On the heels of a $2.1 million second-quarter loss, its program supply agreements in jeopardy, and facing the possibility of the Asper net invading Alberta, WIC Western International Communications is making a play to dilute CanWest Global Communication’s considerable program rights buying power.

Claiming CanWest has grown to the extent that the balance of competitive forces in program buying in Canada is out of whack and needs rejigging, wic is using what began as a simple call for new Ottawa broadcasting licence applications to leverage its pitch for regional Ontario distribution of its local Hamilton affiliate, chch-tv, bumping its penetration to 92% of the province versus its current 61%, and building an Ontario presence strong enough to absorb the costs of buying national rights for foreign programming.

While the quest for eyeballs is a given, the method by which wic is pursuing more Ontario subscribers – a straight rebroadcast, sans local programming commitments – is stoking a myriad of issues, dragging everyone from Moses Znaimer and Doug Holtby to Ivan Fecan and Kevin Shea out to Ottawa this month to argue the realities of broadcasting service distribution in Ontario and national rights buys against the traditional licensing commitments required of local broadcasters.

April 19 marks the fifth and final day of the Ottawa hearings, holding court on 12 different applications running the gamut from a Christian hit radio station to applications by Baton to amend its licences for chro-tv and cjoh-tv, a Global application to extend distribution with a new head-end in Cornwall, and a pitch from chum to rebroadcast Citytv into Ottawa, the synergy of which could result in a reshuffling of broadcasting interests in the key Ontario market.

While much is on the table, it’s the chch application that threatens to change the big picture, a wic attack motivated by events direct and periphery over the last six months that have forced the British Columbia-based broadcaster to reposition itself as a national content buyer.

The fallout already evident, wic registers an ugly second quarter with operating expenses up 13% to $95 million and shares dipping to half value compared to the same period in fiscal ’95.

Precarious position

wic’s in a precarious position and Ontario is key to a turnaround, says Jim Macdonald, president of chch and point man on the application.

‘Like the bigger broadcasters, smaller stations are being forced to increase their distribution to compete. You can’t compete without the programming and you can’t compete to buy the rights to the programs without a strong Ontario, so chch is a key part of wic’s future,’ says Macdonald.

‘The costs are clearly controlled here, and without the distribution, it will be impossible for wic to be an ongoing player.’

The chch application, also pitching to push chch into London, Kingston, Peterborough, North Bay, Sudbury, Timmins, Sault Ste. Marie, Muskoka and Thunder Bay, commits an additional $5 million injection for drama, music and variety programs through independent producers over the licence term. It is, however, without any commitments to new local programming and has left the opposition with a clear defence.

Operating under a regional licence and reaching 94% of the province, CanWest is ballistic with the possibility that chch could become a defacto regional service without assuming all the local programming costs and responsibilities incurred by a regional licensee.

‘It could set a whole new precedent of licensing that could ultimately undo what is at the core of the Broadcasting Act: that you start first with local service,’ say Global president Shea.

‘If the commission does this, they won’t be able to turn down anyone’s request with a stick to go into Ottawa using the same logic. People are going to apply for rebroads across this country overnight.’

Baton, with 14 Ontario affiliates reaching a cumulative 94% of the market, is arguing the same side and stresses that a new contender in its local markets will fragment ad revenues, have a debilitating effect on the established affiliates’ ability to make its local programming commitments, and cost jobs.

But wic, besides arguing that the competition’s revenue base is strong enough to absorb some competition, is arguing that the realities of the Ontario market render the definition of a local broadcaster obsolete.

Under the mandate of increasing Canadian voices on the dial in remotely served areas, the commission has allowed the penetration of cfmt and City to climb to 82% and 77% coverage respectively of the Ontario market, in spite of the fact each holds only a local licence. ‘The regionalization of Ontario is of grave concern,’ says Macdonald.

‘The competition has been allowed to twin-stick and expand their local coverage and allocate their costs and chch has not. The status quo has created a reality where if you’re only able to buy programming for Hamilton, you’re at a disadvantage. That’s the reality.’

Business issue

But Shea argues that wic bought chch as a local service and that if the program-buying processes at the mother net aren’t efficient and cost-effective, that’s a business issue and not a matter for the regulator to compensate for by turning a local service regional with no commitments to Canadian programming attached.

‘If they’re arguing that they’ve been offside because they’re struggling, because they didn’t know who their owner was going to be, that’s not a regulatory or policy matter. That’s an asset in play. The commission doesn’t regulate that. It’s a very lame-duck excuse.’

wic counters that the crtc is in the business of maintaining a fair competitive business environment, and that the growth of CanWest – with second-quarter operating profit from Canadian operations up 35.6% to $66.6 million, revenue from its Canadian tv operations up 10.5% to $171.5 million, and rights owner of the majority of u.s. programming dominating the top 10 in the Toronto/Hamilton market – has created an unbalanced business environment in which CanWest is able to ‘steal every top show that chch had on its schedule as a result of its greater geographic coverage,’ and ‘challenge the national networks long before they contemplated becoming a network themselves.’

‘If they want the television business to be completely controlled by Baton and Global, we’ll be turned down. If they want three players that can compete in a fair and equitable way for national program rights, they’ll grant the application,’ says Macdonald.

Shea says there’s no doubt a decision in wic’s favor will up the ante for foreign rights competition. ‘It’ll be a great boon to American rights holders because it’s going to drive prices up.’

Perhaps in nobody’s best interest, but by the looks of the program supply landscape, wic has little choice but to lobby for extended Ontario distribution. Post failed takeover bid, CanWest axed its program supply agreement with wic (lawsuit pending), opening a huge void for wic’s Alberta stations, itv, rdtv, cict and cisa, which sourced about 100 hours a week from CanWest.

Adding to the pain could be crtc approval of the Baton/Electrohome agreement which will put the kibosh on chch’s program-sharing agreement with Electrohome affiliate ckco-tv.