CTV'S CHUM PROPOSAL GETS CHILLY RECEPTION If it bends rules, CRTC fears sheer size could make network 'national predator' Grant Robertson – Globe and Mail If Canada's broadcast regulator is to approve the $1.4-billion takeover of CHUM Ltd. by the owners of CTV Inc., the deal will require an unprecedented bending of federal rules, network executives have been told.
The transaction, which would see CHUM's 33 radio stations, 21 specialty channels and its conventional TV assets sold, amounts to Canada's highest-rated network, CTV, taking over the No. 3 player.
It would also require the regulator to allow CTV to own two local TV stations in five major markets across the country, something that contravenes the CRTC's rules.
"What you are asking for ... there has never been an exemption application of that nature," Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission, told CTVglobemedia Inc. yesterday.
The comments came during the first day of CRTC hearings into the takeover, which was announced last summer, and illustrate the challenges the broadcaster faces in getting the deal approved.
Mr. von Finckenstein, a former Federal Court judge who was appointed by Stephen Harper to run the regulator in January, challenged network executives to see the deal through his eyes, despite previous exemptions given to other broadcasters to operate dual stations in certain markets.
CanWest Global Communications Corp. has them in at least two markets, but the CHUM deal's approval would require exemptions in several of Canada's major markets, unless some of the assets are sold.
"Put yourself in my shoes," Mr. von Finckenstein said. "We have this rule of one station per market, per language. ... You're asking us to make an exemption for five stations. How can I explain that? How can I justify it, and still maintain any credibility... ?"
CTV has argued in submissions that CanWest operates two networks - Global and CH - in five of Canada's biggest markets. However, CanWest argues that in cities such as Calgary and Edmonton, the CH station located in Red Deer, Alta., is carried as a distant signal and can't solicit local advertising in the major centres.
CTV attempted to alleviate some of the regulator's concerns about concentration of ownership prior to the hearing. Last month, it sold 10 of CHUM's TV stations, including its six-station A Channel network, to Rogers Communications Inc. for $137.5-million. But even with that divestiture, it would still own two local stations - its own, and those under CHUM's CITY-TV banner - in five markets: Vancouver, Calgary, Edmonton, Winnipeg and Toronto.
But CTVglobemedia CEO Ivan Fecan said the future of the CHUM assets may depend on them having access to a bigger owner with deeper pockets. The network produced charts to show the bleak financial situation of CITY-TV, whose flagship station in Toronto may post its first-ever operating loss this year.
As CTV and Global battle each other to buy the top-rated U.S. shows, which drive ratings, programming budgets have been escalating. Meanwhile, competition from other media, including the Internet, has made it tough for mid-level broadcasters like CHUM to keep up with audiences while keeping costs in line, Mr. Fecan said. CTVglobemedia also owns The Globe and Mail.
"Our system is under increasing strain, a strain seen most clearly in conventional television where the CITY stations are teetering on the financial edge," Mr. Fecan said. "The approval of this application not only ensures the survival of the CHUM services, it will give the people of CHUM the opportunity to once again be risk-taking trail blazers."
Facing a barrage of questions over the exemptions the deal requires, CTV executives said the company is willing to give up something no broadcaster has ever offered - pledging to have no duplication in programming between the CHUM's CITY-TV channels and the parent CTV network, should the deal be approved.
"This guarantees that both screens will remain measurably and demonstrably different," Mr. Fecan said.
In cases where exemptions to the one-station ownership rule have been granted before, some duplicate programming runs on both channels. CanWest has exemptions allowing it to own two stations in the Vancouver-Victoria and Hamilton-Toronto markets, where they are allowed to have a Global and CH outlet in each.
CHUM also had similar provisions in place to operate A Channel and CITY-TV in some adjacent markets.
CTV argues those exclusions are precedents for its application. "We're the only ones that don't have exemption from the policy," Mr. Fecan said.
Mr. von Finckenstein said he was concerned the combined company could go from being a national champion - as it has touted itself in the proposal - to a "national predator" because of its sheer size. Mr. Fecan said the CRTC will be able to keep CTV on a "short leash." |