Network owner granted creditor protection
The Edmonton company that owns the Super Channel pay TV network owes creditors $115 million and has been granted bankruptcy protection by an Edmonton judge.
Allarco Entertainment 2008 Inc. won a licence from the CRTC to run the service in 2006 after a bidding war with three competitors, but documents filed in court this week indicate the company and a related limited partnership have been going through tough economic times.
“As a result of decreasing revenues and profitability earned by the … parties, (they) are unable to continue meeting their obligations as they fall due,” a Court of Queen’s Bench application said.
A judge agreed to give the firm protection from creditors under the Companies’ Creditors Arrangement Act for at least 30 days while it goes through a court-supervised restructuring.
About $72 million of Allarco’s debt is secured by company assets. The rest is unsecured.
The application says Allarco has started a “sales and investment solicitation process” and requires a stay of proceedings to restructure debt obligations, which will benefit creditors and shareholders more than liquidation or bankruptcy.
President Malcolm Knox said Friday the company’s revenue has been hit over the last 18 months by subscribers dropping Super Channel, which provides four channels in high definition and standard definition, as well as video on demand.
While many people still sign up, he said the $15 to $18 monthly price charged by many of the cable and satellite firms that offer Super Channel is too high.
“Netflix established a new benchmark for pricing when they came into the marketplace for $7.99 (a month),” he said.
“We have been working with all of (the providers) to get us repriced to 10 bucks. … We have found with those that have reduced us, the retention rate is higher.”
About half the companies have cut the cost for Super Channel in the last few months, although Knox wouldn’t say what proportion of their subscribers this represents or how many subscribers they have.
Although the company continues to offer all its services, it has laid off 12 of its 43 employees and is looking for ways to reduce programming costs, he said.
The holding company behind Allarco also runs The Shine Christian radio stations, which aren’t affected by the court proceedings, Knox said.
The company is owned by Chuck Allard, whose father, Dr. Charles Allard, founded TV and radio stations in Edmonton in the 1960s and ’70s and received Canada’s first pay-TV licence for the original Super Channel in the 1980s.
Knox said he’s optimistic Allarco will weather the current downturn.
“It’s always a challenge, but we’re looking ahead to having a strong programming lineup in the fall, working at this in the summer and coming out the other side. A lot of companies in our industry have used this process.”