Bidders for Canada’s first new pay TV network in over two decades are vowing to invest millions in Canadian dramas, films and documentaries, and to boost on-air Canadian content if they win approval from the CRTC.

Four broadcast groups are in contention for licenses – Spotlight Television, Allarco Entertainment, the Canadian Film Channel and Archambault Group – and they have targeted Canadian film and TV producers for support with offers of cash and a market for their work.

Spotlight leads the bidding with a promise of money up front and a share of annual revenues for Canadian productions that amounts to $171 million over the seven-year license – $35 million in the first two years alone, regardless of revenues.

Meanwhile, the Canadian Film Channel plans to run Cancon programming 24/7 and says it will produce 10 Canadian movies per year with a maximum budget of $500,000 per film, while also creating opportunities for 150 filmmakers with smaller projects budgeted between $5,000 and $100,000.

At stake is a piece of a lucrative and growing market. Between 2000 and 2003, pay TV revenues in Canada soared 50% to $203 million. Spotlight predicts that increased competition could further drive revenues to $435 million by 2012 as subscriber numbers jump from the present 1.8 million to 2.5 million. Currently, the market is controlled by the CRTC-mandated duopoly of Corus Entertainment’s Movie Central in the east and Astral Media’s The Movie Channel in the west.

Spotlight president/CEO George Burger says the time is right for a second English-language channel. Pay TV’s market penetration in Canada stands at 18 % of households, compared with 53 % in the U.S. Spotlight predicts that a second channel could drive Canadian penetration to 26 percent over seven years – profitable but still modest by American standards.

‘This isn’t a specialty channel. This isn’t genre TV. This is a delivery vehicle and we know there’s a market,’ says Burger. Spotlight is a joint venture between Burger and pro sports magnate Larry Tanenbaum. The company got the ball rolling last January, when it applied to the CRTC for a pay TV license. The regulator immediately opened the process to other applicants.

Burger contends that a lack of competition is why Canadian pay TV lags behind that in the U.S. Spotlight’s market studies found that most Canadians know little about the service. ‘Most confuse it with pay-per-view,’ Burger explains. ‘Most don’t know what you can get for what amounts to a movie ticket and popcorn once a month.’

CFC looks to be the most patriotic applicant. Aside from airing such Canadian classics as Goin’ Down the Road, The Decline of the American Empire, Mon Oncle Antoine, Jesus of Montreal and Scanners, CFC says it will run more current films such as Spider, Atanarjuat: The Fast Runner, The Barbarian Invasions and Les Triplettes de Belleville.

‘We plan to create thematic programming that will showcase all-Canadian features, shorts, and docs in both English and French,’ says CFC president Cal Miller. ‘All of this will allow us to promote and spotlight actors, directors, writers, composers, editors and producers of both past and present.’

Miller hopes CFC will build a viewership by creating awareness and ‘eventually a Canadian star system.’

CFC is part of Channel Zero, operators of the digichannels Moviola and Silver Screen Classics, created in 2000 by Miller and former retail executive Roman Podzyhun.

Edmonton-based Allarco Entertainment, owned by Alberta’s Allard broadcast family, who pioneered pay TV with Superchannel, is offering to spend $4 million on Canadian programming in the first year of operation, and 32 percent of the previous year’s gross revenues in each subsequent year. It will also invest $2 million on script and concept development in each broadcast year, excluding overhead costs.

Archambault Group, a division of media giant Quebecor, is angling for two licenses. Through its BOOM TV, Archambault wants to operate an English and French pay TV service, and has earmarked 20 percent of its annual revenues for Canadian content, plus one percent for francophone script development.

The Canadian component is foremost in the CRTC’s considerations. At the Oct. 24 public hearings, the four applicants will present their business plans, market analyses and programming lineup, demonstrate how they will maximize Canadian content, and cite how their programming will reflect Canadian diversity.