The future of the struggling Sun News Network is up in the air after its parent company Quebecor sold off the majority of the newspapers that provided the channel with content on Monday.
UPDATE: Quebecor said Monday night it is concerned about the long-term viability of the channel but added that questions about its operation would not be answered until after the sale of the newspapers closes.
The news network will be able to keep its name under a licensing agreement with Postmedia, which is buying 175 English-language Sun Media newspapers for $316 million.
However, Sun News Network must change its circular red logo within a year as part of the deal, the same logo used by the Sun chain of newspapers operating in Edmonton, Winnipeg, Calgary, Toronto and Ottawa.
Quebecor will continue to run the newspapers until the deal is approved by regulators and shareholders, which means Sun News and the newspapers will continue to share content for the time being.
But little was revealed to employees about how the deal would affect operations at the news network, with few details on how the network will cope without the resources of the Sun newspapers.
“This will become part of the operational discussions within the Sun News -- needs will be assessed and the necessary recommendations will be made,” according to a staff memo obtained by J-Source.
It is the latest in a string of setbacks for the channel which has had to fight for survival since it was launched in 2011 and has run up losses in the $16-million to $18-million range annually.
When asked why the channel wasn’t included in the purchase, Postmedia CEO Paul Godfrey said simply “it wasn’t for sale.” He also said that the company was not interested in buying a TV network because it is focused on its print and digital businesses.
Postmedia splintered from its own broadcast affiliations in 2010, when Canwest, under bankruptcy protection, sold its assets. Shaw bought Canwest’s broadcast arm — including Global TV — while Postmedia took over the print properties.
Sun News Network has its own stable of reporters but it also relied on the Sun newspapers, which shared content with the TV station through Quebecor’s QMI wire service.
Senior Conservative sources have told HuffPost that Sun News Network vice-president Kory Teneycke wants to re-launch the channel and was looking for investors to spin it off from Quebecor.
Neither Teneycke nor a Quebecor spokesman could be immediately reached for comment.
The $316 million is a much-needed injection of cash for Quebecor, which lost $54.8 million in the second quarter of 2014, at a time when it is investing in its fledgling Videotron wireless division in the hopes that it will become Canada’s fourth national carrier.
“We believe management would prefer to keep its powder dry should all the right conditions fall into place for the company to pursue wireless expansion,” said Barclay’s Capital analyst Phillip Huang.
The company could use the cash to buy a stake in one of the country’s smaller wireless players such as Wind, or to acquire more wireless spectrum in the next auction, he added.
The sale comes a week after the CRTC ruled against Sun News Network in a payment dispute with Rogers, the largest cable TV operator. The regulator denied the financially troubled news network a deal that would have helped to shore up future revenue for the channel. But the CRTC did side with the network in a similar dispute with Telus, a much smaller distributor.
Quebecor spokesman Martin Tremblay said Monday night it is "studying the financial impacts of the decisions," adding the company believes fair distribution agreements are important for its survival.
Sun wanted cable companies to pay different rates depending on whether the channel was offered in a specialty package or on basic cable, as an incentive for distributors to carry it more widely. Rogers said that Sun News’ proposed rate (which was omitted from the ruling) would “greatly exceed” how much it is paid by Rogers competitors such as Shaw and Bell.
Rogers’ win means it will pay Sun News based on the same model it uses to determine the rate of pay for competitors like CTV News Channel and CBC News Network — the more viewers a channel gets, the more Rogers pays.
The problem for Sun News is that its audience is a fraction of its competitors. Sun argues it has been historically disadvantaged because it was buried in higher channels.
Sun News argued that it was unfair to compare the fledgling network to its long-established competitors because it is only distributed in 40 per cent of Canadian homes, while its competitors were in 100 per cent of homes.
With files from Althia Raj
Also on HuffPost:
Controversy surrounding the Sun News Network began even before the network went on the air in April, 2011. The Globe and Mail reported in the summer of 2010 that CRTC chairman Konrad von Finckenstein was under pressure from the Prime Minister's Office to resign, in order to pave a smooth path for Sun News to be granted a licence by the regulator. Finckenstein denied the allegations.
With concerns swirling about the possibility of a PMO-driven political agenda at Sun News, the activist site Avaaz launched "Stop Fox News North," a campaign to pressure the CRTC to deny a licence to the news network. The network responded by citing Avaaz's U.S. roots and noting that left-wing billionaire George Soros has contributed to the group, in an apparent effort to discredit the petition as a "U.S. import."
Future Sun News personality Ezra Levant went further than most in his criticism of Avaaz and its links to George Soros (pictured above). Levant suggested in a column that Soros, who is Jewish, aided the Germans in the Holocaust as a teenager. After receiving a letter from Soros' lawyers threatening to sue, the Sun newspapers ran a retraction.
Sun News was on the air for only about six weeks when its first major controversy erupted. The CRTC received a record 6,676 complaints from viewers after host Krista Erickson aggressively challenged dancer Margie Gillis over the issue of whether artists should receive taxpayers' money in the form of grants. The Canadian Broadcasting Standards Council eventually ruled Erickson was within her rights to express her opinions during the interview.
Sun News has made the CBC's public funding a signature issue, repeatedly attacking the network for taking $1 billion per year in taxpayers' money while competing against private-sector broadcasters. But the CBC is fighting back. It put out a press release noting that Quebecor, Sun's parent company, enjoyed $500 million in subsidies over five years, and argued that -- unlike the CBC -- it is not publicly accountable to taxpayers.
Ezra Levant got himself in trouble again in December, 2011, when he responded to Chiquita Bananas' declaration it wanted to avoid oil from the oil sands. "Chinga tu madre," Levant said to Chiquita -- a phrase that translates as "f--k your mother." The Canadian Broadcasting Standards Council declared Levant's outburst a violation of ethics standards.
Canadian journalism reached an embarrassing nadir in the spring of 2012 when it emerged that a citizenship reaffirmation ceremony broadcast on Sun News had been partially staged. Six federal bureaucrats had posed as newly-sworn Canadians during the event that had been reportedly requested by Immigration Minister Jason Kenney. Kenney's office apologized to Sun News. Government officials later alleged Sun News was aware of the bureaucrats posing as new Canadians.
Sun News applied for a "mandatory carriage" licence in the fall of 2012 that would require cable and satellite operators to carry the network as part of their basic cable package. Though neither CBC News Network nor CTV News Channel currently enjoy mandatory carriage, they did when they first started out, as Sun News has pointed out.
Sun News reported in January, 2013, that it lost $17 million in 2012, due to weak revenue because the channel is only carried in 40 per cent of Canadian homes. Parent company Quebecor is saying the network will continue to lose money unless its request to the CRTC for mandatory carriage on basic cable is granted. Pictured: Quebecor CEO Pierre-Karl Peladeau
Sun News personality and well-known right-wing pundit Ezra Levant issued a formal, on-air apology after a September, 2012, segment in which he declared that the Roma were not a race, and were rather "a shiftless group of hobos" who "rob people blind" and whose "chief economy is theft and begging." The Toronto police reportedly even launched a hate-crimes investigation into the segment, at the request of a local Roma group.
In August 2013, the CRTC, Canada's telecom regulator, rejected Sun News' application for mandatory carriage. The network had asked the CRTC to make them a mandatory part of all basic cable services, arguing it would not survive financially without it. Though the CRTC rejected the Sun News application, it also launched a review of the rules surrounding cable news networks. Among the possible outcomes are a realignment of channels so all news channels are grouped together on the dial, and the possibility of a "must-carry" order for Sun News, which would mean that all TV service providers would have to at least offer the network. Pictured: CRTC Chair Jean-Pierre Blais
On Friday, Feb. 13, 2015, Sun News went off the air, less than four years after its debut broadcast. Sun News personalities blamed the failure on the CRTC's decision not to grant the network mandatory carriage, and on cable companies' reluctance to give the network prominent placement on the dial, but analysts said the network's poor ratings and annual losses were the driving factor in the decision.