So is CTV REALLY Losing Money on Local TV?

Very interesting article suggesting some creative accounting from CTVglobemedia.
The following is written by Kelly Toughill, an associate professor in the School of Journalism at the University of King's College, Halifax and a contributing editor for the J-SourceBusiness of Journalism J-Topic:

CTV: Operating Profit and Job Losses

CTV is crying the blues to the CRTC these days, but documents filed with federal securities regulators show the media company had a healthy operating profit last year. The company that owns The Globe and Mail, the CTV network, a radio chain and a string of specialty networks has been laying off workers, shutting down programs and threatening to close local stations. CTVglobemedia executive vice president Peter Sparkes told the Canadian Radio-television and Telecommunications Commission that the company lost $100 million on conventional television last year. But figures buried in the financial statements of Torstar show that CTVglobemedia had an operating profit of 9.7 per cent in 2008, before the cost of interest, taxes and non-cash items like impairment of goodwill. And a CRTC report says that CTV’s local news operations showed a “healthy overall profit” in 2008.

Conventional network television has suffered across the continent for several years as advertisers switched to the Internet and to specialty channels that target niche markets. In recent months conventional broadcast television has also been hammered by a recession that seen advertising budgets slashed around the globe.

CTVglobemedia does not file audited financial statements with securities regulators because it is privately owned. CTVglobemedia spokesperson Bonnie Brownlee did not return calls from j-source.ca. CTVglobemedia is owned by BCE Inc., the Woodbridge Company Ltd., the Ontario Teachers’ Pension Plan, and Torstar. A small summary of its financial report is included in the annual financial statements filed by Torstar. The Torstar report offers a glimpse into the overall health of CTVglobemedia, but does not separate out the performance of The Globe and Mail, the television network or other parts of the company. According to Torstar’s audited statements, CTVglobemedia had a net loss of roughly $1 billion in 2008. But the loss was caused by a general decline in the perceived value of the company, not because operating expenses exceeded income. In fact, CTVglobemedia earned an operating profit of $214 million on revenues of $2.2 billion – a margin of 9.7 per cent. The difference between the profit of $214 million and the loss of $1 billion are two accounting categories known as goodwill and intangible assets. Those categories measure things like the value of a broadcast license, the value of a customer list or the value of a brand. The income statements of media companies around the world have been hit by impairment of goodwill and intangible assets in recent years. The write-offs have fueled huge net losses at most media companies in the United States and Canada, and driven down stock prices of almost all media organizations.

Financial losses are key to CTV’s demand that cable companies begin paying fees to carry the basic network broadcast. The CRTC has rejected that idea, but may reconsider it later this year. The federal government has said that it wants to help private broadcasters weather what many consider a perfect economic storm in which the industry is trying to both restructure and simultaneously survive a major recession. In the meantime, CTVglobemedia has started cutting in virtually every part of its operation. About 90 jobs were cut at the Globe in January. In late February, CTV announced plans to abandon local stations in Wingham and Windsor. The next day it announced the company was killing 40 jobs at CTV’s CHUM Radio subsidiary. The cuts were immediate, with 23 positions left unfilled and 17 people out the door at nine stations across the country. The following Wednesday, CTV killed the local morning shows in Victoria, London and Barrie, and the 6 p.m., 11 p.m. and weekend newscast in Ottawa, ending 78 more jobs. One week later, CTV cut the early morning newscast in Montreal.

By Kelly Toughill

(Bob's note: Interesting how you can make your balance sheets say what you want them to say. In this case, if Ms. Toughill's number crunching is correct, it's clear CTV is using the numbers and layoffs to send the same message to the CRTC: give us carriage fees, or lose local television. Further evidence that it's time for the CRTC to take these local licences away from mega-corporations which have no commitment to the communities they allegedly serve.)

Windsor Stands Behind Local News

Windsor is a great city suffering under the weight of great hardship. The Rose City is Ground Zero for the current recession. It was feeling the sting before the rest of the country even knew it was in a downturn. It will still be suffering when the inevitable recovery is well underway. But Windsor will survive because it's a scrappy town that rallies behind its own. And on a sunny late winter Saturday afternoon, it put its arms around its local television station. When CTVglobemedia announced it would not be renewing its licence in Windsor, it probably knew the city wouldn't give up its local news station without a fight. Well, the fight is on.

With the station set to shut its doors for good on August 31st, about 300 people turned up for a rally in front of 'A' Windsor. There were enough people that Windsor police had to block the main drag, Ouellette, (that's OH-let, not OO-let, if you're an out-of-towner!) as speakers ranging from MP's and MPP's to labour leaders to the Mayor to affected 'A' staffers each took their turn at the microphone. It was a good old-fashioned union-style pep rally, and it's something they know how to do right in Windsor. They're fighters, and they're ready to fight the CRTC, CTV, and anybody else who tries to take away their TV station. They've had enough taken away from them in the past few years, and even though many of the people who came know first-hand about the pain of layoffs, they were determined to do what it takes to keep their station operating. They have the backing of their municipal, provincial and federal representatives. They're in this together. Ontario's Economic Development Minister, and MPP for Windsor West, Sandra Pupatello said the message to the CRTC must be clear: “No licences for CTV without Windsor included!" And there was a roar from the crowd.

Pupatello vowed to be there when CTV seeks the renewal of most of its other licences on April 27th. On March 25th, the Commons Heritage Committee will also be holding hearings with the CRTC on the future of of local Canadian television. Clearly the crisis has finally grabbed the attention of the broadcast regulator. But the CRTC is notoriously slow to act, and the owners are equally slow to adapt. It appears virtually certain that 'A' Windsor will not be a CTV-owned property at the end of August. It may well be that the station does shut down, but if the CRTC is serious about the need for local programming, it will invite new, ideally smaller ownership, and provide the tools necessary to allow that enterprise to turn a profit.

The people who turned out for the rally don't much care HOW it happens, only that somebody in authority does right by Windsor, and creates the conditions that will LET it happen. Mayor Eddie Francis summed up the mood of the city, and got one of the biggest cheers of the day when he said “we’re prepared to fight for our community… because that’s the Windsor way.”

Windsor's way is to battle through hardship, and find solutions. The CRTC and the mega-media giants like CTVglobemedia would do well to follow that model.

Parliamentary Heritage Committee to Explore "Crisis" in Conventional Television

The NDP has been successful in its bid to bring CRTC officials before the Heritage Committee to study the dramatic downturn in local tv content. Here are the details:

http://irenemathyssen.ndp.ca/node/807


Conspicuous by their absence from these hearings are executives with CTVglobemedia & Canwest Global. I think they have some 'splainin' to do as well.

Breaking Away from the "Broken Model"

On 03/03/09 the axe came down on the 'A' stations again. Morning shows were chopped in Victoria, Barrie, and London, where I worked as the show's News anchor. In Ottawa, everything BUT the morning show was eliminated. More than 100 jobs were lost. Not many when you look at the tens of thousands of people being thrown out of work in the province's manufacturing sector, but each job matters. Mine was one of them, but I'm not whining about my lot in life. I had the option, because of my seniority, of bumping into another job at the station. I chose severance. I don't like the look of the broadcast landscape at the moment.

Before the cuts on March 3rd, CTV had announced it was walking away from its licences in Windsor and Wingham. The same in Brandon, Manitoba. Canwest Global, teetering on the brink of financial ruin, threw its five E! stations on the heap, including the venerable CHCH in Hamilton. In the span of less than two months, 8 Canadian communities are facing the prospect of seeing their local television stations disappear, or wither to mere husks. Conventional television is not making money. I don't doubt that. The companies are demanding the CRTC allow them to charge cable and satellite providers for the use of their signals in the same way specialty channels are currently paid. The CRTC won't bite, so here we are. But where are we headed?

Like you, I'm following these latest brutal developments in the conventional broadcast industry with great interest, and I keep coming back to the same conclusion: Yes, carriage fees will help conventional broadcasters, but mega-corporations like CTVglobemedia and Canwest Global should not be in the business of local television. Carriage fees or not, these companies have presided over the ruination of local television across the country. Having read the most recent CTV licence renewal application, to be presented in April, I'm more convinced than ever that the CRTC needs to reject it. As it's written, it really offers no commitment to local television. In fact, it offers the opposite. It's full of threats and gloomy projections. It seems quite clear, by both their words and actions, that these companies have no real interest in, or commitment to, their smaller holdings. Is there any promise that the carriage fees would be directed to the stations in the greatest difficulty? If it's there, I don't see it.

A rejection of the application by the CRTC would almost certainly lead to the closure of stations like London, but I don't believe they would stay closed for long. The short term pain would lead to a much-needed revolution in the way local information is delivered. Ideally, it would also lead to local, or at least smaller, ownership which has a connection to the community it serves. It would revitalize community commitment to local stations. In a market the size of London, I'm told by those who know far more about marketing than I, that money can be made. However, it apparently can't be made by traditional media giants. We have seen more than 15 years of non-stop job losses and program cuts at a time when the number of people watching local news continues to rise.

The media titans say the conventional television "model is broken." The CRTC has apparently found religion and is now using precisely the same language. But who broke it, and why has no-one offered a solution, beyond carriage fees? Why have traditional media conglomerates, for all the talk of convergence, been so slow in adapting to new technologies and new media platforms. There's still a place for television. Tens of thousands of people in markets like London have shown that by tuning in during the now-cancelled morning news, the now-cancelled noon news, and the still-twitching 6 & 11 newscasts. But beyond the traditional is also the need for true integration of new technologies. Give the viewer the genuine opportunity to interact with its local station, and play a role in setting the agenda, not just consuming what's delivered by a very small handful of media professionals.

So, I guess what I'm saying is: a qualified "yes" to carriage fees, "no" to the renewal application as it pertains to small and medium market television. Let's turn the corner once and for all. What say you?