Craig aiming for new carriage deals if he gains control of PrideVision

If the broadcast veteran behind iCraveTV gains CRTC approval to acquire PrideVision TV, William Craig appears headed for a battle with distributors over the channel’s carriage terms. Craig’s plans to rejuvenate the ailing Category 1 digital channel PrideVision hinge almost exclusively on renegotiating its carriage agreements. "The channel has the programming, the channel has the audience and has the advertisers, but it doesn’t have the distribution. So our focus is going to be to do some catch-up here on the distribution," says Craig. "I’m also of the view that in some fashion the channel was gay-bashed corporately by the distributors. The channel has suffered from that and we’re going to come back and counterbalance that." Craig realizes he has his work cut out for him in coming to terms with distributors that will see the channel move away from its current status as a premium pay channel on most systems to one like any other Category 1 that is packaged with other channels. He says that PrideVision would fit in nicely within Lifestyle packages, or with such channels as Men TV, FashionTV and the Travel Channel. However, Shaw Communications Inc. CEO Jim Shaw has stated publicly that he would refuse to distribute the must-carry Category 1 in regions where communities objected (CCR, June 7/01). Shaw Communications also commissioned a survey of its customers that revealed that 89% preferred having the gay and lesbian channel distributed on a "request only" basis (CCR, Sept. 27/01). But Craig tells Canadian Communications Reports that he would have the weight of the regulatory system behind him if he was granted approval to take over the channel. "All Category 1s must be carried and they must be carried on an equitable basis and treated fairly. To the extent that we are not treated equitably and fairly, we will be adamant in asserting ourselves," he says. "I don’t want to diminish Mr. Shaw’s concern - but at the same time, this is a channel that is mandated to be carried. I haven’t invested in this with the notion that he won’t carry it. I don’t think that Jim Shaw is allowed to wake up in the morning and decide he’s not going to carry the CBC today because it’s against his personal beliefs. That’s not the way the broadcasting system runs." Shaw could not be reached for comment at press time. Craig adds, "I am fairly familiar with the games that they play in that I used to work for the cable industry, and I’ve also worked in pretty tough environments in the States. But hopefully, we’re not going to get that kind of subterfuge." Craig was involved in launching specialty channels in Minnesota and in the Cleveland and Pittsburgh areas. If granted approval to acquire PrideVision, Craig says that he will also build a separate studio in a new location separate from current owner Headline Media Inc.’s other channel The Score. "Basically, (PrideVision) was one-tenth the staff of The Score and was operating out of the same studios. So one of the problems with the channel was that it wasn’t able to do TV shows live, and I think this kind of station lends itself to a lot of live programming." Craig’s application to acquire the assets of PrideVision for about $1.5 million was gazetted on March 17. Under the proposed plan, Craig would own 80.2% of the channel’s voting shares, PrideVision Inc. 9.9% and the remaining 9.9% would be owned by another shareholder. In interrogatories filed February 23 with the CRTC, Mark Lewis of Borden Ladner Gervais LLP indicates that no valuation methodology was used to arrive at the $1.5-million sale price. "…The negotiated sale price of $1.5 million reflects the harsh reality of the environment in which the service currently operates, specifically, BDU distribution arrangements which were previously negotiated on a fully stand-alone ‘pay television’ model," Lewis writes. "The assumption that the purchase price bears a relationship to EBITDA multiples is wholly incorrect." Craig has agreed to a benefits package that would include giving $150,000 to the Trebas Institute over seven years. The applicant further tells the CRTC that the integrity of the licencing process has not been compromised and that the acquisition of PrideVision within the first term of the broadcast licence doesn’t constitute "trafficking of a licence" because "there are no profits resulting from this transaction." It is pointed out that Headline Media has lost more than $16 million. According to Craig, PrideVision continues to lose from $10,000 to $15,000 a month. Headline Media has agreed to continue to finance the channel until May 31, or six months after Craig’s initial offer to purchase. If the CRTC hasn’t ruled on his application by that time, Craig is unsure if he will float the channel any bridge financing while awaiting the regulator’s response. "It depends on how big the losses are at the time. I reserve making that decision until that time. My hope is that the commission will deal with this promptly," Craig notes. Comments on Craig’s application to acquire PrideVision are due by April 22. The matter is scheduled to be heard at a public hearing on May 17 (Broadcasting Notice of Public Hearing 2004-2), so it is unlikely that the CRTC will have made its ruling by the end May.

Craig aiming for new carriage deals if he gains control of PrideVision

Broadcast | March 25, 2004

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