TORONTO - When executives from Shaw Communications Inc. (TSX:SJR.B) paid a visit to CTV's local A Channel stations last month, it quickly became glaringly apparent this wasn't to be the high-profile deal they were hoping for - even at just $1 per station.
Instead, what began as a dramatic bid to show up CTV and prove Shaw could squeeze a profit from three money-losing stations turned sour in a hurry.
Earlier this week, cable operator Shaw pulled out of the game, telling CTV in a letter that it would not proceed with the plan to purchase the three over-the-air TV stations - one each in Brandon, Man., Windsor, Ont., and the southern Ontario town of Wingham.
"It just wasn't something we could do given the facilities that were there," Ken Stein, senior vice-president of Shaw's corporate and regulatory affairs, said Friday in an interview.
"We decided that it wasn't worth $1."
As Shaw staff toured the A Channel premises in Windsor, they found not a typical television station, but a bare-bones operation that relied on facilities in other parts of the province to keep the wheels turning and the programming on the air.
One CTV staff member likened it to one giant newsroom with editing suites, reporters and anchors all forced to chip in to produce the newscasts.
The guts of Windsor's operations were miles away in Toronto, where a master control centre flipped switches to run commercials and keep the whole thing on the air.
Even the actual control room, where a director would cut between cameras, wasn't in town - it was more than an hour's drive away, in London, Ont.
Windsor is missing at least half of the infrastructure required to put a typical show on the air, said the CTV staffer, who spoke on condition of anonymity because they weren't authorized to discuss the deal.
The Windsor operations still managed to churn out eight hours of local programming each week, with the rest of the 24-hour schedule packed with high profile shows from CTV's headquarters.
A new buyer would've had to fill all of that dead time with new shows - a pricey proposition at best.
Suffice to say, Shaw executives knew right then that buying the Windsor station would be like buying a car without an engine. The story was similar in Brandon.
Months earlier, Shaw had seen the local TV operations as a way to step into the over-the-air television market and show CTV exactly what it was doing wrong.
Chief executive Jim Shaw had become increasingly frustrated with complaints from CTV that their local TV stations were struggling as the recession worsened, and they they faced an already dismal financial impact from viewers migrating to specialty cable channels.
The broadcasters, including debt-laden Canwest, asked the CRTC to let them charge cable companies for the right to carry their signals - an arrangement, known as "fee for carriage," that would have been worth $300 million to the broadcast industry last year alone.
Shaw had been sharply critical of the idea of charging their customers more. In April, when CTV told the CRTC it would be willing to sell some of its local stations for a loonie each, Shaw jumped at the opportunity to prove over-the-air TV was still viable.
Then they discovered why the price was so right.
On Friday, Stein said the deal wasn't as attractive as the company first thought, though he declined to outline specifics because of a confidentiality clause signed by the cable operator.
Shaw's decision to abandon the offer came just days before the CRTC was to reveal its position on a critical fund for local programming, aimed at helping TV stations that cater to fewer than one million people.
Stein said that the company is going to closely monitor the CRTC's decision, though he didn't offer any more details on what sort of moves they could to make.
"The announcement on Monday will be very important in terms of what our future plans are," he said.
Stein added that it's unlikely the company will reconsider the A Channel operations that it's already staked out.
"Given the state of the facilities, it wouldn't be something that we would pursue in those areas like Windsor, Wingham or Brandon," he said.
CTV, meanwhile, has remained relatively quiet in recent days, only issuing a statement to confirm that Shaw had abandoned its purchase agreement while evaluating the operations.
Calls for comment went unanswered, and it remained unclear whether the network was still contemplating its original plan to close the three stations by the end of August.
