CCR Update

January 21, 2004 Shaw Cablesystems to increase rates despite improved financialsThe cable division of Shaw Communications Inc. will implement rate increases of $1 to $2 per month in February 2004 on most of its packages in most service areas, the company announced in financial results released January 20. The price increases are expected to generate additional monthly revenue of about $1.5 million when fully implemented by the end of March 2004. The price increases were announced despite an improved bottom line at the cable division.The cable division generated free cash flow of about $76.4 million in the first quarter of fiscal 2004 ended Nov. 30, 2003 compared to $28.2 million in the same quarter a year prior. The company also announced that it had achieved its strongest first-quarter start in percentage growth in basic cable customers since November 1998. The number of basic subscribers rose by 21,894, or 1.1%, to 2.073 million in the first quarter. The number of digital customers grew by 14,238 in the first quarter to 488,108 from the previous quarter. Shaw Communications also noted that the preliminary feasibility analysis concerning the deployment of voice over IP telephony is “encouraging.” According to Shaw’s preliminary estimates, the capital cost associated with the first 100,000 IP telephony customers is pegged at about $50 million to $55 million, and the next 100,000 customers at $35 million. Star Choice to implement monthly fee increases on February 1Direct-to-home satellite TV distributor Star Choice Television Network Inc., which is owned by Shaw Communications Inc., said January 20 that it would raise its monthly fee on most programming packages by $3, effective February 1. The price increase will generate about $2 million per month in additional revenue when fully implemented by the end of March 2004. The satellite distributor’s customer base decreased by 956 in the first quarter of fiscal 2004 ended Nov. 30, 2003. The loss in customers was attributed to “increased competition from cable, continued ‘black-market’ theft of satellite programming and higher churn caused by temporary service problems which have now been resolved...” The number of Star Choice subscribers increased by 4,739 in December, Shaw notes.The company indicated that customer retention would be a major focus of its future marketing programs. Shaw expects Star Choice to become free cash flow positive on a run-rate basis in fiscal 2004. Vidéotron introduces PAX TV to its digital TV channel lineupQuebec cableco Vidéotron ltée added PAX TV (WWBI-27 Plattsburgh) to its digital television channel lineup in the regions of Montreal and Sorel QC on January 14. PAX TV’s programming includes MGM movies and made-for-TV films and special events. Paxson Communications Corp. reaches 88% of U.S. television households with PAX TV.Shaw making change to VOD service, launches service in more B.C. communitiesShaw Cablesystems is planning to unbundle its video-on-demand (VOD) service, meaning customers will no longer have to subscribe to both digital cable and high-speed Internet service to order VOD programming. The company disclosed the pending move during a conference call with financial analysts on January 20 to discuss first-quarter financial results. Shaw customers are currently unable to order VOD programming using their remote control directly on the TV. Instead, they must select programming from a library of titles through an online ordering system and then view the programming on their television at a time of their choosing. Shaw said VOD buy rates continue to increase, without providing statistics. Meanwhile, Shaw announced January 14 that it has expanded its VOD service, Shaw On Demand, to Nanaimo and Ladysmith BC. Movies on the Shaw On Demand service start at $3.99, and children’s programming at 49 cents per title. Music videos are offered free (CCR, July 4/02). Shaw TV to broadcast live Western Hockey League games in B.C.Shaw Cablesystems announced January 16 that its Shaw TV community channels will broadcast live six hockey games featuring the five B.C.-based teams in the Western Hockey League. Shaw Cablesystems viewers in Vancouver, Cranbrook, Kelowna, Penticton, Vernon, Kamloops and Prince George BC will be able to see the games.Shaw launches new home page for high-speed Internet customersShaw Cablesystems has redesigned its Internet site (start.shaw.ca) to improve online customer support and introduce broadband multimedia services. The new web site has improved personalization capabilities, and includes a partnership with Internet search engine Google as well as an online music service provided by Iceberg Media.Coalition of unions, cultural organizations vows to fight looser foreign ownership restrictionsA coalition of unions, cultural organizations and some federal opposition party members has vowed to fight the threat of increased foreign ownership of the country’s telephone and broadcast industries. “We must mount a very serious cross-Canada campaign to stop any inclination the (Prime Minister Paul) Martin government might have to move on (lifting foreign ownership restrictions),” Peter Murdoch, national VP of media at the Communications, Energy and Paperworkers Union of Canada (CEP), said at a media conference on January 15. The coalition is calling itself the Coalition for Communication and Cultural Sovereignty. The CEP; Friends of Canadian Broadcasting; the Canadian Conference of the Arts; Union des Artistes; the Alliance of Canadian Cinema, Television and Radio Artists; the Telecommunications Workers Union; the Directors Guild of Canada; the Council of Canadians; and provincial telco SaskTel are among the members of the coalition. The formation of the coalition comes in the wake of the CEP’s vow in September 2003 to lobby the federal government to keep restrictions on foreign investment in the telecom and broadcasting sectors (CCR Update, Sept. 24/03). The CEP on January 15 also released the results of a study that it says shows Canadians’ support for the position of the newly formed coalition. Two-thirds of Canadians oppose letting foreign companies own more of Canada’s telephone and broadcasting industries, according to the poll conducted by Vector Research in December on behalf of the CEP. The results of the survey mirror the findings of several Decima Research Inc. surveys conducted for Decima Publishing Inc. (CCR, Jan. 16/03). Headline Media pursuing investment as The Score gains subscribersThe number of subscribers to Headline Media Group’s analog specialty TV channel The Score increased to 5.3 million in the first quarter of fiscal 2003 ended Nov. 30, 2003, according to financials released January 14. Subscriber revenue increased $100,000, or 9.3%, over the same quarter last year, due primarily to an increase in some subscriber rates. Nonetheless, revenue for The Score decreased by $400,000, or 6.5%, to $5.2 million in the quarter from $5.6 million in the same quarter a year earlier. Advertising revenue generated by the station was down $500,000, or 12.8%, this quarter from the same period a year earlier when there were residual Major League Baseball revenues.Income from discontinued operations at PrideVision TV for the first quarter was $100,000 compared to a loss of $1.6 million in the prior year as a result of cost containment initiatives as well as gains on the settlement of liabilities. Headline Media Group on the whole recorded a net loss of $1.1 million, an improvement over the $2.6-million loss recorded in the same period a year earlier.Headline Media also stated it “will be pursuing financing with potential lenders and investors, which if successful, will, in management’s view, enable the company to achieve its business plans in the long-term.” Access turns Battlefords systems around, makes them profitableAccess Communications stated at its annual general meeting on January 13 that the struggling Battlefords SK systems it acquired in 2002 had returned to profitability in 2003 (CCR, March 1/02). “We grew revenues and increased our net income from the previous year,” said Access president and CEO Jim Deane. “Our Battlefords systems returned to profitability the year following amalgamation, and we continue to have a positive impact on the communities we serve.” The Saskatchewan non-profit community cooperative said that net income had increased to $2.1 million, or 5.1% of revenue, in fiscal 2003.Super Écran proposes transfer of funds for script development to productionAstral Broadcasting Group Inc. has asked the CRTC for permission to divert some of the money it currently is required to spend on script and concept development under conditions of licence for its Super Écran pay TV movie channel to the production of French-language feature films (Broadcasting Public Notice 2004-1). Under its current conditions of licence, Super Écran is required to spend $500,000 on script development, an amount that is to increase to $700,000 by 2007. The request for an amendment to its licence condition “would enable the administrators of the Astral Media Harold Greenberg Fund the flexibility to apportion Super Écran’s yearly contribution to that independent fund between script and concept development and the production of French-language feature films,” Astral states. Comments on the proposed amendment are due by February 7.Look files final prospectus for rights offeringLook Communications Inc. announced January 16 that it has filed a final prospectus with the securities commissions of each province in connection with a previously announced rights offering to its shareholders. Maximum gross proceeds to Look are calculated at $10.655 million. Look will use the net proceeds to expand its network and customer base, and for general corporate purposes. As well, a portion of the proceeds will be used to pay $2 million in outstanding debt owed to majority shareholder Unique Broadband Systems Inc.Government spending on culture rises in 2001-02Total government spending on culture increased at its fastest rate in a decade in 2001-02, with federal government spending surpassing the $3-billion mark for the first time, according to data released earlier this month by Statistics Canada. Combined, all three levels of government spent a total of $6.8 billion on everything from libraries to the performing arts. The number represents a 7.6% increase from 2000-01, and is the fourth consecutive year that spending to culture has risen. The operating budgets of federal cultural departments and agencies, such as the Canadian Broadcasting Corp., the National Film Board of Canada and Parks Canada, rose 5.4% to $2.3 billion in 2001-02. The figure represents about 72% of the total federal cultural budget that year. Broadcasting alone consumed $1.4 billion (about three-fifths of the total federal operational budget), up 6.5%, according to the statistics. However, federal government spending on culture in the upcoming year is expected to decline under Paul Martin’s Liberal government. OMNI to air Canada: A People’s History in seven non-official languagesRogers Media’s ethnic TV station OMNI will air Canada: A People’s History in seven non-official languages, beginning with a Russian version on Feb. 21, 2004. All 32 episodes of the documentary, which was broadcast in French and English on the Canadian Broadcasting Corp./Radio-Canada, will be aired on OMNI in Russian, Chinese, Greek, Hindi, Italian, Polish and Portuguese.INTERNATIONAL NEWSVideo-over-IP services to top $2.2 billion in 2007: In-Stat/MDRThe worldwide market for professional video-over-Internet Protocol (IP) services will top US$2.2 billion during 2007, according to In-Stat/MDR. The research firm is predicting a growth rate of 45.3% between 2003 and 2007. Two-way live video for interactive communications and live one-way video for information distribution are expected to fuel the growth.Charter, Comcast Cable choose Motorola’s BSR 64000 for VoIPBoth Charter Communications Inc. and Comcast Cable announced last week that they had chosen Motorola Inc.’s Broadband Services Router (BSR) 64000 to deploy Voice over Internet Protocol (VoIP) and other advanced IP services. Motorola states that the BSR 64000 provides the benefits of simple configuration (single router appearance), scalable performance (each additional line card brings an associated forwarding engine) and low-cost entry (operators need only purchase the forwarding power required).

CCR Update

Broadcast | January 21, 2004

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