The chief executive of cable giant Shaw Communications ‘glibly’ rubbed the industry’s raw nerve as he opened the Canadian Cable Television Association conference by predicting half of the digital specialty channels launching in the fall will fail.

Jim Shaw, CEO, Shaw Communications and CCTA chairman, told a ballroom full of cable and specialty channel execs that programming and marketing costs would sink 50% of the new services, and ‘maybe we shouldn’t launch any.’

Shaw’s remarks, made in the conference’s opening panel session – fittingly titled Digital Too Damn Many Channels – came as word was emerging that in French Canada, neither TVA nor Astral will launch any of their wholly owned French-track, Category 2 digi-specialties this time round. Even the launch of Perfecto, a 50-50 Astral-Chum Category 1 service, is not confirmed for this fall.

(Category 1s have guaranteed carriage, while 2s are negotiating for carriage independently.)

But other industry leaders on hand at the Metro Toronto Convention Centre for the annual event, held May 27-29, recommended taking Shaw’s comments with a grain of salt.

‘His company is launching 10 channels,’ points out Michael MacMillan, president and CEO, Alliance Atlantis Communications. ‘To then say we shouldn’t launch any – those two [facts] can’t exist together.’

MacMillan’s point was driven home by news that Chum Television had already planned to launch services for which it received CRTC approval just before Playback press time. The two services, the Drive-In Channel and Relationship/Sextv, were licensed following a hearing held earlier this year.

Allan Schwebel, VP, affiliate sales and marketing at Chum Television, says Chum will launch a pair of Cat. 1 services in the fall, but has also literally ‘geared up’ for five Cat. 2s. ‘As programmers, we’ve had to make decisions about what we expect to launch because we’ve had to order equipment,’ explains Peter Miller, Chum TV’s VP, business and regulatory affairs.

Schwebel says Shaw’s convention prognosis is ‘overly pessimistic,’ noting that the digital subscriber universe, or total available audience, is 2.1 million homes now and expected to grow by launch time. However, says Miller: ‘I think it’s fair to say some of them [Cat. 2s] will fail. It’s hard to put a number on it,’ he adds, noting that the marketplace has already seen some corporate consolidation and acknowledgement that most of the 262 2s licensed will not launch this fall.

Meantime, Janet Yale, CCTA president and CEO, says, ‘I think [Shaw] was being a bit glib. Nobody knows how the services are going to work in the marketplace, because we haven’t had a major launch and we certainly haven’t had a major launch of digital services.’

Yale believes Shaw’s point was that the success of the 21 Cat. 1 specialty services and the undetermined number of 2s is by no means a sure thing.

‘This is a much more customer-focused, market-driven launch than we’ve ever had before, because there are very different factors operating,’ she adds. ‘Number one, there are more services than ever before; number two, there are more distributors than ever before; and number three, we’re not in a ‘one-size-fits-all’ model.’

In previous analog launches, cable companies would package all new channels together, giving consumers a simple ‘yes’ or ‘no’ choice. But digital signal compression means distributors can start with multiple offers, whereby specific services can be included in a variety of packages.

‘Each service has to stand on its own feet and find its market,’ Yale says. ‘The advantage of [the old] model was that the less popular services got carried by the more popular ones, and in this [new] model that won’t happen. It really is going to be customer-driven.’

The industry actually sees some degree of failure as a good thing.

At the cable convention, the New Services Pitch panel, featuring Cat. 2 reps pitching packaging and promo ideas to cable industry reps, Trina McQueen, CTV president and COO, suggested the failure of some services would strengthen the long-term value of the offered packages. ‘[No] channel should have entitlement to survive,’ she said.

Sue McGarvie, president, Passion Television, said few consumers will want the channels offered in Cat. 1, but acknowledged that the 2s ‘have to be prepared to go to the wall’ to succeed. She sees the long Canadian winters as one factor benefiting the chances of her channel, which focuses on ‘sex and sexuality, relationships, erotica and more.’

With the deluge of new channels, Yale says the biggest challenge facing broadcasters is to offer compelling brands that are easily identifiable. A big part of that lies in a channel’s name, exemplified by the existence of multiple Cat. 2s from different broadcasters that include the words ‘action,’ ‘adventure,’ ‘animal’ or ‘careers’ in their titles. There are three proposed channels called Classic Sports.

Yet many of the 262 2s don’t have a real push behind them, and Yale noted that CTV, Corus Entertainment, Global and AAC revealed at the conference which 2s they were actually promoting, ‘because they clearly have more licences than [channels] they could possibly launch.’ MacMillan sees companies such as his having the advantage over independents because AAC already has the channel infrastructure, and can focus its dollars on marketing.

The CRTC granted AAC two Cat. 1s and 22 2s. AAC’s recent acquisition of Salter Street Films brings it one additional Cat. 1 (subject to CRTC say-so) and 20 2s. In a statement released at Playback press time, AAC named the following: ‘Category 1 channel Health Network Canada, and Category 2 channels National Geographic Channel, BBC Canada, BBC Kids, D.I.Y. Canada, and a package of movie channels: Showcase Action, Showcase Romance and Showcase Classics.’

Even with these scaled-down numbers, MacMillan intends to maximize cross-promotion. He says AAC could use History Television to drive viewers to its National Geographic Channel and vice versa.

One of AAC’s other 1s, PrideVision, might find itself at the centre of some controversy. Shaw addressed the concern over a backlash, in certain parts of B.C. and Alberta, if cable companies force consumers to receive the gay-and-lesbian-themed channel.

But John Levy, PrideVision CEO, says he’s not worried. ‘I think it would be naive to think there wouldn’t be concerns across the country when you’re doing a service such as this,’ he says, noting distributors have been flexible. He expects the channel will be packaged either as a solo or an add-on to a larger package. ‘The third way is that if there’s a big package of all the Category 1s lumped in together, we’d expect to be part of that. *

-www.ccta.ca

-www.crtc.gc.ca

-www.shaw.ca

-www.allianceatlantis

-www.passionvillage.com