digital

is on

the way

Early this year, Canadian Satellite Communications will convert the first group of its broadcast signals to digital video compression.

Cancom president Alain Gourd won’t be more specific about the launch date for the new technology, but pegs the cost of this first stage of digitizing all of Cancom’s signals at $5 million to $6 million. Cancom has pledged to spend another $25 million in 1996 and $16 million in 2001 on installing decoders and encryption equipment necessary for using the new digital video compression technology.

The large initial expenditure will ultimately lower transmission costs because a transmitter can send four compressed signals for the price of sending one regular signal. The technology will allow an increase in Cancom’s number of signals to 22 and reduce the average fee per signal. There is a short-term return on the investment, Gourd told reporters after the annual shareholders meeting held Jan. 10.

Shareholders and their proxies, representing 83% of the company’s ownership, crowded into a standing-room-only meeting at the Crowne Plaza Toronto Centre to hear Gourd put 1994 in perspective and outline plans for 1995.

For the year ending Aug. 31, 1994, revenues totaled $70.6 million, up 12.8% from $62.6 million in 1993. Operating income increased to $12.3 million in 1994, up 14.5% from $10.7 million in 1993.

In a year characterized by profit, revenue from the broadcast division of Cancom decreased slightly to $48.2 million in 1994 from $49.2 million in 1993.

Growth in this area was inhibited by the crash of the Anik E2 satellite last January. Subscribers to the Cancom Direct-to-Home service were forced to do without MuchMusic for a short time and Superchannel for months, after the system crashed and only seven of 12 services could be immediately relocated to Anik E1. Superchannel was fully restored in August, but by that point 1,265 subscribers had canceled, enough to affect the bottom line.

A marketing program designed to reclaim subscribers succeeded in bringing in 5,957 new subscribers to Cancom Direct-to-Home, and ambitious plans for the launch of Expressvu Sept. 1 are on schedule.

Cancom and partner WIC Western International Communications own one-third of Expressvu. Other partners in the venture are BCE Inc., Montreal, and Tee-Comm Electronics of Milton, Ont.

Rates for the service have yet to be finalized, says Gourd. The inaugural system will most likely be three-tiered: basic, specialty services, and pay-per-view, although ‘in the fullness of time, people will be able to pick and choose services,’ he added.

No final decisions have been made on the positioning of Canadian specialty services on Expressvu. ‘As a philosophy, Expressvu believes they will be on the second tier, but we have yet to decide,’ says Gourd.

Likewise, where American specialty services will be placed hasn’t been decided, but Gourd says it’s possible that established services like cnn and a&e could be put on the basic service.

‘If they were to be put in the first tier, as a shareholder, I wouldn’t be opposed. They have been very popular,’ he says.

The first target group for Expressvu will be the rural markets which have reacted to receiving fewer channels by buying satellite dishes receiving u.s. dth services.

‘We will be working to pull the gray market back into a Canadian broadcasting system,’ says Gourd. The gray market is made up of those thousands of Canadians who are receiving 150 channels through DirectTv in Los Angeles, and its sister corporation Power DirecTv, Toronto.

The direct-to-home satellite battle is heating up. A consortium of cable operators and broadcasters has threatened the u.s. satellite company with legal action if it doesn’t block its signal to its Canadian customers.

Cancom and the Canadian Family Channel are acting as the front-runners in the attack, supported by industry bodies including the Canadian Film and Television Production Association, wic, the Canadian Cable Television Association, Telesat Canada, Astral Communications and YTV Canada. DirecTv has been given until the end of the day Jan. 18 to stop transmitting to Canadian households or Cancom and The Family Channel will sue for damages.

Whether more people will turn to satellite dishes in greater numbers in the wake of events surrounding the launch of the new services has yet to be seen, but Gourd says an increase in consumer interest in Expressvu is tangible. Cancom is receiving hundreds of phone calls a day, ‘a good chunk from cabled areas.’ AV