CTVglobemedia executives faced tough questions from broadcast regulators Monday as hearings began into its proposed $1.4 billion purchase of CHUM Ltd.

Several CRTC commissioners asked CTVglobemedia to justify its request for multiple exemptions from the normal rule that prohibits a broadcaster from owning two stations in the same language in the same market.

"I'm trying to give you what you want but why couldn't you have made your request for an exemption less monumental?" commissioner Stuart Langford asked.

A merged CTV/CHUM network would have two stations in five markets: Vancouver/Victoria, Calgary, Edmonton, Winnipeg and Toronto/Hamilton.

CTVglobemedia pointed out that the CRTC has allowed exceptions to the common ownership policy for CanWest Global, which owns two stations in the Vancouver-Victoria and Toronto-Hamilton markets.

CRTC chairman Konrad von Finckenstein noted that allowing the combined companies to merge in their entirety would result in CTVglobemedia having half the television advertising market.

"I can see why it's in your interest," he said. "I'm not sure why it's in the public interest." 

CTVglobemedia CEO Ivan Fecan said the advertising market continues to fragment.

"It's a different world today than a few years ago and I don't think it's going to get a whole lot better,"  he said.

In its formal reply to those who'd made submissions to the CRTC, CTVglobemedia said CHUM's City-TV outlets in Vancouver, Toronto, Winnipeg, Calgary and Edmonton have "faced significant financial challenges in recent years."

CTVglobemedia said its financial backing would provide City stations with the resources to let its "edgy provocative" programming continue. 

CTVglobemedia wants to keep all the City-TV stations it acquired in last year's deal.

Last month, CTVglobemedia announced the tentative sale of 10 other TV stations to Rogers Communications for $137.5 million — including the six A-Channel stations it acquired from CHUM. Analysts predicted that the spinoff would please the CRTC.

The question now is whether CTVglobemedia will have to sell more stations to get its purchase of CHUM approved.  

CTRC figures released last month showed that profits at Canada's private TV broadcasters fell by almost two-thirds in 2006, largely because ad revenue was flat and they spent a lot more on U.S. programming.

Total advertising revenues at the private broadcasters amounted to $1.9 billion last year, about the same as 2005.

In its submission, the CBC asked the CRTC to deny the takeover application, saying it "would have a totally unacceptable impact on the Canadian broadcasting system by creating a single broadcaster of unprecedented size and dominance."

The CTVglobemedia/CHUM hearings are the first of three media takeovers the broadcast regulator is considering. The others include:

  • CanWest Global's $2.3 billion deal — in partnership with U.S.-based Goldman Sachs — to take over Alliance Atlantis Communications.
  • Astral Media's takeover of the privately owned radio stations of Standard Broadcasting.    
With files from the Canadian Press