The electronics equipment is still being shipped, sets are still being painted and new office cubicles are still being added. This is Stornoway Communications just over a month after champagne corks were popped at 6 a.m. on Sept. 7 to mark the launch of the upstart broadcaster’s three diginets, iChannel, bmp:tv and Movieola. (The short-movie channel, Movieola, was acquired in early October, pending CRTC approval.) And balloons are still afloat.

‘I cried, I don’t know if anyone else did,’ says Stornoway president and CEO Martha Fusca. ‘It was such a long time coming.’

Unlike the majority of the new digital services launched this September, which are owned and operated by established broadcasters, Stornoway’s channels mark the company’s first dip into the world of broadcasting. Current affairs service iChannel and dance channel bpm are co-owned by Cogeco Cable.

‘They have the toughest job to do,’ says Canadian Association of Broadcasters president Michael McCabe, of channels like Stornoway’s, or PrideVision TV (Headline Media Group). ‘They are setting out on their own. They have to still reach out and try to find alliances with others. As they move along, the pressures are enormous.’

Fusca has been waiting to feel those pressures since 1985 when she first wanted a channel as a way to escape the unexpected vagaries of the production market. ‘The god above you is the broadcaster. I thought, who needs these people, but I got busy with three children.’ (Fusca now has four.)

The inadvertent wait may have been fortuitous. Canadian broadcasting has resolutely moved into the age of specialties, with almost one-third of English-speaking Canadian viewers watching specialty services, from just over one-quarter five years ago.

The importance of specialty channels to the broadcasting landscape was underlined in November of last year when the Specialty and Premium Television Association and CAB merged their interests. It was a radical shift from the early days of specialty television, when these services were perceived as threats to conventional broadcasters.

‘The guard at the top had to change,’ McCabe says. ‘There was a realization at the top of companies that the future of broadcasting was in companies that had both conventional and specialty services. At the same time, CAB began to project that specialties would pass conventional broadcasters in terms of viewers by the middle of this decade.

‘Viewers demanded niche services. If Canadian broadcasters had not moved to fill in those niches, the cable companies would have filled them with American services. Broadcasters began to understand that there is no point in letting someone else fragment you, you’re better off fragmenting yourself,’ says McCabe.

Today, from a corporate perspective the differences between conventional and specialty are negligible.

‘Our tasks are very much the same, the people who perform them are different,’ says Phyllis Yaffe, CEO of Alliance Atlantis Broadcasting. Yaffe is aware of the advantages of the Alliance Atlantis model, from having what she calls ‘a truly integrated company’ to offering well-branded channels. ‘We have an infrastructure in place, marketing and sales people in place. All those names come with a fair level of awareness, and what is very good is that they come with a lot of content.’

Nevertheless, AAB and Stornoway do have some things in common, not least of which is their motivation to stake a claim on the digital battlefield. ‘Being there [in digital] is very important. Once favorites are in place, it’s much harder to gain viewers,’ Yaffe says.

With niche targeting the way of the future, Stornoway is an experiment in progress. The channels are a leap for the company, which gained its reputation as a documentary production house, the brainchild of Fusca and partner Kitson Vincent.

Stornoway was originally located above a sandwich shop on Cumberland Avenue in Toronto’s Yorkville disctrict, eventually gaining a foothold on Bloor Street. ‘I could see Rogers from one window and Alliance from the other,’ Fusca recalls. ‘It was always motivating. What you remember is that everyone starts out somewhere at some point unless you’re born into huge independent wealth.’

Stornoway’s early experience provided a taste of some of the challenges the company would face over the years.

‘We were selling our products to the Americans not to Canada. In Canada, everybody makes you bend over 16 times before they actually believe you can bend over in the first place. The Americans don’t do that. You go down there, you make the pitch, and they like it or they don’t. Here it’s, ‘Let’s talk about it some more for 16 years,’ and ‘Who are you?’ and ‘You’ve never done this before.’ As individuals we’d all worked in television, but for some strange reason, you start a new company with a bunch of experienced people and all of a sudden, well, who are you?’

The process of getting the diginets began almost accidentally for Fusca. She was meeting with Bill Macadam of Norfolk Communications (her early employer), who happened to mention the CRTC was soliciting applications for digital channels.

Fusca quickly assembled a team to work on four applications, all of which were Category 1s (but were also submitted for Category 2 consideration in case they didn’t make the first cut). She was to helm the process by default. (Everyone she asked was wise enough to turn down that job.)

‘The financing details [for Category 1s] were so much more stringent than for Category 2s, which were two pages. If you’re a large, publicly traded company that has done it before, you pull in a few people. This isn’t to say that they had it easier than us,’ Fusca says, pausing. ‘But they did. It’s a different kettle of fish. You have to have a lot of expertise, you need programmers and schedulers to set up one form, never mind the legals and so on.’

That said, Fusca adds that the process actually made her appreciate the CRTC, particularly for the 5:1 rule. ‘Stornoway would not exist without that – if the commission had not been paying attention to the idea of new voices.’

For Fusca, one of the most difficult parts of the licensing process was going to Ottawa, with thoughts of what and whom she was up against. ‘I kept thinking, ‘Oh, I know how fabulous Trina McQueen is and I know how terrific Phyllis Yaffe is and oh, my God, how am I going to stack up against them?”

Fusca’s presentation along with her style, which she describes as emotional and off-the-cuff, convinced the regulator to grant the new entry one Category 1 channel (iChannel) and three from Category 2 (bmp, The Pet Channel and @work.ca), but she says, ‘Having two Category 1s would have made the process of launching as a new broadcaster much easier.

‘We are the new players,’ she continues. ‘And Salter Street, too (winner of the Independent Film Channel Canada licence). Salter said in the past that Alliance made them an incredibly attractive offer, but I think it might have been quite different if they’d had two licences, because of the synergies you develop,’ Fusca says of the sale of Salter to AAC.

‘You only have a couple of options as a broadcaster. You piggyback with someone else, but in the long run, that’s a very expensive route to take, so we took the riskier route and built our own facilities. We have room for six or seven channels. That’s an enormous burden – but the more you have the more it helps your expenses,’ she says.

Talks with the BDUs got off slowly, with distributors doing some of their own market research to help decide what would appeal to viewers. As a result, bpm, the Category 2 formerly known as the Dance Channel, was refined to target a new demographic.

‘If you had it as a Category 1, you can be more experimental. But when you’re negotiating and the market is pointing you in a specific direction, you’ve got to listen.’

Fusca says she is astounded at the lack of promotion for the new channels. The situation is complicated by a declining economy, as well as the four-month free preview. ‘It hurts, but it’s better that we take this time to give viewers a proper opportunity to sample these services. From a programmer’s perspective, all that is happening now is that money is pouring out.’

But Fusca is banking on the appeal of her channels’ content. ‘I’m into conservative, steady growth,’ she says. ‘I don’t need to be growing by leaps and bounds. Even if it’s not as sexy as other companies out there, I would be very, very happy to see a few more channels here.’

-www.stornoway.com