In the end, more money on the table made all the difference when, on May 18, Allarco Entertainment won the first new pay-TV licence in Canada in more than two decades, thanks to a cash-rich package for homegrown productions.

The CRTC granted the Alberta company the six-year licence because, according to its ruling, it ‘presented the stronger proposal with respect to financial support for Canadian feature films and other high-quality drama.’

Allarco has promised to spend $4 million on Canadian programming in its first year, and 32% of its annual gross revenues every year after that. Another $2 million will be spent annually on script and concept development.

Allarco has also earmarked $7 million for ‘regional outreach’ and the same for promotion of Canadian programming. It will also pay out a portion of licence fees during production to cut overall financing costs.

‘The CRTC understood our commitment to the Canadian production community and to Canadian consumers,’ says Allarco president Malcolm Knox. The company is controlled by the Allard family, which launched one of the country’s first pay outlets, Superchannel, in the 1980s.

The feds added that, of the four applicants, only Allarco and Spotlight Television met the requirements for a new channel, noting that the would-be Canadian Film Channel was not going to put enough cash into new productions and that the proposal by the Archambault Group was too heavy on sports.

Spotlight – which started the application process last spring – had promised to pump $35 million into Canadian productions, though this was contingent on a second proposal that the CRTC limit the power of The Movie Network and Movie Central to make exclusive long-term deals with Hollywood studios for first-run U.S. movies. The CRTC wasn’t prepared to make such a move.

The decision marks an end to the pay-TV duopoly of TMN/MC, owned by Astral Media and Corus Entertainment, respectively.

At last October’s hearings, both broadcasters strenuously objected to the CRTC allowing any new players onto their lucrative field. Between 2001 and 2005, pay-TV services have grown by over 430,000 new subscribers to 1.8 million, with revenues soaring 65% to $175 million. In 2005, combined profit margins for both services hit 28%.

The CRTC predicts pay-TV revenues will rise by $70 million over the next seven years.

But both broadcasters argued that their success was due to the CRTC’s 1984 decision to limit competition and to divide the Canadian market into regional monopolies – with Astral holding sway in the east and Corus in the west.

Both appear to have conceded defeat.

‘We respect and accept the CRTC’s decision,’ says Alain Bergeron, Astral’s VP of corporate communications. ‘But we are confident of our market position. We already offer the best of the best at the cheapest price, and have a great lineup and strong relations with our suppliers.’

Guy Mayson, president and CEO of the CFTPA, welcomes the injection of new money into the system for Canadian feature films and productions. He adds, however, that his group is cautiously optimistic when it comes to the new broadcaster’s promises.

‘We will monitor the market closely to ensure that Allarco lives up to its commitments and that the market as a whole continues to grow and make increasing contributions to the development of Canadian content,’ he says.

Allarco plans to launch the new, as-of-yet-unnamed service early in 2007.