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When Canwest Global Communications recently announced that it was putting five of its television stations on the selling block, it was yet another sign that the Winnipeg-based company is in dire straits. But getting rid of five non-subscription-based channels could also signal a more significant event — the potential end of over-the-air television.
Over-the-air channels, or conventional TV, as they are collectively known, are stations that viewers can receive with a standard antenna. Because these aren't subscription-based channels like TSN or The Food Network, a company only makes revenue through its ads. It's a model that's becoming tougher to maintain, thanks to increasing competition from specialty channels.
"Over the last 10 years the CRTC has licensed a lot of digital channels," says Doug Barrett, a professor of broadcast management at York's Schulich School of Business. "As a result, the overall share market of conventional channels has come down to about 50%."
Profits are down significantly, too. In 2008 OTA channels collectively made $8 million dollars before interest and taxes, down from $112 million a year before. It's the lowest numbers in 13 years.
The falling profits have a lot to do with the recession, which puts conventional stations in a particularly tight spot, since they only rely on dwindling ad revenues. "Take the combo of a fragmented market and the fact that OTAs rely on a source of income that is highly susceptible to market forces, and what are you supposed to do?" says Barrett.
One option is to sell, like Canwest is doing. Channels such as CHCH in Hamilton and CHEK in Victoria (they’re part of the company's E! network) might be good for local news, but the company — and others around Canada — hasn't been able to successfully bundle ad sales on their main network with ones on their secondary, more local channels.
The problem with selling these stations, however, is that it's currently unclear who would buy them. Besides, pretty much every telecommunications company in Canada is tightening its belt and, with OTA’s future looking bleak, why would anyone get into the market?
"The current environment is not a good one to purchase media in," says Chris Waddell, associate director of journalism and communications at Carleton University. "Conglomerate owners don't say they're making money off these stations."
"The two obvious purchasers, Rogers and Astral, are not interested," adds Barrett. "They probably feel that for the price they'll pay it's not a viable purchase."
HOPE FOR CONVENTIONAL TV?
Despite all the doom and gloom around conventional television, Alain Strati, vice-president of specialty television and development at Rogers (which owns CityTV), does think the aging model can work. He says the stations need to focus on one or two relevant things instead of creating programming that covers everything. And, he adds, the channels have to remain local.
"At CityTV, we want to focus on local news and information and local reflection, rather than having to do Canadian dramas and documentaries," he says. "OTA TV has to go back to its local roots. That's what's at its core."
Unfortunately, some companies would love nothing more than to shift away from local programming. Last year, owners of TQS, a Quebec-based TV network, attempted to abandon all its news programming in favour of prime-time dramas. While the CRTC refused their request, it did allow them to revamp their news offerings into what the regulating body says is a "new concept that features local programming in which current events are discussed and analyzed."
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