Joined: 02 Mar 2009
|Posted: Fri May 01, 2009 8:24 am Post subject: Shaw wins three CTV stations – for $1 each
|Shaw wins three CTV stations – for $1 each
Article Comments (18) GRANT ROBERTSON
From Friday's Globe and Mail
May 1, 2009 at 4:38 AM EDT
The feuding between Canada's major television networks and its big cable companies reached a new level yesterday when Shaw Communications Inc. offered to buy three stations CTV said it must close after the broadcaster could not find a buyer - even for a dollar.
The $3 offer, which came late in the day from Shaw, was quickly accepted by CTV after the network told federal regulators this week that it planned to shut the stations in Windsor and Wingham, Ont., and Brandon, Man., because they could not make a profit.
Canada's cable companies have attacked the TV networks, accusing them of crying poor to the Canadian Radio-television and Telecommunications Commission this week at regulatory hearings. The networks want the right to charge cable and satellite companies for their signals, saying local stations need the money to continue.
Cable operators such as Shaw believe the networks are overstating their financial woes.
In accepting the offer through a press release, CTVglobemedia Inc. chief executive officer, Ivan Fecan wished Shaw luck in trying to make the stations profitable.
"I think it's great," Mr. Fecan said. "We've accepted their offer of $1 per station. Cable is rolling in money and can obviously afford to underwrite the losses."
Earlier in the day, Shaw chief executive officer Jim Shaw said the small TV station his company owns in Kenora, Ont., which was acquired in a deal to buy that city's cable operator, makes a small profit a year of about $200,000. "It doesn't make huge money, but it's profitable," he said. The cable company doesn't see why it can't pull off a similar feat in the other cities. "Maybe it's time that we look at TV different in Canada," Mr. Shaw said. "There's lots of bright people around in Canada, and because [the networks] can't figure it out is not our issue."
Presumably, Shaw Communications will have to perform due diligence on the assets. Though Mr. Shaw could not be reached last night after CTV accepted the offer, he said earlier in the day that his offer was genuine.
"Good for them," Mr. Fecan said of Shaw. "I'm sure they will live up to the existing conditions of licence placed on these stations, which is wonderful news for the employees and for the people of Windsor, Wingham and Brandon," Mr. Fecan said.
Upping the ante, Mr. Shaw also extended the offer to any stations CanWest Global Communications Corp. CGS-T wants to unload for the same price. CanWest has said it may need to shut down some of its small-market stations under the E! brand, which are losing money.
CTV and Global are appearing before the federal broadcast regulator this week seeking major changes to the industry. The networks have argued this week that conventional television is in decline, and several small-market stations are no longer economically viable.
The rising cost of producing local programming amid a fragmentation of audiences and ad dollars due to the proliferation of cable channels and online broadcasting has left several stations struggling to turn a profit.
The TV networks say conventional stations need the right to collect subscriber fees from cable and satellite companies, the same way specialty channels do. Those channels, including dozens owned by CTV (such as TSN and Bravo) and CanWest (Showcase and HGTV) are more stable since they don't rely solely on advertising dollars, which have been hit hard in a recession.
The networks say they shouldn't be forced to give their signal away for free to the cable and satellite carriers. However, the distributors are vowing to pass the proposed 50 cent monthly fee per subscriber on to their customers if it is approved.
At the hearings, Mr. Fecan accused cable companies of holding consumers hostage in the debate by vowing to pass any new fees on to consumers, and suggested it was time for the government to regulate cable bills again. There is no reason the cable companies must pass any fees onto consumers, CTVglobe chief executive officer Ivan Fecan told the CRTC.
"If the [cable and satellite carriers] insist on holding subscribers hostage, perhaps it is time to regulate basic cable rates again," Mr. Fecan said. "In the United States, when [cable and satellite companies] kept raising rates and resisting paying for local stations, the government stepped in and protected viewers by re-regulating the basic rate and ensuring that local stations could get a fee for the important service they provide."
Mr. Fecan also questioned why regulators haven't stood up more to the cable carriers' threats to pass any fees to subscribers. Cable operators such as Rogers Communications Inc., which appeared at the hearings earlier in the week, said they see no reason why they should shoulder the cost of paying networks for the signals, given certain conditions currently granted the networks - such as guaranteed placement on the dial. "I might ask, why everyone here in Canada is so afraid of cable?" Mr. Fecan said. CTV is owned by CTVglobe, which is also the parent company of The Globe and Mail.
The CRTC has proposed creating a fund to help small-market TV stations make local programming. Cable and satellite carriers would be required to contribute 1 per cent of their revenues, which local stations in markets of less than one million people could draw on. The broadcasters have said that such a fund, worth between $60-million and $70-million, would not be enough to address the problem.
CTV said the company has cut costs through a series of layoffs and is closing money-losing stations in Ontario and Manitoba. CTV also told the CRTC that executive bonuses are based on financial success, and given the present climate those have been "significantly" reduced.