Sun News Network and the Market: A Fable for All Canadians

“Data obtained by The Canadian Press from a source at another network and confirmed by independent ratings agency BBM Canada, shows Sun News trailing the pack when “all day” English audience figures — calculated between 2 a.m. and 2 a.m. — were compared for news networks between Aug. 31, 2011 and March 31, 2012.

CBC News Network drew 1.4 per cent of viewers, U.S. news network CNN took 0.9 per cent, CTV News Channel attracted 0.8 per cent and Sun News brought in 0.1 per cent.”

  • Sun News Network Viewership Lags On First Anniversary, Controversies Continue, The Canadian Press as posted on http://www.huffingtonpost.ca, Updated: 04/20/2012 10:57 am

In many ways, I feel sorry for Sun News Network. As has been reported by The Globe and Mail and the Toronto Star, Sun News Network is losing money. Its losses “have already reached $17-million a year”. (As losses mount, Sun turns to CRTC, by Steve Ladurantaye and Simon Houpt, The Globe and Mail (includes correction), Published Monday, Jan. 21 2013, 4:44 PM EST ) So it should not be a surprise that Sun News Network and their owner, Quebecor Inc., are looking for a revenue generating solution. What is surprising is the strategy. For, Quebecor is turning to the CRTC for help. In other words, Quebecor is looking for an order from the CRTC which would require one thing: the Sun News Network to be shown by every cable provider in the country for a two to five year period. In many ways, I should not be surprised; for the Sun News Network is acting like other TV outlets. And yet, I find myself being surprised.

Maybe it is because the Sun News Network has bashed CBC and other Canadian News Outlets since its creation. For Sun News Network has argued that other news outlets have been “captured” by the CRTC, existing political parties, government bureaucrats, various elite groups or “other nebulous parts of Canadian Society”. Since its inception, Sun News Network has been fighting the “man”. So it is funny that they are turning towards the “man”. Especially, when one considers the free-market approach that every Sun News Network columnists wants all governments to take. It is interesting that the Sun News Network finds itself in this position because if they were to take their own advice, Sun News Network would be no more; since a money loser in the market leads a dead-end.

However, some supporters of Sun News Network see it differently. If one listens to Pierre Karl Péladeau, CEO of Quebecor Inc., he would say the situation that Sun News Network finds itself in is a matter of national significance. Sun News Network – he would argue – is a victim of public policy because Sun News Network was not given the same treatment as CBC or CTV. So this is a matter of fairness, of free speech and/or diversity of media. In an opinion piece in National Post, he said:

“And it is for that reason that we have asked that Sun News — and any other new entrant to the Canadian all-news market — be granted the same privilege of mandatory carriage that CBC, CTV and every other Canadian news channel received when they launched. Once such networks have been exposed to the Canadian public — we suggest a term of five years — they should then transfer to the same type of licence that CBC News Network and CTV News Channel recently moved to.” (Pierre Karl Péladeau: The Case for Sun News, by Pierre Karl Péladeau, National Post | 13/01/29 | Last Updated: 13/01/28 3:14 PM ET)

In many ways, that notion seems quant and maybe even acceptable. That is until one looks at that argument with a critical eye. When CBC Newsworld started in July 31, 1989, it faced two competitors: CNN (US) and Sky News (UK). Both had resources to accomplish its task and CNN was already in the Canadian Market. One could easily say that CBC needed the resources to lay down a Canadian Marker in a competitive market place. If one questions that hypothesis look at what happened to Newsworld International, an American cable news network co-owned by the CBC and the Power Corporation of Canada. Even with the support of two major players, Newsworld International found itself outgunned. It was sold to the USA Network for $155 million. USA Network did not have enough money to compete in the American Market, so USA Network was sold to Vivendi Universal. In 2004, Newsworld International was then sold to Al Gore and Joel Hyatt in 2004 and became Current TV. Most recently, Current TV was sold to Al Jazeera for the same reason: need for cash. The proof is clear, just look at an article published on January 29, 2013. It was called “Al Gore defends sale of Current TV to Al Jazeera”. The article reads as follows: “We won every major award in television journalism, and we were profitable each year,” said Gore, who has a home in Nashville. “But it’s difficult for an independent network to compete in an age of conglomerate.” (By Associated Press, Printed on NY Daily News.com) While, CNN’s Kevin Voigt noted that “Current TV never found strong ratings in the U.S. cable market.” (Al Jazeera buys Al Gore’s Current TV, Jan. 3, 2013; Updated 1630 GMT) One could argue that that was the result of not having enough money. Consequently, we can say that Cable News is an expensive thing to do properly. So it was not a surprise that CBC Newsworld was given help in 1989.

In October 17, 1997, CTV News Channel was launched. It was given help for another simple reason: to create a competitive market place for Canadian Cable News. Or put differently, given that CNN and CBC Newsworld were dominating the marketplace, the CRTC felt that providing CTV News Channel with a bit of help was important. In doing this, the CRTC created a market place for Canadian News.

However, after the launch of CTV News Channel, no other networks were given government help. In fact, CBC Newsworld and CTV News Channel are no longer forced to be on ones’ cable package. As such, no other networks were given this luxury, this crutch. Just look at MSNBC Canada. It started on September 7, 2001 and was operated by Rogers Media in partnership with Shaw Communications and MSNBC. It has three big players and it didn’t receive any support. It was forced to compete in the Canadian Media Landscape and it quickly found itself in trouble. They had trouble competing against CNN, CBC Newsworld and CTV News Channel. Things got so bad that the owners pulled the plug on December 1, 2004. MSNBC Canada’s feed simply started to repeat the signal of its American cousin. For the record, it still does the same thing today. The reason for this is simple: putting together a cable news channel is expensive and difficult.

However, this does not mean that it is not possible to make a specialty service work in Canada. While, CNN, FOX News and MSNBC don’t have a Canadian base, they do rebroadcast their American signal. BBC Canada mixes Canadian and British shows, while the Oprah Winfrey Network puts on a mix of Canadian and American shows. Rogers provides the GTA with two 24 hour news services: CityNews Channel and CP24. In fact, according the Globe and mail, “only 10 channels currently enjoying mandatory carriage, including Aboriginal Peoples Television Network and Cable Public Affairs Channel (CPAC). CBC News Network has the special status in French-language markets only, and its French-language counterpart RDI has it in English-language markets.” (As losses mount, Sun turns to CRTC, by Steve Ladurantaye and Simon Houpt, Globe and Mail, Published Monday, Jan. 21 2013, 4:44 PM). Consequently, given that Canada has an operating market in the area of General 24 hour cable news; one would ask why Sun News Network would get an exception.

As we noted earlier, MSNBC Canada didn’t get an exception. It closed down shortly after it started. As a result, MSNBC American feed is what Canadians get to see. Al-Jazeera English also has not gotten an exemption. It took them four years to clear all of the necessary hurdles required to broadcast here. In 2010, Al-Jazeera English, the 24-hour English-language news service based in the Middle East, was only available on three players: “Bell TV, Rogers and Vidéotron, three of Canada’s largest cable providers”. (Al-Jazeera English launches in Canada, by CBC News, Last Updated: May 4, 2010 11:54 AM ET) If other news services were not given priority, why should Sun News Network now receive any help?

However, the complaints from Sun News Network don’t end there. Mr. Péladeau has also noted that the 33 cents that he is asking for is much less than the 63 cents that CBC Newsworld receives. This, in my mind, is another false dichotomy or incorrect equivalency. CBC Newsworld is the most popular news network in Canada. According to an article that ran in the Huffington Post, “CBC News Network drew 1.4 per cent of viewers, U.S. news network CNN took 0.9 per cent, CTV News Channel attracted 0.8 per cent and Sun News brought in 0.1 per cent.” (Sun News Network Viewership Lags On First Anniversary, Controversies Continue; By Canadian Press, Updated: 04/20/2012 10:57 am) If that is the case, one could easily argue that CBC Newsworld attracts viewers. It is not required to be on the dial, yet people flock to it. Accordingly, one could argue that, for a cable company, CBC Newsworld is a quality asset. If CBC attracts viewers, the Cable Company will have more subscribers. As a result, the Cable Company will not mind paying for CBC Newsworld because they will make it up on volume. That is the way the market works.

Additionally, one could also mention that CBC is a world class broadcaster and CBC Newsworld has quality reporting. Not so long ago, CBC released a special report on the death of Lebanon’s Rafik Hariri. Mr. Hariri was Lebanon’s former prime minister and was assassinated in a very public way. When CBC published its results, the world noticed. (SPECIAL REPORTCBC Investigation: Who killed Lebanon’s Rafik Hariri?, By Neil Macdonald, CBC News, Last Updated: Nov 21, 2010 10:54 PM ET) It was republished by Israeli, Lebanese and other Middle Eastern Media Outlets. It provoked commentary from Governments and the UN. This type of reporting is equal to reports coming from BBC, CNN, MSNBC or PBS. In fact, CBC is easily recognized as a world class reporting organization. This is why CBC has interviews with Presidents and Prime Ministers.

Sun News Network, however, has no audience and a reputation for shoddy work. There was the “fake citizenship scenario” where: “Senior government officials insisted the Sun News Network was actively involved in the decision to have bureaucrats take the place of actual new Canadians during a televised citizenship ceremony last fall, newly released documents show. “ (Jason Kenney, Tory officials split on details of Sun News Network ‘fake citizenship’ ceremony, Jennifer Ditchburn, Canadian Press as published in the National Post – 12/06/05 8:45 AM ET) Or we can recount that “on June 1, 2011, Sun anchor and Canada Live host Krista Erickson shouted on air at dancer Margie Gillis, in a discussion regarding public funding for the arts. Her actions prompted more than 4,000 complaints to the Canadian Broadcast Standards Council and the video footage went viral.” (Sun News network courts scandal again, By: Raju Mudhar, Toronto Star, Published on Thu Feb 02 2012) If compared to CBC or CTV, the Sun News Network has yet to distinguish itself. Accordingly, if Sun News Network cannot develop a quality product, why should they be able to demand money or even demand that the CRTC require anyone to carry them? In other words, if Sun News Network was any good, cable carriers would be falling over themselves to secure the rights to distribute Sun News Network broadcasts. These types of observations just leave me with more questions, for I see no public policy need or any market reason for requiring Sun News Network on all Canadian TVs.

What makes Sun News Network inquiry even more suspicious is that we do have a choice driven media market. For years, I paid for Setanta (now Rogers Sportnet World) so I could watch European, Australian, South African and New Zealand based rugby tournaments. Other people pay for extra services like the Movie Network, Super Channel and various food, sports and entertainment packages. Those services have a loyal subscription base. Some stations thrive, while others survive but all of them exist because of a loyal subscription base. The question I have to ask is simple: has Sun News Network tried to create that base? Have they advertised for new people like ABC Spark, the DIY Network or MovieTime? Have they run ads in buses, trains and other forms of public transportation? To give one an idea of what is possible. Consider the advertising campaign of Home Box Office Canada (HBO Canada). HBO Canada is owned by HBO, Astral Broadcasting Group Inc. & Corus® Entertainment Inc. Yet, HBO Canada advertises on the MSNBC’s Canadian Feed. Given that MSNBC’s feed is owned equally by Rogers, Shaw and MSNBC, one can see that Canadian media companies advertise on competing networks media sources. So the simple question is: has Sun News Network advertised on other media? If they haven’t, Sun News Network should before they get an order from the CRTC. This is especially true since most other channels in Canada seem to make money for their owners.

The truth is that this commentary only scratches the surface. When Sun News Network presented their business to the public and the CRTC, they argued that there was a need in Canada. Sun News Network Management argued that the need could be fulfilled in the market, if they just got their chance. Well, they got it and they failed. Sun News Network has not added to the public policy debate because they have no viewers to have a conversation with. They have failed to be a market success because they are running an operating deficit. I would argue that that this situation was of their own making. Sun News Network has produced a low quality product and their management is likely at fault.

Sun News Network has proven that there is no place in the market for them. If Quebecor really wanted this channel to work, they would put together a marketing and advertising plan. It would include a number of components including “word of mouth”, viral and traditional advertising. It would have predictable outcomes. However, that type of plan has not been forthcoming. Instead, the public has been given polling data. Sun News Network has proven that they have no redeeming public policy purpose and no market. This is why they have gone to the CRTC.

In my eyes, the CRTC should reject their application. Before it gets a cent from the tax payer or an mandatory viewing order, the CRTC should allow the market to operate: allow Sun News Network to change or allow it to fail. Or the CRTC could allow the licence for the Sun News Network to go to another bidder. For Quebecor got into the English Language Television market after buying the bankrupt Toronto One. Maybe that is the solution; maybe Sun News Network should be sold. Either way, it would be better than propping up a neutered media voice.

A PDF version can be found at: http://www.scribd.com/doc/133909486

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4 thoughts on “Sun News Network and the Market: A Fable for All Canadians

  1. Russ, this overview is overly North American as context: the PRC is pouring money in to CCTV and People’s Daily overseas operations; Russia Today News is the fastest growing American cable news channel; Al Jazeera loses something like $400 million a year – so? It defeated Al Qaeda in a propaganda war for street Arab opinion, Mission Accomplished. So is news a logical service for market competition at all, given its growing role as an instrument of national power? SUN was always a political tool for Quebecor’s government relations agenda, it was never really an investment, any more than the National Post was for Black Conrad. The real question is: has it shifted opinion? On a few of Ezra Levant’s populist screeds, like human rights & the tribunal system, I think it probably has. Are those the specific shifts of value to Quebecor? Probably not. Leave them to compete? Sure, I’m not sure there’s ANY reason for CRTC to be mandating channels to anybody, anymore. But I do think Newsworld International, or some video iteration of Radio Canada International, is long overdue, and to hope for competitiveness misses misses the point. Our $20B on the military buys us far less influence than $200mil on newscasts would…

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    1. So John there are pieces of your argument I agree with and pieces I don’t. I do agree that media is an instrument of national power. CCTV, People’s Daily and Al Jazeera are all pretty good examples of that. Furthermore, it is true that Sun News Network and the National Post have been created to shape rather than spread news. But the National Post has never made an application to be a mandatory organ of Canadian Media Establishment. That is the key difference. Quebecor’s Sun News Network, in asking to be a part of all of our cable packages, has tried to bend the rules of the market. Or put differently, they couldn’t succeed as a normal cable service, so they are going to seek a government order to make us watch them. Or at least, pay for their expenses.

      With that being said, unlike the National Post, the Sun News Network does not even provide a quality product. While, I disagree with the Post a lot, one cannot say that their reporting/commentary is not at the highest quality.

      On to point number two, there are some valid reasons for the CRTC mandates. Given our market structure and the players, it is easy to see that existing market players – like Bell-CTV, Shaw-Global, Corus, Quebecor, Roges or Astral – would rather not spend money on developing Canadian Content or even a Canadian Industry. Simple rules – like the Canadian Content Rule – have allowed Canada to benefit from a social point of view, while media companies have flourished. Consequently, the system that we have is fair. On my cable package, I get about 100 stations. Out of those stations – according to the globe – 9 are mandated. That seems to me to be a fair balance. So to recap, if there is a public policy reason to add a station, that is okay. But Sun News Network does not hit that level of need, for me.

      Lastly, I do agree with you that Canada buys far more influence through our media or diplomatic actions than through our military. I remember being in Moscow in the 1990’s and listening to rebroadcasts of the CBC and BBC to name a few. Spreading ideas is a very good way of getting your point across. I would argue that Voice of America did more to win the Cold War than did the trillions of dollars spent on weapons. I just wish the Harper Tories understood that.

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    2. John Arthur wrote: “Sure, I’m not sure there’s ANY reason for CRTC to be mandating channels to anybody, anymore.”

      It won’t be long before the nature of TV changes. As a secondary school teacher I see it in the next generation(s). They don’t have TVs in their room. They have laptops and iPads and smartphones. Their “TV” consumption comes from their computer devices.

      My own two year old daughter (who is happily sleeping right now 🙂 views TV as an irritant. She knows how to access an iPod and and iPad but has difficulties with TV–a device where YOU don’t control the content.

      Cable companies will persist for another decade but we certainly won’t recognise the current model by 2030. The mindlessness drudgery of TV isn’t gong away anytime soon, but, it will be up for a monumental shift.

      Data bandwidth has expanded to the point where the bulk of households now have enough of it to stream a significant chunk of their viewing experience.

      The selection of (legal) on-line content is exploding as is the way we can consume or interact with it. Apple TV and Netflix but the tip of the iceberg.

      Mandatory carriage will become a moot point when most people consume their TV by watching it online–where you cannot just skip over ads and where you can make ads interactive!

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