GATINEAU – Back in June of 2007 when CRTC chairman Konrad von Finckenstein was just about five months on the job, the Commission denied CTVglobemedia’s request to keep the Citytv stations as part of the company’s purchase of CHUM Limited.
Since CTVgm (now Bell Media) already owned CFTO-TV in Toronto along with existing stations competing in Citytv’s other markets, the Regulator held firm to its one broadcast station per market policy of the same language, disallowing that portion of the sale. Weeks later, Rogers Communications stepped forward to buy the Citytv stations.
When it issued its decision then, the CRTC noted allowing CTV to take over the Citytv stations “would be inconsistent with the Commission’s common ownership policy. That policy stipulates that a licensee may not operate more than one conventional television station in one language in a given market.”
“The purpose of this policy is to maintain diversity of voices within the Canadian broadcasting system,” said von Finckenstein at the time.
After examining Bell Media’s request to add repeater transmitters in the Golden Horseshoe (in Hamilton and St Catharines) for Barrie station CKVR (now A Channel and soon to be rebranded CTV2), the other broadcasters in the Greater Toronto Area have told the CRTC nothing has changed since 2007 that should permit Bell Media to expand an additional conventional station in an already overcrowded GTA TV market (also known as the Toronto Extended Market, or Toronto EM) that has seen the most recent addition flounder so badly that it has been turned into a digital specialty channel (Toronto One-SunTV-Sun News).
Even going back to 2005, the CRTC turned down an independent TV station application for the St Catharines and Niagara region saying it was a back-door way to get at the lucrative Toronto market which couldn’t support any more TV competition anyhow. CTV opposed that application back then.
However, Bell’s application notes that this is not a big deal but just a way to help an ailing station in Barrie that is already carried by most BDUs anyway, and the new transmitters will force carriers west of Oakville to simultaneously substitute its signal and boost CKVR’s revenue. As an extra-regional station in Hamilton-Niagara, carriers do not currently have to do any simsub when the Barrie station airs its American programming.
“And while CKVR-TV can sell national advertising throughout the Golden Horseshoe already, the lack of simulcast results in the station being sold at a discount,” reads the Bell application for the new transmitters.
“(A)dvertisers place a high value on full coverage for a station buy. Unfortunately, with CKVR-TV’s lack of full simulcast opportunities, Bell Media cannot sell ad time on the station at full value,” continues the application.
“Bell Media estimates that if our application were to be approved, we would see an increase of revenue on an annual basis of approximately $2 to $2.5 million dollars… This increase in revenue will largely come at the expense of U.S. border stations that sell in the region given both the low price point that these stations offer and the fact that CKVR-TV would be repatriating ratings from these stations, who notwithstanding provisions in the Income Tax Act to discourage selling into Canada, continue to do so aggressively.”
This bit is baloney, according to the intervention filed by Channel Zero, which owns Hamilton’s CHCH, the station most likely to suffer from a new competitor in its primary market. The Canadian ads which appear on the Buffalo stations are often from the likes of Canadian attractions such as Marineland or large retailers who are attempting to draw Americans across the border to spend and thus choose to spend with U.S. stations for that reason.
The increase in revenue is more likely to come out of the pockets of existing broadcasters say Channel Zero, Rogers Media, Shaw Media and CBC.
“The approval of Bell’s applications would have such dire consequences for CHCH that no such approval should be considered without a full public hearing… to evaluate the basis of Bell’s applications, and the impact of these applications on all stakeholders,” reads the Channel Zero intervention. The company notes CHCH is still a fragile operation that would have a difficult time handling hits to its revenue.
“The applications, if approved, would result in the creation of what will be, in effect, a complete second Ontario regional network owned by what is already Canada’s largest vertically integrated broadcaster/distributor,” says CZ.
(As most will know, Bell Media also owns stations in the Windsor and Ottawa markets, giving it already very strong coverage across Southern Ontario.)
“While Bell claims that approval of its applications will have no impact on other stations in the Toronto/Hamilton EM, this assertion is blatantly false and defies the facts. As our evidence will demonstrate, Bell’s projected annual increase in revenue of $ 2M to $ 2.5M will in fact be closer to $ 8,875,000 and will come from all of the other existing OTA broadcasters in the Toronto/Hamilton EM, and will not come at the expense of U.S. border stations that sell in the region,” continues the Channel Zero submission.
If the application is approved, the new transmitters would give Bell two GTA-wide networks and an unfair competitive advantage over all other broadcasters both when selling advertising and when acquiring programming.
“Rather than repatriating monies from Buffalo border stations, the additional transmitters would allow CTV Two Barrie to increase its revenues at the expense of existing Canadian OTA stations in the Toronto EM,” reads the Shaw Media intervention.
“We submit that the impact will be much greater than suggested by the applicant, especially since it does not account for material changes to the station’s programming and simulcast strategies, and new branding initiatives. Moreover, the Commission should recognize that any increase in CTV Two Barrie’s revenues as a result of these applications will necessarily lead to a corresponding decrease in advertising revenues for other domestic conventional OTA stations operating in the area — including but not limited to CHCH-TV Hamilton, CTS, Global Toronto, CityTV Toronto, and OMNI.1 and OMNI.2 — likely by an amount proportional to each broadcaster’s current audience share,” adds the Shaw submission.
Besides, adds the Rogers Media intervention, the CRTC just finished off a decision on the benefits package for Bell Media which allows tens of millions to be spent directly on its smaller stations, such as CKVR/CTV2.
“CKVR-TV will receive significant support from the tangible benefits package approved by the Commission in Broadcasting Decision CRTC 2011-163 (Decision 2011-163) when it authorized Bell’s acquisition of CTVgm,” reads the Rogers intervention. “Instead of requiring the traditional approach involving the allocation of benefits monies to third parties such as independent producers, the Commission allowed Bell to allocate a significant portion of its benefits package to its own initiatives,” such as $30 million for local programming at CKVR.
“It is clear, therefore, that these applications are intended to provide CKVR-TV with a fully competitive presence in the Toronto market and thereby provide Bell with a second outlet in that market. As such, (Rogers) submits that it is inconsistent the Commission’s Common Ownership Policy (COP) given that Bell would own two English-language stations serving the GTA – CFTO-TV Toronto and CKVR-TV Barrie.
“…If CTVgm’s ownership of the Citytv stations raised an issue with respect to the COP in 2007, then surely Bell’s ownership of an even more extensive CTV 2 network raises similar concerns in 2011,” continues the Rogers intervention.
And at least one ad buyer believes more competition in the market is a bad thing. Added a submission from media buyer OMD, submitted with Rogers’ intervention: “It is OMD’s opinion that CTV Two having a stronger signal will take away from local station coverage while also cannibalizing their own CTV stations. Allowing this will add more competition into the market place, this is not needed in the Ontario right now. There is enough fragmentation already in the market place. Further advantage over the competition will provide Bell with a potential control in the market place.”
In its reply comments submitted July 28, Bell thought it a bit rich that station owners with rebroadcast transmitters in regions of Ontario where they have no local infrastructure and Bell has much (such as Shaw Media’s CIII and Channel Zero’s CHCH, both of which have transmitters throughout Northern Ontario) were objecting to the expansion of CKVR into the Hamilton-Niagara region.
“The Interveners’ stations pull revenues out of some or all of these markets, but contribute nothing back to them and were given access to these ‘distant markets’ on the same basis Bell Media is seeking to expand CKVR-TV’s footprint – by agreeing not to solicit local advertising. It is somewhat ironic that stations licensed to serve the largest television market in Canada are objecting to a station wanting to serve an additional 1/5 of that market when all of these stations have been given access to all the other major markets throughout Ontario to the detriment of the local stations licensed to serve those communities,” reads Bell’s response to the interventions.
Bell’s applications for the two new transmitters also say the company will not solicit local ads in the new transmitters’ regions.
Besides, even if there ended up being no revenue repatriation from U.S. border stations, as the intervenors argue, the market is plenty healthy to sustain what Bell wants, the company insists.
“(Television Bureau of Canada) data show that spot market advertising revenues… in the Toronto/Hamilton market increased by 6.7% over the first nine months of the current broadcast year (September 2010 to May 2011),” reads Bell’s reply comments. “If this rate of growth continues over the remainder of the broadcast year, spot advertising revenues in the Toronto/Hamilton market will increase by $22.8 million, from $340.6 million in 2010 to $363.4 million in 2011. As such, revenue increases for CKVR-TV of between $2 million and $2.5 million could easily be absorbed by natural market growth, with no material negative impact on other broadcasters. In fact, this would be the case even if market growth were to fall to half the current rate (3.35%), resulting in increased market revenues of $11.4 million.”
As for the complaint that letting Bell add the towers is tantamount to violating Commission policy, the company notes “many licensees have been allowed to own two stations serving the same market where one is licensed for that market and one is licensed for a secondary, bordering market. This has been the case in British Columbia with Vancouver-Victoria and in the present situation with Toronto-Hamilton and Toronto-Barrie. In fact, for almost a decade, Canwest Global operated two OTA stations in effectively every market across Ontario with Global and CHCH-TV, achieving much wider coverage than Bell Media would achieve through approval of the Applications.”
The Commission has not yet indicated whether it will hold a public hearing on the matter.
What do you think of this particular scuffle? Does Bell have it right or do its competitors? Let us know in the comments box below or drop us a line at editorial@cartt.ca.
