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Small-island cable merchants face USlicensing conundrum

Last spring, "Biography", the primetime show on Arts & Entertainment Television (A&E), profiled Sidney Poitier, the Bahamian movie actor of 1960s fame.

If A&E was given any say in the matter, most Bahamians would probably have never seen the programme: Cable Bahamas, the archipelago's monopoly provider of cable television service, has no agreement with A&E Television Networks to air the channel.

Bahamians nevertheless heard Mr. Poitier's story, which began with a childhood on Cay Island and Nassau, because Cable Bahamas carries A&E anyway - along with at least 20 others it has no agreement to show.

Bermuda Cablevision may be the only cable provider facing litigation for allegedly stealing satellite television signals and rebroadcasting them, but it is not the only one with licensing problems.

Cablevision, Cable Bahamas and every cable company in the Caribbean (excluding United States territories) face the same dilemma: operating in markets too small to warrant their own movie or educational channels, the companies (and their subscribers) rely on the US market for much of their television programming.

(Without it, most people in St. Kitts, for instance, would be left with only one option: a government-owned station that broadcasts between 4 p.m. and midnight.)

But while providers in the region can get some programming via satellite without any problems, film channels like Home Box Office (HBO), Showtime, Starz! and even "non-premium" offerings like The Learning Channel refuse to grant the cable operators licences to carry the content they show in the US, even though the programming is available with a satellite dish.

An no-one in Bermuda, the Caribbean or in Washington, D.C., where lawyers represent the interests of Caribbean cable companies, quite understands why.

For the record, the Motion Picture Association (MPA), which represents the movie studios, and Starz Encore, the operator of one of the movie channels allegedly shown in Bermuda without an agreement, both said Bermuda Cablevision never even tried to set up legitimate agreements to purchase programming.

But no-one could say that the company's attempts would have been successful. In fact, most agreed that any attempts would have failed.

According to the film channels, the problem lies in their contracts with the movie studios. The spokesman for Starz Encore, which operates about a dozen movie channels, explained that Starz Encore's programming is not available legally in Bermuda and the Caribbean because the company's agreements with the Hollywood studios limit distribution of their movies to the United States and its territories.

The situation at HBO, Showtime, the Movie Channel and the Disney Channel is largely the same. One industry insider, who spoke anonymously, said he suspects it would only make sense to include Bermuda and other countries in the distribution agreements when contracts come up for renewal, rather than renegotiate midway through.

But this problem has been around for a while (the studios, as owners of rights for the films shown on premium channels, first alleged copyright infringement by Cablevision in Bermuda's Supreme Court eleven years ago), and the agreements have been renewed unchanged.

Mark Palchick is a telecommunications and intellectual property lawyer at Holland & Knight, a US-based firm that represents the Caribbean Cable Cooperative (of which Cablevision is a member) in Washington.

Mr. Palchick cites the Walt Disney Company, which he said promised to make arrangements so that cable companies in the English-speaking Caribbean, like Trinidad and Barbados, could carry the Disney Channel if certain terms were met. The terms were upheld, but the channel is still not available for purchase.

Companies like Disney, Mr. Palchick explains, have made only hollow promises. It has been seven years since he first got involved in the situation, and he is now convinced that US programmers, listing ten of them with dozens of channels between them, are boycotting the Caribbean region and Bermuda.

"There are more than 300,000 cable subscribers (in the English-speaking Caribbean) who are ready and willing to pay for this service," Mr. Palchick said.

But companies refuse to take their money, and the lawyer is baffled. Because programmers use satellites to distribute their content around the US, the marginal cost of servicing the Caribbean is nil. The providers add that they only want to offer a service that can stand up against the variety of programming already available with illegal descramblers for small satellite dishes (see Friday's story, the final one of this series).

"Once I was offered the Fox Movie Channel," recalled Bill Ewing, president of The Cable In St. Kitts. He thought the channel could easily avoid the distribution problem so many other programmers cited because all of the films it carries are produced by a sister company, Twentieth Century Fox.

"But the offer was later withdrawn," he continued. "I suspect Fox was pressured by the other studios not to provide programming in the region."

According to Jose Alegr?a, the chairman of the Caribbean Cable TV Association (CCTVA), which represents about 30 cable operators in the region, US copyright holders are deterred from entering overseas markets because of unfamiliar legal systems which might not offer them adequate protection.

"US movie-producing studios are not as eager to provide licensing rights to the Caribbean and other international regions mainly because of the lack of intellectual copyright laws in these countries that protect the movie producers from piracy and unauthorised duplication," he wrote in an e-mail.

(The problem does not affect Mr. Alegr?a's company, Liberty Cablevision of Puerto Rico, because it operates in a US territory.)

Mr. Palchick and others disagree. Mr. Ewing, who preceded Mr. Alegr?a as chairman of the CCTVA, said all of the countries in the English-speaking Caribbean have copyright protection and are signatories of the Berne Convention.

Mark Litwak, vice president and director of legal affairs for the MPA's worldwide anti-piracy efforts and behind the New York legal action, added another potential reason for their refusal to sell to Bermuda Cablevision.

"Their story is 'they won't sell it to me, so I stole it'," Mr. Litwak said in a telephone interview.

"Any company that has shown itself as a corporation that will steal is a considerable concern to any business person."

Some cable programmers come half-way, telling the Caribbean cable operators they can carry programming designated for the Latin American region. In Bermuda, the Discovery Channel is actually the Discovery Channel Latin America. In TV guides, the programmes have Spanish names, the fillers are in Spanish, but the shows air in English.

Similarly, HBO has told operators that they can air HBO Ol?, a Spanish version of HBO which is licensed to show programming in Latin America and the Caribbean.

"They tell you HBO and HBO Ol? are essentially the same product," said Mr. Palchick, who reasearched HBO Ol? last year on behalf of his clients. "That is not true - the average age of a movie on HBO Ol? is over five years old."

Not to mention that the programming on HBO Ol? is designed for Spanish-speaking markets, with movies dubbed in that language or in English with Spanish subtitles - which also delays their release.

In Barbados, the Caribbean Broadcasting Corporation has taken this route, and according to one spokesman, the company has agreements for all of the channels it carries. A&E, at least the version seen in the US, is not available on the company's system.

Others cable providers, like Cablevision and Cable Bahamas, have resisted Spanish-language programming. They take US signals, as Mr. Alegria explained, "to better serve the needs of their market" (although Cable Bahamas has the backing of its government; see tomorrow's story, the second in this series).

Channels the cable companies carry without permission from the US programmers also include ESPN's US domestic channel (which, along with ABC and several other media business, is owned by Disney), USA Networks and The Learning Channel. Under the guise of residential satellite customers, most of the companies receive the programming the same way most big dish subscribers do. Cablevision has five such dishes at its Laffan Street headquarters, and from there programming is redistributed to subscribers.

The practice is known as signal piracy, although the companies still charge consumers for channels US programmers say they are stealing.

Cablevision has more than 8,000 customers that pay $10 a month to subscribe to at least one of the five movie channels, not much less than the cable company would pay for each channel as a "residential" satellite subscriber.

But the company says it has put away $23 million in an escrow account to pay for channels it cannot pay the owners for because no agreement exists. The money will likely be used to cover a settlement resulting from the New York action.

The Cable in St. Kitts is only beginning to make payments into an escrow account. The country's relative poverty, Mr. Ewing explained, has kept his company from charging the same rates as providers in richer countries.

He is willing to pay for the programming, though, if an agreement is to be reached. Reiterating that it costs nothing for US programmers to service the island, he said he would try to negotiate pro rata rates based on a comparison between US per capita income and the average income in St. Kitts, which is about $7,000 a year.

Read about how Caribbean governments have responded to this problem in tomorrow's Royal Gazette.