The battle over local TV

Share

It will be bitter, abrasive, and things could get ugly. But the biggest battle in the TV world next week will not be an ultimate fighting match on cable or a political shout-fest on a 24-hour news network.

The antagonists are the TV industry itself: Canada's big television networks will be squaring off against its largest cable and satellite carriers. Although the setting is sedate - a hearing room in Gatineau, Que. - the bout is likely to exhibit the same sense of discord. At stake is a proposal before the federal broadcast regulator that is potentially worth hundreds of millions of dollars.

It is not the first time CTV, Global and CBC have clashed with the likes of Bell TV , Rogers Communications Inc. and Shaw Communications Inc. over the broadcasters' proposal to charge the cable operators fees for their signals. But this will be their most divisive standoff yet.

In advance of the CRTC hearings, both sides have poured millions of dollars into lobbying campaigns and advertisements aimed at discrediting the other.

The big broadcasters argue the cable giants make huge profits from subscribers without sharing the wealth with the networks that provide their signals. The cable and satellite companies dismiss the networks' campaign as a cash grab, pointing out that they pipe those channels into 90 per cent of homes in Canada, and the broadcasters reap the advertising revenues.

Caught in the middle are viewers, bombarded with attack ads appealing to hometowns and pocketbooks. The broadcasters say they need a fee to stabilize the shaky financial status of small-market stations. Accordingly, their campaign is branded "Save Local TV." The cable industry's push is branded "Stop the TV Tax," seizing upon consumer fears about bigger bills. Both sides urge consumers to contact their MPs.

The contentious proposal has been debated and dismissed twice by the CRTC. But the idea has been rejuvenated because the networks' financial fortunes have eroded in the past year.

The industry now appears irrevocably polarized. One executive said relations between the supplier and distributor sides of the business are at a record low.

In the face of a declining business model, the big networks are proposing to put themselves on the same steady footing as specialty channels, which charge carriers per subscriber for their signals. With the fees worth about $70-million a year to each network, the stakes are high.

The CRTC is also looking at establishing limits on how much money the networks can spend on U.S. programming. The view in Ottawa is that this spending is the bigger problem for CTV and Global, rather than the cost of local TV. Together, these potential changes represent one of the biggest overhauls the TV industry has contemplated in decades.

IN HAMILTON, A SIGNAL SAVED

This mansion cost six dollars.

For less than the price of a movie ticket, the new owners got a stately 150-year-old house, complete with creaking floors, warmly-lit foyer, hand-carved doors - and the TV station housed inside.

In the deal five months ago, the most valuable thing to change hands wasn't the real estate; it was CHCH Hamilton, the town's only over-the-air television station.

"We're very grateful for CanWest not knowing what they were selling," says Cal Millar, whose company Channel Zero bought CHCH from CanWest Global Communications Corp. in June. "It was a real hidden gem."

For Hamilton, losing the station would have been "devastating," says Donna Skelly, an anchor who led a campaign to save CHCH. "Many of us have lived here forever; some of us were born here. We just didn't want to see it go black."

With her immaculately hair-sprayed coif and talkative nature, Ms. Skelly is every inch a TV personality - and she worked that cachet to drum up support. City councillors got on board; the staff talked about buying the station; the community held a rally. There were speeches. People made signs. They brought their dogs.

And then a bidder stepped in: nine-year-old Channel Zero, which owns a few specialty channels, including Movieola and Silver Screen Classics, but the CHCH deal marked its first foray into over-the-air stations.

For CanWest, the sale - whose bill came to $12 with CJNT in Montreal included - was part of an effort to jettison money-losing operations. The real price tag of the deal was Channel Zero's agreement to assume an undisclosed amount of debt and ongoing financial losses at the two stations.

But the purchase also gives the company an opportunity to move up in the broadcasting leagues with a daring programming strategy.

Mr. Millar believes the model he has put in place has the potential to change the TV industry: all-news during the day, old movies at night.

"We're up over 70 hours a week of local news. Maybe people don't understand what 70 hours means. It's a lot," says Mike Katrycz, CHCH's news director. The output amounts to 10 times the local programming that the station's CRTC licence requires. "There's not another local station or conventional broadcaster that does anywhere near that."

What's more, Mr. Katrycz and the staff were given just six weeks to prepare to go live 14 hours a day - a feat one manager likened to asking a sprinter to run a marathon.

"It was bedlam," Mr. Millar admits. But he says the change is working, and the station has the ratings numbers to prove it. "All of a sudden during the day, when the channel was doing a lot of goose eggs previously, we now have viewers."

The numbers are small compared to what American prime-time shows rake in. But for daytime hours, 10,000-20,000 viewers is good, Mr. Millar says.

Mr. Katrycz argues the response is a sign there's money to be made with news. "There seems to be this pervasive wisdom that says local news is not the thing to be doing and it costs too much money. Hopefully we can prove that we are the exception, if not the rule."

After only two months on the air, the new format hasn't proven anything yet. Mr. Millar expects to lose about $3-million by the end of the first year, but says the station is on track to break even on a month-to-month basis by next spring.

That is an ambitious forecast. Indeed, Canada's larger broadcasters have argued the traditional, advertising-dependent model of conventional broadcasting is no longer viable.

Mr. Millar insists the model still works close to the ground. About half the spots sold at CHCH are for local businesses, which either can't afford to advertise on bigger Toronto stations or find that the stations don't reach their customers sufficiently.

As for CHCH, "It deals with the region we're in," says Dan Cowan, a sales representative at Haldimand Motors Ltd. in Cayuga, about 30 kilometres south of Hamilton. The used car dealership runs a half-dozen ads on the station, mostly during the day. "Their viewing audience is the one we sell to."

The station's reach actually goes well past the Golden Horseshoe. Seven transmitters - including a 1,000-foot tower perched on the Niagara Escarpment in Hamilton's east end - beam the signal to four million homes across the province. It's also picked up by cable and satellite services from St. John's to Vancouver - a potential audience of up to 20 million, though most of those viewers would tune in for the movies, not Hamilton news.

But local news is really the core of CHCH's strategy.

"This is really a model of what is going to work, not just in Hamilton," Donna Skelly says. "It's much more cost-effective to produce local programming than it is to purchase American programming. … We are what keeps people watching television."

"For the individuals that live here that can't afford cable - and there's a lot of them - you can watch and get the news," says Patty Fraser, a local resident who likes watching CHCH's personalities, including tanned and square-jawed "weathercaster" Matt Hayes, a "constant Hamilton man."

Hamilton audiences aren't served by bigger stations up the road in Toronto, city councillor Terry Whitehead says.

"Most media tend to focus on the larger centres," Mr. Whitehead says. "That really does disenfranchise [other]communities."

"Ultimately, we survive or fail on whether this is a business," says Mr. Katrycz, "as does every other journalistic endeavour, with the exception, perhaps, of the CBC. If we can prove there's revenue to be made, yes, this all may grow bigger. That's what I look forward to."

IN RED DEER, A STATION GONE DARK

Mike Sinclair has no trouble recalling the last time his family's store advertised with Red Deer Television. It was 16 years ago, and he was 11.

"I remember," he says, "because I was in it, standing on the staircase over there."

He points to steps leading to the second floor of his family's 55,000-square-foot furniture store. As best he can recall, the commercial went something like this: "Merry Christmas! Come to Sims Furniture and buy a couch!"

But the store, the second-biggest of its kind in Alberta, hasn't advertised on local television since. Mr. Sinclair, now Sims' sales manager, says the logic was simple. "In my opinion, nobody watches local TV. And obviously, with [the station]going out of business, I was partly right."

On Aug. 31, the local station closed. After 52 years of serving as the only station to ever operate in Alberta's third-largest city, Red Deer Television, operated as CH television affiliate CHCA, was terminated by CanWest Global Communications Corp. in the fallout of that company's financial turmoil. The station's closing has been seen by some as proof that in the battle between broadcasters and cable providers, communities are suffering.

But in the flatlands that fill the 300 kilometres between Calgary and Edmonton, a more uncomfortable truth may be at work. For many, the loss of CHCA was not so much an event to be mourned as an event few noticed.

"I don't even know what channel it was," says Dave Schneider, the comptroller at Sims Furniture. "With satellite and all that, you don't get any local [stations]"

The Co-op grocery store, which regularly bought commercial time on the station, has seen no change in customer buying levels now that its ads no longer air. In fact, the Co-op is now saving advertising dollars.

The Red Deer Rebels, a Western Hockey League team that regularly led local sportscasts, has seen no effect. "I thought that loss of local coverage would have a fairly dramatic impact upon our attendance numbers. I really did," says Greg McConkey, the Rebels' vice-president of business development.

But when he sat down to review what happened in the season's first 12 home games, he found he was wrong. Season-ticket sales are down, largely because of the economic downturn. But walkup purchases are up. The Rebels have also installed their own arena video system. Instead of relying on TV to film and package highlights, they make their own. "That makes it to our website immediately following the game," Mr. McConkey said. "It's usually up by 11 p.m. on game night."

In the bare halls of what used to be CHCA, only one video feed still operates. It appears on a screen behind the empty reception desk, showing a stream from security cameras.

The rest of what used to be the station is nearly empty. In the former studio, desktop computers sit in a tidy row on a massive concave green screen that covers part of the floor. Nearby, a small stack of video monitors waits to be shipped out. Old camera jackets lie on the floor next to bits of wire. The boardroom table is gone. In its place, a vacuum cleaner.

By the end of the month, Bob Bourns, who still holds the title of station manager, expects the space to be empty. "It's very surreal, you know, to go from a hubbub of people - a lot of activity in the building and people mulling around - to just dark, empty offices and hallways," he says.

First licensed in 1957, Red Deer's station was owned by local residents until 1976, when it was bought by Monarch Broadcasting. After several other corporate owners, it became a CanWest property in 2000, although it kept an affiliation with CBC (which it had since it opened) - until five years later, when it was made part of CanWest's CH chain.

Those last five years were difficult for the station. Though its signal covered a sizable swath of central Alberta, more than half the viewers had switched to satellite, which did not carry the signal. Advertising revenue declined, and the station, which carried two hours of daily local news and once produced entertainment programming as well, shrank from 80 employees to 20.

When CanWest couldn't find a buyer, the Red Deer crew was too small to attempt an employee buyout. Worse, there was no local groundswell of support.

"I don't think that there was enough local interest," Mr. Bourns says.

The closing, he says, is "really disappointing because this station has been an integral part of the fabric of this community for 50-plus years. And now the people of this city, they don't have a voice any more."

Even if the station's disappearance had little economic effect, was the voice it provided still valuable? And does anyone miss it now that it's gone?

"I am really upset, but so is our community," says Janice Wing, CEO of the Red Deer and District Community Foundation. "There is a real need for us in this region to be able to have good, solid, local ways to communicate with people."

Though Red Deer is served by both a daily and weekly local newspaper - as well as six national and big-city dailies delivered here, plus the Calgary and Edmonton TV stations that occasionally report on the city - community leaders say CHCA was an important tool for local information.

Without the station, "there is no true video record being kept of activities in the community," says Michael Donlevy, vice-president of community relations with Red Deer College.

No longer able to depend on televised coverage of important speakers or sports events, the college is expanding its online social media presence.

"Do we miss them?" he said of the station. "I miss them."