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Can TVA win with Toronto 1?
11/2/2004
by Laurel Hyatt

 
Companies in this story
CHUM Limited
Craig Media Inc.
Le Groupe TVA Inc.
Articles in related categories
CRTC - television
Financial/Mergers & Acquisitions
OTTAWA - TVA Group Inc. and Sun Media Corp. can succeed with Toronto 1 where Craig Media Inc. failed because it can better promote the fledgling station, the group told CRTC commissioners in Gatineau yesterday during a hearing to approve its bid to take over the station.

Toronto 1, the Toronto-Hamilton station aimed at an ethnically diverse audience aged 25 to 54, has had a rough ride since launching over a year ago with what many thought was an innovative concept, eventually laying off more than two dozen staffers after just nine months.

But it's a concept that could work if only more people knew about it, says Serge Gouin, president of TVA and its parent company Quebecor, which wants to buy Toronto 1 for $46 million from Craig Media, which was recently purchased by CHUM (also subject to CRTC approval). CHUM had to sell off the station to avoid conflict with its Toronto flagship Citytv and nearby Barrie station, The New VR.

TVA doesn't have any English-language stations, so Toronto 1 would be a standalone - a business the Commission is concerned might be risky. But what it does have, through the Sun Media group, is a readership of one million people in Toronto through the Toronto Sun and its free commuter daily paper, and an audience of Internet surfers who visit the popular Canoe Web site.

Gouin told commissioners that making a going concern of Toronto 1 would be "a tremendous challenge" but he's confident TVA can "turn the station around" with more cost-cutting moves, using cross-promotion from Quebecor's print properties to gain more regular viewers, and developing "its own particular niche" in the crowded Toronto marketplace. "Despite the significant losses," he promised, "we'll turn Toronto 1's fortunes around."

TVA also has deep pockets, Gouin told www.broadcastermagazine.com in an interview. "We have more staying power, obviously, from a financial standpoint. TVA is a very profitable company that generates a significant cash flow and can finance easily such an operation."

Those coffers will certainly be needed as TVA and Sun Media propose a $4.6 million benefits package, or 10% of the transaction value (the minimum required by the Commission), to go mainly to programming funds. Commissioner Stuart Langford asked TVA why it feels it can make Toronto 1 viable by "essentially selling pretty much the same product" as Craig, another experienced broadcaster. "What's the secret?"

"It's a very tough marketplace," Gouin responded. "We don't have to reinvent the wheel. We are looking at this as incremental changes."

Langford also wondered how TVA could operate on a stand-alone basis, whereas Craig had synergies with its Western TV stations. By not having the bargaining power to negotiate rights to U.S. network shows and blockbuster movies, "you are left with the leftovers," the commissioner said.

"Some of the leftovers are pretty good," Gouin replied.

TVA recognizes the expenses involved in producing local programming to meet the conditions of licence, awarded to Craig in 2002 after it beat out three other applicants. TVA intends to continue broadcasting an average of eight hours or priority programming a week, a condition normally imposed on the larger multi-station groups.

It hinted it could find more cost efficiencies such as the layoffs, and possibly changing its "costly" daily half-hour flagship show Toronto Tonight.

TVA is also counting on steady growth of viewers and advertising. Figures filed with the commission show that Toronto 1 had $14.3 million in revenues in 2003-04, while TVA projects revenues for the station of $18-19 million in 2004-05, and $21.4 million in 2005-2006, rising to more than $40 million in its seventh year as owner.

The application promises to spend $3 million on a Priority Program Fund (in addition to the $7 million it is required to spend on an average of at least eight hours of priority programs a week), add an extra $1 million to Craig's New Voices Fund (for ethnic programming), spend $500,000 on a Quebecor Fund to train people in Toronto-Hamilton on TV production, and spend $100,000 to do market studies on the needs of ethnic communities in the viewing area.

Toronto 1 hopes to mimic the success of TVA's development of a "star system" in Quebec by showcasing Toronto-area talent. It aims to create a viewer following by focusing on shows on popular entertainment (including movies), current trends, and lifestyles; local programming, including English-language ethnic programming; news commentary; and local events and cultural activities.

Two intervenors appeared at the hearing, which lasted less than three hours. Officials with the City of Hamilton objected to the TVA proposal, saying it didn't include enough of a commitment to Craig's original mandate to serve the Hamilton area. The Canadian Film and Television Production Association felt the proposal was lacking in creativity and won't spend enough money on independent production. Gouin responded by promising to work with both groups to increase local and independent programming as a business opportunity, not a regulatory obligation, once the station has "turned around."
 
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