Analog wolf in HD sheep’s clothing?

Television is a fast-paced industry, but given the unprecedented technological free-for-all that’s been going on for the last decade or so – the explosion of the Internet and digital this and that – it’s no wonder that a lot of people are confused about where HD fits into the picture.

Give you a f’rinstance. Lots of us have HD television sets, but most of us don’t realize that we’re not actually getting HD signals because we need a receiver, and it has to be switched on for the high-res, widescreen magic to start happening. And then there are those of us who go the other way, and are paying every month for our high-definition signal through our cable or DTH provider, when lots of us city dwellers could be picking up some signals gratis – if you live in Toronto, Vancouver, Ottawa or Montreal, and have an ATSC tuner, there are conventional HD channels available in the ether, courtesy of the likes of CBC, CTV and Canwest.

And the world of HD is about to get a lot more interesting. Just before you read this, businessman John Bitove had wiped the sweat from his brow, packed up his briefcase, rounded up his lawyers and consultants and exited the premises in Gatineau following hearings on Feb. 12 and 13 regarding his application for a licence for a brand-new, national, over-the-air HD television network, called HDTV.

Bitove may be a newcomer to television broadcasting, but he’s no greenhorn. An A-type personality even among the entrepreneur set, this is the man who built the Air Canada Centre, brought the NBA to Canada, and tried to bring the Olympics to Toronto. Currently he helms Priszm Income Fund, which operates KFC, Taco Bell and Pizza Hut restaurants in Canada. You may recall his lunch invitation three years ago to Pamela Anderson in response to her call for a boycott of KFC on behalf of animal rights group PETA.

Nor is this his first time in front of the CRTC. He is also chairman and CEO of Canadian Satellite Radio Investments, which owns and operates XM Satellite Radio in Canada, and it was he who spearheaded the company’s successful bid to win its broadcasting licence from the CRTC.

HDTV is Bitove’s latest, and arguably his most ambitious, venture to date. He’s asking for a licence to launch HDTV out of Vancouver, Edmonton, Calgary, Winnipeg, Toronto, Ottawa, Montreal and Halifax – covering around 60% of English Canada.

Since submitting his application in late 2006, Bitove has gathered a team of about a dozen that includes some high-profile programming executives, such as Doug Hoover, formerly of Global, Ellen Baine from CHUM and Tecca Crosby from CTV, as well as former independent Michael Taylor.

Broadcasters in this country have been moving toward HD for some years, though unlike the U.S. – which is pushing hard for the changeover and has a 2009 analog shutdown d-day for broadcasters – Canada is taking a more market-driven attitude, with its shutdown set for 2011.

Bitove argues that the cost of upgrading existing equipment has the current conventionals dragging their feet in the digital switchover, and, as a result, Canadians are losing out in the race to the future. He contends that HDTV can get Canada caught up cheaper, faster and better than the others because it’s an ‘out of the box’ start-up, with programming that will look like a cross between that of CTV and A-Channel.

‘If they’re not prepared to do something, they should let us come and do it,’ says HDTV executive VP Stewart Lyons.

Other cornerstones of the application include a commitment to be a new and independent door for the production community to knock on in an increasingly consolidated environment, and an investment of $350 million in indigenous programming over the course of HDTV’s seven-year licence term.

What a juicy carrot. Dozens of independent producers have proffered letters of support, including Ron Mann of Sphinx Productions, White Pine Pictures’ Peter Raymont, Gary Maavara of Corus Entertainment and Michael Hirsh of Cookie Jar Entertainment.

‘I think it’s a fantastic idea and I’m really glad they’ve done it,’ says Glyn Evans, CEO of industrial prodco Stonehenge Media Group, and an early adopter and heavy investor in HD. ‘My only questions lie in the business model and whether it will ultimately be of benefit to Canadian producers. But I support it, because more is better in this day and age, and that’s the way things are going, anyway.’

The application also has its share of critics, including the conventional broadcasters, and cable and satellite companies.

‘The existing broadcasters are concerned about the impact on bottom-line revenues,’ Lyons explains. ‘It’s a bit of a stretch when you consider the fact that they’ve amalgamated and become very large, very powerful oligopolies.’

Sure, one would expect them to both dismiss the need for another player in the conventional market – which they say is already struggling to stay afloat – and decry the built-in advantage a new start-up would have. But some of their other complaints are a bit harder to pooh-pooh.

They point to the lack of local or regional programming – the majority of HDTV’s programming would run from the same Vancouver-based feed – and ‘exceptionally low’ priority programming targets (although the net bumped these numbers prior to the hearings – to six hours per week in the first three years, increasing to eight in the next four). And, perhaps most tellingly, they say that HDTV’s request for must-carry status for both a digital and analog signal (unless certain HD saturation targets are met by launch) does not pass the sniff test.

‘HDTV’s application for carriage as an analog as well as a digital service makes it an analog wolf in the clothing of an HD sheep,’ says CAB president and CEO Glenn O’Farrell in the CAB’s intervention.

CTV hearkens back to the aftermath of the CRTC’s awarding of the Canadian Satellite Radio licence, noting that within months the company went public, raising $55 million and putting Bitove’s personal stake in the company in the stratospheric $475-million range. A company’s gotta do what a company’s gotta do, the broadcaster concedes, but notes that with the CSR IPO, ‘Bitove relied on other investors to fund and offset the risk of operating a broadcasting business.’

HDTV indicates in its application that it does plan to take the thing public if approval is forthcoming, raising approximately $200 million in addition to the $100-million war chest it has already amassed (half of it borrowed) to take it to its breakeven point by year six.

So, is HDTV an outside-the-box solution for leveling the playing field for Canadian television producers and audiences? Or is it O’Farrell’s analog wolf in digital sheep’s clothing? Time for the CRTC to decide.