An application for a new English-language pay television service is putting the spotlight on competition and the CRTC’s pay-TV policies.

Spotlight Television is looking to crack the duopoly of Astral Media’s The Movie Network in the east and Corus Entertainment’s Movie Central in the west by introducing a new national pay-TV service to Canada, and unveiled its plans to the regulator last month.

President and CEO George Burger says the service will benefit independent producers by emphasizing original domestic programming, including Canadian drama, series and long-form documentaries. The service, compared to TMN and MC, will be less focused on movies, he adds.

TMN and MC enjoy a CRTC-approved duopoly, in place since 1984 when pay channels were still struggling. Twenty years later, the market is much healthier, the services more robust and the justification for market exclusivity is in question.

According to the CRTC’s recent Pay and Specialty Statistical and Financial Summaries report, non-satellite pay services generated $203.3 million in revenue in 2004, up almost 50% from 2000. Profit margins were at about 25% in 2004 compared to 16% in 2000. TMN and MC collectively have 1.5 million subscribers.

The business plan for Spotlight, says Burger, is more about building the overall subscriber market rather than poaching viewers from the existing services.

‘Consumer choice is always welcome,’ says Burger, citing one of the driving forces behind the Spotlight application. ‘A good portion of the grey and black market in satellite is attributable to less choice in Canada.’

Burger – who is a joint venture partner in Spotlight with pro sports magnate Larry Tanenbaum – says Spotlight has already met with Hollywood studios and admits the increased Canadian competition will put upward pressure on acquisition pricing.

‘Prices will go up, but there are limitations,’ he says. ‘Suppliers will see the long-term interest in building a strong competitive market [here],’ meaning that it is counterproductive for the studios to make the content so expensive as to undermine the long-term viability of the pay market in Canada.

While Spotlight is promising to develop and finance domestic production and is talking about a commitment to Canadian content, it has no plans to boost Cancon airtime beyond the legislated minimum thresholds. However, licensing another pay service doubles the opportunities for English-language Canadian content, says Burger.

While there is generally greater latitude for edgy content on Canadian free television than, say, in the U.S., the Spotlight programming will feature ‘strong’ content and programming not seen on the over-the-air services in Canada, says Burger.

Spotlight is a partnership between Burger and Tanenbaum divisions Insight Sports (led by president and COO Brian Cooper and chairman and CEO John Brunton) and Kilmer Enterprises.

Tanenbaum is chair of Maple Leaf Sports & Entertainment, which owns the Toronto Maple Leafs, the Toronto Raptors and the Air Canada Centre in Toronto, as well as the digichannels Leafs TV and Raptors NBA TV.

Burger was EVP of Alliance Communications in the four years before the merger with Atlantis Communications and was instrumental in Alliance’s expansion into the U.K. in 1997 and its application for History Television.

Competing for the CRTC’s attention are Quebecor, Channel Zero and Allarco, which owned Movie Central back when it was known as Superchannel.

Burger estimates the minimum startup costs for Spotlight at $40 million. After the scrutiny period by the CRTC, applications could be made public by July, with a hearing by the fall.