Back in May, when Rogers and Channel Zero announced that they had reached an agreement to buy CJNT from the latter and turn it into a Citytv-branded station (with it becoming a Citytv affiliate in the meantime), it was unclear whether it would remain Montreal’s only ethnic television station. Rogers Media President of Broadcast, Scott Moore, couldn’t be pinned down either way on what, if any, amendments to the station’s licence the media giant would propose as part of the purchase.

On Sept. 5, the Canadian Radio-television and Telecommunications Commission published the application for transfer of ownership, and we learn that, in fact, Rogers is asking to change Citytv from an ethnic station into an English one, or at least to relieve it of a condition of licence requiring 75% of programming from 8pm to 10pm be ethnic in nature (a condition that previous owners have tried and failed to have relieved).

But this request comes with a twist: In exchange for turning CJNT into an English station, Rogers proposes to support a brand new television station in Montreal whose programming would be almost entirely ethnic in nature. The new station, which would be the 10th over-the-air television station in Montreal, would be run by an independent group and would include some of the same programming that used to air on CJNT.

During this week, I’ll be speaking with the principal parties involved (Rogers, Channel Zero and the independent group proposing the new station). In the meantime, here’s what the applications themselves say.

Citytv Montreal

“The acquisition of CJNT-TV and its conversion to an English-language commercial television station will allow RBL to establish an over-the-air television presence for Citytv in Montréal. This is a key step towards making Citytv more competitive with CTV and Global in terms of programming and our ability to access network advertising revenues.”

Rogers has made clear its intention for a more national footprint for the Citytv network, which celebrates its 40th anniversary this week. Advertisers treat Citytv, which has no stations east of Toronto, as a small regional player, and Rogers wants that to change. So it signed an affiliation agreement with three small-market western stations in the Jim Pattison Group, and acquired Saskatchewan educational network SCN, rebranding it Citytv Saskatchewan. And it acquired CJNT in Montreal.

The network still isn’t complete. There’s no station in Atlantic Canada, and only a retransmitter in Ottawa. But these moves have increased the network’s reach about 27%.

Being a national advertising player is a priority for Rogers, so much so that it’s willing to lose a lot of money on a Citytv station in Montreal:

“In terms of revenue potential, Citytv has a very limited ability to sell network advertising. National advertising buyers want access to top quality programming on national networks with extensive audience reach to meet their clients’ needs in the most efficient way possible. They naturally look first to CTV and Global for network buy opportunities, as these networks have the national reach that they are seeking. Citytv network buys may be considered to fill the gaps, but only after the buyers have exhausted their advertising opportunities with the large national networks.”

Purchase price

The application lists a purchase price for CJNT: $10.3 million. That breaks down as about $550,000 for the actual assets (mostly transmission assets, as Rogers isn’t interested in the existing studios or programming rights), and the rest for the licence itself. When Channel Zero bought CJNT in 2009, it was in a package deal with CHCH in Hamilton for $12, along with commitments to cover the stations’ liabilities.

If we consider a $6 purchase price and a $10.3 million sale price, that’s a 171,666,667% return on investment in just three years for Channel Zero, or 57,222,222% a year. That’s about 10 million times the rate on my RRSP.

From the Rogers application, we also learn a bit about Channel Zero’s motives, including the fact that it took the station mainly so it could get CHCH:

Channel Zero’s primary consideration was the acquisition of CHCH-TV; however, it was clear that the stations were being sold as a package and Channel Zero was enthused by the opportunity to acquire an ethnic station in one of Canada’s greatest cities.

Channel Zero has invested just under $500,000 on technical upgrades to the CJNT-TV facility including converting the transmission facilities to digital. It has also created new office facilities and has funded operating losses which are expected to total $1.5 million by the end of the current broadcast year.

This is consistent with criticisms that while Channel Zero has invested a lot of time, energy and money into programming at CHCH, it has all but ignored CJNT. (Though, the application also correctly points out that if Channel Zero had not bought CJNT in 2009, the station would likely have been shut down.)

The big question, though, is why Rogers is bothering with this when it could just apply for a new licence for a new television station, and leave CJNT to remain ethnic. The CRTC asked the same question, and here is Rogers’s response:

Montreal, as a major English-language television market, remains a key part of our expansion strategy. As such, we have looked at number of options to monetize Citytv’s programming in this market including applying for a new licence, applying for a rebroadcast transmitter, negotiating broad distribution and simultaneous substitution with local distributors and available acquisition opportunities.

The purchase of CJNT-TV was the most attractive of these options as it represented the fastest and most predictable entry into the market and would allow us to start monetizing our programming in the upcoming broadcast year.

The other point made is that if Rogers tried to start a new station, Channel Zero and CJNT would probably be first in line to oppose it.

It’s through the related application presented for this CRTC hearing that we learn that Channel Zero had originally planned to ask the CRTC to convert CJNT from an ethnic station into an English station, similar to what Rogers is proposing now. Channel Zero and the group behind the new ethnic station project came up with this joint proposal in order to allow CJNT to become English without depriving Montreal of its only ethnic television station.

If the Rogers acquisition is denied, Channel Zero is apparently still interested in converting CJNT into an English station. From Rogers’s application:

In the event the Commission denies the proposed transaction, 2209005 (the licensee of CJNT) intends to apply to the Commission to convert CJNT-TV into an English-language television station as it does not believe the station is viable, on a long-term basis, as an ethnic station based on its current business model. RBL (Rogers Broadcasting Ltd.) has also been informed by 2209005 that should the Commission deny the proposed transaction that it will strongly oppose any applications for a new English-language television station to serve Montreal, as 2209005’s intention is to apply for an English-language television station in Montreal.

Programming

Proposed Citytv schedule for CJNT (PDF)

As previously stated in May, Rogers’s plan for CJNT would not include a daily evening newscast, since Montreal already has three of those (CTV, CBC and Global). Instead, most of a Montreal Citytv station’s local programming would come through a local morning show called Breakfast Television Montreal, which would run from 6am to 9am weekdays. This is consistent with Citytv’s other (non-Toronto) local stations, which also rely on Breakfast Television for most of their local programming.

The application describes the proposed morning show as “a mix of local news, information and entertainment programming focused exclusively on the Montréal market.” It also touts the “community” focus of the shows, covering everything from cultural events to fundraisers.

The other local show would be a weekly sports show, which in its application Rogers calls “Connected Montréal”:

RBL will also launch a weekly half-hour sports program, to be known as Connected Montréal, dedicated to covering the best in professional, amateur, university, CEGEP, and junior league sports in the Greater Montréal area. Currently, there are no programs on television that showcase the talented athletes and coaches that make-up this rich and diverse sporting community. We intend to focus on the positive influences sports bring to young people, community building, and the historical and cultural fabric of Montréal.

This show will include a mix of game highlights; team, athlete and coach profiles; and analysis from a wide variety of local sporting events. This program will be uplifting and motivational, providing Montréalers with the opportunity to celebrate their city’s athletic achievements.

The proposed programming grid lists a one-hour program called “The Fan” that would air Sundays at 6pm and repeat Mondays. The half-hour option seems to be the more recent of the two. It’s not clear at this point when exactly the show would air, but likely on weekends with at least one repeat, Moore tells me.

With 15 hours for the morning show and half an hour for the sports show (repeated once), the station would produce 15.5 hours of original local programming a week, and air 16 hours including the repeat.

Citytv Montreal would also air Citytv network programming as it does now, including Cityline and programs like The Bachelor Canada.

But the big thing is U.S. programming. The reason Rogers wants more local stations (as opposed to distant-signal carriage on local distributors) is to benefit from simultaneous substitution. The real losers here aren’t CFCF or CKMI, they’re WPTZ, WFFF, WVNY and WCAX, who will lose a big chunk of what non-substituted primetime programming it has left.

Plan B: An ethnic station

Rogers’s application proposes an alternative if the CRTC decides against turning CJNT into an English station:

“RBL would be prepared to respect the current licensee’s commitment to provide 14 hours of local ethnic programming each week, provided that the word “original” is deleted. We would be prepared to accept the revised commitment as a (condition of licence) in the licence to be issued for CJNT-TV as an ethnic station.”

But more importantly, Rogers needs the requirement that 75% of programming from 8 to 10pm be ethnic to be removed, as well as another similar condition requiring that at least 50% of programming between 6pm and midnight be ethnic. Without those licence changes at minimum, Rogers says it will walk away from the deal.

“Without these changes to CJNT-TV’s licence our purchase of the station no longer has any strategic value to our broadcast group.”

If the CRTC doesn’t buy the two-station plan, Rogers may have a tough time convincing the CRTC to move forward with this change. The CRTC has already twice denied previous owners’ applications to have this condition removed.

It’s not clear at this point what Rogers would do as far as local ethnic programming in case CJNT remains an ethnic station under its control. But it would not air an English morning show if the station remains ethnic.

Finances

Rogers’s proposed five-year budget for an English-language CJNT shows it would lose between $6 million and $7 million each year as an English station, and in fact it would get worse rather than getting better. The largest expense, about half its total, would be for the acquisition of American programming. Less than half of that, about $3 million a year, would be spent on Canadian programming, including its local shows.

Under the second proposed scenario, where Rogers buys CJNT but it remains an ethnic station (relieved of its obligation to air 75% ethnic programming from 8 to 10pm), it would spend only about $1 million a year on Canadian programming and about $6-7 million on U.S. programs, but would lose slightly less money every year.

Technical parameters

No changes are being proposed to the technical setup of CJNT. It would remain on digital channel 49 (virtual channel 62.1), transmitting from a small tower on the roof of the CTV/TVA transmission building next to the Mount Royal tower, with 4 kilowatts effective radiated power.

Rogers proposes its licence for CJNT expire on Aug. 31, 2016, which is when CJNT’s current licence expires.

ICI

ICI (International Channel / Canal International) is a project of Mohammad Nowrouzzahrai and his family, who want to bring Montreal’s ethnic television station back to its roots. Nowrouzzahrai produced a Persian program for Télévision Ethnique du Québec, which was a public access cable channel and became an over-the-air broadcaster in 1997 as CJNT. It was sold to WIC in 1999, and became a Canwest station when Canwest bought WIC.

Mohammad’s son Sam, who worked for him in the TEQ days, runs the day-to-day operations at Mi-Cam Communications, a production company owned by his father which created programs for CJNT in its early days. According to the application, Sam Nowrouzzahrai, aka Sam Norouzi, would continue in this role at ICI.

Because the ICI project predates the announced sale of CJNT to Rogers, the plan does not consider Rogers’s involvement locally. And with the announcement that Rogers is buying CJNT, the plan doesn’t change much. But there’s an additional bonus for ICI, in that Rogers has proposed to use the tangible benefits package of $1 million (10% of the $10 million purchase price) to help fund the ICI station and offset its losses. This is additional money that ICI’s original plan hadn’t considered. (If the ICI station is denied, Rogers plans to put the money to other uses.)

Because it gets funding from Channel Zero, the ICI application is dependent on the sale of CJNT to Rogers. Otherwise, the two would both be ethnic stations competing with each other.

But the group behind ICI insists that it is not contingent on Rogers converting CJNT from an ethnic station into an English-language one. Though it admits that the business case becomes a lot tougher (particularly if it doesn’t get that $1 million in benefits money), it feels that it could continue while competing with CJNT. ICI’s plan does not involve OMNI programming, which CJNT currently airs a lot of as a Citytv affiliate.

Rogers, however, is less convinced that Montreal could support two ethnic TV stations:

“…we believe there is increased potential for brand confusion and audience fragmentation as a result of having two ethnic stations in the market. Based on the above, and given CJNT-TV’s financial history, it is not clear to RBL that there is room for two ethnic stations in the Montreal market.”

It’s hard to imagine the CRTC ruling in such a way that we get two ethnic stations, considering the precarious history of the existing one. If ICI is approved, expect Rogers to get its wish for a fully English station.

Ownership

The channel would be run by 4517466 Canada Inc., a company owned 90% by five members of the Nowrouzzahrai family (specifically, Mohammad Nowrouzzahrai, his wife and three children). Another 5% would be owned by Marie Griffiths, who used to own part of CJNT and is the controlling owner of Groupe CHCR, which runs Montreal ethnic radio stations CKDG (Mike FM) and CKIN-FM. The other 5% is “to be determined.”

Finances

The group would be financed by up to $1 million from Channel Zero’s Movieola subsidiary, as well as about $1 million in benefits from Rogers (over five years) that come from the tangible benefits package from its acquisition of CJNT.

The station would have an operating budget of about $3.5 million for each of its first seven years, with programming in the news, music/variety and entertainment magazine formats. There would also be about 14% of its programming budget spent on non-Canadian programs.

Its revenue, entirely through local advertising, would start around that level and eventually increase to $6.5 million by the end of its first seven-year licence term. The station would be profitable by the third year, and making almost $2 million in Year 7.

That sounds incredibly optimistic. To put it in perspective, according to the same application, the English stations combined received about $8 million a year in local advertising in the six years up to 2009, and $10 million in 2009-10. And CFCF currently has about 100 times the audience of CJNT.

Cooperative

According to the application, the station would operate as a producer’s cooperative. This means the producers of individual shows would be responsible for their own budgets, and for selling their own advertising. The application explains the structure this way:

Ici proposes a channel that will operate very much like a co-operative in that each of the individual language producers will be able to shape their program as their own business within the overall business structure that ici will create. Each of the producers will own the advertising inventory within their own programming and therefore be in a position to generate revenue through the sale of advertising to the community that they know best. The producer’s will in turn provide a share of these revenues to ici in exchange for the services which ici will provide.

This makes sense, in that the individual producers are closer to their communities than any central ad sales staff could be. But it also means that more of the risk would be on the shoulders of the individual producers. Many would probably end up producing their shows on a volunteer basis.

Programming

Proposed programming schedule for ICI (PDF)

Programming for ICI would originate from a small studio (74 square metres) on Christophe Colomb Ave. in Ahuntsic, at the home of Mi-Cam Communications.

The programming would be in 15 languages and directed to 18 ethnic groups, including:

• Italian
• Latino
• Arab (including: Lebanese, Egyptian, Moroccan, Algerian)
• Portuguese
• Greek
• Haitian
• Polish
• Armenian
• Persian
• Romanian
• African (French)
• Russian
• German
• Afghan
• Indian
• Pakistani
• Chinese

The largest chunk of programming would be Italian (31%, including most of the weekday afternoon schedule), followed by Arabic (10%), Spanish (8%), Greek (3%) and Mandarin/Cantonese (2.5%).

Some of the programs previously produced for CJNT would find a new home on ICI. The application includes signed letters from hosts and staff of Chinese, Bangladesh, African and Egyptian programs that aired on CJNT, as well as potential producers of other programs, that are willing and excited to sign on to this project.

In all, the programming grid proposes 33 shows of half an hour or an hour in length, almost all of them locally-produced weekly shows. Shows appearing more often include a one-hour yoga show weekdays at 7am,, and a Hellenic show and a Greek show that would each be produced twice a week. Most shows would be repeated at least once on another day.

Monday and Thursday evenings, from 7pm to 11pm, the channel would air Teleritmo, which consists mainly of music videos in Spanish.

Despite the involvement of Rogers, which came after the original application for this station was submitted, there are no significant plans for OMNI programming on ICI, even if CJNT is stripped of its ethnic station status. “We do not envision OMNI programming being a significant portion of the ici schedule,” the application says.

Also unlike OMNI (and CJNT under Canwest, Channel Zero and as a Citytv affiliate), the ICI station would not air significant English-language programming during primetime (or at all, really). It says this is because of the way the industry has changed in the past decade. Rather than each station in a market acquiring programming, the large players (Bell, Rogers, Shaw) buy U.S. programs on a national basis, leaving little room for small broadcasters. So instead of trying to put some high-profit U.S. programs in primetime (and take advantage of simultaneous substitution to steal some ad revenue), the station is abandoning this practice and focusing entirely on ethnic programming. It does leave open the door to airing some U.S. programs, however, particularly those that are acquired by other independent stations like CHCH in Hamilton.

Though there are no definitive plans for programming synergies with Rogers, the application does expect Rogers and Ici to collaborate on national ethnic ad sales if CJNT becomes an English station.

The revised application also suggests news gathering resource sharing between ICI and Citytv, much like OMNI and City share resources in other markets, with the same visuals being used by both but with different reporters in different languages.

Master control would either be shared between Rogers and ICI, or if that doesn’t work, ICI says it is prepared to rent master control facilities from other broadcasters.

Conditions of licence

The ICI application proposes to replicate most of CJNT’s current conditions of licence, namely:

• At least 60% ethnic programming between 6am and midnight
• At least 60% ethnic programming between 6pm and midnight
• At least 75% ethnic programming between 8pm and 10pm
• At least 55% Canadian programming between 6am and midnight
• At least 50% Canadian programming between 6pm and midnight
• Ethnic programming directed at at least 18 ethnic groups and in at least 15 languages each month
• 100% closed captioning of programming, including all advertising in English and French by Year 4

Proposed transmission pattern for “ICI” would be directional, with a triangular shape.

Transmitter

ICI would operate on Channel 47 (it had originally proposed Channel 51), with a transmitter on the Bell tower on Mount Royal (just west of the main CBC tower). That’s the same tower CFCF used when it was operating a temporary digital transmitter (also on Channel 51). Because the plan for this new station began before CFCF left that channel, they decided to move to Channel 47. Industry Canada also has a moratorium on issuing new broadcasting certificates for Channel 51.

The transmitter would put out a maximum 5,500 watts ERP at a height of 196 metres. This puts it about on par with CJNT’s current signal, for those wondering if they’d be able to capture it.

Unlike CJNT, which is carried by many distribution services, ICI expects it would not get satellite carriage, and so would rely solely on local cable systems (which are required by law to carry all local over-the-air stations). About two-thirds of Montreal’s English population and 80% of the francophone population either get cable or rely on over-the-air reception, according to the application’s estimates.

The CRTC is considering these two applications at a hearing to begin Nov. 7 in Gatineau. The deadline for comments is 8pm Eastern Time on Oct. 5. To submit an intervention, click here, choose Option 1, then choose “2012-0756-4: Rogers Broadcasting Limited” (for the CJNT application) and/or “2012-0175-6: 4517466 Canada Inc.” (for the ICI application).