very Canadian needs $2-million in RRSP contribution room to achieve parity with public-sector defined benefit pension plans, the C.D. Howe Institute says.
As things stand, the system punishes those with defined-contribution pensions in the private sector and those who rely on what little RRSP room is granted them, says James Pierlot, principal with Toronto-based Pierlot Pension Law.
The $2-million figure comes from the value of public-sector DB plans for top managers earning $150,000 late in their careers. Rather than limit RRSP contributions to 18% of a prior year’s earned income, Mr. Pierlot would give every Canadian the lifetime RRSP contribution room, adjusted to inflation.
The need to redress the gap between pension “haves and have nots” has become urgent, Mr. Pierlot says. Indeed, a new book published by Wiley Canada – Pension Ponzi – makes the same point: It depicts a system of “pension apartheid” that favours 20% of workers with union negotiated public-sector DB plans at the expense of the rest who guarantee those pensions through their future taxes.
Most penalized are new Canadians, the self-employed, the chronically unemployed and those who have suffered market losses in RRSPs or prematurely withdrawn funds from them.
In an interview, Mr. Pierlot said his paper (titled Legal for Life) still calls for upfront tax deductions for RRSP contributions but no annual contribution limit. The only constraint would be coming up with the money. Plans would still be taxable once funds are withdrawn in retirement.
Eventually, registered retirement income funds (RRIFs) would decline to zero but would not be subjected to minimum annual withdrawal rules that may force seniors to sell at market bottoms.
An early draft advocated a “declining limit system.” So while the limit might fall from $2-million to $1.9-million the first year of a RRIF, and fall another $100,000 each year thereafter, someone with only $500,000 wouldn’t be forced to withdraw anything in the early years of a RRIF.
The paper does not discuss taxfree savings accounts, but Mr. Pierlot advocates a lifetime TFSA limit of $250,000 to $500,000. “The retirement system is intended for middleclass workers earning $50,000 to $150,000 a year,” he said, “Anyone earning less should not be in RRSPs but in TFSAs.”
His proposals were included in private-member’s bill C574, which passed first and second readings until the federal election intervened. The Retirement Income Bill of Rights was presented by Liberal pension critic Judy Sgro and supported by all parties except the Conservatives, Mr. Pierlot said.
“It said every Canadian shall have equal opportunity to accumulate pension income no matter how they are employed or where they were born. If it had passed, it would have forced changes to the Income Tax Act.”
Mr. Pierlot said he didn’t “cost” his ideas because Ottawa misrepresents RRSP and pension tax deductions as tax expenditures.
“They’re not,” he says. “Money goes into plans and accumulates tax-free but down the road, the government gets its tax with interest. Yes, it affects government cash flow in the short term, but it isn’t a tax-avoidance mechanism. It’s a tax deferral.”
Fred Vettese, chief actuary with Toronto-based Morneau Shepell, says Canadians “essentially have a lifetime limit already since unused RRSP contribution room can be carried forward indefinitely.” But it’s true average private-sector workers with RRSPs can’t replicate public-sector levels of retirement income.
“If we truly felt public-sector plans provide an appropriate level of retirement income, the author is right in suggesting a $2-million lifetime limit to level the playing field.”
But there would still be inequity, Mr. Vettese said, because contribution rates needed to generate so much income would impoverish average RRSP savers over a working lifetime.
jchevreau@nationalpost.com
Friday, 28 October 2011
Monday, 24 October 2011
Carney ready to take on the world’s banks
OTTAWA — As a young hockey player with dreams of making it big, Mark Carney liked to get revved up before a big game by listening to AC/DC’s “Hell’s Bells.”
“Coming on like a hurricane” and “take no prisoners”, as the lyrics go, pretty much sum up the Bank of Canada Governor now as he prepares to take on the world’s most powerful banks as head of the Financial Stability Board, the key driving force behind the reform of global financial regulation.
The still-athletic, 46-year-old is certain to get the job, according to sources who spoke to Reuters on condition of anonymity, although he must wait for G20 leaders to give him their formal blessing at a Nov 3-4 summit in Cannes, France.
Carney, fondly described as “un-Canadian” by one Ottawa official because of a blunt and confrontational style, will replace the Bank of Italy’s Mario Draghi, who takes over as president of the European Central Bank on Nov. 1.
Carney’s past as a Goldman Sachs investment banker has been a double-edged sword, as he fought to prove his loyalties lie with ordinary citizens, not his high-flying banker buddies. He clashed memorably with JPMorgan Chase & Co Chief Executive Jamie Dimon in Washington last month as the banker argued against new regulations for the financial sector.
At the same time, the financial markets savvy Carney won over 13 years at Goldman’s offices in London, Tokyo, New York and Toronto has propelled his meteoric rise from the finance ministry to his current job.
He heads a well-respected central bank that helped make Canada’s recession one of the weakest in the rich country group. No Canadian bank needed government help during the world financial crisis, and already by January, the country had recovered all the jobs it lost in the downturn.
The Bank of Canada would not comment until after a formal announcement on the FSB, but Carney is set to head the board at a time when bankers are pushing back against tougher capital requirements designed to strengthen financial institutions so taxpayers won’t have to rescue them in the next crisis.
The regulators say the new standards will help prevent another crippling crisis, or at least minimize the damage, and they insist the global economy itself is at risk if they get things wrong.
Bankers say the crackdown will crimp their lending and hit economic growth. They particularly oppose a capital surcharge on on the biggest 28 cross-border banks, including Carney’s former employer Goldman, HSBC, Deutsche Bank and JPMorgan Chase, the institutions that are considered too big to fail in today’s interconnected financial world.
Carney’s challenge will be to keep reforms moving on even as cracks and slippages appear, and to “name and shame” countries that don’t deliver on their promises.
FIGHTER WITH A HALO
In Reuters interviews, several people who interacted with Carney during his public service career stressed two traits that will help him: he’s a fighter who does not back down and he speaks the bankers’ language.
“I think he believes he has a halo over him. He’s pretty … confident, for lack of a better word,” said a Canadian academic who has met Carney at meetings and seminars. “You may not want to have dinner with that person but as head of the FSB I think it’s a good choice.”
Carney has the “chutzpah” needed, agrees Chris Ragan, a former special advisor at the Bank of Canada who has overlapped with Carney at the central bank and in government. “If he has a view that he holds strongly, he’s absolutely prepared to fight for that. He’s not a wallflower.”
The FSB brings together G20 central bankers, finance ministers and regulators to craft and coordinate financial regulation in what has so far been a pretty unglamorous job.
But that could change if, as expected, the G20 gives the board additional resources and independence from the Bank for International Settlements in Basel, Switzerland, boosting its clout and making it more like the International Monetary Fund and the World Bank.
“It needs to move beyond a very Mickey Mouse operation of just 20 people,” said Bessma Momani, a research fellow at the Centre for International Governance Innovation at Waterloo, Ontario and a panelist on FSB governance for the Washington-based Brookings Institution.
“With the systemic problems we’re dealing with we need something bigger and more substantial. We need a full-time person that is devoted and focused on the FSB mandate.” Carney intends to stay on as Bank of Canada governor, but if the revamped FSB requires a full-time chair he may have to abandon the bank before his seven-year mandate ends in 2015.
The only other serious contender for the job was Swiss National Bank’s Philipp Hildebrand, a friend of Carney’s from their Oxford student days. But a European official told Reuters he was certain Carney would win over his former classmate.
Finance Minister Jim Flaherty and banking regulator Julie Dickson, who sits on the FSB Steering Committee, have gone on the record saying Carney’s chances are good.
Formally, it is up to the FSB plenary to choose the chairman by consensus. But sources say the negotiations are largely done behind closed doors with little transparency.
NOT JUST SOME EGGHEAD
As head of the Bank of Canada, Carney has made it clear that despite his Goldman Sachs background – or perhaps because of it – he believes banks have acted in questionable ways and he is ready to confront them.
Of all his speeches, the ones to banker audiences on financial reform have been the most sharply worded.
A few months after becoming governor in February 2008, Carney earned the wrath of Canadian bank CEOs by suggesting they were hoarding cash and not lending enough to businesses.
That spat is long forgotten, but Carney locked horns with Dimon at a private bankers’ meeting in September and left abruptly, prompting headlines about a walkout. The Bank of Canada said the meeting was running late and he needed to get to another engagement.
And while bankers often disagree with him, they respect his mettle and intellect.
“He would have been less likely to take on Jamie Dimon if he didn’t know the way those guys think and if he wasn’t able to speak their language,” said Ragan. “They can’t say, hey you’re just some egghead that works in the government.”
A source who witnessed how Carney handled the confrontation confirmed Ragan’s hunch. “He comes across very well because he is a former private sector financial guy. He understands their perspective,” the source said.
Gordon Nixon, the chief executive of Canada’s biggest bank, the Royal Bank of Canada, is also a fan.
“I’m very fond of him,” Nixon told Reuters. “He’s not just respected and admired but he’s well liked as an individual… In these roles part of your responsibility is to build consensus and I think Mark brings a real personal strength to that requirement.”
Other central bank governors liked Carney enough to appoint him as chair of the very influential Basel committee on global financial stability, notes David Longworth, a deputy governor under Carney until May 2010.
“I think a chair of an international body is always important,” said Longworth. “That person helps to set the tone, they help to set the agenda. They, at times, have to be people who will convince others to come on board.”
THE DOWNSIDE
But Carney’s investment banker hustle and dominant personality have not gone over so well with some at the Bank of Canada, creating friction and bitterness.
Carney completely overhauled the senior ranks of the bank when he took the job, replacing four of five deputy governors who decide interest rates with him. On paper, decisions are made by consensus but privately, officials have reportedly joked that they always “agree” with their boss.
Carney does not suffer fools gladly and finds it hard to hide his annoyance if he dislikes a question. He has a reputation for losing his temper with bank staff, and has been known to yell at employees in front of others for minor missteps in outbursts that may include the “f” word.
In February 2009 when the bank’s growth projections were far more upbeat than those of any other forecasters, Liberal legislator John McCallum asked if his outlook went “out on something of an optimistic limb.”
“We don’t do optimism, we don’t do pessimism,” Carney snapped in reply. “We do realism at the Bank of Canada. We don’t do spin.”
Paul Masson, a University of Toronto economist who was special advisor at the bank as Carney took over observed that Carney was “less lenient” with long-winded staff meetings. Carney is focused and informed, so “doesn’t need to be told things several times,” Masson said.
Carney was so confident in his own abilities that he broke with custom and insisted on writing his own speeches, eschewing feedback, and scaled back internal briefings ahead of public appearances.
His communication skills proved less than ideal when in June 2008 a surprise freeze on interest rates exposed a rare disconnect with a market that had unanimously expected a rate cut. Bank economists and traders were perplexed by the sudden reticence to hint at intentions and put it down to Carney’s inexperience in central banking.
His personal life, by comparison, appears simple. He is married with four young daughters and rushes home from international meetings to see the girls before bedtime or attend their soccer matches.
He still has time to run most mornings and last May finished the Ottawa marathon in three hours and 48 minutes.
IT’S AN ASSET, EH?
Being from Canada is an asset for Carney at the FSB, says Canada’s banking regulator Julie Dickson, noting that international organizations often look to politically neutral countries to broker deals between the Americans and Europeans. Canada has the added bonus of getting regulation right.
“We don’t go in with a lot of baggage, we’ve had time to reflect as well. When you’re in the middle of the crisis as Europe is right now, I think it’s a little harder to step back,” Dickson said.
Nixon agrees, “Given the way the world has unfolded, I would say that being from Canada is not a negative. I think the world looks at the Canadian marketplace and the governance within the Canadian marketplace in a very positive vein.”
Including Carney, Ottawa has three top officials leading committees involved in the global reform process. Dickson chairs the FSB committee on improving supervision and Tiff Macklem, the No. 2 at the Bank of Canada, heads the standards and implementation committee, which is in charge of peer reviews and the “naming and shaming” that may be needed.
Canadian bankers, who have long complained that tougher domestic rules put them at a disadvantage, also welcome the idea of one of their own at the top.
“It would be great for him … but also good for Canada to have somebody in that role,” said Nixon.
“Coming on like a hurricane” and “take no prisoners”, as the lyrics go, pretty much sum up the Bank of Canada Governor now as he prepares to take on the world’s most powerful banks as head of the Financial Stability Board, the key driving force behind the reform of global financial regulation.
The still-athletic, 46-year-old is certain to get the job, according to sources who spoke to Reuters on condition of anonymity, although he must wait for G20 leaders to give him their formal blessing at a Nov 3-4 summit in Cannes, France.
Carney, fondly described as “un-Canadian” by one Ottawa official because of a blunt and confrontational style, will replace the Bank of Italy’s Mario Draghi, who takes over as president of the European Central Bank on Nov. 1.
Carney’s past as a Goldman Sachs investment banker has been a double-edged sword, as he fought to prove his loyalties lie with ordinary citizens, not his high-flying banker buddies. He clashed memorably with JPMorgan Chase & Co Chief Executive Jamie Dimon in Washington last month as the banker argued against new regulations for the financial sector.
At the same time, the financial markets savvy Carney won over 13 years at Goldman’s offices in London, Tokyo, New York and Toronto has propelled his meteoric rise from the finance ministry to his current job.
He heads a well-respected central bank that helped make Canada’s recession one of the weakest in the rich country group. No Canadian bank needed government help during the world financial crisis, and already by January, the country had recovered all the jobs it lost in the downturn.
The Bank of Canada would not comment until after a formal announcement on the FSB, but Carney is set to head the board at a time when bankers are pushing back against tougher capital requirements designed to strengthen financial institutions so taxpayers won’t have to rescue them in the next crisis.
The regulators say the new standards will help prevent another crippling crisis, or at least minimize the damage, and they insist the global economy itself is at risk if they get things wrong.
Bankers say the crackdown will crimp their lending and hit economic growth. They particularly oppose a capital surcharge on on the biggest 28 cross-border banks, including Carney’s former employer Goldman, HSBC, Deutsche Bank and JPMorgan Chase, the institutions that are considered too big to fail in today’s interconnected financial world.
Carney’s challenge will be to keep reforms moving on even as cracks and slippages appear, and to “name and shame” countries that don’t deliver on their promises.
FIGHTER WITH A HALO
In Reuters interviews, several people who interacted with Carney during his public service career stressed two traits that will help him: he’s a fighter who does not back down and he speaks the bankers’ language.
“I think he believes he has a halo over him. He’s pretty … confident, for lack of a better word,” said a Canadian academic who has met Carney at meetings and seminars. “You may not want to have dinner with that person but as head of the FSB I think it’s a good choice.”
Carney has the “chutzpah” needed, agrees Chris Ragan, a former special advisor at the Bank of Canada who has overlapped with Carney at the central bank and in government. “If he has a view that he holds strongly, he’s absolutely prepared to fight for that. He’s not a wallflower.”
The FSB brings together G20 central bankers, finance ministers and regulators to craft and coordinate financial regulation in what has so far been a pretty unglamorous job.
But that could change if, as expected, the G20 gives the board additional resources and independence from the Bank for International Settlements in Basel, Switzerland, boosting its clout and making it more like the International Monetary Fund and the World Bank.
“It needs to move beyond a very Mickey Mouse operation of just 20 people,” said Bessma Momani, a research fellow at the Centre for International Governance Innovation at Waterloo, Ontario and a panelist on FSB governance for the Washington-based Brookings Institution.
“With the systemic problems we’re dealing with we need something bigger and more substantial. We need a full-time person that is devoted and focused on the FSB mandate.” Carney intends to stay on as Bank of Canada governor, but if the revamped FSB requires a full-time chair he may have to abandon the bank before his seven-year mandate ends in 2015.
The only other serious contender for the job was Swiss National Bank’s Philipp Hildebrand, a friend of Carney’s from their Oxford student days. But a European official told Reuters he was certain Carney would win over his former classmate.
Finance Minister Jim Flaherty and banking regulator Julie Dickson, who sits on the FSB Steering Committee, have gone on the record saying Carney’s chances are good.
Formally, it is up to the FSB plenary to choose the chairman by consensus. But sources say the negotiations are largely done behind closed doors with little transparency.
NOT JUST SOME EGGHEAD
As head of the Bank of Canada, Carney has made it clear that despite his Goldman Sachs background – or perhaps because of it – he believes banks have acted in questionable ways and he is ready to confront them.
Of all his speeches, the ones to banker audiences on financial reform have been the most sharply worded.
A few months after becoming governor in February 2008, Carney earned the wrath of Canadian bank CEOs by suggesting they were hoarding cash and not lending enough to businesses.
That spat is long forgotten, but Carney locked horns with Dimon at a private bankers’ meeting in September and left abruptly, prompting headlines about a walkout. The Bank of Canada said the meeting was running late and he needed to get to another engagement.
And while bankers often disagree with him, they respect his mettle and intellect.
“He would have been less likely to take on Jamie Dimon if he didn’t know the way those guys think and if he wasn’t able to speak their language,” said Ragan. “They can’t say, hey you’re just some egghead that works in the government.”
A source who witnessed how Carney handled the confrontation confirmed Ragan’s hunch. “He comes across very well because he is a former private sector financial guy. He understands their perspective,” the source said.
Gordon Nixon, the chief executive of Canada’s biggest bank, the Royal Bank of Canada, is also a fan.
“I’m very fond of him,” Nixon told Reuters. “He’s not just respected and admired but he’s well liked as an individual… In these roles part of your responsibility is to build consensus and I think Mark brings a real personal strength to that requirement.”
Other central bank governors liked Carney enough to appoint him as chair of the very influential Basel committee on global financial stability, notes David Longworth, a deputy governor under Carney until May 2010.
“I think a chair of an international body is always important,” said Longworth. “That person helps to set the tone, they help to set the agenda. They, at times, have to be people who will convince others to come on board.”
THE DOWNSIDE
But Carney’s investment banker hustle and dominant personality have not gone over so well with some at the Bank of Canada, creating friction and bitterness.
Carney completely overhauled the senior ranks of the bank when he took the job, replacing four of five deputy governors who decide interest rates with him. On paper, decisions are made by consensus but privately, officials have reportedly joked that they always “agree” with their boss.
Carney does not suffer fools gladly and finds it hard to hide his annoyance if he dislikes a question. He has a reputation for losing his temper with bank staff, and has been known to yell at employees in front of others for minor missteps in outbursts that may include the “f” word.
In February 2009 when the bank’s growth projections were far more upbeat than those of any other forecasters, Liberal legislator John McCallum asked if his outlook went “out on something of an optimistic limb.”
“We don’t do optimism, we don’t do pessimism,” Carney snapped in reply. “We do realism at the Bank of Canada. We don’t do spin.”
Paul Masson, a University of Toronto economist who was special advisor at the bank as Carney took over observed that Carney was “less lenient” with long-winded staff meetings. Carney is focused and informed, so “doesn’t need to be told things several times,” Masson said.
Carney was so confident in his own abilities that he broke with custom and insisted on writing his own speeches, eschewing feedback, and scaled back internal briefings ahead of public appearances.
His communication skills proved less than ideal when in June 2008 a surprise freeze on interest rates exposed a rare disconnect with a market that had unanimously expected a rate cut. Bank economists and traders were perplexed by the sudden reticence to hint at intentions and put it down to Carney’s inexperience in central banking.
His personal life, by comparison, appears simple. He is married with four young daughters and rushes home from international meetings to see the girls before bedtime or attend their soccer matches.
He still has time to run most mornings and last May finished the Ottawa marathon in three hours and 48 minutes.
IT’S AN ASSET, EH?
Being from Canada is an asset for Carney at the FSB, says Canada’s banking regulator Julie Dickson, noting that international organizations often look to politically neutral countries to broker deals between the Americans and Europeans. Canada has the added bonus of getting regulation right.
“We don’t go in with a lot of baggage, we’ve had time to reflect as well. When you’re in the middle of the crisis as Europe is right now, I think it’s a little harder to step back,” Dickson said.
Nixon agrees, “Given the way the world has unfolded, I would say that being from Canada is not a negative. I think the world looks at the Canadian marketplace and the governance within the Canadian marketplace in a very positive vein.”
Including Carney, Ottawa has three top officials leading committees involved in the global reform process. Dickson chairs the FSB committee on improving supervision and Tiff Macklem, the No. 2 at the Bank of Canada, heads the standards and implementation committee, which is in charge of peer reviews and the “naming and shaming” that may be needed.
Canadian bankers, who have long complained that tougher domestic rules put them at a disadvantage, also welcome the idea of one of their own at the top.
“It would be great for him … but also good for Canada to have somebody in that role,” said Nixon.
Where are TV viewers slipping away to?
Who knew the mild-mannered chief of Rogers Communications Inc.’s television product development would gravitate to a band of criminal bikers? David Purdy, whose viewing tastes are partial to Entourage, certainly didn’t.
“I’ve only recently discovered a show called Sons of Anarchy,” the executive says, referring to the FX series about an outlaw motorcycle club in northern California now on its fourth season on Super Channel. Like many viewers nowadays, he’s looking to binge on episode upon episode on weekends and weeknights until caught up.
“That’s the way people are consuming content now,” he says.
Mr. Purdy’s company, one of Canada’s biggest cable and Internet providers, is working quickly these days to secure rights to back catalogues to popular TV series, either for online or video-on-demand. It is part of a strategy to evolve the television product to keep up with customers’ viewing behaviour – something that’s shifting markedly this year away from traditional TV.
The initial wave of ratings and data is rolling in from the new broadcast schedule this fall. It is the first in which all the country’s big broadcasters are no longer independent networks but divisions of larger telecommunications conglomerates – recent moves by competitors of Rogers (which owns CityTV) mimicking its model of owning both the content and pipes that deliver it.
Early results indicate, perhaps not surprisingly, that Shaw Communications Inc. and BCE Inc., who paid $2-billion and $3.2-billion, respectively, for the country’s two biggest broadcasters in Canwest Global and CTV Inc., have inherited the same issues plaguing television before each network was acquired: fragmenting audiences.
Overall weekly viewership among key demographics has softened year over year, BBM Canada says. Prime-time viewership – all important for ad buyers – is flat or down across conventional networks as well.
Audiences, it appears, are splitting attention more than ever between old-fashioned network TV, specialty channels and, increasingly, video-on-demand and online viewing windows. “It is safe to say that the trend we’ve seen over the last several years continues,” one Bay Street media analyst said.
That trend is pushing Rogers and the other integrated carriers to create new products for online and mobile devices they can sell to both advertisers and their customers.
So far this broadcast year, which runs from about midSeptember to spring, adults over 18 are watching on average 28 hours of television a week. That is down from an average of 29.4 hours for the full 2010-11 broadcast year. The key 25-to-54 demographic has fallen to 23.8 hours from 25.
The story for prime-time network television is the same as the broader picture: thinning audiences. Between Sept. 20 and Oct. 9 in the 25-to-54 segment, CTV’s main network, Rogers’ CityTV, Global and CBC all saw viewer slippage in the 8 p.m.-to-11 p.m. slot. (The exception is CTV Two, Bell Media’s secondary network rebranded from A Channel, for which ratings have surged as result of Bell’s efforts to boost performance.)
Canadian networks are not alone in reporting smaller audiences. In the United States, early data from Nielsen Holdings NV shows an average of 14.3 million adults between 18 and 49 years of age tuned into prime-time shows last month, representing a drop of 4.1%.
So, where are viewers slipping away to? In part at least, to more specialty channels. U.S. networks such as Discovery, Time Warner’s CW and Comcast Corp.’s USA Network have helped push viewership there up 4% in prime time, to 22.1 million people.
In Canada, the experience is the same, said Barb Williams, Shaw’s senior vice-president of content.
“To the extent that there is any weakening at all in conventional we are showing wonderful strength in specialty,” she said. Shaw, which bought Global while the network was under court protection from creditors last year, owns 19 specialty channels, including History Television, HGTV and The Food Network.
A spokesman for Bell Media, which now owns the biggest stable of specialties in the country since acquiring CTV in April, including The Comedy Network, BNN and Bravo!, said numbers in specialty are “essentially flat for total viewers.”
Specialties have cheaper ad rates than conventional channels but nonetheless are acceptable viewer destinations for the media units of Rogers, Bell and Shaw, which still cannot charge nearly as much for ads online.
Ad agencies, which still rely heavily on TV for the bulk of their buy, are paying close attention, yet say they are largely unfazed by the early figures.
“I’ve been in this business a long, long time and I will tell you that at the end of the quarter … we’re going to find that, you know what, the top 20 or 30 programming overall is going to basically look the same in terms of audiences,” said Dennis Dinga, director of broadcast investment at media agency Universal McCann Canada.
Back at Rogers, however, it appears Mr. Purdy isn’t waiting.
“We’re trying to move ahead as quickly as possible,” on new online video packages, he said. Asked why, he responded, “There’s a segment of the base that doesn’t necessarily subscribe to traditional platforms anymore.”
“I’ve only recently discovered a show called Sons of Anarchy,” the executive says, referring to the FX series about an outlaw motorcycle club in northern California now on its fourth season on Super Channel. Like many viewers nowadays, he’s looking to binge on episode upon episode on weekends and weeknights until caught up.
“That’s the way people are consuming content now,” he says.
Mr. Purdy’s company, one of Canada’s biggest cable and Internet providers, is working quickly these days to secure rights to back catalogues to popular TV series, either for online or video-on-demand. It is part of a strategy to evolve the television product to keep up with customers’ viewing behaviour – something that’s shifting markedly this year away from traditional TV.
The initial wave of ratings and data is rolling in from the new broadcast schedule this fall. It is the first in which all the country’s big broadcasters are no longer independent networks but divisions of larger telecommunications conglomerates – recent moves by competitors of Rogers (which owns CityTV) mimicking its model of owning both the content and pipes that deliver it.
Early results indicate, perhaps not surprisingly, that Shaw Communications Inc. and BCE Inc., who paid $2-billion and $3.2-billion, respectively, for the country’s two biggest broadcasters in Canwest Global and CTV Inc., have inherited the same issues plaguing television before each network was acquired: fragmenting audiences.
Overall weekly viewership among key demographics has softened year over year, BBM Canada says. Prime-time viewership – all important for ad buyers – is flat or down across conventional networks as well.
Jonathon Rivait/National Post
That trend is pushing Rogers and the other integrated carriers to create new products for online and mobile devices they can sell to both advertisers and their customers.
So far this broadcast year, which runs from about midSeptember to spring, adults over 18 are watching on average 28 hours of television a week. That is down from an average of 29.4 hours for the full 2010-11 broadcast year. The key 25-to-54 demographic has fallen to 23.8 hours from 25.
The story for prime-time network television is the same as the broader picture: thinning audiences. Between Sept. 20 and Oct. 9 in the 25-to-54 segment, CTV’s main network, Rogers’ CityTV, Global and CBC all saw viewer slippage in the 8 p.m.-to-11 p.m. slot. (The exception is CTV Two, Bell Media’s secondary network rebranded from A Channel, for which ratings have surged as result of Bell’s efforts to boost performance.)
Canadian networks are not alone in reporting smaller audiences. In the United States, early data from Nielsen Holdings NV shows an average of 14.3 million adults between 18 and 49 years of age tuned into prime-time shows last month, representing a drop of 4.1%.
So, where are viewers slipping away to? In part at least, to more specialty channels. U.S. networks such as Discovery, Time Warner’s CW and Comcast Corp.’s USA Network have helped push viewership there up 4% in prime time, to 22.1 million people.
In Canada, the experience is the same, said Barb Williams, Shaw’s senior vice-president of content.
“To the extent that there is any weakening at all in conventional we are showing wonderful strength in specialty,” she said. Shaw, which bought Global while the network was under court protection from creditors last year, owns 19 specialty channels, including History Television, HGTV and The Food Network.
A spokesman for Bell Media, which now owns the biggest stable of specialties in the country since acquiring CTV in April, including The Comedy Network, BNN and Bravo!, said numbers in specialty are “essentially flat for total viewers.”
Specialties have cheaper ad rates than conventional channels but nonetheless are acceptable viewer destinations for the media units of Rogers, Bell and Shaw, which still cannot charge nearly as much for ads online.
Ad agencies, which still rely heavily on TV for the bulk of their buy, are paying close attention, yet say they are largely unfazed by the early figures.
“I’ve been in this business a long, long time and I will tell you that at the end of the quarter … we’re going to find that, you know what, the top 20 or 30 programming overall is going to basically look the same in terms of audiences,” said Dennis Dinga, director of broadcast investment at media agency Universal McCann Canada.
Back at Rogers, however, it appears Mr. Purdy isn’t waiting.
“We’re trying to move ahead as quickly as possible,” on new online video packages, he said. Asked why, he responded, “There’s a segment of the base that doesn’t necessarily subscribe to traditional platforms anymore.”
Sunday, 23 October 2011
Once Wal-Mart's Equal, Carrefour Falls Behind
When Wal-Mart Stores (WMT) began expanding outside North America in the 1990s, its toughest rival was the French retail chain Carrefour. After opening the world’s first big-box superstore in 1963, Carrefour spent three decades spreading its combination grocery-and-general-merchandise stores across Europe, South America, and Asia. Today, the retailer is in trouble around the globe. On Oct. 13, Carrefour issued its fifth profit warning in less than a year as it reported slumping third-quarter sales in key Western European and Asian markets. Chief Executive Officer Lars Olofsson, recruited from Nestlé in 2009, is the company’s third CEO in seven years, and four top executives have been replaced in the past 12 months.
Carrefour shares have plunged nearly two-thirds since 2007, when LVMH Moët Hennessy Louis Vuitton CEO Bernard Arnault along with U.S. real estate investment group Colony Capital spent $5.5 billion on a 9.8 percent stake. That investment is now worth less than $2 billion. They “got the timing wrong” on Carrefour, says Royal Bank of Scotland (RBS) analyst Justin Scarborough. “The markets they’re in have come under huge amounts of pressure since 2008 and lots of those pressures aren’t going to go away.” Arnault and Colony declined interview requests.
That means Carrefour has fallen far behind $467 billion Wal-Mart. Though they have about the same number of retail locations (9,667 for Wal-Mart, vs. Carrefour’s 9,631), Wal-Mart’s international sales now top $109 billion, almost surpassing Carrefour’s total $114 billion in revenues. While Wal-Mart has generated roughly 7.5 percent operating margins in recent years, Carrefour managed only 5.5 percent. In profits, the divide is particularly acute: Walmart last year logged net income of $7,804 per employee while Carrefour earned just $1,260.
How did Carrefour veer so badly off course? Its rapid international expansion, intended to offset slow growth in France, stretched the company too thin as it entered 24 countries between 1994 and 2004. It has succeeded in some, notably China, where its $5.8 billion-a-year operation wins praise for innovative marketing such as in-store produce and fish departments modeled on traditional Chinese street markets, complete with salespeople urging customers to stop and see what’s on sale. But Carrefour since 2000 has sold off operations in 10 countries, including Mexico, Russia, Japan, and South Korea, and has publicly mulled a retreat from others.
Wal-Mart also has stumbled in some international markets, including Germany, where it pulled out after only nine years. But it expanded more cautiously than Carrefour, building a thriving business in Mexico before moving into South America and Asia. Wal-Mart could afford to take its time because it has a vast domestic market where big-box retailing still flourishes. In France—the source of 43 percent of Carrefour’s sales—it operates scores of hypermarkets in aging, congested suburbs, and zoning restrictions make it hard to build new stores. It’s increasingly a similar story in the rest of Europe, which accounts for another 31 percent of Carrefour sales. Customers are deserting the chain for smaller stores in more-accessible city centers, or to deep-discount merchants such as Aldi and Schwarz Gruppe’s Lidl chain. Those trends, along with e-commerce, are changing the way Europeans shop, particularly for high-margin, non-food items, says Natalie Berg, an analyst at Planet Retail in London.
Carrefour is “stuck between a rock and a hard place,” she says. “You could say that they’re structurally flawed.”
Olofsson, in an Aug. 31 analyst call, promised “a new game plan to fix what hasn’t worked and allow us to regain momentum.” Over the past year, the company launched a makeover of 500 superstores in Western Europe, including lower prices and more private-label goods. But with Europe’s debt crisis threatening to further pinch consumer spending and fears that France could slip into recession next year, some analysts worry any rebound will be slow. After promising in June to invest $2.2 billion in the store revamp, Olofsson in August announced that spending would be scaled back.
Investors can’t count on asset sales to revive Carrefour’s fortunes. While it spun off all of discounter Distribuidora Internacional de Alimentacion on the Madrid stock exchange in July, a plan to take public a company holding 25 percent of its European real estate assets was floated and then shelved in May following opposition from investors and unions. Carrefour last year also pulled the sale of units in Malaysia and Singapore after a strategic review, and a proposal to merge its Brazilian unit with Cia. Brasileira de Distribuiçao Grupo Pao de Açucar fell through in July. That same month, former chief financial officer Pierre Bouchut said that a public stock listing of Carrefour’s China operations was years away. For now, predicts Sanford C. Bernstein analyst Chris Hogbin: “There may be more pain before there’s gain.”
Carrefour shares have plunged nearly two-thirds since 2007, when LVMH Moët Hennessy Louis Vuitton CEO Bernard Arnault along with U.S. real estate investment group Colony Capital spent $5.5 billion on a 9.8 percent stake. That investment is now worth less than $2 billion. They “got the timing wrong” on Carrefour, says Royal Bank of Scotland (RBS) analyst Justin Scarborough. “The markets they’re in have come under huge amounts of pressure since 2008 and lots of those pressures aren’t going to go away.” Arnault and Colony declined interview requests.
That means Carrefour has fallen far behind $467 billion Wal-Mart. Though they have about the same number of retail locations (9,667 for Wal-Mart, vs. Carrefour’s 9,631), Wal-Mart’s international sales now top $109 billion, almost surpassing Carrefour’s total $114 billion in revenues. While Wal-Mart has generated roughly 7.5 percent operating margins in recent years, Carrefour managed only 5.5 percent. In profits, the divide is particularly acute: Walmart last year logged net income of $7,804 per employee while Carrefour earned just $1,260.
How did Carrefour veer so badly off course? Its rapid international expansion, intended to offset slow growth in France, stretched the company too thin as it entered 24 countries between 1994 and 2004. It has succeeded in some, notably China, where its $5.8 billion-a-year operation wins praise for innovative marketing such as in-store produce and fish departments modeled on traditional Chinese street markets, complete with salespeople urging customers to stop and see what’s on sale. But Carrefour since 2000 has sold off operations in 10 countries, including Mexico, Russia, Japan, and South Korea, and has publicly mulled a retreat from others.
Wal-Mart also has stumbled in some international markets, including Germany, where it pulled out after only nine years. But it expanded more cautiously than Carrefour, building a thriving business in Mexico before moving into South America and Asia. Wal-Mart could afford to take its time because it has a vast domestic market where big-box retailing still flourishes. In France—the source of 43 percent of Carrefour’s sales—it operates scores of hypermarkets in aging, congested suburbs, and zoning restrictions make it hard to build new stores. It’s increasingly a similar story in the rest of Europe, which accounts for another 31 percent of Carrefour sales. Customers are deserting the chain for smaller stores in more-accessible city centers, or to deep-discount merchants such as Aldi and Schwarz Gruppe’s Lidl chain. Those trends, along with e-commerce, are changing the way Europeans shop, particularly for high-margin, non-food items, says Natalie Berg, an analyst at Planet Retail in London.
Carrefour is “stuck between a rock and a hard place,” she says. “You could say that they’re structurally flawed.”
Olofsson, in an Aug. 31 analyst call, promised “a new game plan to fix what hasn’t worked and allow us to regain momentum.” Over the past year, the company launched a makeover of 500 superstores in Western Europe, including lower prices and more private-label goods. But with Europe’s debt crisis threatening to further pinch consumer spending and fears that France could slip into recession next year, some analysts worry any rebound will be slow. After promising in June to invest $2.2 billion in the store revamp, Olofsson in August announced that spending would be scaled back.
Investors can’t count on asset sales to revive Carrefour’s fortunes. While it spun off all of discounter Distribuidora Internacional de Alimentacion on the Madrid stock exchange in July, a plan to take public a company holding 25 percent of its European real estate assets was floated and then shelved in May following opposition from investors and unions. Carrefour last year also pulled the sale of units in Malaysia and Singapore after a strategic review, and a proposal to merge its Brazilian unit with Cia. Brasileira de Distribuiçao Grupo Pao de Açucar fell through in July. That same month, former chief financial officer Pierre Bouchut said that a public stock listing of Carrefour’s China operations was years away. For now, predicts Sanford C. Bernstein analyst Chris Hogbin: “There may be more pain before there’s gain.”
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