Source : Globe & Mail

Media firm also pondering its next moves in an attempt to become a national force

You can't blame Drew Craig for being a little Toronto-centric at the moment.

His company, Craig Media Inc., is just days away from the launch of Toronto's first new conventional television station in almost 30 years. Toronto One is set to go on the air Sept. 19, and it has promised a new approach to broadcasting, by doing more than any of its competitors to reflect the diverse nature of the city.

Toronto viewers will be able to decide for themselves whether Toronto One has succeeded, after the first show pops on their screens at 7 p.m. next Friday night.

While focusing on the hundreds of last-minute details before the launch, Mr. Craig is also thinking ahead, to his company's next moves in its attempt to become a truly national force in Canada's broadcasting scene.

Until Toronto One was awarded its licence in April, 2002, beating out other strong contenders including Toronto Star publisher Torstar Corp., Craig Media was firmly based in the West. It owned television stations in Winnipeg, Calgary and Edmonton, a CBC affiliate in Brandon, Man., and several digital specialty channels. A sister company runs a wireless cable service in Manitoba.

With the addition of Toronto One, Craig Media's broadcasting services are now available to about 40 per cent of Canada's English-speaking population, making it a truly national player.

"That's really what the Toronto licence was all about for us," said Mr. Craig, whose grandfather founded the family broadcasting empire in Brandon after the Second World War.

Still, the company has ambitions to go much further.

Rival CHUM Ltd.'s television operations reach about 70 per cent of English-Canadians, he said, and Craig Media wants to be in that league, or better.

"It's going to be critical for us, over the course of time, to get up to their relative size, and to get up to Global's and CTV's relative size."

Essentially, "you're in the business of covering enough geography," Mr. Craig said. "It's becoming more difficult to be competitive when you are a smaller player [and] if you don't have access to the major Canadian markets."

Vancouver is a logical next step, Mr. Craig said, although that market has been an elusive target for Craig Media. It has lost out three times in attempts to buy stations or get broadcasting licences on the West Coast.

He is also considering expansion into some secondary markets, such as Montreal's English community, and Atlantic Canada.

Expansion will be done by applying for new licences, not through purchases, Mr. Craig said, because at the moment "there's nothing to buy."

Mr. Craig said his expansion goals can be accomplished with his company remaining private, and there are no plans in the works for a public offering of shares.

Craig Media has been able to raise private equity, most recently in a deal with U.S. investment firm Providence Equity Partners Inc., which pumped $110-million into the company in March. That gave it about 18 per cent of Craig Media, compared with about 82 per cent still in the Craig family's hands.

At the same time, Craig Media raised $35-million in a debt facility managed by two Canadian brokerages.

Rhode Island-based Providence has many media investments, and has worked with broadcasters at all stages of development, Mr. Craig points out.

"The beauty of the partnership is that they are a media-centric fund, and they have lots of experience with investments both in Canada and the U.S.," he said. "It's nice to have a private equity partner who is aligned with us in terms of our vision."

The investment from Providence was enough to complete the Toronto One launch and to provide funding for future expansion, Mr. Craig said. If the company needs additional funding in the future, "Providence obviously has the [investment] capability for more, much more." Providence is well below the limit imposed by Canadian foreign-ownership law, which prohibits U.S. firms from owning more than 33 per cent of a media holding company

Craig Media has, in fact, continued to expand even during the Toronto One startup. Calgary-based cable station The Stampede Channel went on the air a few days ago, although its $2-million start-up costs pale in comparison to the Toronto One launch.

Mr. Craig said his firm has managed to stay within its financial goals at the new Toronto operation, mainly because it has had experience with station startups in Winnipeg, Calgary and Edmonton.

Over all, he said, the company has been true to the business plan that was submitted to the Canadian Radio-television and Telecommunications Commission 2½ years ago.

The hard part for many broadcasters is to "crystal ball" advertising revenue, he said, but "we've got a lot of experience there [and] we took a pretty conservative approach when we built a revenue model." The estimate of first year revenue was about $33-million, and "we're on track with that," he said.

On the expense side, Mr. Craig said the station is "pretty much bang on" its budget of $35-million to $40-million for the launch. The projected first-year loss is about $6-million.

One of the opponents to the launch of a new Toronto station -- CHUM's incumbent CITY-TV -- told the CRTC a new entrant would drive up the cost of buying programming. But that hasn't happened, Mr. Craig said.

"With the proliferation of networks in the U.S., there's just so much more programming available. When you add to that sports, movies and cable shows, there's a wide range of product out there," he said.

One thing that has changed from the original plan presented to the CRTC is that Toronto One is putting on more local programming than it originally promised. "We're overdelivering," Mr. Craig said. "We have way more local programming in the schedule than we originally intended."

The huge size of the Toronto market -- 6.5 million people in the station's extended coverage area -- means there are more resources to do things "you can't do in any other Canadian market."

He said the station has met the challenge of developing a well-rounded schedule, with locally produced morning and evening programs, American imports during the daytime slots, movies in prime time, Monday night football, and World Series baseball coverage.

Toronto One general manager Barbara Williams claims the station's new programming will be different from anything else on the air in Toronto, with the emphasis on "entertainment, lifestyle and cultural programming, [while] staying away from the very traditional top of the clock hard news programming."

One of the big initiatives emphasized at the CRTC hearings was The Toronto Show, a three times a week variety program featuring local musicians, singers, dancers and comedians.

"I think there was some skepticism about whether we'd really be able to step up and do a program of that magnitude in the Toronto market, and really live up to that promise, but absolutely we have," Ms. Williams said.