CTV sweetens offer to sell regulators on CHUM deal

Perhaps sensing it was in for a knock-down fight from the CRTC in its bid to acquire CHUM Ltd., CTV Inc. sweetened its offer as hearings into the proposal began."We pledge that there will be zero overlap - that's zero - between any CTV station and any CHUM station," CTV Inc. president Rick Brace told the commission yesterday. As the broadcaster announced in its April 17 reply to intervenors, the only exception to that would be a 20-hour-per-year programming allowance for special events such as the Junos or the Giller Prize Awards, which may garner an additional audience if they ran on CHUM.Earlier, in its response to deficiencies tendered to the regulator on January 29, CTV originally agreed to no more than 10% commonality, on a weekly basis, in programming on the CTV and CHUM networks.However, CTV globemedia president and CEO Ivan Fecan stopped short of guaranteeing that CHUM and CTV's programming buyers would operate completely independently by refusing to commit to a condition of licence mandating as much.The representatives from CTV and CHUM painted a picture of a once-innovative network that had lost its leading edge, and said that the proposed acquisition would provide the capital and corporate culture to regain the broadcaster's former glory. "We will do for CHUM what CHUM did for City 30 years ago," said Brace.As noted in the CRTC's 2006 Broadcast Policy Monitoring Report, PBIT margins at private conventional television broadcasters stabilized in 2004 after back-to-back declining years. The situation at CHUM, however, doesn't reflect that reality: the City brand is the one profitable - but only barely - holding in CHUM's conventional TV stable, the applicants told the commission.But not all on the commission were convinced. After the applicants had portrayed CTV as the white knight riding to CHUM's rescue, commissioner Stuart Langford pressed for more details as to how CTV plans to reinvigorate City's conventional TV assets. To Fecan's assertions that CHUM will be more "edgy" under CTV ownership, Langford asked: "If that wasn't selling for Mr. Switzer, how's that going to sell for you?""What we're going to do is invest, and investing takes time," answered Fecan, who pointed out that CTV's conventional broadcasting licence is up for renewal in the next 12 months, a perfect opportunity to assess how well it's adhering to any terms the regulator imposes on the transaction."That may not be good enough for me," retorted Langford. "You've said, ‘Well, you will get another shot at us in a year...in a year it will be too late....In a year there will be no CHUM - there'll be bits and pieces here and there."Langford continued to press Fecan for examples of the kind of edgy programming that might be a hallmark of the new CHUM, a line of questioning that visibly wore on Fecan. "I'm not going to play that game, commissioner," he said.But Langford insisted such questions were at the heart of whether or not the commission can approve the deal, given the importance of diversity of voices in the broadcasting system. He urged Fecan to suggest conditions of licence for a CHUM service within the CTV empire that would protect CHUM's distinct demographic, adding that he didn't want to have CTV "come back to use in two years saying 'Oh my God, we're going down, help us.'"Both Langford and recently appointed chairman Konrad von Finckenstein queried the applicants as to why they were keeping the CHUM assets and selling the A-Channel stations to Rogers Communications Inc., when demographically the latter would be more easily assimilated into the CTV fold and wouldn't be as egregious a violation of the one-station-per-language-per market common ownership policy."By keeping City, you've basically put the biggest regulatory hurdle between you and acceptance of this deal," Langford said, adding that accepting the deal as proposed "will just stomp into the ground.""We think the less obvious opportunities will be the longer-lasting and more meaningful ones," replied Fecan.But von Finckenstein asked Fecan to "put yourself in my shoes," noting that the CRTC safeguards the public trust when it comes to ensuring the integrity and plurality of the Canadian broadcasting system. As such, rules such as the one-station-per-language-per-market policy are only meant to be broken in exceptional circumstances, such as when a licensee's viability is threatened."Along come you with this transaction, and it has absolutely nothing to do with that," von Fickenstein told Fecan.CTV also faced tough questioning about its expressed need for "competitive equality" with its closest conventional TV competitor, CanWest Global Communication Corp.Commissioner Helen del Val opined that a CTV-CHUM union would give CTV more than 40% market share in analog English-language specialty channels, which would create a new competitive imbalance in CTV's favour; CanWest, for instance, would have less than 25% of the analog English specialty market, even assuming it's bid to acquire Alliance Atlantis Communications Inc. is ultimately successful. "Shouldn't I be concerned with that?" she asked Fecan."We all made our choices as to where to invest our capital," replied Fecan. "We made, in the early '90s, the choice to invest in specialty channels. CanWest, on the other hand, made the choice to invest in print and, before that, outside the country."The hearings continue today in Gatineau QC. Canadian Communications Reports will update this story tomorrow after Phase II interventions are heard.

CTV sweetens offer to sell regulators on CHUM deal

Broadcast | May 1, 2007

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