Special Report: Specialty Channels: At the gateŠTELETOON

These 23 new licensees mean murky days for all, including producers....

These 23 new licensees mean murky days for all, including producers.

With the exception of the fab four destined for analog – teletoon, The Comedy Network, The History & Entertainment Network and N1 Headline News – all in start-up mode with some idea of what programming they’re in search of and their independent production needs, everyone else is pretty much in limbo until the cable companies come up with a tangible plan.

What follows is an outline of all the licensees, including detailed information on the four guaranteed a Sept. 1 start-up.

For the 13 English-language services granted a licence to negotiate with cable, projected spending on Canadian programming and independent production is on paper, but with the caveat that the numbers are written in sand until a subscriber base and a launch date nailed down.

TELETOON

With both Nelvana and Cinar Films signalling their intent to increase their stakes in teletoon, the ownership layout for the animation channel will run Family Channel at 40%, and ytv, Cinar and Nelvana each at 20%.

John Riley, formerly Family Channel vp business affairs, has been appointed president of the new national French- and English-language service.

The second hire priority will be lining up a head of programming. As to whether there’s a short list, Riley says, ‘There is a list, I’m not sure how short it isŠit’s an open-ended list.’ The goal is to have someone in place a.s.a.p., hopefully within a couple of weeks.

Nelvana chairman Michael Hirsh is chair of teletoon’s board of directors, which also includes Micheline Charest, chair/ceo of Cinar; ytv’s two board members, J.R. Shaw and cfo Martin Abel; and Family’s four board members, Chuck Allard, Len Cochrane, Nancy Auld and Andre Bureau, vice-chair of Astral Communications’ board.

ytv is selling the ad time while Family handles the business affairs, distribution, legal/regulatory affairs, accounting and service origination.

teletoon is looking to deliver all types of Canadian and international animation for all ages in French (Eastern time signal) and English (Eastern and Mountain time feeds). Programs include animated series, animated features, animation infomag, bilingual shorts, science, reading and healthy lifestyle shows for kids, and an NFB Presents category.

In terms of programming needs, teletoon will be looking for acquisitions and original programming as soon as the new programming head is in place.

Canadian programming costs over the seven-year term will be $76 million, of which $42 million is earmarked for new production (a minimum of 78 half-hours each year as of year one). Cancon will be 50% in year three, growing to a minimum of 60% in year six. At least one-third of the foreign content will be non-u.s.

Due to the longer lead time of animation, original product is important to get a jump on. Due to the French- and English-language rights requirements, acquisitions are also more complicated for teletoon, ‘so that means we have to get going on that right away too,’ says Riley.

There is a substantial amount of animation out there in the children’s realm, so for the immediate job of lining up the adult portion of the schedule for the September ’97 launch, Riley says, ‘we might have a keener eye out for animated programming that is not specifically children’s at this particular stage.

‘Of course, all of this will be the head of programming’s problem; they’ll have to make the decision when they look at the market as to what’s out there. We may find that children’s programming seems plentiful in theory, in catalogue, but the rights might not be available.’

As to what stage a project should be at, Riley says they’ll be looking at everything, however, projects that are fairly developed would have an obvious advantage in terms of the September launch. ‘By the same token, there’s only one launch date, then you have the rest of your (network’s) life to worry about, so even an idea is something worth pursuing at this stage.’

Although they’ve been pitched over the summer, nothing has been commissioned yet.

In terms of a model deal structure, anything will be looked at, including the option of program sponsorship. No in-house production will be done other than network id, interstitials, packaging and perhaps program host segments.

Asked for a licence fee ballpark, Riley says there are too many variables (rights, budget, exclusivity) to name a range. ‘It wouldn’t be out of bounds to what is generally being paid for now by specialty services for those kinds of rights. They’ll be in line with the general marketplace.’

The application stated licence fees budgeted for original Cancon will equal or surpass those paid by established broadcasters, and stipulated that ‘in some cases teletoon’s licence fee is equal to the combined licence fees for two or three windows in the existing marketplace.’

As to how that computes, Riley says: ‘You’ll have to look at where teletoon is, we’ll be a specialty service in whatever percentage of homes, and we’ll pay in the same ballpark as other broadcasters. If there’s a broadcaster 10 times our size who wants to buy keynote programming, we may not be able to compete.’

As to what portion of the budget the licence fee would typically cover, Riley says, ‘that would depend on the individual deal and the financing of the other people in place.’

Due to the animation interests of the stakeholders, the president and programming director are not employees/principals of the shareholders, have primary development/acquisition responsibility, and will keep the line-item budget confidential from teletoon’s board.

The minimum percentage of Canadian non-affiliate programming will be 25% in year one, rising each year by 5% to 50% for year six and seven. Compliance and licence fee payment will be confidentially reported to the crtc.

Script and concept development funds available through teletoon are reserved for non-affiliate companies: $100,000 in years one and two; $125,000 in years three, four and five; and $150,000 thereafter.

Carriage: As regional cable meetings have just begun and will traverse the country over the next month and a half, nothing is concrete yet. While the highest penetration opp – basic would be good – is the ideal, Riley says the options are that cable could come up with an additional tier for the four services with immediate access, perhaps packaged with additional partners, or added to an existing tier (at which point the specter of negative optioning rises).

teletoon’s anticipated revenue runs predominately sub fees – $12 million in year one, rising to $25 million in year seven – along with projected ad revenue of $992,000 in year one, growing to $8.3 million in year seven.