Alberta’s two main cities can’t sustain more TV competition, CHUM tells CRTC

The commission is again considering applications to operate new TV stations in Alberta’s two largest cities, but CHUM Ltd. wants the CRTC to stand by its 2004 decision not to license new competitors in Calgary and Edmonton (CCR, Feb. 27/04). Public hearings begin February 12 into applications by Crossroads Television System to extend its religious TV channel to Calgary and Edmonton from Ontario, while Rogers Broadcasting Ltd. and MVBC Holdings Ltd. are competing for new ethnic stations (Broadcasting Notice of Public Hearing 2006-13). CanWest Global Communications Corp. has also applied for permission to establish over-the-air transmitters in Calgary and Edmonton to rebroadcast the signal of its Red Deer AB station, an application similar to the one it submitted when CHUM made its bid for TV licences in 2003. Less contentious is an application by The Miracle Channel Association to operate a transitional digital TV channel in Calgary and Edmonton associated with its existing Lethbridge AB station. It is not being opposed because the station isn’t seeking analog distribution and doesn’t sell commercial airtime. In 2003, CHUM argued the Alberta market could support added competition, and its proposed service would bring much-needed diversity and new regional programming to the province (CCR, April 25/03). At the time, the broadcaster called the Calgary/Edmonton corridor "the fastest-growing urban region in Canada." But in the most recent round of applications, CHUM has changed its tune. In its January 18 submission to the CRTC, CHUM states "…no applicant has demonstrated that the Calgary and Edmonton television markets are healthy enough to support a new entrant or even the rebroadcast of an out-of-market station." CHUM refers to the CRTC’s 2004 decision to back up its opposition to the new channels. The commission looked at two key factors when it turned down CHUM’s 2003 applications – the profit before interest and taxes (PBIT) of existing stations and the rate of advertising growth. CHUM contends that none of the current applicants have analyzed how the licensing of a new station would affect profitability of existing stations. CHUM, of course, is now the owner of some of those existing channels: although it never got its TV licences, CHUM later acquired the Calgary and Edmonton stations of Craig Media Inc., which was forced to sell after incurring disastrous losses from launching a Toronto station (CCR, Aug. 27/04). In 2004, the CRTC turned CHUM down because it determined that if licensed, the new stations would have a detrimental impact on Craig’s stations (now owned by CHUM), a ruling CHUM maintains remains good today. CHUM points out that PBIT for the three private commercial TV stations serving Calgary was 15.7% in 2005, down from 17.1% in 2004, and contends that its stations will be the hardest-hit. It notes that its CKAL-TV in Calgary had a PBIT of 0.4% in 2005, while the stations in that market owned by CTV Inc. and CanWest had a combined PBIT of 17.7%. CHUM’s Edmonton station had a PBIT of just over 4% in 2005, while other licensees had a combined PBIT of 28.5%. "The Alberta marketplace is very similar to the Toronto situation.…The licensing of new television stations in Calgary and Edmonton, whether religious, ethnic or mainstream, will seriously impact CHUM’s stations, which provide a valuable local service and further the objectives of the Broadcasting Act," writes CHUM Ltd. VP of government and regulatory affairs David Goldstein in CHUM’s submission. "Simply put, licensing at the ‘lower’ end of the market will only further fracture the already dwindling market for non-network and retail advertising," the CHUM submission states. Strong GDP growth will not necessarily translate to increased advertising, the Toronto-based broadcaster adds, noting that companies in a booming economy may not want to advertise since they already often can’t meet demand. Unlike CTV and Global, CHUM states it doesn’t have the resources to pursue top-20 TV programming and, given the economic and regulatory realities associated with religious and ethnic television, would be vying for the same advertisers as the new licence applicants. But Rogers refutes this contention, noting that CHUM’s situation is different from Craig’s since the former has a national footprint, and moreover is in the midst of being purchased by broadcast giant CTVglobemedia. But the $1.7-billion deal must still be approved by the broadcast regulator, leading CHUM to retort that "no one should presume what the commission will determine relating to the CTV purchase." On the programming front, CHUM argues that Alberta’s ethnic groups can already access a wide range of programming on cable and DTH specialty channels. Plus, it points out that existing religious and ethnic TV channels in other markets broadcast popular US programming. Rogers’s OMNI channels in Toronto air the Simpsons and Wheel of Fortune, for example. In response to CRTC deficiencies, Rogers states the majority of the non-Canadian programming on its proposed station will be popular syndicated comedies and dramas originating from the US. But it also plans to air ethnic programming such as Bollywood movies and Hong Kong action flicks. Rogers wants to offer 75 hours of ethnic programming each week, 50 hours of which will be available in third languages. Channel M, owned by MVBC Holdings, is targeting 86 hours per week of ethnic programming, of which 58% will be in third languages. Incumbent CanWest Communications also opposes the new stations, reiterating CHUM’s argument that a wide variety of ethnic services are already available on Shaw Cable, Bell ExpressVu and Star Choice. On the other hand, CanWest says its application is designed to "support an existing small-market local station (Red Deer) while ensuring programming diversity in Calgary and Edmonton." While CanWest already operates TV stations in the two markets, it wants to bring in the Red Deer station, which offers different programming based on its CH television lineup. It complains that 80,000 potential viewers in Red Deer don’t have access to its TV station because it isn’t carried on either Bell ExpressVu or Star Choice, and that expansion into new territories will help. Rogers has committed to spend $9.5 million over seven years to fund the development and production of new Canadian ethnic programming by Alberta-based independent producers ($4 million for dramas and documentaries, $4 million for cross-cultural initiatives, $1 million for an official language media educational initiative and $500,000 for local program pilots for under-served ethnic groups). Channel M has put $3.7 million on the table to be spent over seven years on independent production in Edmonton and Calgary, promising 10 hours per week of independently produced programming in each city in five languages. It’s also willing to put an additional $650,000 over the period into script and concept development for independent production. CanWest has committed to spend $10.5 million over seven years on priority programming from Alberta-based independent producers – an amount the Canadian Film and Television Production Association (CFTPA) finds deficient. CHUM had offered $15 million in benefits when it sought licences for Calgary and Edmonton in 2003, and Craig committed $14 million when it was granted licences for the two markets in 1996. On the distribution side, Shaw Communications Inc. only wants the TV stations licensed if it doesn’t have to carry them on the basic band (channels 2 to 13) on its basic service to prevent a channel lineup rearrangement which would be "highly disruptive to customers." The distributor argues that mandatory carriage as part of the basic service is sufficient.

Alberta’s two main cities can’t sustain more TV competition, CHUM tells CRTC

Broadcast | January 31, 2007

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