People sit in the Place des Festivals beneath a Bell Media billboard in in downtown Montreal on June 22.Andrej Ivanov/The Globe and Mail
You might think millennials are too young to be nostalgic about anything. But Bell Media’s BCE-T decision to pull the plug on a French-language specialty TV channel that was once a magnet for adolescents has prompted sentimental pangs among Quebeckers in their 20s and 30s.
In its heyday, VRAK carved out a niche in youth programming with domestically produced shows that became cult favourites among the generation of Quebeckers born in the 1980s and 1990s. Its success was one of the reasons that Bell Media’s parent company, BCE Inc., paid $3-billion (excluding debt) in 2013 to acquire VRAK’s then-owner, Astral Media Inc.
BCE’s purchase of Astral thrust Bell Media overnight into second place in the Quebec television market – and into a bitter rivalry with industry leader Quebecor Inc. QBR-B-T.
BCE and Quebecor were already big competitors in wireless and cable services. But Bell Media’s entry into the French-language specialty TV market – at a time when convergence was still a thing, and francophone Quebeckers remained fiercely loyal to homegrown shows – turned their rivalry into a soap opera as riveting as any téléroman on Quebec TV.
The two rivals have since waged a war of attrition in the French-language market amid shrinking advertising revenues and competition from streaming services. Bell Media’s move to axe VRAK effective Oct. 1 could presage a similar fate for other faltering specialty channels in Quebec.
“The regulatory framework with which broadcasters such as Bell Media must comply is obsolete and does not take current challenges into account,” the company said in announcing VRAK’s demise, which it also blamed on the move by Quebecor’s Videotron subsidiary to drop the channel from its cable offerings, depriving VRAK of more than half of its subscriber revenues.
Videotron initially announced its intention to pull VRAK from its lineup last year, after failing to come to a deal with Bell Media on carriage fees. Bell Media appealed to the Canadian Radio-television and Telecommunications Commission to block the move, arguing Quebecor had sought to confer an undue preference on its own specialty channel by dropping VRAK.
In February, the CRTC ruled against Bell Media, saying Videotron had “demonstrated valid commercial reasons” for ceasing to carry VRAK. But it encouraged the two companies to “continue to negotiate distribution terms” for the channel. Any chance of that happening ended last week, when Videotron permanently pulled VRAK from its cable offering.
“Videotron customers should not have to subsidize specialty channels in decline that no one watches,” Quebecor chief executive Pierre Karl Péladeau tweeted in defence of the move.
In the year ended Aug. 31, 2013, on the heels of its purchase by BCE, VRAK boasted 2.2 million subscribers with a pretax profit of $10.3-million and a pretax profit margin of 36.2 per cent. By 2022, its subscriber base had plummeted to 763,000, while it eked out a pretax profit of $837,558, for a pretax profit margin of 7.5 per cent.
That followed pretax losses of $19.7-million in 2019 and $16.4-million in 2020, prompting Bell Media to slash VRAK’s costs by ending original programming and switching to broadcasting foreign-made series dubbed into French.
English-language specialty TV has proved somewhat more resilient to streaming and cord-cutting. In 2022, the English sector posted overall pretax profits of $582-million on revenues of $3.5-billion, down from a pretax profit of $856-million on revenues of $3.3-billion in 2013. Over the same period, its pretax profit margin fell to 22.7 cent from 25.8 per cent.
Bell Media’s main English specialty TV properties, which include TSN, CTV News Channel and CablePulse24, remain wildly profitable. TSN alone generated a pretax profit of almost $90-million on revenue of $573-million in 2022. In contrast, Bell Media’s French-language sports channel, RDS, posted a pretax loss of $2-million on revenue of $153-million last year.
Even so, RDS has outperformed Quebecor’s TVA Sports specialty channel, which holds the French-language rights to broadcast 22 regular-season Montreal Canadiens games as well as the NHL playoffs. The struggling channel posted pretax losses amounting to more than $70-million in the five years to 2022, including a $9.3-million loss last year. Mr. Péladeau has suggested he could be forced to close TVA Sports if an arbitrator rules in BCE’s favour in a dispute over the fees Bell’s satellite TV division pays Quebecor to carry the channel.
Over all, French-language specialty channels posted a combined pretax profit of $49.5-million in 2022, on revenues of $690-million. That is precipitous decline from a pretax profit of $166-million on revenue of $687-million in 2013. The French sector’s pretax profit margin slid from 24 per cent in 2013 to just 7.2 per cent in 2022.
VRAK’s demise may not be the only off-screen drama in Quebec’s specialty TV market this season.