National Post from Toronto, Ontario, Canada • 8

1997 The Financial Post 1 1 i I Bennett Jones Verchere is pleased to announce that U.S. independent KVOS TV holding its own in Vancouver BY KEITH DAMSELL Vancouver Bureau The Financial Post i iiiil 1 3 rr ti it vL Grant R.M. Haynen has joined the firm as a partner in the corporatecommercial and securities areas in the Toronto office, Grant has practised in the corporate and securities areas for more than 18 years and has extensive experience in mergers and acquisitions and corporate finance. He was a senior partner with another prominent Toronto law firm prior to joining Bennett Jones Verchere. Bennett Jones Verchere is one of Canada's leading law firms with approximately 175 lawyers practising in its Calgary.

Edmonton. Toronto. Ottawa and Montreal offices. There are over 25 lawyers in the Toronto office who practise in the corporate commercial, securities, tax. banking, insolvency, energy, regulatory, pension, insurance, real estate, health care and litigation law areas.

Bennett Jones Verchere 1 First Canadian Place Suite 3400, P.O. Box 130 Toronto, Ontario M5X 1A4 General Telephone (4l6) 863-1200 Facsimile (416) 863-1716 QBennett l(oneYercfiere BARRISTERS AND SOLICITORS CALGARY EPMONTON TORONTO OTTAWA MONTREAL Out of the spotlight: KVOS vice-president John Gibson (left) and vice-president and general manager David Reid want a chance to compete. Something seems amiss at the Vancouver office of independent television station KVOS TV Ltd. Management of the U.S.-based station is positively cheery when it comes to Baton Broadcasting the Toronto media giant that is forging a $140-million strategy to win over the city's television audience starting in September. The best news we could have had was Baton winning," says a smiling KVOS general manager David Reid.

In January, federal regulators gave Baton the green light to start Vancouver's fourth English-language station. From KVOS's point of view, the Canadian Radio-television Telecommunications Commission's licensing decision puts the heat on its significantly larger rivals, WIC Western International Communications Ltd. and, to a lesser extent, CanWest Global Communications Corp. "KVOS is no longer the focus," says Reid. The Bellingham, station is pleased to lose the regulatory spotlight and sit on the sidelines for Vancouver's coming TV battle.

With its headquarters less than an hour from the British Columbia border, KVOS is a broadcasting anomaly, unique to North America. When the station was founded in 1953, Canadian Broadcasting Corp. was still on the drawing board for bucolic Vancouver. With an eye for the underserved market, KVOS headed north. At its peak, it employed more than 150 people in Vancouver.

Then in 1976, Ottawa introduced Bill C58, a tax law that forced Canadian advertisers to stop deducting the cost of ads in U.S.-based media. As a result, KVOS cut advertising rates to remain competitive and wrapped up Vancouver production. Today, U.S. movies and sitcom reruns make up most of the station's prime-time fare. Nevertheless, about 75 of the station's viewers live in Canada.

The CRTC estimates KVOS, a subsidiary of Seattle's publicly traded Ackerley Group pulled in about $24 million from Vancouver advertisers in 1995. During last year's heated competition for the new station, the anti-KVOS rhetoric was flying. Canadian broadcasting executives accused KVOS of draining millions of this country's advertising dollars south of the border. Moses Znaimer, the outspoken founder of CHUM CITY-TV, described the station as "a parasite." And licence also-rans Can-West and Craig Broadcast Systems Inc. each claimed they could repatriate KVOS revenue if given a Vancouver licence.

Baton stayed out of the KVOS fray when it presented plans for its winning bid, CTVT-TV. Hie new station, scheduled to begin broadcasting in mid-September, will focus on local news and current affairs. Over the next seven years, about $140 million will be spent on local programming and production. As to direct competition, "we're not going after anybody's audience we will affect everybody equally," says Baton chief operating officer and vice-president Bruce Cowie. That may be a hard pill to swallow at Vancouver-based WIC.

The jewel in WIC's crown resides in its tmnm. seem to be frozen at BCTV's channel 11 at six o' clock," says U.TV president Jim Rusnak. Traditionally, Baton is the No. 1 news provider in all its broadcast markets, including Toronto, Edmonton and Calgary. The new Vancouver station is after an urban audience, the same crowd that watches U.TV every night.

Despite the jockeying for position, media buyers expect there's enough room for all the players in Vancouver, Canada's fastest growing market for advertisers. In the past, demand for television advertising time on the West Coast has exceeded supply, an equation that has pushed Vancouver ad rates per capita higher ihan those in Toronto. In general, advertisers pay about $350 per television rating point in Toronto compared with $250 in Vancouver but the B.C. ad will reach a significantly smaller audience. "limited competition makes media expensive," says Anthony Ijon-goz, president of Vancouver's Media Buying Co.

This fall, he expects television rates to remain pricey but, fingers crossed, he hopes to see some softening in the long term. By 2000, Coopers Lybrand anticipates Baton's new station will draw $19.3 million in revenue from existing stations. That figure doesn't seem to faze KVOS, the self-described "fall guy" of broadcasters. Despite the best efforts of the CRTC and the Canadian competition, the little station that brought Vancouverites the coronation of Queen Ivlizabeth II in 1953 plans to be around the next time the Royal Family has a changing of the guard. "Everybody takes potshots at us," says KVOS vice-president of sales John Gibson.

"We can compete, given half a chance." own backyard Vancouver's BCTV. Bay Street analysts estimate the station may contribute up to one-third of the company's revenue, which was $422.3 million in 1995. Every night, the BCTV News Hour draws 650,000 viewers, a whopping 46 market share. Unfortunately for WIC, Baton will scoop up 18 hours worth of U.S. programming, which it had been previously selling to BCTV and its sister station in Victoria, CHEK.

The loss of top-rated shows such as Home Improvement, Melrose Place and Drew Carey to Baton will leave a gaping hole in WIC's B.C. prime-time schedule. "BCTV will take a big hit. They are the ones that are going to lose," says one Vancouver advertising executive. To add insult to injury, last month Baton lured away WIC secretary and general counsel Jon Festinger to act as senior vice-president for British Columbia and general manager ofCTVT.

'ITie coming competition has prompted WIC to shed 51 jobs at the two B.C. stations. Like a defending champ preparing for a title bout, the company must be "lean and mean," says spokesman Terry O'Donovan. "You don't want to carry any excess weight," he adds. Unlike WIC, CanWest's after-7 p.m.

lineup at Vancouver's U.TV is second to none. The station has the rights to 14 of the top 20 prime-time television shows, including Seinfeld and The Files. But news is another story. Against the behemoth BCTV News Hour, U.TV's urban-flavored News at Six has struggled, slowly clawing its way to a second-place share of the market at 13. "There's a lot of TV sets that Actually we have three positions.

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