Surprised there has been no mention of this today so far.....
TV networks float idea of shutting smaller stations
GRANT ROBERTSON
From Thursday's Globe and Mail
January 22, 2009 at 3:39 AM EST
http://business.theglobeandmail.com/..._gam_mostemail
Canada's major television networks are considering the drastic step of shutting smaller stations across the country, fearing that some local markets may never again be profitable in a TV industry where dollars are increasingly migrating to cable.
Such a move would have been unthinkable only five years ago, but the possibility is being discussed behind the scenes at CTV Television Network and CanWest Global Communications Corp. as a way to stem losses in small-market conventional television.
Faced with a federal requirement to spend millions updating transmitters as the industry moves to digital broadcasts, the networks are now weighing whether it makes sense to invest in their weakest markets, knowing they may never recoup the money.
It is too early to tell whether the networks are serious about walking away from money-losing markets, or if the position is a negotiating tactic with regulators.
But the prospect of closing small-market stations is expected to be raised at licence renewal hearings in April.
The networks will ask the Canadian Radio-television and Telecommunications Commission to relax the rules governing how much local programming must be produced, and will also suggest that some small TV markets cannot be salvaged without major changes.
Though stations in larger cities are profitable for CTV and Global, the broadcasters have acknowledged that smaller cities in their secondary networks, A channel and E! respectively, are losing money.
CanWest Global chief executive officer Leonard Asper would not divulge what the company plans to say at Global's licence renewal hearings, but said he hoped the CRTC would be responsive to the networks' predicament.
"They do understand the business has changed, and that regulation has to change too," Mr. Asper said. "The only dispute we have is how far they are willing to go [to accommodate the networks.]... We'll find out if they are serious about it in April."
The networks have argued the financial model for network TV has forever changed, with cable networks now responsible for nearly all of the financial growth in the sector.
Fed by monthly fees on consumer cable bills and less reliant on advertising dollars than the main networks, cable channels now make up 44 per cent of the industry's revenue, compared with 21 per cent only a decade ago. Those numbers are expected to rise again this year, and may surpass conventional TV for the first time.
CTV and Global have acquired dozens of cable channels in the past two years as a way to offset eroding margins at their conventional networks. That has lessened the impact, but has not stopped the bleeding in small markets, they say.
CanWest's E! network has stations in smaller cities like Red Deer, Alta., and Kelowna, B.C., while CTV owns A channels in Barrie and London, Ont., and other small cities.
Last week, CanWest's interim broadcasting president, Peter Viner, told analysts that the company's E! network isn't making money. He added the company would consider shutting some stations if the situation got bad enough. "Maybe. That's an option we have to think about," he said.
CTV executives have reserved comment, but sources indicate the picture is similar at the network's A channels.
Licence renewals are usually the time when broadcasters seek changes from the CRTC to their program-spending requirements. Another option includes asking the CRTC to issue shorter licence terms, instead of the standard seven years.
The CRTC and others have suggested the forces hitting the conventional television sector are temporary, while the networks argue the business model is now imperilled.
Agreeing to a shorter licence term "gives both sides an opportunity to see who is right," one TV executive said.
If the economic situation worsens in the meantime, the networks will then seek additional concessions. But if the economic climate has improved, none will be needed.
The idea gained traction last year after Quebec TV network TQS emerged from bankruptcy protection. The CRTC gave the new owners a licence that carried only minimal requirements to produce local programming, but stipulated that the operation be reviewed after two years to gauge its financial position.
The regulator believed this was the only way to stop TQS from folding. Now the networks may see it as the new way to licence small market TV stations.
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