GATINEAU, Que. - In just over a year, Canada could have the first TV network that broadcasts over the air exclusively in high definition and free of charge to viewers, Toronto businessman John Bitove told the federal regulator Tuesday.
He said the country is ready for another network in an industry that has seen a lot of consolidation lately.
Bitove is a major force behind Canadian Satellite Radio Holdings Inc. (TSX:XSR) and the XM Canada subscription-radio service, which uses satellites to deliver programming, as well as Priszm Income Fund (TSX:QSR.UN), the country's largest operator of Kentucky Fried Chicken outlets.
"I've had people come up to me and say, 'What are you doing, don't you know conventional TV is dying? Are you nuts?" Bitove told the Canadian Radio-television and Telecommunications Commission hearing on the application by his HDTV Network Inc.
"We're not afraid to try and do things that others haven't done before. Others have had years to apply, and haven't. Just because it hasn't been done before doesn't mean it can't be done now."
The proposal is unique in Canada because it would establish a cross-country TV network with stations in eight markets, without the purchase and bundling of existing local stations.
The application has been opposed by most of the current conventional broadcasters, which have argued there is no room in Canada for what essentially would be a fifth network competing for scarce advertising dollars alongside CTV, Global TV (TSX:CGS), the CHUM stations and CBC.
Bitove said in an interview the network would cost about $800 million to run over the seven-year life of a first licence and, if given the green light by the CRTC: "It's our objective to be on the air within a year of being granted a licence."
The businessman, flanked by about a dozen officials from the fledgling new network, said he plans to air about 60 per cent Canadian content, ranging from Canadian films, documentaries and original series to video and current affairs submitted from ordinary Canadians, all in high definition.
As well, the network would air inexpensive foreign shows, at least in the beginning, because it would not have the resources to compete for such television hits as "House" or the CSI series.
But it's Bitove's plan not to air local news or community programs in the network's proposed eight stations - in Vancouver, Edmonton, Calgary, Winnipeg, Toronto, Ottawa, Montreal and Halifax - that drew the sharpest questioning from the commission.
"It's very important for this commission to be clear and consistent in its rules" about local programming requirements for broadcasters," said chairman Konrad von Finckenstein.
"This is a very big (exception) you are asking of me."
Bitove said the network didn't want to get into local programming because of the costs and because it would be competing for tight advertising dollars with already operating local stations.
The situation is more open in the national advertising landscape, he added, saying the national networks would not be significantly affected by a new entrant. He predicted the high-definition network would attract, at most, three per cent of the national ad pie.
Bitove said the new, free over-the-air network is needed because existing broadcasters are dragging their heels in bringing the new technology to Canadians and are creating two classes of viewers: those who can afford the extra premiums for HDTV and those who can't.
Within three years, he said, about half of Canadians will own high-definition-ready television sets, but Canadian programming in high definition is lagging behind.
The commission is also hearing an application from Yes TV for a licence to operate a high-definition television station in the Toronto market that would be geared to a youth audience and show primarily Canadian content.
In a submission to the commission, the Canadian Association of Broadcasters that represents private broadcasters opposed both applications. It said adding new over-the-air services "could have a severely detrimental impact on the revenues of the existing conventional television sector, which is already in perilous financial condition."
The CAB added that the applications are also premature, given that all broadcasters are in the midst of switching to high-definition digital to meet the August 2011 deadline.
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