a little deal between Baton and CHUM Ltd. and suddenly dismantling the ctv co-op, a seemingly insurmountable problem for a half-decade, is solved. All that remains for the new King of Canadian broadcasting and his court are four months of math hell and shareholder smoothing as they begin to detail how this is all going to work.

It’s early days after this month’s announcement that Baton will swap $10 million and three of its Ontario stations for chum’s Atlantic affiliates, and take control of the CTV Network with 57% of the voting shares.

What it all means is the stuff of Gemini jokes, but at the end of the day, the answer in part has to be rooted in establishing an expenditure equilibrium between Canada’s three private broadcasters. By the looks of things, CanWest will get its national network hearing forum after all.

Although Baton’s majority control rectifies the decision-making gridlock at the ctv board level, it crystallizes a different problem. The structural decisions of late have given Baton, wic and CanWest equal access to markets and ad revenue across the country.

All pay into Canadian production based on a percentage of gross revenue and exhibition hours; all will, by the time Baton’s Vancouver station goes up, have distribution consistent with a national network but without the wieldy bi-level requirements saddled by ctv, the only official ‘network’ in the pack and beholden by its own commitments separate from Baton.

At this point, Baton president Ivan Fecan is saying little on the subject of plans to streamline the licence requirements of Baton and ctv.

‘It’s exactly the kind of thing we need to talk to ctv shareholders about. We’ll make an application, it’ll be gazetted and then there’s a call for comments. We’re really in the phase now where we’ve said what we know and are going to do a lot of consultation.’

It’s no small task at hand. As a network, ctv owns 40 hours per week of its affiliates airtime, 12 of them in primetime. As the mother net, it buys another 2.5 hours of programming per week for its affiliates to air on their own time, and, as per its licence renewal in 1994, supplies them annual cash payments of approximately 14% of its net revenue, $17.7 million in 1996 and projected to climb to $21.8 million in 1998/99.

At the same time, ctv is committed by licence to a minimum of three hours, 30 minutes per week of regularly scheduled drama programming and a minimum of 48 hours per year of Canadian dramatic features, miniseries and limited series programming during peak viewing hours. At least one hour per week of regularly scheduled children’s programming is required, as is a minimum of 26 hours per year of Canadian specials including music, variety, documentary and children’s or family specials.

By licence, it spends on categories 7, 8 and 9 by the revenue formula. Although ctv’s financial stats are confidential, this year’s expenditure is reportedly about $18 million.

Baton/Electrohome, on the other hand, have various licences, most of which expire in 2002, with the exception of cjoh-tv in Ottawa which ends in 1999. To date, the Baton/Electrohome expenditure on the underserved programming categories is approximately $14 million, although the civt licence was the first time Baton committed via licence to a minimum expenditure on and hours of Canadian entertainment programming.

As per its licence, it will spend 35% of gross on Canadian programming and air a minimum of seven hours of drama, music or variety programming in primetime in each year of the licence.

How this all shakes out into a national network benchmark is only one among many unknowns chasing the latest reshuffling.

Speculation has wic both selling its 28% of ctv and selling bctv to Baton. To the latter, one wic exec says, ‘Not a snowball’s chance in hell.’ To the former, both Baton and wic say not so fast.

Both share common ground at this point – restless shareholders, huge expenditures, and an economic interest in 40 hours of programming through ctv. Both are under pressure to bring the bottom line up and to buy national program rights.

Although Fecan has been vocal with his intent to focus more spending on Canadian programs, stake holders may be satiated in the short term by their broadcaster acquiring a larger inventory of the top 20 high-profile programs, where national advertisers generally spend about 55% of their budget.

On maintaining the wic/ Baton/ctv u.s. program buying consortium in existence for a couple of years, Fecan says ‘we’re more determined than ever to work together.’

Considering both broadcasters’ increased distribution to amortize the cost of national rights and pressure to pick up inventory which will drive ad revenues, negotiations for the u.s. stables arguably have increased potential to germinate into auctions. But since wic and Baton have been buying national rights for more than a year, Fecan says the new status quo won’t have the effect of pushing prices up. ‘We’re already spending it.’

David Asper, vp of programming at CanWest, which increased its stake in wic by 15% this week, has another perspective. He says the l.a. screenings could go two ways, and takes issue with wic, which he says is making the sky its limit.

‘Either they hold true to their stated intention to pay above-average rates and single-mindedly go out of their way to buy up programming, which will be bad for the whole Canadian system, or they’ll be much more surgical and tactical, perhaps spending more and buying less.’

But if prices on a package push beyond reasonable margins, Asper says ‘we’ll go get another program and we’ll beat them with that. It’s what we’ve done for 20 years.’

Optimedia’s managing director Sunni Boot agrees there’s a lot riding on the private broadcasters’ American inventory, but adds it’s not the whole picture. ‘Most advertisers, yes, would like to exclusively buy the top 20, but that’s an expensive way on a consistent basis to reach a target. In order to make it efficient, you need other programming as well which may be movies or daytime. The top programs are important not only because they net rates but also because they’re usually a catalyst for more spending.’

Boot says the buying community isn’t registering a rate increase yet. The market will be somewhat delayed until it’s clear what Baton will do in Vancouver, Craig in Alberta, CanWest in Quebec, and teletoon, The History and Entertainment Network, The Comedy Network and N1, which she says looks like ‘a good round of specialties.’

It’s too early to tell whether any of this is a red flag for the production community. Fecan’s reputation precedes him, and although it’s unclear how the dust will settle, most seem confident more Canadian production will be part of the picture.

There’s no evidence to suggest a ctv/Baton Cancon commitment will be less than the sum of its parts. It’s Baton’s style to go into licence hearings with the mind set they have the licence and all they can do is lose it. Any confusion on Canadian commitments or 7, 8 and 9 expenditures could spell another Alberta and after five years to get here, it’s likely neither ctv nor Baton will take risks.