It is 9:15 on a snowy Monday night and John Bitove has spent the entire day in meetings. Now liberated, he arrives in the hotel lounge full of vigour. But his mood quickly deflates. "Ohhhh," he groans as he scans the room. "Should've gone to Hoops."
He is standing in the bar of the Fairmont Château Laurier, a polished staging ground for Old Ottawa power, a haunt of ministers and mandarins. Which is to say, it's as comfortable as an old shoe to Bitove. But he wants none of it tonight. The only prime ministers at Hoops are stuffed inside the cash register, but the place is guaranteed to be showing the basketball game. The two TVs behind the bar here at the Château look as though they haven't seen action since Trudeau.
"This is fine," Bitove decides regretfully, as he settles himself at a table with his back to the bar. We're not here to watch TV anyway. We're here to talk about it.
Less than 12 hours from now, Bitove will appear in front of Canada's broadcast regulator with an unusual request: He will ask for permission to launch a new national television network, HDTV Networks Inc. No one has done this before-Canada's biggest commercial broadcasters have been forged through decades of mergers, acquisitions, bankruptcies and buyouts-and in many ways, Bitove's is a long-shot bid.
He devoutly wants into the Club, as he calls the big broadcasters. Which is a bit ironic. Bitove comes from a wealthy, well-connected Toronto family. He knows power. He's already a fast-food king, the man who started the Toronto Raptors, and a pioneer in satellite radio, where the Club tried to shut him out.
We are only a few minutes into the conversation about his latest ambition and Bitove can no longer stand it. He gets up and makes a beeline for the bar. What ensues is a short conversation in which Bitove, a tall, broad-shouldered man who once contemplated playing college football, by turns apologizes for intruding, then politely asks, suggests, requests, negotiates and finally charms the bartender into flicking on the game. Bitove returns with a smile and seats himself back down, this time in a chair facing the TV.
Tomorrow, Bitove will make his pitch to join the Club. As everyone in this town knows: In Ottawa, it's not necessarily about what you ask for, it's how you ask for it.
The impulse to start companies seems bred in the bone. John Ivan Bitove Jr. was born in 1960. His father, the son of Macedonian immigrants who arrived in Canada after the First World War, opened a 14-stool coffee shop in Toronto in 1949 and spent the next four decades building a catering empire. It's an enterprise forged from sweat, strategy and some bitter clashes with partners and rivals, with the Bitove name usually coming out on top.
The coffee shop begat family restaurants, which led to John Sr. buying the Canadian franchise rights to the U.S. burger chain Big Boy. He monogrammed his chain-JB's Big Boy-and parlayed it into a cash cow.
Though the family business was expanding in Toronto, it was Ottawa that gave John Sr. what was arguably his biggest break. In the fall of 1983, York County Quality Foods Ltd., a company Bitove owned with a group of partners, pulled off a remarkable feat. Despite being relative unknowns, the crew wrestled away a lucrative 10-year food and beverage contract for the terminals at Toronto's Pearson airport from Canada's second-biggest food service company, Cara Operations Ltd., which had held it for 20 years.
The coup required a little bit of cash and a lot of lobby ing. Bitove's team overbid Cara by $600,000 for the contract, but more importantly, Bitove beat out Cara in the back-rooms, launching a months-long campaign with MPs to convince Transport Minister Lloyd Axworthy that York County was the one for the job.
Though Cara was a force on Parliament Hill in its own right, Bitove Sr. had an ace in the hole: David Collenette, a Liberal MP from Toronto who was then minister of state for multiculturalism. On a trip to Ottawa, Collenette introduced Bitove Sr. to key cabinet ministers. Collenette went further still, writing a character reference on behalf of Bitove, which was delivered to cabinet.
But the Bitoves can work more than one room. In 1988, with a Tory government now in power, Transport Canada decided a third terminal was needed in Toronto. Bitove Sr., also a Tory fundraiser, was apoplectic at the idea of losing customers to the new facility. As the story goes, he called in favours and phoned up Prime Minister Brian Mulroney directly to complain. With Bitove Sr. threatening to sue, a deal was struck, mere days before the 1988 federal election, to turn over Terminal 3 to Bitove as well. "Did I raise hell with ministers? Did I raise hell with the deputies? Did I raise hell with a whole bunch of other people? You're goddamn right I did," Bitove Sr. once told this magazine in a rare interview.
The importance of influence-the sort that makes critics of the Bitoves turn red with frustration-was a lesson that the younger Bitove took to heart.
By the time he was university age, Bitove Jr. was running a cigarette vending machine business out of his father's restaurants, making enough cash to pay for classes, first in business at Indiana University, then in law at the University of Windsor. Upon graduation, Bitove headed to Ottawa, articling at what is now Gowling Lafleur Henderson, before moving over to Parliament Hill to work for Conservative Industry Minister Sinclair Stevens. When Stevens was forced to resign from cabinet in 1986 following allegations of conflict of interest, Bitove landed a plum job in the office of Deputy Prime Minister Don Mazankowski. It was there, working under arguably the second-most powerful politician in Canada, that Bitove learned the ropes of Ottawa, and how to pull them.
"When you grow up in an entrepreneurial family where your father owns the business, there's a certain mindset. I often say I got the aggressiveness from my dad," Bitove says. "Maz taught me how to deal with people, he taught me how to deal in meetings. He taught me about Ottawa and government and the things that are important and the things that are not important."
Back in Toronto, the family business was growing. Oldest brother Nick launched the Hard Rock Cafe in Toronto in the late '70s, a chain the family would eventually take across Canada. With the Tories waning in power, Bitove returned home for what would prove to be his own big break.
If Ottawa schooled Bitove, the National Basketball Association made him. Backed by family funds, Bitove made an ambitious bid in 1993 to bring an NBA franchise to Canada. Now the younger Bitove worked the rooms just like his father had. Long-time friend Gary Slaight, the son of broadcasting magnate Allan Slaight (Standard Radio), recalls the first time Bitove raised the notion of getting into the NBA."It was at my wife's 40th birthday party," Slaight recalls. "We were talking over cocktails."
Bitove had already enlisted a formidable ally and family friend-former Ontario Liberal premier David Peterson-to help out.
The Slaights liked what they saw. "John will do what-ever it takes not to lose," Slaight declares. That meant pressing the flesh with all 27 NBA teams personally. To Bitove, nothing could be done by phone. He would fly to meet the owners, shake hands, ask questions-whatever it took. Jerry Colangelo, former owner of the Phoenix Suns (and father of Raptors president Bryan Colangelo), headed up the NBA expansion committee. He remembers looking at the bidders in Toronto and thinking that the Bitove team was in a tough fight against a competing offer led by wealthy construction mogul Larry Tanenbaum.
But Bitove had advantages too. "He was a good salesman," says Colangelo. "If you're a good salesman, you can make a lot of things happen. If you're believable, and you know how to work a room, that can bring you pretty far." He chuckles thinking about Bitove. "He's got a little Barnum & Bailey in him."
The glory of winning the Raptors bid was short-lived. A venue for the team was a point of contention. The partnership behind the franchise splintered in 1996, after just one season on the court, when delays in getting a new arena built prompted Allan Slaight to exercise a shotgun clause in the ownership arrangement. While Bitove wanted the Raptors to have their own space, Slaight wanted to push the team forward with himself as majority owner, positioning the franchise to partner with the Toronto Maple Leafs. The arrangement forced Bitove to come up with enough money to buy Slaight out, or walk away for good.
As it happened, Hard Rock Cafe International Inc. of Orlando was anxious at the time to consolidate its brand with the Canadian one. The Bitoves weighed using the proceeds from a sale to buy out Slaight. But by December, when the Bitoves banked a cheque for $61 million (U.S.) for a business they'd started for $100,000, it was too late. A month earlier, Slaight had paid Bitove more than $50 million to buy out his 39.5% stake in the team. Ultimately, Slaight's vision of a Leafs-Raptors hookup came to pass when he sold the Raptors to Maple Leaf Sports and Entertainment, where Tanenbaum now serves as chairman and part owner.
It was an ungracious exit, but it left Bitove with a reputation as a go-getter capable of sealing long-shot bids. In the late '90s, when Toronto launched its campaign to host the 2008 Olympics, the executive committee turned to Bitove to be its front man.
Though Beijing was the favourite, Toronto was determined to put up a fight. Those efforts fell apart when then-Toronto mayor Mel Lastman made an infelicitous remark before leaving for Africa to promote the bid: "Why the hell do I want to go to a place like Mombasa?... I just see myself in a pot of boiling water with all these natives dancing around me."
The statement sparked an international uproar and led to one of the most difficult moments of Bitove's career. A week before the Toronto team was to leave for the final vote in Moscow, Bitove was awakened at 5:30 a.m. by a senior member of the International Olympic Committee calling with a warning. If Lastman went up on stage when the Toronto team made its final presentation, the African IOC delegates planned to walk out.
It was a test of how smooth Bitove could be under pressure. If the Africans snubbed Toronto, it would make headlines around the world. The solution: As the team made their way to the stage before the presentation, Bitove quickly shepherded Lastman and his wife into seats down front on the floor rather than on the stage, keeping him close enough to the action to feel part of it, but still far enough from the stage that no one would take umbrage. It didn't save the bid, of course, but it did prevent an international incident.
Not long after the Olympic bid collapsed for good, Bitove found himself on a plane trying to plot his future. Maybe he was done with these ambitious, pie-in-the-sky ideas. He had recently bought Scott's Restaurants Inc. for $237 million. The company operated more than 300 fast-food restaurants in Canada, most of them Kentucky Fried Chicken. It wasn't something he went looking for, but Bitove felt the business was undervalued. Investment bankers approached him with a deal, and-sensing he might be able to turn things around-he bought the company. (Even then, fast food, particularly fried chicken, was losing its lustre. Bitove eventually expanded the company into Priszm LP, which spun off part of the business into an income trust. Nearly a decade later, Priszm in-cludes Taco Bell and Pizza Hut outlets, but growth has been flat. The operation is looking to shed 128 underperforming locations as the fat factor continues to thwart the fast-food business.)
During the flight, Bitove flipped through a magazine and noticed an article about a new technology launching in the United States that he didn't quite understand.
A few days later, Stewart Lyons, a lawyer who had worked on the Olympic bid, was summoned to Bitove's Toronto offices. When Lyons walked in, he remembers Bitove handing him the pages torn from the magazine. "John said to me, 'Have you ever heard about satellite radio?'" Bitove had finally found his entree into broadcasting.
Satellite radio seemed like a can't-miss bet. It was 2001, and the industry was just getting going in the U.S., with two companies squaring off: Sirius and XM.
Unlike terrestrial radio, satellite radio promised a slew of channels (more than 100), most of them commercial-free. It operated outside the jurisdiction of federal regulators, so DJs who were forced to behave on FM could let loose on satellite. The signal could be beamed to small portable receivers, in cars and elsewhere, from space. And the programming came through crystal clear, even if the listener were to drive straight across the country. The service sold for about $15 a month, and the only main competitors were CD players and scratchy old AM and FM.
Bitove loved it. He saw a day when not only music was beamed into cars, but also movies, global positioning data, maps and whatever else could be digitized and bounced off a satellite.
The young technology reminded him of the early days of cellphones and cable TV: You spend a lot in the beginning to market the service, then once you amass a large enough subscriber base, you can sit back and collect the steady flow of cash. All he needed was a licence.
"It was the same with Ted Rogers and the early days of wireless. Nobody knew if it was hula-hoop technology," says Robert Buchan, an Ottawa lawyer Bitove called upon to help land a satellite radio licence from Ottawa. "John has that same thing. It's more than swashbuckling."
A bid for a licence was launched in 2003. If all went well, Bitove figured he could be up and running with XM Canada, a joint venture with the American company, in about a year. But he never saw what was coming. Rival broadcasters tried to paint him as much worse than a bit of Barnum & Bailey: He was a snake oil salesman, a smooth operator who was selling one thing but planning to deliver another.
The chief opponents were CHUM Ltd., which owned 33 radio stations that could lose listeners to satellite radio, and Astral Media Inc., which owned more than 20 stations and is a powerful force in French Canada. Bitove suddenly found himself fighting the broadcast establishment. At federal hearings, he laid out the case for allowing satellite radio into Canada and, as one insider at the Canadian Radio-television and Telecommunications Commission puts it, "charmed the socks off" then-chairman Charles Dalfen. The pitch was twofold: Bitove would bring new technology to Canada and launch domestic channels to give local artists some more exposure-two things that dovetailed with the regulator's goals.
But CHUM and Astral argued vehemently that satellite radio-as proposed by a Canadian offshoot of Sirius as well as by Bitove-would do too little for Canadian musicians compared to terrestrial radio. Perhaps even worse, Bitove's proposal was lacking in French content, since most of the channels came from the United States. They convinced several MPs that all satellite radio would do is import American programming.
Bitove thought XM Canada was ready to go when the regulator approved his application in June, 2005, on condition the company operate at least eight Canadian channels. But he soon learned the matter had been quietly appealed to cabinet, and was set to be on the agenda at Liberal caucus meetings in Regina. This was no longer business; this was politics. Bitove flew out to Saskatchewan with David Peterson riding shotgun.
The XM radio side printed up letters defending its case and, late at night, stuffed them under guest-room doors in the hotel where the meetings were being held. They weren't exactly sure which rooms the Liberal MPs were staying in, so entire hallways of rooms got the pitch.
"We have both been schooled in politics," says Lyons, who worked in Tory Tony Clement's office at the Ontario legislature. "It was a full political campaign. We met with every minister we could, we hung out in Ottawa the entire summer. The whole thing for us was political, because it became very political." He pauses, nostalgically. "That was a vicious one."
The appeal eventually lost out, and satellite radio got off to a late start that fall. It looked like a clear victory-however, the delay proved crippling. XM Canada had to rush its receivers into stores in November, 2005, for the Christmas shopping season, with almost no time for marketing. Subscription sales got off to a plodding start that was made worse when rival Sirius announced it would pay celebrity shock jock Howard Stern a jaw-dropping $500 million (U.S.) to come on board. The media sensation over that deal alone was enough to draw tens of thousands of subscribers to Sirius Canada.
But something even more bedevilling had happened in those months while Bitove had been carrying around that article on satellite radio. On Oct. 23, 2001, the entire paradigm of the music industry shifted: Apple Inc. released the first iPod. It wasn't the first MP3 player to hit store shelves, but it was the one that took them mainstream, eventually making CD players unfashionable. Satellite radio's prospects of becoming the hot, new portable gadget for music listeners were dealt a gut-wrenching blow.
Matters have not improved. Satellite radio on both sides of the border has yet to make a dollar. XM Canada's parent company, Canadian Satellite Radio Holdings Inc., has lost $196 million since it launched in late 2005. By early 2007, analysts were already worrying aloud that the parent company would run out of cash before it ever turned a profit.
To date, XM has amassed 350,000 subscribers, of which 136,000 have signed up via discounted promotions. Still, Bitove is steadfast in declaring that the model will work out. At the annual meeting in January, he said XM Canada will hit one million subscribers by 2010. And by 2012, XM Canada will be on its way to $100 million worth of cash flow.
Make no mistake: Bitove is a believer in satellite radio. He looks forward to a time when the service is piped into millions of cars, through agreements that XM Canada has negotiated with automakers. "I remember when people had doubts about the growth of wireless. And when they had doubts about cable," he says. "Look, you either believe satellite radio is cable-TV-comes-to-the-car or not. If you do, there's a very simple conclusion. If you don't, there's a very simple conclusion the other way."
Investors haven't necessarily stuck around to find out who's right. Bitove took XM public at $16 a share in late 2005. The stock subsequently lost nearly three-quarters of its value. (It had revived to around $5 by early March.) Sirius and XM in the U.S. are now trying to get federal approval for a merger, which would force similar consolidation in Canada.
Though revenue is showing signs of life-more than doubling to $8.1 million in the most recent quarter-the stock is thinly traded, and most analysts have stopped covering the company closely. When Bitove threw the phones open to questions from the financial community at the annual meeting in January, there was no one on the line.
It's not helping investor perceptions that Bitove announced an initial public offering soon after the licence was received, which made it look like he was out to make a quick buck from the start. He points out that he invested millions of his own money to start the company. That said, the IPO netted $55 million in 2005. At that time, his 57.3% stake in the company was valued at $463 million, but even with the collapse in the share price, Bitove's share is still worth $138 million. The fact that he and three other executives together hold 1.1 million options at an exercise price of just one cent offers little comfort to shareholders.
Judging by banter in the hallways of the CRTC, at least one broadcaster has made the same inference to government officials-that Bitove's TV bid is a ploy to cash out with a handsome IPO, that the man is simply a promoter and flipper of assets. Bitove's camp argues back heatedly, pointing out that he hasn't sold any of his stake in the satellite radio operations, even as the market sentiment turned sour. "He could have flipped it for a very nice profit, I'm sure," says Frank Penny, president of Clover Administration, the company that handles Bitove's financial affairs. "But that never even really entered his mind because that isn't what he was there to do."
Bitove's circle calls him a visionary, someone who is constantly looking for ideas that are ahead of their time. His detractors-broadcasters
who speak on condition of anonymity because they envision a day in the tiny world of Canadian media when they might be working with him-suggest he's not a visionary, just a dreamer with money and well-placed contacts. And it's satellite radio that they use to illustrate this point.
Bitove insists the multibillion-dollar TV industry is easily vibrant enough to sustain more competition.His rivals are painting him as a wan-nabe TV executive who still has a lot to learn. CanWest Global Communi-cations Corp. sent a letter to the CRTC a few months ago citing data that showed an industry in decline: fragmenting audiences and intense competition for advertising dollars. "There is little support for [Bitove's]unqualified optimism in the face of more sobering information," said the owners of Global Television.
Bitove has been laying the groundwork for his bid for a national TV network for a few years now. And in that time, he has won the praise and backing of many in the Canadian production community who like the idea of a new chain of Canadian stations.
Not surprisingly, much of the action has been going on quietly in hallways and backrooms. Last June, Bitove turned up unexpectedly in a lecture theatre at the Fairmont Banff Springs Hotel. Sitting near the back, he stood out in a pinstriped suit, chomping on an unlit cigar. The occasion was the Banff World Television Festival, an annual gathering of TV creative types, and Bitove was listening to a panel discuss the role of fast-food advertising in children's programming. But it wasn't the main reason he was there.
Earlier that morning, Bitove could be seen waiting patiently outside a conference room following a speech by CRTC chairman Konrad von Finckenstein. Bitove wanted to talk to the cadre of CRTC folk who were milling about, to shake some hands, meet producers, ask some questions about his HDTV bid, and generally see if there was anything else he could do to make it succeed.
"He would meet anybody if he thought it could be productive," says Buchan, who said Bitove made it a priority to speak with assistant deputy ministers in Ottawa when the satellite radio bid was being launched. Most CEOs send regulatory staff or engineers to handle such matters. "He's very forthright, he goes in with a clear agenda, he puts his cards on the table, then he leaves," says Buchan. "He doesn't ask for anything he's not entitled to ask for."
Bitove laid further groundwork for his bid in September when, despite having dislocated his shoulder falling off his bike the day before, he appeared at CRTC hearings on industry consolidation. "In the '90s, I too wanted to be in broadcasting, but found it mostly a closed shop," he told von Finckenstein. It was a strategic argument: If the regulator is worried about consolidation after the more than $4.8 billion worth of takeovers that have swept through the broadcasting industry in the last few years, then maybe it should let new entrants into the business.
Fast-forward to the more recent CRTC hearings in February on Bitove's HDTV bid. As he walked into the hearing room in Gatineau, accompanied by Lyons and a team of a dozen TV executives, some of them recent hires from CTV, CHUM and Global, Bitove was confident they were prepared. He presented a letter indicating he had access to $300 million to launch HDTV Networks, including $100 million of cash and $200 million of debt.
The Bitove team laid out their planned programming schedule and the business model, with stations in eight major cities from Vancouver to Halifax. The network wouldn't bother trying to compete for Hollywood shows that CTV and Global pay big dollars to land. Rather than play that ratings game, his stations would operate on the edges, buying up other programs from around the world, and producing its own, such as The World Show, a sort of Canadian version of Jon Stewart's The Daily Show. And Bitove would leverage XM Canada to produce music-driven programs that would expose Canadian acts to bigger
audiences. The channel would make its money through national advertising sales, which would be enough to sustain its operations, Bitove said.
It sounded like a lot of what the regulators were so badly looking for. But the Club, as Bitove calls it, fought back. The Canadian Association of Broadcasters urged the CRTC not to license HDTV, saying the application was missing key elements. Most notably, CTV and Global criticized Bitove for not proposing any local programming such as news or community-based shows. They accused him of seeking overly favourable conditions, opportunistically playing the consolidation card in order to get a licence that would essentially allow him to save wads of cash by not producing any local news. If Bitove got such conditions, why shouldn't they?
CTV executive Rick Lewchuk called Bitove's plan "naive." That's the kind of reaction Bitove has come to shrug off. On the second day of the hearings, he gathered himself before closing arguments, then assailed the broadcasting sector for being a tight-knit cabal that protects its own. He pointed out that he is not a member of the Canadian Association of Broadcasters. "So I don't think it's any coincidence it has been silent when other CAB members are applying for licences, but when non-CAB members apply, everything seems to protect the Club," he said.
Bitove was challenging the CRTC: If you want competition, then here it is, give me a licence. Then, knowing that in Ottawa, it's how you ask that counts as much as what you ask for, Bitove also revised his proposal. There had been pushback from the CRTC about local programming. So, on the next day of hearings, he offered two hours of local content a week. It was a significant concession in his eyes. But it still ranked far back of the industry norms; would it be enough? If Canada is to see the birth of a new national network, much will depend on how willing the CRTC is to let that standard slide for the sake of getting an upstart in the door to combat consolidation. Approving the network could set the stage for a bitter fight similar to the satellite radio appeal. It's a long-shot bid, but Bitove has made a few of those before. An answer is expected in early April. And with Bitove deciding whether to bid in federal spectrum auctions in May-which will allow new competitors into the cellphone industry-the proposed TV network may not be the only business he tries to build through Ottawa.
In the Château Laurier, Bitove has turned the conversation back to basketball. It is the dying seconds of the game, and the Raptors are down by three points.
Bitove is in the middle of a sentence when he suddenly halts the discussion. "Watch this!" he says, raising his voice. Chris Bosh, at the top of the paint, lets loose a jump shot that can bring the Raptors to within reach of winning. Bitove is confident as the ball leaves Bosh's hands. "Bingo," he declares. But the ball glances off the rim. "Shit." Friends say Bitove is eternally optimistic, a glass-three-quarters-full kind of guy. But as a veteran of this city, even he would acknowledge the mistake he had just made: In Ottawa, you can play the game, but you never call the shots.