Montreal: The cable for broadcast assets swap negotiations between Groupe Videotron and CFCF Inc. pushed tension levels over the top among indie producers in the French-track Quebec market, says the chairman of the apftq, the Quebec producers association.

Jacquelin Bouchard says Quebec tv producers are ‘anxious’ that any impending change in broadcast ownership could lead directly to a reduction in competition, and consequently, the level of quality independent production.

He says the fate of French-language Quebec producers is tied to four primary broadcaster/clients – Radio-Quebec, Television Quatre Saisons, Tele-Metropole and Radio-Canada – all of whom are facing major crises.

The negotiations between Videotron and cfcf only came to light Nov. 9 when Videotron issued a brief press release saying it was talking to its competitor about acquiring cfcf’s cable assets in a swap for Videotron’s interest in Tele-Metropole. That announcement was essentially forced after trading in both stocks was halted on the Toronto and Montreal stock exchanges.

The battle for cfcf deepened four days later, Nov. 13, when Cogeco Cable announced it was preparing to make an offer to buy cfcf outright for $18.50 a share, or about $260 million.

The talks between cfcf and Videotron concern a sale and/or swap of cfcf’s cable assets for Videotron’s interest in Tele-Metropole, majority owner of the 10-station TVA Network, including cftm-tv, the network’s flagship station in Montreal.

On Nov. 13, Cogeco Cable, which owns 9.5% of CFCF Inc. subordinate voting shares, issued a statement saying ‘the proposed cfcf/Videotron/Tele-Metropole transaction may not be in the best interests of the public or the holders of subordinate voting shares of cfcf, and that is likely to raise significant regulatory issues.’

Bouchard says the independent production milieu has a developed a ‘survival instinct’ and ‘whatever transpires, whether one private network is closed, or both private networks end up with the same owner, any reduction in the level of independent production is counter to public interest and program quality and will be opposed.’

According to the apftq, conventional French-language broadcasters invested $49.5 million in independent production in 1991/92, the last year figures are available. French-track specialty channels invested $23.6 million in indie programs while pay-tv broadcasters invested $6.3 million. It’s not likely the investment has increased since. In the past three years, Quebec broadcasters have mainly cut spending.

While nobody knows the final outcome, the ball is clearly in the court of the Pouliot family, which controls cfcf.

cfcf stockholders have emerged as round-one winners.

Early last week, following the announcement that Cogeco had entered the fray, cfcf shares jumped $3 in a single day, closing at $16.50. A week earlier the stock had traded at $12.50.

cfcf, Cogeco and Tele-Metropole recently issued their year-end financial reports.

Despite a strong showing by cfcf-tv, the ctv affiliate in Montreal, losses at the French-language Television Quatre Saisons network continued to have a downward effect on net earnings.

cfcf has announced a net loss of $1.2 million for the 12-month period ending Aug. 31, compared to earnings of $8 million last year.

In an interview with Playback, Charles Belanger, CFCF Broadcast Group ceo and tqs president, says poor reviews and sluggish ratings hurt tqs in the fall of ’94, although new miniseries did well. The nhl hockey strike also impacted negatively on ratings, holding tqs to a third-place, 15-share in the 18 to 49 age group in Quebec, he says.

However, Belanger points out that ‘tqs is only slightly in the red’ for fiscal ’94/95.

‘We’re looking for some improvement with tqs. But you know in our business you pay the price for a relatively poor showing the year after.’

Pretax earnings for cfcf in ’94/95 rose 36% over the preceding year to $66.8 million, mainly on the strength of two cable company acquisitions. Longer term refinancing for CF Cable TV also worked to reduce net income before taxes to $2.4 million, down from $14.3 million last year.

The Broadcast Group, composed of cfcf-tv, tqs and Champlain Productions, reported pretax year-end earnings of $14 million while earnings for the Cable TV Group went from $35.8 million to $52.7 million.

Combined revenues for the cable and broadcast groups rose from $188 million in ’93/94 to $245.3 million in ’94/95.

‘There is disappointment on the tqs side, but we’ve taken drastic measures,’ says Belanger. ‘We’ve revamped top management (by adding executive vp/chief operating officer Claire Samson and programming vp Vincent Leduc). Sometimes it can take up to two years before you see the benefits of your investment,’ he says.

As such, cfcf also reported a first-quarter loss for ’95/96 of $4.6 million.

cfcf also reported long-term debt rose dramatically this year to $335.4 million from $160.4 million last year.

During the year, CF Cable secured two debenture issues on the u.s. market worth approximately us$210 million, which have ‘completely eliminated bank indebtedness.’

Following last January’s specialty launch, CF Cable reports its extended basic tier penetration has risen to 84% for its Montreal and Hull area systems. cfcf now has 434,000 subscribers.

In a turnaround, Tele-Metropole is reporting its best financial performance in 10 years for the fiscal year ending Aug. 27. It reports total sales were up to $179.9 million while profits hit a record high of $7.1 million.

In August, Tele-Metropole signed an agreement with CanWest Global System to turn cbc station ckmi-tv in Quebec City into a Global station which would also broadcast into the more lucrative Sherbrooke and Montreal markets. cfcf says it will oppose the deal because Global’s entry into Quebec would cause a price war. The proposal has been submitted to the crtc with hearings are slated for Nov. 30.