TORONTO – With an initial investment of $125 million, pay TV license hopeful Spotlight TV “will transform pay TV into a compelling, choice-filled, high-value entertainment option for Canadian viewers,” said George Burger, president and CEO of Spotlight Television
“The whole category will benefit from a new competitor as Spotlight builds awareness of the advantages of premium pay TV.”
For an exclusive www.cartt.ca story on one of the other appicants and its plans, click here.
Canadian Pay TV penetration has lagged far behind the U.S. market. Currently, approximately 18% of cable and satellite homes subscribe to pay TV, compared to over 52% of homes in the U.S. In addition, half of U.S. pay TV homes subscribe to two or more competing services, combining HBO, Showtime and Starz! (However, in the U.S., cable companies sell all their cable channels, including HBO, Starz! and Showtime in giant, all-inclusive cable bundles. There, you either have cable or you don’t. There are no distinctions between specialty and pay, as there are in Canada.)
“This is an opportunity to reinvigorate the whole category. Our extensive market research clearly shows a pent up demand for a vibrant, competitive pay TV platform that will provide more excitement and more choice,” Burger added in this morning’s press release.
Spotlight’s research found that:
ª 80% of current Canadian subscribers favour a move to a competitive model – and over 50% would take both an existing service (provided by the incumbents, TMN or Movie Central) and a new service.
ª 60% of non- and former pay TV subscribers with digital or satellite service in their homes would subscribe under a competitive model
ª 25% of analogue TV subscribers would move to a digital or satellite service if more recent movies and original programming were available.
With a proposed investment of $125 million, Spotlight envisions the doubling of the pay TV market during its first license term, driven by an industry-leading marketing strategy that will provide long-term benefits for audiences, the Canadian production industry and the whole category.
“We believe that by licensing Spotlight and introducing competition to this platform everyone wins, even the incumbents,” Burger said.
ª For Canadian viewers, continues the press release, “Spotlight will deliver more choice, up to seven new channels of recent theatrical feature films and top-quality, made-for-pay original television programming;”
ª For the Canadian feature film and television drama industry, Spotlight will invest more private capital to help finance their projects – as much as $170 million in incremental Canadian content expenditures over the first seven years, driven by revenue growth generated by the new competitive landscape; and
ª For cable and satellite services, Spotlight will offer more quality content to enhance the value of their digital services, helping to drive conversion from analogue TV.
The benefits to the Canadian production industry say that during Spotlight’s two year start-up period it will spend $35 million on Canadian content as a guaranteed commitment against 32% of gross revenues, to be spent as license fees and investments in theatrical feature films and original made-for-pay TV drama, comedies and documentaries.
“Our commitment to Canadian feature films and premium original programming is a central element of our business strategy. We do not propose to become a production company; we will leave that to the many talented independent producers in Canada. We will however pursue an active role in developing and financing projects, with a view to creating the kind of top-quality content that will help to build our brand,” said Burger.
Spotlight Television Inc. is a joint venture between Burger, formerly the executive vice-president of Alliance Communications Corp., and Spotlight LP, a limited partnership controlled by Kilmer Van Nostrand Co. Limited, through its related entities, Insight Sports Ltd. and Kilmer Enterprises Inc. Operating under the brand Spotlight, the company was formed to introduce competition and consumer choice to the premium pay TV market, which is currently made up of regional monopolies controlled by Astral Media (TMN-The Movie Network, MoviePix, The Family Channel, SuperEcran) and Corus Entertainment (Movie Central, MovieMax).
At Alliance Communications Corporation in the four years ending with its merger with Atlantis Communications Ltd., Burger was responsible for all of the company’s strategic and corporate finance activities. He was instrumental in Alliance’s expansion of the distribution business into the United Kingdom in 1997, and the successful application for History Television.
Kilmer Van Nostrand is a private investment company with substantial interests in the infrastructure sector (Lafarge North America), manufacturing, and sports and entertainment (Maple Leaf Sports & Entertainment Ltd. and Insight Sports Ltd.), as well as the private equity market, through its fund, Kilmer Capital Partners.
Insight Sports Ltd., led by its president and COO, Brian Cooper and chairman and CEO, John Brunton, is a television broadcasting company that has substantial investments in Score Media Inc. (The Score) and The NHL Network and will be launching The Global Fishing Network in 2005. As well, Insight Sports produces programming for broadcast television (Be A Player, The Business of Sports, CFL Crunch, ICE), in-arena scoreboards and DVD home entertainment (Gold Rush 2002, Ultimate Gretzky). Mr. Brunton is also president and CEO of Insight Productions Ltd.(Canadian Idol, Ready or Not, The Juno Awards, The Sean Cullen Show). In addition to Mr. Cooper and Mr. Brunton, Insight’s principal shareholders include Kilmer Enterprises Inc. a subsidiary of Kilmer Van Nostrand, MWI & Partners, a private equity fund, and IMG, a global force in athlete representation and event management.
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