Catching up on MediaPolicy – YouTube and the Uncancellables – the Australian C11 – Rogers eats Bell’s lunch and Corus’ dinner – Paul Wells’ new Justin Trudeau audiobook

July 6, 2024

When you find a blog post with Big Facts about the battle for market dominance in global streaming, best to just quote the thing at length. Here is US analyst Evan Shapiro’s latest about King Kong Netflix and Godzilla YouTube:

When Hub asked consumers WHICH services are MUST HAVES, which platforms they’d NEVER cancel, no matter what, the answers likely will surprise most of you.

Spotify is the most uncancellable Media in Media. Netflix is the only SVOD to make the top ten. Sony‘s Playstation+ scores ABOVE Netflix! There are THREE different music services in the top ten – and two [virtual BDUs]! Reading subscriptions – yes, READING – are a must-have for a LOT of digital consumers.

But perhaps most surprising to everyone in the industry is just how dominant YouTube‘s entire suite of services is in the minds and hearts of today’s Media consumers. Four of the top five MUST HAVE/WILL NEVER CANCEL services are from YouTube. [MediaPolicy note: the subscription based YouTubeTV is not available in Canada].

Which brings up two BIG lessons for the User Centric Era:

1. No matter what you do in Media – music, gaming, TV, sports, social, advertising, subscription – your biggest competitor, now, is ALWAYS Youtube. Hi Netflix and Spotify. That means you too.

2. If you are in Media and thinking about bundling, look at what Amazon and YouTube are doing, NOT what Comcast is doing with Netflix, Peacock, and Apple TV+. Amazon may not be on Hub’s must-have list, but that’s because this question was solely about Media, not total services. Yet Amazon’s combo of free delivery, music, TV et al is one of the least-cancelled services in all consumer-dom. (They just raised prices, AGAIN. Did YOU even think about cancelling?) YouTube consumes the mind-space of hundreds of millions of consumers, across multiple verticals, worldwide. This dominance is even greater among those under 40 – THE KEY gatekeepers of expendable income for the next two decades.

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The Australian government’s promise to introduce a video streaming bill (it just uneventfully passed its July 1st target date to table) is a reminder that Hollywood uses the same political playbook in multiple countries.

The local screen industry is asking that the government legislate a minimum 20% of programming budget for Australian content, similar to Canada’s long standing rules on Canadian Programming Expenditures for legacy broadcasters that are generally in the 30% range.

Screen Producers Australia (SPA), counterpart of Canada’s two independent producers’ associations, had this to say in April:

“With commercial free-to-air broadcasters all but having been allowed to give up on commissioning any Australian drama or children’s programs, and subscription television commissioning only the minimum amount required under an outdated 1990s era scheme, we are now faced with a situation in which global streamers are increasingly the masters of Australia’s screen industry, and our industry is at risk of becoming their slaves.”

The SPA says that Netflix and the Hollywood studios are lobbying the Australian government not to proceed (backed by trade threats) or, alternatively, water down the definition of Australian content and rules around local producers’ retention of intellectual property in commissioned shows. That may sound familiar to Canadians following the C-11 debate.

Last year, Hollywood’s Motion Picture Association (Asia-Pacific) applauded the Australian government for doubling film production subsidies that encourage its studio members to shoot in Australia. That’s regulation Hollywood can learn to love.

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On the topic of the streamer playbook in Canada, you may have read that both video and music streamers have filed court appeals against the CRTC’s ruling on financial contributions to Canadian content.

I am going to save my comments until I can review the complete legal filings. My first impression is that these appeals are no-hopers but rather part of the streamer strategy to rag the regulatory puck until federal elections are held in the US and Canada.

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For regulatory nerds, it’s always important to follow Canadian broadcaster deals with American content suppliers because the ability of Canadian television companies to soak up losses in news and Canadian drama has been hitched, for better or worse, to licensing high-margin US content for distribution to Canadian audiences.

When it was announced earlier this month that Warner Brothers Discovery was moving a large swath of its retail distribution of branded programming in Canada from Corus Entertainment to Rogers, the focus was on the devastating impact on Corus’ financial position. The content in question includes HGTV, The Food Network, Magnolia Network, The Cooking Channel, and the Oprah Winfrey Network.

Down a few paragraphs in the Canadian Press coverage, Bell entered the picture with some opaque commentary about the broadcaster protecting its own exclusive rights to WBD branded content in Canada. The content in question is the Discovery Channel, Discovery Velocity, Discovery Science and Animal Planet.

Just what is going on has become more clear now that Bell has filed an injunction against WBD and Rogers. When WBD’s retail distribution deals with Corus and Bell expire at the end of 2024 they will not be renewed and the content goes to Rogers. Bell’s long standing Canadian rights to Discovery-branded content go back in some cases to 1994.

Unlike Corus, Bell appears to have negotiated a non-compete covenant with WBD that lasts for two-years after termination of its programming rights. According to the Bell court filing:

Neither [Bell] nor [WB], nor any of their respective Affiliates, shall directly or indirectly file, or support or participate in the filing of, an application to the CRTC for a licence for Canada for a programming service (a “[Competitive Service]”) which is the same as or substantially similar to the Service (as it exists on the date such party ceases to be a Shareholder), or be engaged directly or indirectly in operating a [Competitive Service] in Canada, or directly or indirectly supply programming to a [Competitive Service] in Canada, for as long as such party or any of its Affiliates is a Shareholder of the Corporation and for a period of two years following the date on which such party or its Affiliate ceases to be a Shareholder, unless such Shareholder, or an Affiliate of such Shareholder, acquires all of the Shares of the other Shareholder or purchases all of the assets of the Corporation…. [Emphasis added.]

Bell has asked the Federal Court to issue a snap injunction blocking the Rogers-WBD deal. Bell will have to convince the court that its financial loss from losing WBD content can’t be remedied with compensation at the end of a years-long legal battle.

Rogers and WBD haven’t filed their responses yet.

News reports suggested that the Rogers-WBD deal was a Corus killer. Bell Media is of course twice the size of Corus Entertainment at roughly $2 billion in annual revenues for its two major television divisions, network television and cable specialty.

At $943 million in annual revenue, Corus relies more heavily than Bell on US programming. Corus forks out $444 million on American shows compared to spending $338 million on its Global News network and Canadian entertainment. Within its US programming portfolio, the WBD-branded channels earn Corus $137 million in annual revenue, fully 15% of its total television revenue. Losing it is a grevious wound.

Bell Media is far less reliant than Corus on American programming. Bell spends $661 million on US content compared to $926 million on Canadian news, sports and entertainment. It’s soon to expire Discovery licenses earn $107 million, about 5% of Bell’s $2 billion in total television revenues. That’s not a flesh wound either.

A major legal spat between Bell and WBD over Discovery-branded content could spill over into their other significant content deal for HBO shows that is the keystone of Bell’s Crave TV business.

When the long standing Bell/WBD deal for HBO was extended last year it was seen as a reprieve from WBD taking that content off of the Canadian retail market and instead launching HBO Max as a direct to consumer rival to Netflix Canada. Now it seems like WBD might entertain a different option for its HBO programming: a bidding war between Rogers and Bell for cable rights, with the fallback of launching Max on streaming.

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I have a recommendation for how to spend your next ten dollars. It’s Canadian journalist Paul Wells’ hour-long audio book Justin Trudeau on the Ropes.

An admission: I’m a devoted reader of Wells’ Substack blog. The veteran Hill reporter has great command of every major policy file and terrific delivery, in any medium. His work also satisfies my ecumenical interest in conservative writers whose tendency, when backed into a policy corner, is to insist that the free market will provide a solution that we can’t see at the moment. Sometimes they are right, sometimes they aren’t. If I could match Wells’ 25,000 Substack subscribers and $1.5 million in annual earnings, I’d be a believer too.

Wells’ even tempered evisceration of Justin Trudeau is not a screed. It boils down to his conviction that the twenty-third Prime Minister of Canada is far too absorbed in political messaging than he is in serious governance. At the moment, about 80% of Canadians agree.

There are times when Wells’ harsh conclusions about Trudeau seem bang on, other times when you have to wonder about the absence in his narrative of the non-stop demonization of the Prime Minister and filibustering of his Parliamentary agenda by Conservative premiers and federal Opposition since 2015. 

Also I am influenced in my opinion of Wells out of my immodest conviction that I know more than he does about only one thing: Canadian media policy. His shallow and breezy condemnation of Trudeau’s federal aid to journalism was a real disappointment. In another podcast, where Wells collaborates with Andrew Coyne, the two dismiss the Online News Act as self evidently unmerited, even though as free market advocates they ought to be confronting how best to deal with Google and Meta’s monopolies on distributing news by Search and Social. 

Differences aside, if Wells says at least one thing in his audiobook that I passionately endorse, it’s his analysis of the rising phenomenon of affective polarization: how as citizens we have willfully closed our minds to dialogue with those we regard as the political enemy. We are impoverished for it and on those grounds alone I recommend Wells’ book.

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