SATELLITE CAMPAIGN HINGED ON COMPROMISE Appeal played out in corridors of power Simon Tuck – Globe and Mail After getting the thumbs up from Ottawa less than two months ago to broadcast dozens of new satellite radio stations, John Bitove Jr. did what most entrepreneurs would do: He moved as quickly as possible to turn his opportunity into a business.
Mr. Bitove, 44, best known for his fast-food restaurants and efforts to bring NBA basketball and the Olympics to Toronto, was keenly aware of the importance of first-mover advantage in a budding industry. Racing against the clock, he hired, negotiated, and, just a day after being granted a licence, announced that he expected to launch an initial public offering to help pay for the rollout. The goal was to hit the consumer market in time for the busy Christmas shopping season, just six months away.
"I spent millions," said Mr. Bitove, head of Canadian Satellite Radio Inc.
Amid the flurry of activity, however, there was one thing the energetic businessman now acknowledges didn't get enough attention: politics.
The licences awarded to CSR and two other firms had been appealed by a host of industry players, including CHUM Ltd. of Toronto and Astral Media Inc. of Montreal, whose joint bid for a licence to offer land-based subscription services had also been approved. The appeal was quietly gaining momentum among some Liberal MPs who have had little opportunity to exercise their nationalistic muscles in recent years, and recognized an opportunity to wrap themselves in the flag just months before an election.
The satellite guys' efforts over the last couple of weeks to turn the momentum in their favour, which required a change in strategy and counsel from an old political hand, turned out to be almost a textbook case for doing business in Ottawa.
For Mr. Bitove, meanwhile, it was a crash course in politics -- a course that paid off Friday when a cabinet committee rejected the appeal from CHUM-Astral and their supporters.
But losing track of the political part of the battle was an oversight that almost cost CSR and Sirius Canada Inc., the other satellite company poised to hit the market, the licences they had been working on for years. In an industry that proponents compare to the early days of cable TV, tens of millions of dollars could have been left on the table and dozens of employees could have been out of work.
During the scramble to set up shop since being awarded their licence, Mr. Bitove and his troops lost focus of their opponents' activities, largely because the two sides had been fighting on different battlefields. CSR was hunkered in its Toronto offices putting the building blocks in place for a new business, operating under the belief that it had its licence and that its work in Ottawa was basically done.
CHUM-Astral, meanwhile, was conducting a behind-the-scenes lobbying campaign in the restaurants and corridors of downtown Ottawa. And that lobbying, resting largely on the argument that the satellite licences were a threat because they lacked Canadian content and French-language services, was starting to pay dividends.
In late August, the sleeper issue became a cause célèbre at the Liberal caucus meeting in Regina. Nationalist-leaning MPs took turns during various caucus meetings to bash the Canadian Radio-television and Telecommunications Commission decision.
And Heritage Minister Liza Frulla was already an obstacle to the satellite guys' plan for continent-wide programming. A former Quebec broadcaster known as a passionate supporter of Canada's cultural industries, Ms. Frulla is also a Montreal MP whose riding is expected to be a toss-up in the next election between her party and the separatist Bloc Québécois.
Mr. Bitove's side was clearly in some trouble and there was less than three weeks to go before the government's Sept. 14 deadline to deal with the appeal. The two satellite players had well-heeled backers in the U.S., the support of the giant auto makers that wanted to get satellite radio gear into some 2006 models, and well-placed Ottawa lobbyists, including Martin insiders such as David Herle and Richard Mahoney. But, according to Mr. Bitove, Heritage Canada officials were much better informed about -- and much more receptive to -- the other side's arguments.
In a battle one senior government official described as "David versus Goliath," the little guy was back in it. "The CHUM side did a very good job of selling their case," said a government official. "If you can hit an emotional button, you've got something."
If Mr. Bitove was going to get something, meanwhile, he'd have to take care of a number of buttons in a very short period of time.
For starters, he flew to Regina to confront his naysayers. But the early returns weren't good. Within a couple of hours of arriving in Regina, he was at a Liberal function at the Delta Hotel. A tall man whose voice can carry, Mr. Bitove was turning heads about an hour into the pre-dinner gathering as he got into a heated debate over the licences with Ontario MP Sarmite Bulte, Ms. Frulla's parliamentary secretary and a supporter of just about all things Canadian content.
It got better. He sent an e-mail to his employees that he now refers to as his "Pearl Harbor" message. A public campaign was also needed, but there wasn't enough time to match the lobbying conducted over the previous months by CHUM-Astral. Mr. Bitove reacted with newspaper ads, press releases, and direct contact with cabinet ministers.
But national politics was still foreign territory for Mr. Bitove and his colleagues.
Enter David Peterson, the former Ontario premier. Although he wasn't exactly a Bay Street darling during his time at Queen's Park in the 1980s, Mr. Peterson has since become an influential player in Toronto corporate circles. Unlike business, a zero-sum game where the goal is to trounce your rivals, politics is the art of the compromise, Mr. Peterson told Mr. Bitove. If the satellite players were going to stickhandle through their political problem, they'd have to meet the nationalists half-way -- or at least part of the way.
On Sept. 1, the satellite companies first offered to add a French-language station, although they didn't highlight that it would be at the expense of one of the English-language Canadian stations. Less than a week later, the two firms said they'd offer a 20-per-cent increase in the number of Canadian stations if there was room on the satellite.
Although Ms. Bulte and many other Liberals said the offers weren't enough, a cabinet committee rejected the appeal Friday, after two earlier failed attempts by cabinet to reach a decision.
A government press release said Ottawa "welcomes" the companies' recent requests to have their licences amended. In the release, Ms. Frulla is quoted saying she's pleased with the new offers and that the debate led to an "intense dialogue."
Mr. Bitove, who praised Ms. Frulla's efforts to get Canadians a better deal, is pleased that he got his licence -- and a compromise. |