TQS fortunes improving but not out of the woods yet, president tells MPs

A year after Remstar Broadcasting Inc. bought cash-strapped TQS, the president of the Quebec-based company has told the Standing Committee on Canadian Heritage that TQS’ bad days are behind it – but the network still needs another revenue stream to stay afloat. Maxime Rémillard said TQS’ prime-time market share between March 9 and April 20, jumped from 6.4% to 10.6%, representing a 66% increase. The results are particularly good, he said, considering that Radio-Canada, one of TQS’ main competitors in Quebec, saw its prime-time market share drop from 15% to 12.5%. “These figures show the importance and relevance of having a second conventional broadcaster in the Quebec market,” he told MPs, who are currently examining the financial crisis facing the broadcast industry. TQS’ rivals in the Quebec market are TVA and Radio-Canada. Remstar, a production and film distribution company, bought the network in April 2008 after TQS went bankrupt in Dec. 2007, registering $18 million in losses for the same year. Since Sept. 2008, TQS has been on the mend as a result of a revamped business plan targeting young audiences between the ages of 18-49, Rémillard said. The network has invested $30 million in the development and acquisition of original French-language productions. “We have seen some success, however, the effects will not be felt as of September 2009.” TQS also expects to beat the Aug. 31, 2001 deadline for the switch to digital. It estimates the transition will cost $50 million, although it also says the process might not be feasible in some remote areas. Despite the optimistic outlook, Rémillard warned that TQS still faces an uphill battle in the market, arguing that it can’t compete with specialty channels owned by its competitors and that the network needs another revenue stream. Like other broadcasters, it supports a fee-for-carriage regime, and criticized the CRTC for allowing rules that favour BDUs at the expense of conventional broadcasters. “An imbalance exists today and it has to be corrected,” Rémillard said. But when asked by Bloc Quebecois Heritage critic, Carole Lavallée why TQS needs new revenue when its market share had increased, Rémillard replied that greater audience share has not translated into an increase in ad revenues. “We are eager to see that but this is a long-term process. To put a network back on the rails takes time.” Rémillard wouldn’t commit to using carriage fees for local programming, saying the money would be used to meet TQS’s obligations and ensure quality service. Asked if the network will survive solely on ad revenues, Rémillard said it’s difficult to predict in light of the current economic turmoil facing broadcasters. He also suggested that the $20 million earmarked for Quebec through the Local Programming Improvement Fund likely wouldn’t be enough to help the 33 stations in the province, including TQS. Rémillard also strongly objected to any moves to avail LPIF funds to the CBC-Radio Canada. On Monday, Hubert Lacroix, CBC president and CEO told the committee that the public broadcaster would apply for LPIF funds, despite speculation that it would not be eligible because of its reluctance to divulge expenditures. “For CBC/Radio-Canada, access to this fund is vital and it will allow us to improve and enhance our local programming in eight English-language and 12 French-language stations,” he said. Rémillard also proposed a tax credit for information workers to support local programming, describing it as “an incentive to produce over and above our obligations.” Bloc MP Roger Pomerleau said the call for a tax credit suggests carriage fees would not be enough, to which Rémillard replied: “There are tax credits for the film industry, why not for the broadcast industry?” On May 25, CRTC chair Konrad von Finckenstein is scheduled to make his second appearance before the Heritage Committee.

TQS fortunes improving but not out of the woods yet, president tells MPs

Broadcast | April 30, 2009

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