Shaw Communications Inc. has walked away from its deal to buy three struggling CTV stations for a dollar, a deal that surprised the television sector several weeks ago when it was announced.
No reason was given for the cable company's decision not to purchase the stations in Windsor and Wingham, Ont., and Brandon, Man. However, CTV had said publicly the outlets were losing money and that it planned to shut them down if a buyer couldn't be found.
Responding to claims CTV executives made to the federal broadcast regulator that the stations needed regulatory relief and were in such poor shape they could not be sold for a dollar, Shaw chief executive officer Jim Shaw said his company would take the offer and prove that it could make them work.
Shaw could not immediately be reached for comment to explain the decision. However, the company had spent the past month touring the three TV outlets and going over the financial books. The stations belong to CTV's secondary A Channel network. It is believed Shaw officials did not like the financial situation at the small-market stations.
CTV is owned by CTVglobemedia Inc., which is also the parent company of The Globe and Mail.
The announcement came on the same day rival TV network CanWest Global Communications Corp. reached a deal to sell two smaller TV stations in Hamilton and Montreal belonging to its secondary E! network.
Channel Zero Inc., a broadcaster that owns specialty TV stations Movieola and Silver Screen Classics, is the buyer of the CanWest stations, and plans to operate the Hamilton station, CHCH, as a mostly news channel, while showing movies in prime time.
CanWest is also trying to sell off other E! stations in cities like Kelowna and Victoria, and those, too, could be shut down by the end of August if a buyer isn't found. CanWest said the amount it received for the stations was not material to the company's financial situation, and suggested the biggest gain was eliminating the drag those TV stations had on the rest of its businesses.
Cal Millar, the vice-president of Channel Zero, said the company believes it can run the two stations as a profitable operation, which CanWest said it could not.
CTV and CanWest told regulators this spring that they needed to get out of operating secondary conventional networks, and argued that the conventional broadcasting sector, which includes stations that can be picked up by antennas rather than using cable or satellite receivers, is financially challenged.
The networks have argued for financial or regulatory relief. It is expected that next week, the Canadian Radio-television and Telecommunications Commission will disclose whether it plans to increase a special fund that collects money from cable and satellite companies and distributes it to small market TV stations.
The fund began last fall, and requires cable and satellite companies to contribute one per cent of revenue, but the TV networks argue it should be higher, at two per cent or more.