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Channel Zero chief executive officer Cal Millar . The company bought CanWest’s CHCH station in Hamilton and CJNT in Montreal.
Channel Zero chief executive officer Cal Millar . The company bought CanWest’s CHCH station in Hamilton and CJNT in Montreal.

Two CanWest stations sold; CTV deal falls through Add to ...

It was deal and no deal in Canada's television sector Tuesday as CanWest Global Communications Corp. announced it is selling two small TV stations to an upstart broadcaster, while CTV Inc. revealed that its sale of three smaller stations had fallen apart.

In a deal that took several months to negotiate, cable broadcaster Channel Zero Inc. said Tuesday that it is buying two stations from CanWest, which were set to close if CanWest couldn't find a buyer. The stations, in Montreal and Hamilton, are believed to be changing hands in what one source said was a four-figure deal, likely worth less than $5,000.

Later Tuesday, a deal that CTV had in place to sell three money-losing stations to cable company Shaw Communications Inc. fell apart. After CTV said in March that it would shut the outlets - in Brandon, Man., and Windsor and Wingham, Ont. - if a buyer could not be found, Shaw stepped up to buy them for the bargain-basement price of $1 each.

For both CTV and CanWest, the discount price was less important than removing the financial losses the small-market stations were causing on their books. Both networks have told regulators they must trim their conventional TV operations, which have become less profitable than owning specialty channels on cable.

CTV issued a brief statement saying that the Shaw deal had been cancelled. CTV is owned by CTVglobemedia Inc., also the parent company of The Globe and Mail.

Executives from Shaw could not be reached for comment, but a source close to the deal said the company did not like the financial state of the small stations, whose operations and books Shaw officials examined closely in recent weeks.

The $1 sale raised eyebrows in the industry this spring. After CTV told the Canadian Radio-television and Telecommunications Commission that it could not turn a profit in small market TV unless it got financial help or regulatory relief, Shaw stepped up and said it would operate the stations and prove they could be viable without any help from Ottawa.

Cancellation of the deal throws into question the fate of the three CTV stations, which were operating as A Channel in Windsor and Wingham. The network still plans to close them by September unless there are regulatory changes. It is expected the CRTC will announce next week whether it will increase the amount of funding stations can receive in a special local television fund set up last fall, to which cable and satellite companies contribute. However, it is likely only the Windsor station could be pulled from the brink if the financing were increased significantly, the network said.

The deal to sell the two Global stations to Channel Zero, however, effectively means those operations will continue. Cal Millar, general manager of Channel Zero, said he plans to change the format of Hamilton's CHCH station to an all-news format throughout the day while running movies at night. The Montreal station operates as a multicultural channel.

Bay Street analysts have questioned whether a smaller broadcaster can make money in the network TV business, considering CTV and Global have struggled. Mr. Millar acknowledged that his company, which owns cable stations Movieola and Silver Screen Classics, is a newcomer to the network business, but said it plans to use a different model.

Mr. Millar doesn't intend to spend heavily on U.S. shows from Hollywood, which he sees as the biggest cost problem for Canadian networks. CTV and Global have argued U.S. shows draw the biggest audiences and the most lucrative ad dollars, and are necessary despite their rising costs.

"The problem isn't the news, the problem as we see it is the foreign programming running in prime time. So once you start from a different perspective you can look at it differently," Mr. Millar said in an interview. "News has a cost, there's no question, local programming is not cheap. But neither is it the most expensive thing that you can do."

The announcement of the Channel Zero deal was applauded in Hamilton. "We're very fortunate that this is what's happened. It's pretty exciting," said CHCH news anchor Donna Skelly. "It's not the same old player in the game, it's a fresh approach."

In March, Ms. Skelly was part of a group of employees who began putting together a plan to buy the station to keep it open. The proposal would have seen the station operate as a local news and variety station, which Ms. Skelly said was very similar to what Channel Zero has pitched. She said the staff buyout plan lacked the funds to get the deal done.

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