CHCH buyer will keep jobs, cut benefits
July 02, 2009
Meredith Macleod
The Hamilton Spectator
http://www.thespec.com/News/Business/article/592877
Staff at Hamilton's venerable CHCH were dreading Aug. 31.
That was the deadline set by struggling media giant Canwest to find a buyer for five stations branded under the E! Channel banner.
No buyer and the 55-year-old station would have closed.
Now Aug. 31 is expected to be the closing date for a sale of the station to a Toronto-based specialty cable channel operator.
Channel Zero plans to abandon the current entertainment and American programming focus to operate CHCH as an all-day news station and show movies at night.
Close to 120 Hamilton jobs are safe.
Channel Zero also has a deal to buy Canwest's Montreal affiliate CJNT-TV and operate it as a multicultural station. The company did not disclose how much it will pay for the two stations.
"These stations have lost millions (of dollars) over the last few years. That's not sustainable," said Cal Millar, vice-president and general manager of Channel Zero.
"We're small but we're profitable ... We want to give CHCH another 55 years."
Canwest is being crushed under $4 billion in debt and had lost $1.5 billion in the first four months of this year.
The CHCH deal is subject to approval by the CRTC and hinges on unionized staff accepting cuts to pensions and benefits.
Workers are greatly relieved by the deal and that jobs are safe, said Nick Garbutt, president of Local 1100 of the Communications, Energy and Paperworkers Union of Canada, which represents about 100 workers at the station.
"It's a wonderful day for CH considering the alternative.... There's lots of relief considering we were two months away from closing."
But the deal comes with a price.
Garbutt said Channel Zero wants to dissolve the defined benefit pension plan, pay out employees and replace it with a defined contribution plan.
The prospective buyer also wants to end benefits for retirees.
Union members will vote on the concessions sometime in the next few weeks.
Garbutt said employees are "buoyed" by the renewed commitment to news and have no qualms about Channel Zero's lack of news experience since the promise is that existing staff and managers will stay on board.
Toronto-based Channel Zero formed about nine years ago, is privately held and employs about 40 people. It operates Silver Screen Classics and Movieola, and distributes The Fight Network and adult channels AOV Adult Movie Channel, XXX Action Clips Channel and MaleFlixxx Television.
While it's a departure for the niche broadcaster, Millar said CHCH is a "phenomenal opportunity. It's fully staffed with news professionals and has growing ratings."
He said Channel Zero executives are currently meeting with CHCH staff to iron out details, but that the plan is to begin local broadcasting with CH Morning Live at 5:30 a.m. and have local news broadcast throughout the day until about 8 p.m.
He said that could be extended to midnight to accommodate the 11 o'clock news.
Producing news is always more labour-intensive and expensive than broadcasting packaged programming, but Millar said Channel Zero is prepared to make the investment.
"We are not going to muck with what works."
The company is also keen to upgrade the station's broadcasting capability to high definition.
The outpouring of support for CHCH, including public statements by Mayor Fred Eisenberger, a rally and a 15,000-member Facebook group, was key in showing Channel Zero executives the value of CHCH, said Millar.
"We were astounded. It helped refine our thinking as we went along."
Eisenberger said he's "delighted" by the focus on local news.
"It's back to the future. This is the tradition of CH, local news and movies."
Toronto-based media consultant Alan Sawyer says the acquisition will give Channel Zero deep penetration into the Toronto and southern Ontario market, since CHCH is already part of basic cable packages. It's also a well-known brand that stretches back generations.
Channel Zero will also get access to a lucrative fund to create local programming.
Last year, the Canadian Radio-television and Telecommunications Commission required cable and satellite providers to pay an additional 1 per cent of their revenues into the fund and that could be boosted to 2.5 per cent.
"That's a lot of money for the creation of local programming. Buying CHCH gives somebody like Channel Zero a chance to tap into it," Sawyer said.
Marvin Ryder, a professor at the DeGroote School of Business at McMaster University, said he was always skeptical that the local station would go dark.
Broadcasting licences are too valuable to just be turned back to the CRTC for nothing, he said.
Channel Zero's unexpected move came on the same day that cable company Shaw Communications Inc. backed out of its offer to buy three of CTV's local TV stations for the rock-bottom price of $1 each. Shaw had vowed to prove the small-market stations could make money after CTV said it couldn't turn a profit without financial help from Ottawa.
The cancellation of the Shaw deal was announced in a brief statement from CTV. Neither company gave reasons for the deal falling through.
Major Canadian broadcasters like CTV and Canwest bemoan their over-the-air television stations, saying that the model is broken and that many of their stations are unprofitable.