Business

Downsizing the news

Andrew Clark September 6 1999
Business

Downsizing the news

Andrew Clark September 6 1999

Downsizing the news

Business

Andrew Clark

Henry Kowaiski seemed troubled. The senior vice-president of CTV News had spent the summer months suffering through Toronto heat waves and, according to one insider, was "locked in his office pacing around with his head down." His was not an envi able position. After being taken over by Baton Broadcasting Inc. in 1997, and quickly buying a majority interest in its rival NetStar, CTVwas still in the midst of a major reorganization-slashing overhead, eliminating jobs and tilting the network's focus from information to entertainment. Thanks to govern ment subsidies and funding, Kowaiski observes, it is cheaper to produce drama than news. That meant layoffs in the newsroom, and Kowaiski, a veteran re

porter who moved into his current post in 1997, was responsible for handing out the pink slips. “You do the best that you can at the best possible cost,” he says. “But as sophisticated as we are in the 1990s, there are only two ways to keep level. You either generate revenue or you cut costs.”

That insight has not been lost on CTVs management, including president and chief executive Ivan Fecan. Drama, comedy and variety on CTV are stronger than ever. The network is producing or buying a host of Canadian series and movies, such as the Sheldon Kennedy Story, and offering more big-name American shows, such as Ally McBeal and Law and Order. It has a lucrative deal with an American distributor for The City, CTV’s onehour drama set in Toronto. Power Play, its series about a Hamilton minorhockey team, won raves from critics both in Canada and the United States

and had a short run on the U.S. entertainment cable network UPN.

Overseeing the operations is a new high-profile executive vice-president, Trina McQueen, who joined the network in early August after captaining the Discovery Channel. McQueen, a former senior CBC executive, will be responsible for all programming and cable stations and takes over a successful stable of CTV specialty channels— The Comedy Network and the Outdoor Life Network—which are among the most popular on TV. The Comedy Network even managed to achieve the unthinkable—launching a hit latenight talk show. Open Mike with Mike Bullard, which first aired in 1997, has gone from its cable niche onto a spot on the main network.

Behind the scenes, however, CTV is not a happy shop. Reporters grumble privately that CTV is getting out of the news business. And there is concern

about advertising revenues. Media buyers say an industry-wide downturn in advertising has left the network with fewer sponsors as advertisers are turning to the Internet, newspapers and local radio.

The networks financial dealings are also under scrutiny. In March, 1998, CTV purchased a 68-per-cent share of NetStar Communications Inc., owner of sports channel TSN, for $409 million That won out over a rival bid by CanWest-Global whose founder, Izzy Asper, still covets NetStar. The reason for the scrutiny: the deal is still under review by both the competition bureau and the Canadian Radio-television and Telecommunications Commission because CTV already owns Sportsnet, another specialty channel. Meanwhile, the debt CTV incurred to acquire NetStar has helped to depress its stock. CTV shares hit a high of $26.20 in the summer of 1998. Last week, they closed at $22.50.

Spurred on by these results, CTV has

As CTV cuts back, employees lose their jobs and entertainment gets boosted over information

been working to shore up its finances. Like many corporations, CTV found that fix by laying off employees. In May, 1998, 334 out of about 2,300 positions were cut, followed by another 131 in April of this year. Last week, 11 journalists—six on-air personalities among them—were laid off, including reporters Ken Ernhofer in Toronto, AÍ Sweeney in Vancouver, Elliot Shiff in Jerusalem and three members of the networks Ottawa bureau—Dave Rinn, Diana Bishop and Elizabeth Chiu. McQueen says the layoffs must be put in perspective: “It’s very difficult for the individuals involved, but it is a small loss judged against CTV’s 700 news staff.”

In a conference call to the surviving Ottawa staff, Kowalski said that if CTV shareholders did not get a return on their investment, it might mean the removal of the network’s executives and board of directors. Unlike the days when the Eaton family effectively controlled CTV, todays shareholders could not be expected to take a long-term view.

“The bloom is definitely off the rose,” observes Peter Swain, chairman and chief executive officer for Toronto’s influential ad buyer, The Media Company. “They have not turned out to be the stars they claimed to be two years ago.” That’s when Baton, led by Fecan, took over CTV.

CTV began in 1961 as a loose affiliation of eight stations and grew to a collection of 23 owned and operated units. Its seven principal shareholders vied for control in often protracted negotiations that, at one point, involved legendary Harvard dispute resolution expert Roger Fisher. In 1997, Baton swapped assets with the CHUM Group, acquired the four broad-

casting stations of Electrohome Ltd., launched Vancouver TV station CIVT, and The Comedy Network and Outdoor Life Network specialty channels. With these aggressive initiatives in place, the stage was set for the next move.

In November, 1997, Baton bought out its competitors and gained 100-per-cent ownership of CTV. The takeover was good news for Baton’s executives: Fecans salary in 1998 was $919,000 and he exercised stock options valued at just under $8 million. It was bad news for some of the the network’s employees. “It was inevitable that when Baton took over CTV that there was going to be a lot of layoffs,” says Bill Mustos, the networks vice-president of dramatic programming.

The most glaring example of the way the severe cuts are changing program priorities is the fate of W-Five, North Americas longest-running TV newsmagazine. As recently as July, the picture seemed rosy. According to an insider, the show received a 30-per-cent budget increase and added extra journalists to the staff. But WFive then laid off nine people, and CTV announced that the show would be changed from a newsmagazine into a forum for half-hour in-house and commissioned documentaries.

CTV executives maintain that the flipflop was instigated by the CRTC, which, in July, decreed that certain types of programming—drama, documentaries over a half-hour in length, variety and entertainment magazines—would be “priority” programming. Networks must now air eight hours of priority programming a week in prime time, and CTV says the old W-Five, with its series of several investigative and feature items, did not qualify. Kowalski says the CRTC move made the switch from W-Fives previous incarnation inevitable. But the CRTC maintains

that CTV is using the regulator as a scapegoat. “Somebody has made a business decision and they are pegging it on us,” says CRTC spokesman Denis Carmel. While Kowalski claims W-Five is evolving, critics say it has been emasculated.

Competitors and disgmnded former employees say cost-cutting is also hurting the networks ability to cover the news. Along with the layoffs, there has been a steady stream of willing defections. Four journalists, including Jim O’Connell, an 11-year CTV veteran, left W-Five to join the fledgling business channel ROBTv. Business specialist Deirdre McMurdy left Canada AM, the network’s weekday-morning program, to produce and host a weeknight show on Global’s Prime Television Network, and more than a dozen W-Five producers have also moved on.

For Kowalski and his supporters, it is a necessary step towards a new style of TV journalism, one in which mobility and speed are usurping the old format executed by a reporter, camera operator and producer. Kowalski says that any changes that do not affect onscreen coverage are possible, including the use of videographers who both report and take pictures.

CTV is not alone in its respect for the bottom line. Television networks are cutting back all over, both in Canada and the United States. CBC has experienced a series of devastating budget reductions and another major one is looming in the next few months. In the same fashion, the CTV network—and its 2,000 remaining employees—may not be out of the woods yet. After last week’s cuts, Kowalski told his staff he could not guarantee there wouldn’t be more layoffs. Still, he insists CTV News has taken two steps forward and only one half-step back. Kowalski can take comfort in the fact that he is not the first CTV news boss to face such turbulence. In 1987, the network closed four bureaus, including Beijing, Winnipeg, Quebec City and Jerusalem. Twenty staff were laid off, among them W-Five host Harvey Kirck. At CTV, the more things change, the more they seem to stay the same. E3