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TVA Group profit down, but Sun News Network sale makes positive impact

TVA Group Inc. president and CEO Pierre Dion is pictured in 2010. The French broadcaster continues to face challenges after reducing its stake in Sun News Network.


Reducing its stake in the troubled Sun News Network helped prop up TVA Group Inc.'s profits in its last quarter, although flat ratings and a weak advertising market continue to plague the French broadcaster.

"Results for the latest quarter, combined with those for the first quarter of 2013, point towards long-term trends in the global television market," said chief executive officer Pierre Dion. "This reality has prompted us to introduce a cost-reduction plan to enable us to achieve our financial targets for fiscal 2013 while continuing to invest in growth projects."

TVA said its second-quarter profit was $7-million, compared to $10-million in the same quarter last year. Its operating profit – a separate measure that excludes the effects of variable items such as interest and taxes – increased by $3-million largely because of its decision to sell its majority stake in Sun News to Sun Media Corp. (the two companies are owned by Quebecor Inc. but report their results separately).

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Sun News is losing about $17-million a year, and has argued that it will fold unless Canadian regulators force it onto basic cable subscriptions across the country. Almost two dozen stations applied for the "mandatory carriage" designation, and the Canadian Radio-television and Telecommunications Commission held hearings in the spring to determine which, if any, should receive the privilege.

A decision on all of the requests – which include proposed channels such as Starlight: The Canadian Movie Channel, as well as some that already have the designation, such as Aboriginal Peoples Television Network – is expected next week.

Sun executives have said they will shut the channel if they don't get mandatory carriage, although sources say the channel is likely to remain on the air if the CRTC gives any indication that it will force the cable and satellite companies that carry its signal to pay subscription rates similar to other news services being broadcast in the country.

One way to do this would be to impose a "baseball arbitration" system, which would allow the channel (and others) to go to the regulator when it feels the broadcasters aren't negotiating in good faith. Both sides would submit what they believe to be a fair price, and the CRTC would pick one.

Sun News believes its signal is worth 18 cents a subscriber under a mandatory carriage order, but is only receiving 6 cents from the companies broadcasting its signal. If it were to receive the full amount, it would mean about $18-million a year in revenue and a more stable future for the right-leaning network.

The CRTC wouldn't comment on when a decision would be made, or whether it would introduce any new regulatory measures to address the applicants' concerns about the way the cable and satellite companies negotiate.

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