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A bid by fast food and satellite radio executive John Bitove to launch a new national TV network has been blocked by Canada's broadcast regulator.
The Canadian Radio-television and Telecommunications Commission denied the application from Mr. Bitove's HDTV Networks Inc. Thursday, saying the proposal would not have produced enough local programming and news from each of its stations.
Mr. Bitove, who started XM Canada satellite radio and plans to take part in wireless spectrum auctions in May to launch a new cell phone company in partnership with Microsoft co-founder Paul Allen, was looking to launch HDTV Networks in eight cities from Vancouver to Halifax.
While the regulator wants new competition in the TV sector after a wave of consolidation over the past two years, the HDTV bid called for fewer hours of local programming than other networks are required to produce. If the bid had been allowed, other networks could have sought the same concessions.
A bid by fast food and satellite radio executive John Bitove to launch a national TV network was blocked Thursday by the CRTC.
Mr. Bitove, on the right, is seen here during a public CRTC hearing in Gatineau, Que., in February to discuss his application for a new network. (The Globe and Mail)
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“The requirement to make local programming available to audiences is an integral feature of the CRTC's conventional television policy,” the regulator said in its decision.
“HDTV Networks would only commit to providing two hours of local programming per week in each of the eight markets it wanted to serve... By way of comparison, existing conventional stations offer on average more than 22 hours of local programming per week.”
The CRTC said the application amounted to a U.S. superstation model, for which there are no licences in Canada. Superstations broadcast across the country but do not produce local programming in each city in which they have stations. HDTV Networks wanted to launch in Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montreal and Halifax.
“The programming strategy associated with such a station is inconsistent with the objectives of the Broadcasting Act and the commission's policies,” said Michel Arpin, the CRTC's vice-chairman of broadcasting.
“We have never granted a licence for such a conventional television station in the past and did not find any compelling reason to do so at this time.”
However, CRTC commissioner Len Katz filed a dissenting opinion, saying the regulator should have allowed fewer requirements on local programming, which costs more, for the first few years. That would have helped the new network get off the ground.
“Why not provide a transition period during which a new entrant can establish itself, after which time it must be treated consistently with the established players,” Mr. Katz said, comparing the broadcasting sector to the cell phone market, where the government is looking to encourage new competition.
“I see little distinction between a new wireless operator entering the market against the likes of Rogers, Bell and Telus, and a new network broadcaster going up against CTVglobemedia, CanWest and Rogers Media,” Mr. Katz said.
“In the wireless case, Industry Canada has recognized the challenge facing new entrants and has offered concessions to the new entrants in order for them to establish themselves and compete in a market-driven economy. Yet for some reason my colleagues have chosen not to accept this transitional stage for a new national broadcasting network during its formative years.”
If approved, HDTV would have been the first national TV network to come along in years, a rarity for the industry since it would have been launched entirely from scratch. Canada's other privately owned national networks – including CTV, Global, and CityTV – have been strung together over the decades through mergers, partnerships and takeovers.
Mr. Bitove has aspired to be in the television industry for years. At hearings in February, he criticized the broadcast industry as a tight-knit club that seeks to block outsiders from entering the business.
At those hearings, rival broadcasters and the CRTC raised concerns about the lack of local programming. Canadian broadcasters are required to produce between nine hours and 42 hours a week, depending on the station.
Mr. Bitove came back at the end of the hearings and made the concession to fund two hours a week of local programming at each station, but the offering proved too little for the CRTC.
In addition to XM Canada and the coming cell phone bid with financing from Mr. Allen's investment company, Mr. Bitove also heads up Priszm Income Fund, which owns hundreds of KFC, Taco Bell and Pizza Hut outlets across the country. He is also known for bringing the Toronto Raptors basketball franchise to Canada.
The other networks also argued the industry isn't big enough to allow a new competitor into the market without placing ad revenue in peril. They said the business is in a perilous state right now amid competition from cable networks and the Internet. Responding at the hearings, Mr. Bitove said if Canada's major broadcasters are so worried about the fragility of the industry he'll buy any of them “for a dollar” to protect the owners from future losses.
The CRTC also turned down an application from YES TV Inc., which was seeking to start a high-definition conventional television service in Toronto. “The commission was not convinced that the applicant could fulfill its programming commitments, among other things,” the regulator said.
