'TWIN STICKS' AT HEART OF LATEST TV BATTLE CRTC ruling will dictate whether assets are sold Grant Robertson – Globe and Mail When CTVglobemedia Inc. goes before the federal broadcast regulator Monday to seek approval for its $1.4-billion purchase of CHUM Ltd., the question looming over the hearing is whether it will be forced to sell off more assets to get the deal cleared.
Despite selling 10 television stations to Rogers Communications Inc. for $137.5-million a few weeks ago — a pre-emptive bid to appease the regulator — there is a chance the Canadian Radio-television and Telecommunications Commission could ask for more.
The decision will come down to a debate between CTVglobemedia and its rival CanWest Global Communications Corp. over a strategy known within the TV industry as “twin-stick” networks, and whether such an approach should be allowed.
When CTV bought CHUM last summer it acquired 33 radio stations, 21 specialty cable channels (including names such as MuchMusic and Bravo) and a national TV network under the A Channel and CITY-TV banners.
This month, CTVglobemedia sold six A Channel stations (in Victoria, Windsor, Wingham, Ont., London, Barrie, Ont., and Ottawa) and four smaller channels to Rogers, but it wants to keep the CITY-TV assets.
Those stations serve larger markets such as Toronto, Calgary and Edmonton, which are much more lucrative in terms of ad sales.
But if CTVglobemedia is allowed to hold onto CITY-TV, CanWest argues it would give the company a twin stick — or two conventional stations — in several markets. CRTC rules state that one company can only own one conventional TV station per market.
CTVglobemedia, however, is expected to argue that CanWest has already been granted the right to operate twin-stick networks in some markets with Global and its secondary CH network.
CTVglobemedia, which owns the CTV network and The Globe and Mail, will likely argue that such a model sets a precedent for its deal to buy CHUM and operate CITY-TV alongside CTV in several cities. CanWest operates more than one station in markets such as Toronto-Hamilton and Vancouver-Victoria.
The company will also argue that CanWest operates a twin-stick network in places such as Calgary and Edmonton, where the signal for its Red Deer, Alta., CH station is carried in those two larger cities.
CanWest denies that its exemptions clear the way for the CHUM deal to happen.
CanWest says its stations in Hamilton and Red Deer, for example, are required to run local programming and are prevented from soliciting advertising in the adjacent markets, though ad buyers can place ads in those cities if they choose. Meanwhile, CTV would have two local networks in several major cities, CanWest says, with access to local ad dollars.
How the CRTC rules on the twin-stick debate will dictate whether CTVglobemedia is required to sell off further assets, potentially including some of the CITY-TV stations, to have the deal approved. In the past, the regulator has forced firms to divest acquired broadcast properties to lessen concentration in certain markets.
CTVglobemedia will also argue the CITY-TV assets were under pressure to squeeze out profits for CHUM, and the deal will make them more stable. |