shrinking given their widespread availability from other sources, resulting in a major drop in advertising revenue. Rogers Media executive Keith Pelley told the House of Commons committee that OMNI advertising revenues had declined from $80 million to $22 million over the past four years. Profits from the U.S. shows had been used to subsidize money-losing Canadian programming, but with revenues dropping by tens of millions, that formula looks increasingly shaky.

Second, original Canadian programming may not fare well either. While critics have been vocal about the OMNI changes, Pelley revealed that ratings for the Italian language newscasts were down by 68 per cent over the past year.

With few people watching the programs – there are plenty of online alternatives – the audience is no longer there.

Shrinking audiences are likely to cause significant changes at conventional channels that rely solely on advertising revenues that are shifting to other media. But the biggest change within the Canadian broadcasting landscape will be among specialty channels that rely upon the bundling of channels to generate sizable subscription revenues despite small audiences.

As the accompanying chart illustrates, there is no shortage of channels that have thrived largely on the backs of those bundles to which consumers have been forced to subscribe as part of larger packages. That has yielded strong profits for Canadian broadcasters, but with pick-and-pay options on the way, the inability to generate advertising or audiences may mean those channels come to an end.

Subscriber Revenue (2014)
Advertising Revenue (2014)
Profit Margin
Book Television (BCE) $4,577,395 $29,525 66.0% 0 Cottage Life (Blue Ant) $3,913,117 $780,806 14.8% 0 Discovery Velocity (BCE) $24,772,293 $585,057 57.8% 2.5 Documentary (CBC) $6,277,020 $270,325 12.9% 8.5 ESPN Classic (BCE) $2,827,170 $208,014 34.9% 2 Fashion Television Channel (BCE) $4,511,730 $172,552 34.5% 1 G4 (Canada) (Rogers) $8,369,274 $959,159 47.8% 13 MTV2 (BCE) $4,955,132 $122,920 37.8% 0 Odyssey (formerly OTN) (Odyssey) $2,192,522 $229,462 21.6% 10 The Brand New ONE Body, Mind, Spirit, Love Channel (Zoomer) $4,604,750 $70,973 24.6% 17

For example, BCE’s Book Television garnered $4.5 million in subscriber fees in 2014, but only $29,525 in advertising revenue. Its profit margin was 66 per cent and it employed no staff. Book Television may sound like an anomaly, but it isn’t. BCE’s MTV2 generated $4.9 million in subscriber revenues with only $122,920 in advertising earnings and no staff, while a Zoomer channel garnered $4.6 million in subscriber revenues but only $70,973 in advertising dollars.

Pick-and-pay will not spell the end of all subscription-reliant channels, but with advertising revenues typically linked to viewership, many may no longer be viable. In fact, assuming Canadians opt for pick-and-pay and the trend toward watching Internet video continues, House of Commons hearings on the disappearing channels could become regular programming.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

The post Why Many Canadian TV Channels May Be Headed for the Chopping Block appeared first on Michael Geist.

Guess Who Claims Canadian Music May Go Silent Without Another Copyright Extension?

Michael Geist Law RSS Feed - Wed, 2015/06/24 - 09:34

The government’s gift to the recording industry wrapped up yesterday as Bill C-59 received royal assent and with it, the term of copyright for sound recordings was extended from 50 to 70 years. I’ve chronicled in detail how the extension of the copyright term without public consultation or discussion hurts Canadian consumers, reduces competition, and is a direct result of record label lobbying (surprise, cost to consumers, limited competition, reduced access to Canadian heritage, lobbying impact).

As an added bonus, groups have started to use the extension to argue that the government should also extend the term of copyright for authors from the current term of life plus an additional 50 years to life plus 70 years. Randy Bachman has an op-ed in the Globe and Mail today calling for a copyright term extension that must be read to be believed. The piece was not only a day late (he calls for the government to extend term in the same budget bill that already received royal assent), but contains some of the most absurd claims about copyright in recent memory.

The piece starts by suggesting that Canadian music may go silent if the government doesn’t extend the term of copyright. Bachman oddly cites as an example Glenn Gould, who died in 1982 and was best known as a performer with relatively few completed compositions. In fact, Gould’s best known works are performances of Bach and Brahms, works that are in the public domain. Obviously, neither Gould’s performance nor the Bach and Brahms works would be affected by Bachman’s proposed term extension.

To ensure that Canadian music doesn’t die, Bachman’s solution is to extend the term of copyright:

In the most recent federal budget, the government proposed to increase the length of copyright protection for sound recordings to 70 years from 50 years to be closer to international standards. This would be great if it also always covered the songwriters and composers who actually wrote the music, but it does not. It helps only those who performed on the recordings. The creators’ copyright protection is frozen at the life of the author plus 50 years. This would leave Canada lagging behind most other G20 countries, including the United States, the U.K., and almost all of the European Union.

Bachman neatly uses “70 years” to suggest that songwriters and composers are somehow mistreated in light of the extension for sound recordings to 70 years. Yet the reality is that songwriters and composers typically get far more than 70 years since their work is protected for their entire lives plus an additional 50 years.

In Bachman’s case, Takin’ Care of Business was written in 1973. That means it has already been protected for 42 years. It is entitled to another 50 years after Bachman dies, meaning that it is guaranteed to get at least 92 years of protection and the clock will hopefully continue to run for many more years for the 71 year old Bachman. Indeed, with the exception of Gould, the artists cited in Bachman’s op-ed (including Joni Mitchell, Neil Young, and Sarah McLachlan) will all have copyright protection on what they’ve written until at least 2065.

Not only does Bachman mislead on the term of protection, but in calling for international standards, he fails to note that the international standard for term of protection as found in the Berne Convention is life of the author plus 50 years (or exactly what Canada already provides).

While that alone would have been quite enough, to quote Bachman, you ain’t seen nothin’ yet. His piece concludes by again emphasizing the prospect of no further Canadian music:

Writing music that connects with people and evokes emotion takes work, passion and an unwavering focus, and carries a high risk of failure. Society should pay the creators what they have rightfully earned, so that a middle-class career (at least) can be the reward for solid songwriting skills, and so that they can keep creating – in Canada. Otherwise, Canadian music could stop being made.

Canadian law ensures that songwriters like Bachman maintain copyright protection for their entire lives plus their heirs benefit for another 50 years. It is difficult to see how that protection is insufficient to ensure that Canadian music is made. Does Bachman seriously believe that there are any Canadians songwriters, composers, or authors who would decide not to write because they receive copyright protection for their entire lives and their heirs get 50 years of protection rather than 70 years? Would Gould have completed his composition only if there was an extra 20 years of protection after he died? The claim is simply not credible.

While Bachman has proposed innovative copyright reforms in the past – he was an inaugural member of the Canadian Music Creators Coalition that opposed suing fans and he has supported a proposal for the legalization of file sharing – his support for term extension based on conjuring up implausible claims about the end of music is sad way for an acclaimed musician to celebrate a major lobbying victory that handed record labels millions at the expense of Canadian consumers.

The post Guess Who Claims Canadian Music May Go Silent Without Another Copyright Extension? appeared first on Michael Geist.

B.C. Court of Appeal Rules Facebook’s Fine Print Trumps Privacy Law

Michael Geist Law RSS Feed - Mon, 2015/06/22 - 10:05

One week after the B.C. Court of Appeal ruled that it could order Google to remove websites from its global index, the same court (but different judges) ruled that a privacy class action lawsuit against Facebook could not proceed in the province because the Facebook terms and conditions provide that all disputes must be resolved in a court in Santa Clara, California. The decision should provide a wake-up call to users and policy makers because an absolute approach to terms and conditions not only means that Canadian courts may be unable resolve consumer disputes involving companies like Facebook, but that Canadian law will not apply either.

The current Facebook terms and conditions state:

You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to this Statement or Facebook exclusively in the U.S. District Court for the Northern District of California or a state court located in San Mateo County, and you agree to submit to the personal jurisdiction of such courts for the purpose of litigating all such claims. The laws of the State of California will govern this Statement, as well as any claim that might arise between you and us, without regard to conflict of law provisions.

While this appears to be slightly different from the terms that governed the dispute before the B.C. courts (it referenced courts in Santa Clara county), the key takeaway from the decision goes well beyond a proposed class action lawsuit over a Facebook “sponsored stories” program that no longer exists. The trial judge rightly noted that the heart of the case is whether online terms and conditions override domestic legal protections (in this case, the B.C. Privacy Act).

The trial court judge ruled that the terms did not, citing provisions in the B.C. Privacy Act that confer exclusive jurisdiction on the B.C. Supreme Court. The B.C. Court of Appeal rejected both the analysis of the BC Privacy Act and the broader public policy considerations of whether online terms should trump local law. The court ruled that the Facebook terms were “valid, clear, and enforceable”. It then fell to the plaintiff to demonstrate why the court should decline to enforce the forum selection clause. The court cites as a possible example evidence that the case could not be heard in the California court (which would have the effect of creating a limitation of liability for Facebook). Without such evidence, the court ruled that the Facebook terms were binding. Moreover, it rejected the argument that the B.C. Privacy Act is intended to trump valid contracts.

Interestingly, a class action lawsuit over Facebook’s sponsored stories launched in the State of Illinois raised similar questions about the enforceability of the Facebook terms and conditions. The court also sided with Facebook, ruling that its forum selection clause was enforceable. The court identified three situations where the clause might not be enforced:

  • if their incorporation into the contract was the result of fraud, undue influence or overweening bargaining power;
  • if the selected forum is so gravely difficult and inconvenient that the complaining party will for all practical purposes be deprived of its day in court; or
  • if enforcement of the clause would contravene a strong public policy of the forum in which the suit is brought, declared by statute or judicial decision.

The public policy discussion was interesting as the court ruled that California was fully capable of addressing the issue. That case was one of several that have upheld Facebook’s terms and conditions.

From a Canadian perspective, the public policy issue might well be whether California law offers the same level of privacy protection as that found in Canada. The Privacy Commissioner of Canada’s well-known 2009 investigation against Facebook did not focus on jurisdictional issues (the OPC maintains that the collection, use or disclosure of Canadian personal information triggers the law), but this case provides a reminder that Facebook believes that its terms and conditions ensure that California law and California courts govern any dispute or cause of action.

There is obvious value in contractual certainty and the benefits for online businesses, who can look to this case to more confidently rely on their terms and conditions. However, there is also a significant public policy risk, since it opens the door to contractual terms that trump local laws and protections. This is particularly true for online consumer contracts that involve no negotiation and are presented on a “take it or leave it” basis. In fact, few expect consumers to actually read the detailed fine print of every online contract, meaning that the clicking “I agree” may result in being bound by terms that trump Canadian law and the Canadian courts.

The post B.C. Court of Appeal Rules Facebook’s Fine Print Trumps Privacy Law appeared first on Michael Geist.

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