Sun News Network Pleads for Government Intervention

As an example of how government regulation distorts markets and encourages waste, it is interesting to consider to Sun News Network, aka CNN (Canadian Neocon Network) or “Fox News North.”

This network is supposedly more populist and conservative-leaning than, say, CBC or CTV news networks. One would hope that a “conservatives-leaning” network would be more friendly to letting the market determine its own outcomes.

Yet Sun News Network is petitioning the CRTC to declare it a “must-carry” channel, so that all basic digital television packages must have it by default. This would add approximately 7 million Canadian digital TV subscribers who would receive the channel, and about seven total people who would become new viewers. Yet all the providers would have to allocate a portion of their subscription revenues to Sun News Network if they are forced to carry the channel. It is essentially a tax — forcing people to pay for a service they do not want.

It would be perfectly fine to negotiate with the television service providers directly. But note that the mandatory carriage channels are compulsory regulatory requirements. If I am Bell, Shaw, Rogers or whoever, I cannot offer television service without including the must-carry channels in the basic package. As a subscriber, one must get the basic package in its entirety before one can select other services to add.

Let’s put aside that it’s things like “must-carry” channels and other CRTC regulations that are causing people to drop their cable subscriptions en masse, although that is interesting. Instead, let’s focus on how to become a mandatory carriage channel, you have to jump through the CRTC’s CanCon hoops. That means having lots of Canadian content that no one watches.

So, Sun News Network invests large amounts of resources in producing Canadian content to become must-carry, which would automatically give them a huge boost in revenue. Since no one cares about Canadian content for the most part (particularly that of the neocon variety), this causes Sun News Network to lose a lot of money ($18.5 million last year). Losses are the result of consumers telling a firm that it is using resources inefficiently. Here we see that Sun News Network executives are throwing resources at uninteresting Canadian content that no one cares about, to satisfy government regulations. All so that they might win on the gamble that the CRTC can be convinced to coerce everyone else into subscribing to Sun News Network.

It is also interesting how Sun News defends its efforts by saying CBC and CTV’s news networks are must-carry, and they are profitable. A true market-friendly argument would instead contend that must-carry regulations should end entirely, not be expanded further. Service providers, responding to consumers, should decide what channels are offered — not a government regulator.

Read the original story at The Globe and Mail.

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