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Pierre Karl Péladeau, president and CEO of Quebecor Inc.


The Sun TV News channel is taking another run at getting off the ground - but the all-news network, poised to launch using a Fox News model of hard news reporting and opinion shows, hasn't quite given up on its requests for preferential treatment from the federal regulator.

On Wednesday, Quebecor Inc. application to the Canadian Radio-television and Telecommunications Commission was made public. The application, filed in July, was the company's second attempt to win a licence for the channel after its request for a rare must-carry licence, guaranteeing distribution to all cable and satellite customers, was rejected.

This time, Quebecor has asked for a run-of-the-mill Category 2 specialty licence - but with a twist: It wants "mandatory access," meaning the channel would not necessarily be carried on basic cable but would have to be offered on at least one tier or package by each distributor. This means creating essentially a new category of specialty channel.

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The company is proposing pricing the channel at a monthly wholesale cost to the distributors of 25 cents per subscriber, which means distributors will most likely offer the channel for about 50 cents.

The company is asking for the special status for the first three years of operations, "in order to effectively expose and promote its programming to viewers across Canada," according to regulatory documents.

"It's an assurance, that [Sun TV News]won't be locked out of the marketplace," Kory Teneycke, the head of the Sun TV News project, said Thursday.

Along with its application, Quebecor outlined its financial projections. In the scenario where the three-year exception is not granted, it foresees the channel attracting 26-per-cent fewer subscribers by year seven. Without the special status, cable and satellite firms would not have to offer the channel and Quebecor predicted it would not break even in the first seven years.

"This would be fatal to our business case … and would likely result in the cancellation of the Sun TV News project," Quebecor's director of regulatory affairs for broadcasting, Peggy Tabet, wrote in a letter to the CRTC on Aug. 25.

"We welcome competition in the marketplace. But all news channels must operate on the same playing field," CTVglobemedia's executive vice-president of corporate affairs, Paul Sparkes, said in a statement on Thursday. "If Quebecor is granted an exemption, then we expect all other players to be granted the same exemption."

Quebecor argues that CBC News Network and CTV News Channel have had preferential status on the cable dial for years and have already established their brands with Canadian viewers. In September, 2011, those two channels will be converted to regular Category 2 specialty channels, meaning they will also have to negotiate carriage with distributors.

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Mandatory access is not the same as carriage on basic cable, Mr. Teneycke said, since customers are not forced to choose the package in which it's included. He said public criticism over the company's request for the licence exception was not warranted. "Everyone from Margaret Atwood to Snuffleupagus is opposing our application as something it is not."

At least one distributor disagrees. "CRTC rules are quite clear when it comes to licence categories. … The CRTC should obviously be abiding by them," Bell spokesperson Mark Langton said.

The CRTC has asked for public comment on the application, and will hold a hearing in Gatineau, Que., in November to consider the licence.



In its application for a licence for the Sun TV News channel, Quebecor included a Leger Marketing survey conducted last November, showing that nearly half of English-speaking Canadians surveyed said they'd like to see a broader range of opinions represented in news coverage. However, 76 per cent of respondents said they would not be willing to pay an extra 50 cents a month on their cable or satellite bills for such a service.

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Quebecor also included another Leger survey taken more recently - in March - in which 41 per cent of those asked said the Sun TV News concept was interesting enough for them to subscribe.

"For sure you try to identify a market, a niche, well it's more than a niche," Quebecor chief executive officer Pierre Karl Péladeau told The Globe and Mail in July. "And you look at what's taking place in the U.S., with Fox, it's [one of]the most profitable specialty channels."

But the company's other English-language TV asset never found its niche: In its application, Quebecor said there is "no foreseeable break-even point" for the money-losing Sun TV station, which operates an over-the-air broadcast signal in Toronto and London, Ont.

If the licence for the specialty channel is granted, the company plans to hand its broadcast licence back to the CRTC. The Toronto station is now operating with a deficit of $50.3-million, according to the company's application documents.

Susan Krashinsky and Iain Marlow

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