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Many unanswered questions in CHCH aftermath

With Christmas and New Year’s out of the way approximately 90 former full time and part time employees of CHCH will start trying to get on with the rest of their lives in the aftermath of the bankruptcy of CHCH. Until the Friday afternoon in December when CHCH employees were herded into two studios—one for those who were being fired and a smaller studio for those being offered positions—few probably realized that they were employees of a numbered company—that did not actually hold a broadcast licence but was simply a provider of news content to Channel Zero, the parent company who purchased CHCH in 2009.

Channel 11 LP, as the purpose-created news entity was known, collapsed in a sea of debt totalling $4.7 Million. It showed assets of only $60,000, but, significantly, this did not include the value of the CHCH-occupied property occupying half a city block at 163 Jackson Street West—the real estate apparently being held by another numbered company safe from creditors—a property that a commercial real estate specialist contacted by the Bay Observer estimated to be valued at approximately $8 Million.

It wasn’t until CHCH resumed newscasts 3 days following the collapse, that it finally sunk in for Hamilton viewers that long-time household CHCH names like Matt Hayes, Donna Skelly, Ken Welch and Mark Hebscher were gone. Hayes had been with CHCH since 1981. As a young weatherman, Hayes introduced a comedic touch that won over a community and saw him pull cheeky stunts like ambushing comedian Bob Hope at Hamilton Place asking him to spin the Weather Wheel of Fortune. Hebscher’s late Uncle Sam Hebscher had been one of the original programmers at CHCH who helped usher in the era of CHCH as the Movie Channel. Although he commuted daily from his home in Mississauga, Ken Welch was an active member of the Hamilton community serving as emcee for many charitable sports banquets and organizing a Big Brother Bowl-a-thon for years. Donna Skelly, who fought to save the station in 2009 when it was threatened by the bankruptcy of Global, and who appeared before the CRTC in support of Channel Zero’s takeover; was herself cut loose.

News reports last month suggested that all full time employees were being offered cash of up to $4,000 and indeed it was the unannounced deposit of sums into employee bank accounts on that black Friday that made some CHCH staffers realize that something was up. Now some are saying all employees didn’t get the money. But for those who did it only means delaying the date that they can start collecting EI benefits. Without severance packages the laid off workers can apply to the federal government’s Wage Earner Protection Program for severance which has a cap of $3,807. Unifor, the union representing the workers, chipped in with a $1,000 gift to each of the unemployed just before Christmas. The actual number of jobs that were saved may be overstated. Some of the workers who were offered positions say they are essentially on stand-by and only expect to get a few part-time hours. A few days before the crash a long-time videographer was encouraged by management to step up his training of younger part-timers, only to be ultimately cut himself.

The CHCH saga has many moving parts. First is the question of whether it is legal to collapse one company and then immediately set up a new company to void a union contract. If Channel Zero can get away with it, observers ask, why not every other employer in Canada who would like to escape union contracts? Unifor, is applying to the Canada Industrial Relations Board hoping to force the new company to assume the bankrupt company’s obligations which would include seniority rights. The Lawyer’s Weekly quoted labour lawyer Danny Kastner as saying, “the question is whether it’s a successor employer that has taken over the business…they are required to respect all of the employment contracts of the former company — both the collective agreement as well as their statutory severance and termination obligations.” In the article

Kastner went on to add that “under the governing labour legislation if even a tiny part of the reason for a termination or a company restructuring is anti-union animus, that part will taint the entire decision.” It didn’t help that a CHCH account representative sent an email to a client, subsequently leaked to the media, that suggested exactly that motive, although Channel Zero has denied any attempt at union busting.

One characteristic of Hamilton’s culture, whether it’s in the fields of business, politics or the media; is that you can go from hero to zero, (no pun intended), pretty fast. As recently as last spring, the CHCH model of all-day news and syndicated programming and movies at night; was being hailed a cutting edge approach to the survival of local news, perhaps a template for local broadcasting across Canada. In 2009, Channel Zero’s acquisition of CHCH garnered praise from Ian Morrison, spokesperson for the Friends of Canadian Broadcasting, who enthused in a Spectator story, “ there’s really nothing quite like it in Canada. Conventional media operates under certain perceived constraints. Channel Zero is coming in doing things unheard of.” Nostalgic hearts were warmed last year when CHCH brought back the beloved Tiny Talent Time program and college sports. It seemed the wheel had come full circle from the days of broadcast pioneer Ken Soble—the station’s founder. But as positive as the CHCH picture seemed, there were troubling signs on the horizon. Key among these was the 2014 phase-out of the Local Program Improvement Fund. The fund was created by a tax on household TV cable bills that amounted to roughly $1 per month for subscribers. The amount provided to CHCH in 2012 was over $5 million, roughly the equivalent of the salaries of 100 fully tenured employees. That was the same year, however, that the CRTC declared the fund would be phased out, saying the economy had improved and the subsidy for local programming was no longer required. In 2013 CHCH’s share dropped to $3.5 million and in 2014, the final year of the plan, CHCH got just $1.8 Million. Just a month before the bankruptcy Channel Zero filed a lengthy memo with the Canadian Radio, Television and Telecommunications Commission—the broadcast regulator as part of a review of local programming that warned that local news was not profitable unless some form of subsidy was available to broadcasters.

This filing came shortly after a significant deterioration in the relationship of Channel Zero with the CRTC over Channel Zero’s other television properties. At a hearing in April, 2014 the Channel Zero owners were in front of the Commission in a testy “show-cause” hearing at which they were bluntly told by CRTC Chair Jean-Pierre Blais that the company’s specialty channel licences were at risk because of its failure to meet Canadian Content regulations or at least to provide programming logs verifying its programming content . (CHCH was not up for renewal in this hearing, and in any event was providing more Canadian content than was required by its license). But equally at issue in the hearing was the CRTC’s concerns over exactly who were the holders of the licenses to operate Channel Zero’s three adult channels, two nostalgia channels and CHCH. Revealed in the hearing was a bewildering network of holding companies, companies with no assets, employees or liabilities, numbered entities with the same directors as well as poor, or non-existent record keeping which included an absence of corporate minutes. CRTC Chairman Blais noted that the CRTC had been trying unsuccessfully for years to get a clear understanding of how the Channel Zero broadcast empire was structured. Typical of the adversarial tone of the hearings was this exchange between Blais and Channel Zero President Cal Millar:

THE CHAIRPERSON: So let’s get some facts on the record because certainly it has been quite difficult for us to get any clarity on this file so far.

MR. MILLAR: So perhaps, rather than continuing on the line answering individual questions, perhaps I can provide some clarity with the context, if you permit me that.

THE CHAIRPERSON: Go ahead. This is your chance.

MR. MILLAR: Thank you.

THE CHAIRPERSON: Maybe your last chance.

At one point the chairman accused Channel Zero of operating “shell companies,” saying, “Mr. Millar, I provide more documentation when I have my tires rotated with my garage owner and it’s a much smaller operation than these three licensees.” Ultimately, however, the commission granted shortened license extensions to the specialty channels with the warning: these short-term licence renewals will allow for an earlier review of the licensees’ compliance with the Commission’s regulatory requirements, including requirements regarding the level of Canadian programming that must be broadcast and the submission of accurate and complete program logs.

When the Bankruptcy of CHCH was announced last month Channel Zero said it had been losing approximately $130,000 a week. Profit and loss figures for broadcast entities like CHCH are submitted to the CRTC annually but not made public. However Channel Zero’s other broadcast holdings—three adult channels, the nostalgia channel Rewind and Silver Screen Classics– reported a combined profit of approximately $5.4 Million in 2014.

CHCH was granted a 7-year licence in 2009 and it will be up for renewal this year. No doubt the CRTC will be demanding detailed answers about Channel Zero’s long term business plan for CHCH. The question broadcasting observers are asking is whether the restructured CHCH is sustainable or whether it is simply undergoing a “dead-cat bounce”—a grim term for a company’s last gasp. The current collective agreement with Unifor sets the top pay scale for news reporters at $1100 per week, suggesting that even with a massive layoff of some 90 employees, the savings would amount to significantly less than the $130,000 a week the company says it is losing. In addition, by eliminating some 60 hours of news content the station will now need to purchase programming to fill the gap. This begs the question of who will provide the programming. In its bankruptcy filing CHCH listed several of the major US studios and program distributors as unsecured creditors to the tune of over $1 Million.

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3 comments

  1. Thank you Mr. Best for bringing Channel Zero’s HORRENDOUS business practices to light!! SHAME on the
    CRTC !!! In April you smelled something but you did NOTHING!!

  2. To be clear, full time employees were not “offered cash of up to $4,000”. The amount deposited into their accounts was payment of unused vacation pay and other sums owed to them by the company. The company stated that if this amount was under $4,000, that they would top it up to $4,000. However, in at least one case, this top up did not happen.

  3. While I understand why CHCH expanded their horizons to bring in a larger viewing audience, ask anyone who lives in the Hamilton and immediate area they will likely tell you that it often felt like very little Hamilon and especially outskirts news was being broadcasted. People with school children rely on knowing very early in the day whether it’s a snow day, not at 9:00 a.m. That is a vital service for many people. That being said, the average person really knows little about how a business is set up and how the company they work for can affect their lives. Most people are happy just to have a job, blindly hoping their job is secure. Nobody expects or is prepared for what happens in a bancruptcy….or how it all came down at CHCH. Hope everyone has that 6 months salary saved up. most of all, I cannot understand why the CRCT allowed CHCH to operate as it had been. Shame on the CRCT. Heads should be rolling, but I have not heard of any changes. I can’t imagine what was overlooked would have been tolerated within other regulatory systems. What a mess!

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