by Steve Faguy
GATINEAU – With the recent, unexpected and much-publicized denial of Bell Canada’s purchase of Astral Media (because the players didn't prove the transaction to be a net benefit to Canadians) as a backdrop, the CRTC made it clear to Rogers Media Wednesday that its tough line isn't limited to Canada's largest media company.
At a hearing in Gatineau on Wednesday, the commission grilled Rogers, Channel Zero and a Montreal-based start-up on their multi-part plan to essentially convert ethnic television station CJNT Montreal (branded Metro 14) into two television stations, allowing Citytv to enter Canada's second-largest city.
The proposal goes like this: Channel Zero, which bought CJNT and Hamilton's CHCH from Canwest Global for $12 in 2009, will sell CJNT to Rogers for $10.3 million, so the latter can convert it into a Citytv station. Channel Zero, which said it spent $4 million on the station since acquiring it, said it plans to use the money to help CHCH survive the loss of the Local Programming Improvement Fund, as well as finance the launch of new TV channels for which it has applied to the CRTC, but has not yet publicly announced.
To get the Commission to approve the deal and a conversion of the existing license from an ethnic to an English broadcast license, Rogers proposes to use the 10% of tangible benefits funding from the CJNT purchase to fund programming on a new fully-ethnic television station to be called ICI (International Channel/Canal International).
Though more complicated than Rogers simply applying for a new licence, moving this way allowed Citytv programming to air on the station immediately through an affiliation agreement, rather than wait two years for a new licence to be approved, Rogers executives said.
CRTC chairman Jean-Pierre Blais called the plan a "back-door approach" to entering the market, but admitted that there wasn't anyone "knocking at the front door" to launch a new conventional television station in Montreal.
Rogers plans to program CJNT similarly to how it does non-Toronto Citytv stations: a three-hour local morning show on weekdays and a weekly half-hour sports show (which would also air on Rogers Sportsnet). It would have no evening newscast. Rogers said it does not feel it can compete directly with those from CTV, Global and CBC and Rogers Media president Keith Pelley said the company would not agree to a condition of license requiring an evening newscast.
Rogers said adding a Montreal station would fill the main hole in its network preventing national advertisers to come on board, unlocking $10 million in sales in addition to the $7 million the station itself would generate. It specifically cited L'Oréal, which budgets $82 million a year for network television that Citytv can't access.
The treatment of Rogers was light compared to that of Channel Zero, the station's current owner. Commissioners aggressively questioned the Toronto-based company on what vice-chair Tom Pentefountas called an apparent "gross non-compliance" with its ethnic programming obligations. Channel Zero president Cal Millar countered the station has in fact been complying, as evidenced by its schedule, but that some fault with the logs, which went unnoticed for years, is not categorizing its programming properly. The Commission gave the company two weeks to prove it by redoing the logs for September.
Pentefountas also criticized the station for having no mention of ethnic programming on its website (www.metro14.ca), which makes it seem as if the station is ignoring the very nature of its licence.
Commissioners were also tough with ICI, whose parent, a numbered company owned by Montreal's Norouzi family, has been in ethnic broadcasting for decades and produced shows for the cable access channel that grew into CJNT. The proposed station would be run as a co-operative, where show producers sell their own advertising to their communities. Unlike CJNT or OMNI, which rely on profits from airing U.S. primetime shows (mostly repeats) to fund the rest of the schedule, ICI would be 100% ethnic programming, at least at first.
Rogers praised the plan, and even said it was looking "very, very closely" at it to see if it could run OMNI stations under a similar formula, noting its business plan is suffering from fragmentation. Ratings have fallen on OMNI’s U.S. programming since viewers can watch old episodes of Two and a Half Men, for example, in dozens of places.
Though not critical of the ICI per se, commissioners were very skeptical that its financial projections, which call for selling almost $5 million a year in advertising by the end of the first licence term, were realistic. They also questioned whether the station could get off the ground without promised financing from Rogers and Channel Zero. Neither of those is guaranteed because depending how the Commission rules, either company could end up running CJNT as a competitor to ICI.
"We need a little bit more comfort to… give us that warm fuzzy feeling that yeah you have passion but also a plan," Blais said. (The above quote was has been corrected from our original piece as we had mistakenly used the word "cash" instead of "passion". We regret the error.)
The CRTC has multiple options available to it: It could approve both applications as submitted; it could approve both but keep CJNT an ethnic station (unlikely since it would turn the two stations into competitors); it could deny ICI but approve the Rogers purchase (probably maintaining ethnic obligations); it could approve ICI but deny the Rogers purchase; or it could say no to everything.
Rogers said it could live with CJNT remaining an ethnic station, provided it's relieved of the most restrictive licence condition that requires 75% of programming from 8 to 10 p.m. be ethnic. With that in place, it said it couldn't hope to make a profit and would walk away from the deal.
But an ethnic-Citytv hybrid (dubbed the "Frankenstein model" during the hearing) is not an ideal solution for either Rogers or ICI.
The applications have met little opposition from third parties. Bell Media submitted a written intervention opposing the CJNT purchase on procedural grounds, saying Rogers should apply for a new licence. Shaw, which noted that its Global station in Montreal is launching a morning show of its own in the coming months, said Rogers was being overly optimistic in financial projections. But it didn't oppose the application.
Neither Bell nor Shaw asked to appear at the hearing. The five groups which made presentations all support bringing Citytv to Montreal, but want more money spent on independent local programming by the English-language minority in Quebec.
The CRTC continues with Item 3 on its agenda tomorrow, where it is calling CHMZ-FM of Tofino, B.C. on the carpet to explain “apparent non-compliance” with its license obligations before considering a change in its ownership.
