Now not the time for new TV stations in Ontario, CTV tells the regulator

On Nov. 14, CTV Inc. pulled the plug on its applications for local conventional television stations in Toronto and Kitchener-Waterloo, citing a "dramatically changing economic environment," among other things. At the eleventh hour, the broadcaster made a 180-degree turn and is now opposing the other licence bids still on the table. An abridged version of CTV’s letter to the CRTC appears below. CTV Inc. has had the opportunity to review the applications filed and the interventions submitted by both applicants and interested parties under this process. Our perspective relative to the fragility of the markets in both Kitchener and Toronto has solidified since the initial development of our application over the summer. We so strongly believe that now is not the time to license a new conventional station, that we are, through this letter, formally withdrawing our applications for MyTV and MyTV Kitchener-Waterloo. There are two major reasons why we have made the difficult decision to take this step: Based on the dramatically changing economic environment, we do not believe that the Toronto and Kitchener markets can sustain new conventional licences; If licensed for MyTV in the current economic environment, CTV would be forced to redirect additional resources to MyTV to address lower than projected revenues, at the expense of our existing local services and priority programming commitments, which we are not prepared to do. Over the past several months, the broadcasting landscape has become even more unstable. The launch of the new digital specialty services, the escalation of the general economic downturn, the impact it has had on advertising revenue forecasts, and the resulting need to prudently allocate existing resources to sustain service have led CTV to conclude that the scenario in which the competitive conventional applications were filed in this process no longer exists. Our MyTV business plan is no longer viable in the current environment. The advertising revenues forecast have become too optimistic and the losses would not be tenable. Additional resources would need to be committed to the new station in order to launch and maintain them. For the same reasons, our fundamental concern with the licensing of any new conventional television station in Toronto and Kitchener has increased significantly. The markets in both Toronto and Kitchener cannot sustain a new conventional service without severe impact on existing services; even more so than when we raised the concern in our initial applications. Forecasts are all calling for a decline in total advertising revenue and a sharper drop in conventional television revenue. For example, CIBC recently estimated that Canadian advertising in 2001 will decline by 3.5 per cent with conventional television advertising falling by 3.7 per cent. In 2002, CIBC forecasts that Canadian conventional television will see some recovery but will come in below the overall average growth rate at around 1.9 per cent. Economists are divided in their assessment of the length of the economic slowdown because the depth of the current economic malaise is not yet known….There are numerous other economic analyses filed with, and/or cited, in various interventions that come to the same conclusion. Telemedia Radio Ontario, Standard Radio Inc., Chum Television and the Global Television Network all reference third-party reports on the challenging economic environment…. Others have filed proposals under the commission’s call. But the challenging economic realities are the same for all of us in this process. For all the reasons set out, we do not believe any licences should be issued. And no matter what the good intentions of other applicants, were a licence to be issued, no applicant would be able to ignore the economic realities. Any one of the applicants would be forced to change course, admit the realities, and move to the mainstream. Inevitably, the commission would be licensing a standard conventional television service.

Now not the time for new TV stations in Ontario, CTV tells the regulator

News | 11/22/2001 5:00 am EST

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