Canada’s gay and lesbian cable network has avoided having to declare bankruptcy.
At an Apr 18 meeting OUTtv’s unsecured creditors voted in favour of the network’s plan to pay off part of its debt. The plan will reduce the network’s unsecured debt to about $400,000 from $2.7 million, says Bill Craig, the majority shareholder and president of the company that runs both OUTtv and Hard On PrideVision, its adult-content sibling network.
“We were the first gay and lesbian TV network in the world,” says Craig, “and now we have avoided becoming the world’s first bankrupt gay TV network.”
Back in January, the company filed a Notice Of Intention (NOI) under Canada’s Bankruptcy And Insolvency Act to stop the bleeding of money to its unsecured creditors — that is, debt not owed directly to the bank.
At last week’s meeting, the company needed approval of its plans from a majority of its creditors totalling more than two-thirds of the monetary value of the debt. Seventy-one percent of the gathered creditors approved the company’s plan on the first ballot.
The plan has the company paying most of the creditors 19 percent of the debt owed. Some of the creditors, including shareholders, agreed to forgive their debts in return for keeping equity in the company. Those creditors include Pink Triangle Press, which publishes Xtra, and Craig himself, who was owed $340,000.
“From that perspective, it wasn’t a very good day,” says Craig with a laugh.
The plan still has to be approved by a judge, which should happen in the next few weeks, says Craig. Once the deal is finalized, the company can go back to doing the business of running a television network, including developing programming and increasing viewership. Programming has languished in rerun-ville while the restructuring was taking place.
Craig is also looking into attracting “white knight” investors who have deep enough pockets to keep the network afloat.
“We have more than one potential investor who has shown an interest, pending court approval,” says Craig.
Despite the problems of the past few months, Craig says the company has not had to lay off any staff nor did Craig have to give up control of the company.
“While we are not in a positive cash-flow situation yet, we should be there maybe sometime this summer,” says Craig.
OUTtv has had its share of financial problems since Craig and others bought the company, then known as PrideVision, from founder Headline Media Group in 2001, including its debt load. Craig also cites problems the network initially had with cable companies prior to 2005. At that time, the network under different ownership ran into problems when cable providers Rogers and Shaw balked at including the network bundled in a package with other channels. Instead, the companies offered it as a stand-alone service that had to be purchased separately for about $7 a month.
“Four years ago, cable operators were afraid of including a gay channel in a package. Other channels were afraid that people wouldn’t buy the package they were in because it came with a gay channel,” says Craig. “So we were ostracized. We were placed between the Playboy and Hustler channels.”
This arrangement, which eventually changed, delayed the network’s growth, says Craig.
“The good news is that in April of last year we were in about 20,000 homes. That total has since grown to 200,000,” he adds. “That’s a 10-fold increase in a year.”
Craig says his goal is to catch up to similar networks, like the Independent Film Channel, which is in 1.1-million homes.