CRTC denies CHUM TV licences for Edmonton, Calgary markets

The CRTC has refused to grant licences to CHUM Ltd. for over-the-air TV stations in Calgary and Edmonton, with a retransmitter in Red Deer AB. In the long run, though, the decision is likely to be just as beneficial to CHUM as it is to Craig Media Inc., which has its base in the Alberta market. In its February 26 decision, the regulator lists a concern about the negative impact approving CHUM’s applications would have at this time compared to the potential benefits of additional local programming as the reasons for denying CHUM’s bid (Broadcasting Decision 2004-98). The CRTC saw things differently when it licensed new entrants in the Toronto market two years ago (CCR, June 7/02). CHUM then used many of the arguments that Craig made in the Alberta licensing hearing, but in the Toronto case, the CRTC felt the market was large enough for new players. Perhaps the commission misjudged, as Craig’s Toronto station struggles so badly that it has affected the financial wherewithal of its other media holdings. The CRTC may have decided not to go down that road in Alberta. But the decision could be a blessing in disguise for CHUM, which likely would have found its resources strained in attempting to launch stations from the ground up in Alberta. The Toronto-based broadcaster is still struggling with its Vancouver and Victoria stations, and has had to cut staff at its B.C. operations and combine the master control operations of both those stations. But CHUM president and CEO Jay Switzer says that his company hasn’t given up on the Alberta market, where CHUM already owns part of Learning and Skills Television of Alberta Ltd. "Though we are obviously disappointed, we nevertheless respect the commission’s decision. We maintain our belief in the strength and importance of the Alberta market and remain committed to finding a way to provide local television service to Albertans," he says. "We will continue to pursue any acquisition or licensing opportunities that may arise in the near or medium term." With Craig Media’s assets up for sale, it makes more sense for CHUM to attempt to acquire the A-Channels already operating in the market than to launch similar competing stations. Because CHUM’s programming is aimed at the same younger demographic targeted by Craig’s A-Channels, CHUM’s entry would have had the most drastic effect on Craig. As well, the licensing of new channels in the Alberta market would have decreased the value of Craig Media’s channels, which have been put up for sale due to financial pressure forced on the company from its sluggish new conventional station in Toronto, which has been unable to meet the sales targets in its business plans. "Although the financial data now available for 2003 indicate substantial improvement in the performance of the Calgary and Edmonton markets, the commission is not prepared to view the data for 2003 as conclusive evidence that the Calgary and Edmonton television markets could support the licensing of new stations at this time," reads the CRTC decision. In the 2002 broadcast year, the private conventional stations in the Edmonton, Calgary and Red Deer markets together accounted for 85% of advertising revenues earned by television stations in Alberta. The average profits before interest and taxes (PBIT) margin for the private conventional TV stations operating in these three markets declined from 19.9% in 1997 to 9.2% in the 1998 broadcast year, the year Craig launched its A-Channels in Edmonton and Calgary. In the 2002 broadcast year, the average PBIT margin for the private conventional TV station in those three Alberta markets was 9.3%. The CRTC used the same rationale of the negative effect on the existing stations, plus excessive media consolidation, in refusing an application by CanWest Global Communications Inc. to add new transmitters for its CKRD-TV Red Deer station in Edmonton and Calgary. Global also asked to disaffiliate its Red Deer station from the Canadian Broadcasting Corp. so that it could run its own programming schedule. The move would have essentially allowed Global to operate new channels in the three markets targeted by CHUM. In its decision, the CRTC noted that approval of Global’s proposal would allow the broadcaster to duplicate its coverage with alternative programming in these markets, since it already operates existing stations in Edmonton and Calgary. "Approval would allow Global to increase its revenues by means of two program schedules and inventories or the sale of national advertising in Calgary and Edmonton. Both services would have full simulcasting privileges. In addition, Global would enjoy increased opportunities for cross-promotion and for counter programming against the schedules of its competitors," the CRTC decision reads. Furthermore, the commission notes CanWest is already the leading media ownership group in Alberta. "Global’s stations earn more than 45% of conventional television advertising revenues and CanWest’s newspapers are responsible for more than 60% of the daily newspaper circulation in the province," the commission points out. "Approval of Global’s applications, as submitted would strengthen CanWest’s presence in Edmonton and Calgary, and increase the level of concentration of ownership and of cross-media ownership in these markets."

CRTC denies CHUM TV licences for Edmonton, Calgary markets

News | 02/27/2004 5:00 am EST

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