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Private broadcasters post first operating loss

Canada's television broadcasters posted an operating loss for the first time in recorded history last year while cable and satellite providers posted healthy profits. Now broadcasters are hoping the federal regulator will mind the gap.

Private broadcasters lost $116-million before interest and taxes in 2009, the Canadian Radio-television and Telecommunications Commission said in a report on the industry Thursday. That erased the already slim profits of $8-million in 2008, which represented a staggering 93-per-cent drop from the previous year.

The TV business in Canada has seen fortunes follow two very different trajectories. Cable and satellite distributors have grown and prospered, with operating profits steadily mounting during the past five years. Conventional television, meanwhile, has withered.

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Now the television industry is awaiting a final decision on the latest battle between the networks and cable and satellite distributors, which will be released by the Canadian Radio-television and Telecommunications Commission on Monday.

The CRTC's report reaffirmed one claim made by broadcasters in the course of the fight: Conventional over-the-air television is losing money. As the recession hit and advertisers cut back on their budgets, the ad revenues that conventional TV stations depend on for their survival shrank significantly: by more than 10 per cent at both the local and national levels last year from 2008.

Networks attempted to deal with the losses by cutting costs. Private broadcasters slashed more than 650 jobs across the country, or nearly one in 10 employees.

"Fundamentally, we know the conventional television model is something that needs to be fixed," said John Douglas, a spokesperson for CanWest Global Communications Corp., which owns the Global Television network.

In November, broadcasters such as CanWest and CTVglobemedia Inc. took that argument to the CRTC, claiming they deserve to be paid by cable and satellite providers, who have so far transmitted their signals for free.

The distributors argue that in addition to the advertising downturn, the networks have brought their financial problems on themselves by overspending on pricey American and other foreign shows.

At the hearings in November, Rogers chief executive officer Nadir Mohamed told the CRTC that "the destructive overspending by CTV and CanWest on U.S. programming is well known."

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Thursday's report showed that the broadcasters spent more than $800-million on foreign programming in 2009, an increase of more than 9 per cent.

CanWest's Mr. Douglas said spending on foreign programming is a necessary part of the business.

"If you're going to bring shows that continue to be the favourites of Canadians, if you're going to bring Glee , you have to pay for it."

But while the networks launched a "Save Local TV" campaign around the hearings, their spending on Canadian shows was actually down slightly in 2009 from the previous year. Cable and satellite firms increased their contributions to Canadian programming, but the networks spent more overall.

On Monday, broadcasters hope the regulator will force distributors to help them to pay for some of that programming. Cable and satellite companies already pay steadily growing fees to specialty and pay TV services for their signals - a total of $2.5-billion last year - but argue they shouldn't have to pay for signals that have so far been free over the airwaves.

CTV declined to comment on the CRTC report.

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Representatives for the cable and satellite distributors could not be reached yesterday.

CTV Inc. is owned by CTVglobemedia, which also owns The Globe and Mail.

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