By Laurel Hyatt
GATINEAU – The Citytv stations are “failing” and need CTV’s injection of cash to stay afloat, so the CRTC should make an exception to its ban on owning two conventional TV stations in a market, says Ivan Fecan, president and CEO of CTVglobemedia.
Allowing CTV to keep City stations in Toronto/Hamilton, Vancouver/Victoria, Calgary, Edmonton, and Winnipeg is in the public interest because “the City stations are teetering at the financial edge,” Fecan told commissioners Monday at the start of a two-day hearing into the $1.365 billion CTV buyout of CHUM Limited.
The CRTC’s long-time policy of one over-the-air TV station per language per owner per market no longer serves conventional television, which is losing audience and revenues, Fecan argued.
To help sweeten the pot, CTV on Monday promised that if it were allowed to keep its local CTV and City stations in those markets, there would be “zero overlap” in programming between them. “Zero overlap is no small thing compared to what you have approved (for other broadcasters already),” Fecan said.
The issue of twin sticks generated much heated discussion, with new chair Konrad von Finckenstein—making his hearing debut—noting that while the CRTC has made exceptions to its twin stick ban before, “You are asking for exemptions in five markets. There’s never been an exception application of that magnitude.” Von Finckenstein asked Fecan to justify why “in effect, we should be canning our two-stick policy as far as CTV is concerned.”
“We’re the only ones that don’t have exemption from the policy,” Fecan replied, noting that City is barely making money while the A-Channel stations, which it announced earlier this month it intends to sell to Rogers, are losing money.
“Let’s be honest, they’re not failing stations,” von Finckenstein countered. “They may not be doing as well” as they could be, he said.
After the lunch break, Fecan took von Finckenstein to task with that statement, saying the City stations “are likely to fail.” CHUM CFO Alan Mayne said that CHUM’s conventional stations in the last decade had pre-tax losses of $68 million. Citytv in Toronto has had only single-digit profitability in the last few years. In the first seven months of this fiscal, the Citytv group of stations had a drop in revenue of 4% and a drop in profit before taxes of 90%, and Citytv Toronto has had an operating loss for the first time, Mayne said.
Commissioner Stuart Langford, showing his typical candour, wondered why CTV agreed to sell CHUM’s A-Channel stations and keep City instead of the other way around, which would have largely avoided the twin stick situation. “By keeping City, you’ve built the biggest regulatory hurdle you could possibly have between acceptance. We’ve got to really climb over that policy and just stomp it into the ground.”
Fecan said that sometimes, the less obvious choices are the most meaningful. Choosing to keep City was not the easiest thing to do, but it is the right thing, he said. With Citytv Toronto’s average viewer age of 41, compared with 47 for A-Channel and 51 for CTV in Toronto, City gives the company a “huge, huge spread” demographically to reach more viewers and advertisers, Fecan said.
CTV was also in the hot seat over its portrayal of itself as a “national champion” for Canadian programming. While it’s nice in theory, von Finckenstein said, in reality, a national champion could turn into a “national predator.” “What assurance do we have here that…we don’t find a laid-back CTV that milks profits rather than is innovative and forward-looking?,” he asked.
“We have demonstrated that we have…helped with the creation of wonderful programming that has the best possible audience reaction,” Fecan replied. If the commission is still not convinced, the conventional station licences are up for renewal in a year. “Within a year, you can take a quick look to see whether we’re behaving or not.”
But a year from now is too late to decide on programming conditions, said Langford. “This is our chance today to deal with CHUM, not in a year. There will be no CHUM. There will be pieces of CHUM.”
CTV’s proposed $103.5 benefits package also came under scrutiny from commissioners, particularly for CTV’s proposal that the benefits be calculated based on the transaction’s purchase price. Commissioners seemed keener on using the enterprise value, including debt.
They were also curious about the proposal to disperse the TV benefits, worth about three-quarters of the total benefits package, to producers itself instead of through a third-party fund. CTV pointed to the benefits package approved for BCE’s takeover of CTV itself, which set up a self-directed production fund. “We should build on success. We have something that works,” Fecan said in reply to a question from Commissioner Rita Cugini why the money shouldn’t go to a third-party fund. “It’s something to be proud of.”
In a departure from previous chairs, von Finckenstein ended the day with a summary of his thoughts. “There are some major hurdles, and the two-stick policy is obviously one of them.” Another one is the benefits package. “You basically said, ‘Trust us. Our track record speaks for itself,” he said. “That’s how it looks for us at this point in time.”
The hearing continues on Tuesday with appearances by the intervenors, including the CBC, Canadian Film and Television Production Association, and the Communications, Energy and Paperworkers Union of Canada, which has been highly critical of media concentration of ownership.
Laurel Hyatt is cartt.ca’s radio editor, based in Ottawa and is covering the CTV/CHUM hearing in Gatineau this week.
