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May 5, 2003 - Strategy Media Archive
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CHUM vs. Craig
The battle for Canadian domination is heating up - but will advertisers support all those new channels?

by Terry Poulton
page M 1

The gentlemen's agreement that once kept CHUM in Eastern Canada and Craig Media in the West isn't just defunct. It's turned into a rock 'em, sock 'em turf war that's scattering question marks - and new stations - all over the TV landscape.

Both nets seem to be aiming for national coverage, with Craig establishing a Hogtown stronghold with Toronto|One and CHUM currently awaiting a CRTC decision on stations in Calgary and Edmonton. In fact, once Toronto|One is up and running, and if the CRTC greenlights the CHUM stations, Craig's reach will jump from 18% to 42% of English-speaking Canadians, and CHUM's will jump from under 70% to over 80%.

But do Canadian viewers want two more national nets? And perhaps more to the point, will Canadian advertisers support all these new channels? The buyers are mixed, but one thing they all agree on is this means Canadian TV is going to get more fragmented than ever before.

So far, the scrimmages between the two nets have played out like this: Craig launched A-Channels in Calgary, Edmonton and Winnipeg, duplicating the streetwise, drop-in style of CHUM's Citytv channels. CHUM then beat out Craig to acquire a channel in Lotus Land, naming it Citytv Vancouver.

Next was Craig's audacious application to not only launch a station to compete head-to-head with CHUM-owned Citytv Toronto for audiences and ad revenue, but to actually name it "Toronto|One" - a strategy that a recent report by investment firm BMO Nesbitt Burns calls "a full-frontal assault on CHUM."

Craig has now just acquired $145 million in new investment money and is beginning construction on a state-of-the-art Toronto|One headquarters a mere dozen blocks away from the downtown Toronto HQ of CHUM's flagship Citytv, with the debut set for Sept. 19.

Meanwhile CHUM's application to launch stations in Calgary and Edmonton in fall 2004, with a retransmitter in Red Deer, goes before the CRTC in mid-June. It's generally regarded as a done deal even though the buzz is that Craig will oppose it.

Sunni Boot, president of Toronto's Optimedia Canada, is watching this channel proliferation with a worried eye. She fears that increased competition "will fragment and fractionalize" ad buys, while "escalating programming costs at least 20% above where the markets should be."

The result? "Advertisers just aren't going to pay for that," she says, "so I think it's going to drive us to cable, which could be devastating to both."

But Dennis Dinga, VP sales at Toronto's M2 Universal, sees the glass half full. He says that "mass television is continuing to erode, and it takes more and more channels and more and more spots to reach mass audiences. So having more outlets means being able to more carefully target the exact programs and times that will deliver the interest groups you want."

Beyond the impact of Canada-wide fragmentation, of course, is whether the individual markets can support the new entries, from both an audience and media spend point of view.

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