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Torstar appeals CRTC decision on TV licenses

5/21/2002

Toronto, - Newspaper giant Torstar Corp. is asking the federal cabinet to overrule a regulatory decision that denied its application for three TV stations in southern Ontario.

Toronto-based Torstar last month lost out on its bid for conventional television licenses in Hamilton and Kitchener-Waterloo, Ont., to Craig Broadcasting Systems Inc. of Calgary. It also applied for a license in Toronto and lost, with licences being granted instead to Craig and Rogers Media.

Torstar said Tuesday it has filed a petition with the federal cabinet, appealing the April 8 decision by the Canadian Radio-television and Telecommunications Commission.

It wants the decision to be either set aside or referred back to the CRTC.

Torstar owns the Toronto Star, Canada's largest-circulation newspaper, daily newspapers in Hamilton and Kitchener-Waterloo and a chain of Ontario weeklies.

``The CRTC's decision was an anomalous one, inconsistent with the objectives of the Broadcasting Act, the commission's prior decisions and the commission's call for proposals,'' Torstar chief executive Robert Prichard said in a release. ``It should not be allowed to stand unchallenged.''

Torstar argues it had stronger commitments to Canadian programming than the Craig application.

``By denying the Torstar application, we believe the CRTC missed a unique opportunity to license a service that would advance the key objectives in the Broadcasting Act more fully than any other private broadcaster,'' Prichard said.

The CRTC's decision had already sparked calls for cabinet review by Stan Keyes, the Liberal member of Parliament for Hamilton West, and independent television producer Alan Aylward, also of Hamilton.

They supported the Torstar application, largely because of its commitment to 118 hours weekly of local and regional programming.

The five original applicants for the TV licences have until Thursday to file an appeal and cabinet has 45 days from then to deal with any appeals.

Cabinet has the power to deny the appeals, quash the CRTC decision or send it back to the commission for reconsideration.

In the latter case, the CRTC would hold another hearing, likely with a new set of commissioners who could either uphold the original decision, amend it or rescind it.

Torstar's proposal involves separate TV stations with their own, independent editorial staff in each of the three markets serving the Toronto, Hamilton and Kitchener-Waterloo areas.

Some analysts didn't like Torstar's bid, saying the business plan didn't make sense. During the week in which its applications were
rejected, Torstar's stock hit a new 52-week high, trading at as high as $25.29 on the Toronto stock market.

Shares of Torstar were trading at $24.40, up five cents, on the Toronto market Tuesday.

Torstar spokeswoman Catherine Yates said she has no fears that Tuesday's appeal would bring negative reaction from investors.

``We've had a lot of conversations with the investment community about this,'' Yates said in an interview.

She said investors understand the television stations ``would represent a very small part of our business going forward, but we still believe that there is value in our applications.''

Adam Shine, an analyst who covers Torstar for CIBC World Markets, said the appeal was expected.

``We believe that a lot of this issue represents noise to what is otherwise an improving story at Torstar,'' he said. ``Our view is that the anticipated startup costs and the initial losses for the TV service would have been more than manageable for Torstar, given its strong free-cash-flow profile.''

The Global Television Network was the only other applicant proposing separate stations with their own staff in each of the three markets. But its local and regional programming would have been more limited, at 30 hours weekly, and would not include local news.

The winning Rogers bid calls for a new ethnic channel to be called CFMT Too, a sister station to the company's current UHF
multicultural channel.

The Craig application is for Toronto One, an English-language service with a rebroadcasting transmitter in the Hamilton area.

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