Canadian Hardware, Foreign Software: The Political Economy of Pay-per-View
Terzic, Marilyn, Journal of Broadcasting & Electronic Media
On February 1, 1983, the introduction of First Choice, currently known as The Movie Network, marked a significant step in the evolution of Canada's video industry. For a nominal fee, cable subscribers were able to watch uninterrupted and unedited versions of top box office releases that had completed their theatrical runs. Not only were Canadian audiences provided with an alternative to going to the cinema, but they were given the opportunity to purchase the programming of their choice, at a price they were prepared to pay. However, pay television was more than just another vehicle for the influx of U.S. films and made-for-cable programming. For the Canadian program-production industry, it was a means by which it could attempt to repatriate viewers to Canadian programming, strengthen its position within the marketplace, and establish new sources of revenue and investment funds. Most important, it was a solution to the underutilization of works created by domestic independent program producers in a television and feature film industry that produces the majority of its works in-house.
The cable television industry has always faced the problem of becoming, very quickly, a mature industry. As its markets became saturated, the growth in its customer base leveled off. Consequently, broadcasters and cable operators were not only faced with the challenge of creating more programming, but also of developing new service formats that would allow consumers to personalize their viewing experiences. The introduction of pay television and specialty channels was a key step in this direction. As Perrin Beatty, the Canadian Minister of Communications, pointed out, "The viewer, not the broadcaster and certainly not the government, is king. The disappearance of a captive audience has forced us all to reexamine not only how we do, but what we are doing" (Canadian Cable Television Association, 1992, p. 12). The next step, then, was to offer Canadians the option of purchasing programming on a per-event basis.
By law, the Canadian broadcasting system is "a public service essential to the maintenance and enhancement of national identity and cultural sovereignty ... [and should] serve to safeguard, enrich and strengthen the [country's] cultural, political, social and economic fabric" (Canadian Radio-Television and Telecommunications Commission, 1991a, section 3). The law is founded on public, private, and community undertakings, each of which are subject to ownership restrictions and content regulations. Foreign ownership is effectively permitted up to 46.6% (33.3% at the holding company level and 20% at the licensee level; Dalfen, 2003). Content regulations require broadcasters to dedicate a minimum amount of time for the exhibition of Canadian programming; private broadcasters and program undertakings are required to make significant financial contributions to the production of domestic programming as well. These laws have been hotly contested. Pay television's ability to contribute to the achievement of these objectives has fueled significant policy debate (e.g., Feldman & Janisch, 1982; Globerman, 1982; Jaffee, 1980), as did the type, scope, and structure of service that should be offered (e.g., Black, Woodrow, & Woodside, 1982; Peers, 1982), in addition to its potentially adverse effects on the Canadian communications industry (e.g., Bernstein & Goldberger, 1982; Shields, 1980a).
Economics, too, were a part of the debate. The Canadian Radio-Television and Telecommunications Commission (CRTC) faced criticism for pay television's limited success and ultimate demise. According to Hardy (1983), the weak economic climate of the 1980s combined with the increased scheduling of films on network television contributed to the public's tepid response. In his view, "pay television [should have been] licensed [in the 1970s]. As all product life cycles tend to be determined by buyer habits and available substitutes, pay television . …