The day local TV died

CHCH, the superstation in Hamilton, Ont., was Canada’s last best hope for the idea of truly local television.

It failed.

On Friday at 4pm, the station aired a 90-second statement from Channel Zero CEO Romen Podzyhun, explaining that the station would be undergoing a major restructuring and would eliminate a large part of its local programming, and the jobs that go with that. The amount of local programming would reportedly drop from 80 hours to 17.5 hours a week, a little more than most large-market local TV stations in Canada. (Its licence requires a minimum of only seven.)

Rather than have local original programming from 4am (they prided themselves on being the first on the air weekday mornings) to 7pm weekdays, they’ll be left with 6pm and 11pm newscasts starting Saturday, and the morning show starting Tuesday.

Other, non-news programming gets cancelled.

The human cost: 129 full-time jobs, and 38 part-timers, according to the Hamilton Spectator. Of them, 58 full-time employees and 23 part-time will be offered new jobs. The cuts include the Niagara bureau, apparently in its entirety.

Channel 11 LP, the company that Channel Zero created to do its local news, and which technically employed CHCH’s news employees, has declared bankruptcy, with $1.6 million owed to employees. (This is being erroneously reported in the media as CHCH itself or its parent company declaring bankruptcy, which is not the case.) The consequence of this is that the company can wash its hands of its union obligations, and the union is not happy, though it focuses its blame on the CRTC and the government.

It’s hard to overstate how disappointing this news is, not just for people in Hamilton but for anyone who believes in local television. When CHCH was bought by Channel Zero in 2009 (along with CJNT in Montreal for a grand total of $12), it was already producing more than its fair share of local programming. But the new owners decided to gamble on the idea of expanding that even further, putting on local news throughout the day and airing movies or other bought programming at night. (That eventually turned into running fourth-rate American network shows that CTV, CTV Two, Global and City had no room for on their schedules.)

Local news is very expensive to produce, but CHCH would partly mitigate that through economies of scale and by not buying as much expensive programming from the U.S.

If anyone could make this idea work, it was CHCH, which rebranded itself as Canada’s superstation. And when it did work, we could see this new business model expand to other stations or even new stations. And we could throw it in the faces of the bigwigs at Bell and Shaw and Rogers and Quebecor and V who think cutting is the answer.

Changing economics

So why didn’t it work? Well, money, obviously. Podzyhun explained that national advertising revenue is in decline. According to the CRTC’s financial summaries, national ad revenue for over-the-air television stations declined an average of 5% a year from 2010 to 2014. (CHCH’s finances aren’t public, but it has been telling reporters that it was losing $130,000 a week, which is more than $6 million a year.)

But it wasn’t just the ad revenue decline. When the CRTC instituted the Local Programming Improvement Fund after the 2008 recession, CHCH was a major beneficiary. At its peak, the station got $5 million a year from this fund, that taxed all cable and satellite subscribers 1.5% of the price of their service. But the commission declared that the fund had served its purpose, and in 2012 it started phasing it out. The fund ended on Sept. 1, 2014.

Hamilton is too large a market for CHCH to be eligible for a similar fund for small-market stations (which includes the other independents, CJON in St. John’s and CHEK in Victoria).

And because it’s free-to-air, CHCH doesn’t benefit from subscriber fees.

What now?

Channel Zero, which also owns Silver Screen Classics, Rewind TV and the new Bloomberg TV Canada (plus some porn channels they don’t talk about much), hasn’t said what will fill the daytime schedule on CHCH. The most likely choice is U.S. talk shows, game shows, fake courtroom shows and other stuff you find in daytime.

The idea of expanding into other markets (Channel Zero had apparently taken steps toward opening stations in Calgary and Edmonton) is now definitely off the table. Projects like Bloomberg, which gets money from subscribers, look like a more solid future.

We can only hope that the slimmed down CHCH can bring itself into the black while maintaining enough local programming to still make a difference and hold a connection with viewers. And maybe if some new sources of revenue emerge they can slowly think about expanding again.

I’m not optimistic, though.

In the meantime, there are dozens of now former CHCH employees who don’t know where their next paycheque will come from.

The CRTC begins a hearing in January on the future of local and community television. Some issues have already been decided on, like simultaneous substitution (staying, except for the Super Bowl) or fee for carriage (still not going to be a thing for over-the-air stations). But expect CHCH and other broadcasters to add this to their list of arguments for why regulatory change of some sort is needed to save local television.

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UPDATE (Dec. 15): The CBC has an email from a CHCH salesperson essentially saying the restructuring was to get rid of the union, among other things. Channel Zero has denied this, noting that it has rehired some union staff (though that doesn’t make the union-busing accusation untrue). Former union members are not happy.

UPDATE (Jan. 30, 2016): Reporter Scot Urquhart offers a first-person perspective about the loss of his job and others.

15 thoughts on “The day local TV died

  1. Darren

    Its time the CRTC take note on how the FCC mandates networks since more OTA (over-the-air channels) are being launched in the U.S. while Canadian networks say they cannot complete. In Toronto, 75% of the OTA are from Buffalo. One channel is owned by an individual and has its main channel and 6 sub channels. (channel 56 WBXZ). The CRTC needs to change the Broadcast Act to allow Canadian OTA channels to carry sub channels and make more money since a portion of the ad revenue received from the sub channels go to the owner of the main channel. CHCH could survive by allowing sub channels and make money from their ad revenue. Also with this model CHCH could be seen throughout Canada as a sub channel of other channels.

    Reply
    1. Fagstein Post author

      The CRTC needs to change the Broadcast Act to allow Canadian OTA channels to carry sub channels and make more money

      1. The CRTC doesn’t have the power to change the Broadcasting Act
      2. The Broadcasting Act does not prohibit multicasting over-the-air digital signals
      3. The CRTC doesn’t disallow multiple signals on one transmitter. It simply requires approval from the commission before adding them. But there’s no demand for it because free TV doesn’t pay.

      CHCH could survive by allowing sub channels and make money from their ad revenue.

      What ad revenue would magically manifest itself from the creation of a subchannel? And how would that be enough to employ a hundred people?

      Reply
      1. Dilbert

        1, No, but they have the bully pulpit from which change can occur.
        2. No, but in the wildly non-competitive world of Canadian TV, nobody has the need or desire to try.
        3. ” It simply requires approval” – since the CRTC’s standard for approving such undertakings is both forecast profitability for the new service and no particular impact on existing services, it’s almost impossible to get anything approved.

        It’s where the Canadian and US systems diverge. In the US, if you can find an available frequency and can meet the technical requirements, you can have a radio or TV station of your own. What you choose to do with it is pretty much up to you, as long as you don’t violate the broadcast standards.

        Local TV matters in the US because for the most part, the stations are affiliate stations and are not owned by the networks. Generally they strike deals with the networks that are win-win situations, giving the network distribution in an area and giving the local channels the programming they sell they ad space against. They strive to gain viewership in their local market because it’s what drive income into the bottom of the system and on through to the network.

        In Canada, the networks own they local affiliate channels. The local channels are all pretty much clones of each other, a single formula approach based mostly on the idea that everything done during the day and all the rest is unimportant – it’s all about simsub selling ad space on US network programming at night – and then taking a big chunk of that money and sending it south to pay for the programming (at insanely high prices considering the market size in Canada). The local channels produce nothing but news and provide justification for simsub operations in prime time. If they could, the major networks would likely love to kill of their local stations and go with a single source, national feed.

        CHCH tried to do things their own way but failed, in no small part because the big boys of network TV in Canada have destroyed the market for national advertising on local stations. Why buy local when you can go to Bell, and buy ad space on the syndicated talk shows all across Canada, at a reduced rate because they have so much space to sell? It sucks the market for local ads by national source dry.

        Reply
        1. Fagstein Post author

          3. ” It simply requires approval” – since the CRTC’s standard for approving such undertakings is both forecast profitability for the new service and no particular impact on existing services, it’s almost impossible to get anything approved.

          The CRTC has no standard for approving subchannels. In the few cases in which such use has been requested, it has always been approved.

          Reply
          1. Dilbert

            “The CRTC has no standard for approving subchannels. In the few cases in which such use has been requested, it has always been approved.”

            Same discussion as always.

            You are looking at subchannels as versions of the original channel (like the 480i version that I think Global uses). That isn’t the point here.

            In the US, many stations have subchannels with other brands. WPTZ as an example has the CW and Me-TV subchannels. This stuff is added and removed without any regulatory control, outside of meeting the pure technical requirements for the broadcast signal as defined by the FCC.

            In Canada, each of those stations would be a “new commercial station in the market” and would require approval by the CRTC is EXACTLY the same manner as adding any new OTA station – that would include impact in the local market and so on. The CRTC is loath to approve any new OTA station that wouldn’t have local programming and meet all of the other requirements – and they really don’t want to approve a station that they feel would impact the market or have no hope of being profitable.

            It’s significant. I am not sure why (over and over again) you aren’t getting it.

            Reply
            1. Fagstein Post author

              You are looking at subchannels as versions of the original channel (like the 480i version that I think Global uses).

              No, I’m not. SD versions of the same channel don’t require specific CRTC approval.

              In Canada, each of those stations would be a “new commercial station in the market” and would require approval by the CRTC is EXACTLY the same manner as adding any new OTA station

              You’ve stated this as fact before, without supporting evidence to prove it. The Leamington station is a very good counterexample that you also ignore. But the truth is there’s no real precedent for this kind of operation because no one is proposing it, since free TV doesn’t pay. I’ve seen zero evidence that a single broadcaster would make use of multicasting if the CRTC regulations were looser, or that such additional channels would somehow save local television.

              Reply
              1. Fagstein Post author

                Leamington is community not for profit.

                That is correct. It’s also the only TV station in Canada I’m aware of that has multiple channels with different video programming on a single digital transmitter. And it did not require a different licence for each channel.

        2. NaBUru38

          “Since the CRTC’s standard for approving such undertakings is both forecast profitability for the new service and no particular impact on existing services, it’s almost impossible to get anything approved.”

          That requirements are ridiculous.

          Why do they about forecasting profitability? If they underestimate, they dont approve, which is unfair. And if they overestinate, the channel fails, so what?

          And no impact on existing services means they only approve channels that dont attract large numbers of viewers, which means protecting incumbents.

          Reply
          1. Fagstein Post author

            That requirements are ridiculous.

            Then good thing those aren’t actually the requirements.

            The CRTC looks at the ability of the market to sustain a new station. That doesn’t mean that they won’t approve a new station if it would compete with existing ones.

            Reply
  2. It's Me

    Not to say that this wouldn’t happen under any other broadcaster, it was a ballsy move and a big gamble, but Channel Zero just seems like an incompetent company that cannot get anything right.

    1. CJNT was a disaster and was sold off
    2. Fight Now TV in the US failed.
    3. They have reportedly tried several acquisitions or startups in other countries with no success – Propeller TV, supposedly they were trying to expand into the UK and there were reports of them getting in on the deal to launch a local channel in Birmingham, England, but then that was refuted by the proposed owners, so not sure if those two things are related.
    4. There’s a strange history between Stornoway Communications and Movieola (the channel now branded Rewind) – look it up on the net if you’d like.
    5. They made plans to keep Movieola running as an online service and app in Canada after the channel was rebranded, but the app never materialized and the online presence lasted a bit on Hulu and it seems like thats even gone now and supposedly it was a popular channel on Hulu I read somewhere.

    I can only imagine that the new Bloomberg TV Canada venture will most certainly fail, and poor Amanda Lang left a decent gig with the CBC for that. With stints at Bell and CBC in her past, she’s running out of potential TV gigs in Canada unless they will take her back. She must be be banking on the fact that even if the channel fails, she can still stay on as a Canadian contributor for the Bloomberg international brand.

    But, I digress, back on the original topic…

    This is a failure of a company. It has a stink on it that no one will be able to get out unless there is a total overhaul of management with a good set of cleaners on em.

    Reply
  3. Mario D.

    It makes no sense. No sense because it was probably to be expected as it is in every market with the gazillion choices you have today.

    Those markets slowly loose their audience here and there ,are kept on air artificially until the day when the only option is to pull the plug.

    The CRTC takes any offer it gets without making sure there is a place and a market for those local boys. Against the big guns and the american competition how can local content survive ?

    So what do you do then ? You limit the numbers of allowed competitors ? You force the merger of stations that deliver the same product ? Of course those ideas are unlikely to be put in place but then the faith of many local product providers is sealed. Does it make sense to not locally produce content
    because then if this is what it takes to survive why does the CRTC exists?

    No matter the size of the market ,something will have to give. Take MTL`s french market for instance. On Sunday nights you have a fierce battle between Tout le monde en parle and le Banquier that get close to 4 million home viewership . 4 millions ? What does it leave for the hundreds of other channels and what are the ratings for other french stations that have a limited potential ? That makes for slim pickings of which we have no numbers to show for. At a certain point something has got to give and nature`s law applies.
    No matter how good or bad the product is…

    This is only one of many to come because now ,TV as we have known it is being phased out by streaming and a new generation will decide what the future holds for the mom`s and pop`s tv businesses…

    Reply
  4. Sauce

    A few things to consider.

    1 – CHCH-DT had re-transmitters throughout most of Ontario. Some still analog. Those transmitters eat a lot of power. And does anybody tune into analog. I doubt it. And who in Northern Ontario really wants to get a the traffic report for Hamilton, and Toronto. They could have started to shut down those re-transmitters first.

    2 – CHCH-DT could have cutdown on there all-day local news, and presented a syndicated package of programs to other stations in the country. Including some that might have wanted to experiment with a sub-channel. Perhaps four 30 min news packages a day, Sportline, a few other shows that they also do, a movie a night etc. In all perhaps 4 – 5 hrs a day of a syndicated package to other stations. Stations like, CJON, CKWS, CHEX, all those stations out west under that Paterson group.

    If you really want to be creative about it, you can come up with a plan. It would certainly not be the same CHCH, but an alternative would be available to viewers.

    It’s a shame.

    Reply

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