WUTV, a Buffalo, N.Y.-based television station better known to viewers as Fox 29, was the surprise villain of last month's federal broadcasting hearings in Hamilton, Ont.
One by one, some of Canada's largest media companies presented their cases to the Canadian Radio-television and Telecommunications Commission to launch new TV stations to serve the crowded Southern Ontario market. While programming ideas varied, most of the business plans shared one common element: repatriating the estimated $25-million spent annually by Canadian companies to advertise on Buffalo-based TV stations.
It was widely agreed that the lion's share of the ad spending ends up in the coffers of Fox 29, an affiliate of Rupert Murdoch's New York media giant News Corp.
Fox 29, a station that carpet bombs TV screens with repeated viewings of popular sitcoms such as The Simpsons and Frasier, owes its success to a mix of geography and economics. Despite a weak Canadian dollar and tax disadvantages, the station continues to thrive thanks to its location near this country's largest city and, to the frustration of Canadian broadcasters, good old fashioned American competitiveness.
"This always flares up when business gets tough. All of a sudden we become a target again," said Donald Moran, general manager of Fox 29. The Fox affiliate is owned by Sinclair Broadcast Group Inc., a cost-conscious Cockeysville, Md.-based owner of 63 TV stations.
"I'm not interested in getting into a battle with anyone. They are giving us too much credit all around," Mr. Moran said.
Nevertheless, his station is the target of four of the five competing Ontario TV applications. To varying degrees, Torstar Corp., Alliance Atlantis Communications Inc., Rogers Communications Inc. and Craig Broadcast Systems Inc. are all factoring Fox 29 revenue into their economic forecasts. The CRTC is expected to decide if it will licence new services this spring.
"We think we can repatriate a small portion of that buy," said Mark Rubinstein, president and chief operating officer of Alliance Atlantis Broadcasting, the TV arm of the Toronto-based entertainment company.
Alliance Atlantis wants to launch Greater Toronto Television, a conventional TV station that emphasizes local news and community events. With the commission's approval, GTTV hopes to capture about $4.2-million or 17 per cent of annual revenue from competing Buffalo TV stations.
Rival broadcasters CanWest Global Communications Corp. and CHUM Ltd. characterized Fox 29 as an aggressive competitor, but for very different reasons.
CanWest's Global Television Network wants the CRTC to support its Purely Canadian application, a proposal to launch three local stations with a mandate to promote existing TV services, including new digital channels. Purely Canadian would rely heavily on national advertising, arguing in part that repatriating local ad spending from Buffalo may be easier said than done.
"You can't just snap a finger and it will all come here," said Ken Goldstein, chief strategy officer of Winnipeg-based CanWest.
CHUM, a Toronto broadcaster opposed to the licensing of any new TV stations, said history indicates Fox 29 will do everything possible to defend its turf. Peggy Hebden, program director for CHUM's New VR of Barrie, Ont., said the Buffalo station has fought CHUM's right to simulcast shows, changing scheduling plans at the last minute.
"How much can be repatriated?" asked Jay Switzer, president of CHUM Television. "They will remain untouchable."
To date, Fox 29 has done very well by Canada. A recent night's viewing saw a handful of Canadian advertisers, including Cogeco Cable Inc., Leon's Furniture, and Taco Bell of Canada. Mr. Moran declares his rival's revenue estimates are "ridiculous" but concedes Canada "does represent a pretty good revenue stream for our station."
Fox 29 and a few other Buffalo stations are in a unique position along the U.S.-Canadian border, broadcasting from a small U.S. market to a much larger Canadian centre. (KVOS-TV12 of Bellingham, Wash., is available across Vancouver and the Lower Mainland but unlike Fox 29, the station pays Canadian broadcasting rights.)
Aggressive pricing gives Fox 29 a competitive edge, despite Canadian tax laws. Thanks to Bill C-58, Canadian companies advertising on Canadian TV or radio can write off costs. To counter this, Buffalo stations offer cut-rate ad prices, up to 50 per cent less than the same time on a conventional Canadian TV channel.
"Sometimes Canadian stations price themselves right out of the market and advertisers turn elsewhere and that means foreign stations," said Robert Reaume, vice-president of media and research at Toronto-based Association of Canadian Advertisers.
Fox 29's success in Canada is less than rocket science, Mr. Moran said. Ontario residents like to watch U.S. hit shows, old and new. Canadian channels benefit too by simulcasting or running a proven Fox 29 ratings hit at an earlier time period. For example, Rogers' multicultural channel CFMT broadcasts Frasier weeknights at 7 p.m., 30 minutes before the Seattle psychiatrist hits Fox 29's airwaves.
"It's anything but an aggressive assault on Ontario," Mr. Moran said. "The big stations in Toronto go for general size and age of audience, bigger blockbuster programming. And many times I'm offering Mad TV or Howard Stern or something that's much younger and cutting edge . . . We kind of inundate [the market]with some of the shows we bring in there and if we are successful, they run out and get them." email@example.com