Citytv’s fate as a national broadcaster—at least in the near-term—is now in the hands of the CRTC.
Rogers acquired Montreal channel CJNT (an ethnic channel branded as Metro 14) from Toronto’s Channel Zero for $10.3 million earlier this year, with the intention of converting it to a Citytv station.
The federal broadcast regulator held hearings on the acquisition in Gatineau last week, during which executives including Rogers Media president Keith Pelley and Rogers Broadcasting president Scott Moore outlined their plans for the channel.
Channel Zero, which originally purchased CJNT and Hamilton TV station CHCH-TV from the now-defunct Canwest for a reported $12 in 2009, has said it plans to use the proceeds from the sale to prop up CHCH and to finance the launch of two new stations.
The CRTC has recently take a hard-line stance to deals not deemed in the public interest under new chairman Jean-Pierre Blais, most notably Bell’s planned $3.4 billion acquisition of Astral Media.
Metro 14 is seen as a key plank in Rogers’ strategy to transform Citytv—which currently operates five channels in Toronto, Vancouver, Winnipeg, Calgary and Edmonton—into a national network capable of competing with CTV and Global Television.
In its application, Rogers said allowing it to operate a Citytv station in Montreal would enable it to “take an important step” towards addressing what it described as “significant issues” relating to the network’s lack of national coverage.
Pelley echoed that sentiment at the hearings, telling the Commission “Citytv cannot be a television network with national representation without the Montreal market.”
Insufficient national coverage has prevented marquee shows such as the Rogers-commissioned Canada’s Got Talent from finding a mass audience and generating sufficient advertising revenue. Pelley told the Commission that Rogers was told by several national advertisers they could not invest in the show because of City’s lack of national distribution.
Pelley used L’Oreal Canada as an example of the limitations facing Citytv in its current incarnation. While the cosmetics firm spends $115 million on TV, more than half—$82 million—is reserved exclusively for network buys. “Without a national network those dollars were inaccessible to Citytv,” Pelley told the Commission.
Rogers faces a “chicken-and-egg problem,” he said, because City’s lack of penetration makes it difficult to justify buying or building popular programming. He cited the CBS show Two Broke Girls—a Citytv property—as an example of a U.S. ratings hit that had failed to break through with Canadian audiences because of City’s lack of national penetration.
However, Pelley said that the company’s acquisition of Saskatchewan channel SCN and the negotiation of affiliate arrangements with Pattison Broadcasting in the B.C. interior has produced a 21% increase in tuning to Citytv among adults 25-54, turning Two Broke Girls into a top 20 show for the channel.
While Citytv programming is not currently available through Montreal’s local channels, it does reach the market through the carriage of other Citytv stations as distant signals by BDUs. Several of its prime-time programs also reach Montreal viewers through U.S. signals entering the market. The ability to simulcast those shows, said Rogers, would enable it to repatriate audiences and revenues.
Morning moves, but no news
Rogers’ application called for the creation of a local version of Breakfast Television—a three-hour programming block which would be the only English-language morning TV show in the market—and a weekly 30-minute sports show called Connected Montréal.
News programming, however, is not in the plans for Rogers. During the hearings, Moore informed the Commission that there are already three local stations providing English-language news programming, but none providing a morning show. “For us to get into the news game late, we’d be banging our head against the wall for a number of years,” he said.
Pelley had said Citytv would not be able to create a competitive evening newscast against the incumbents, but indicated that a morning show like BT would fill a programming void. “I think we would be fourth in the market in news and first in the market in cultural lifestyle community programming,” he said.
Pelley said Rogers would invest $3 million in BT for Montreal, noting that it “doesn’t even come close” to breaking even. “But we know there is a big hole in the market for lifestyle programming and at the same time it is what our brand is all about,” he said.
In its application, Rogers said it anticipated advertising revenues of $7.5 million in 2012-13 growing to $9.1 million. The company anticipated total ad revenues of $41.4 million from now until 2017.
Rogers has also said it is also open to what Pelley described as “Option B,” which involves keeping CJNT as an ethnic station but running Citytv programming—primarily U.S. imports—in the key 8-10 p.m. time slot.
The Rogers application was delivered in tandem with an application to create a new over-the-air ethnic station called Ici (International Channel/Canal International). Rogers has pledged to support the start-up with technical and engineering support to providing studio space and even supplying programming from its OMNI stations.
Rogers said the complementary approach represents the “optimal solution” to serving the needs of both Montreal’s English and ethnic communities.
