CRTC TO CAST WIDE NET IN HEARINGS Major takeover deals in works could be affected as von Finckenstein chairs debate Grant Robertson – Globe and Mail The proposed $1.4-billion takeover of CHUM Ltd. is set to spark a much bigger debate about consolidation in the Canadian broadcasting sector that will have significant implications for several other billion-dollar deals on the horizon.
CRTC hearings into the purchase of CHUM by rival CTVglobemedia Inc. are scheduled to begin April 30 and — in a move that underscores the gravity of the issue for regulators — newly appointed CRTC boss Konrad von Finckenstein will chair the debate himself and entertain new rules regarding takeovers.
In a statement issued yesterday afternoon to announce the hearings, the CRTC said that “considering the size and nature” of the companies involved in the CHUM deal, the regulator will throw open the debate to a larger discussion about the rules governing media mergers.
“In light of this proposed [CHUM] transaction, the commission considers that this is the appropriate time to seek public comment on the effectiveness of the current policy,” the CRTC said.
News of Mr. von Finckenstein's direct involvement sent a buzz through the sector because he has yet to indicate a stance on mergers as the new head of the CRTC.
Observers said the announcement is a departure from the CRTC's previous probes, since it suggests a new federal policy could be created. The CRTC has historically focused on Canadian content and foreign ownership matters.
It is the first public hearing to be led by Mr. von Finckenstein since the former head of the federal Competition Bureau was handpicked by Stephen Harper in January as the new chairman of the CRTC.
The move comes as the CRTC is getting ready to examine three billion-dollar broadcasting takeovers within months of each other.
This year CRTC officials must also scrutinize CanWest Global Communications Corp.'s $2.3-billion purchase of Alliance Atlantis Communications Corp., along with the proposed takeover of Standard Broadcasting Corp. Ltd. by Astral Media Inc. for $1.2-billion.
Debates about market concentration, such as influence in advertising sales and anti-competitive behaviour, are typically left up to the federal Competition Bureau, which Mr. Von Finckenstein headed between 1997 and 2003.
“For years the CRTC has consistently shied away from making any sort of comment on merger policy,” said Marc Raboy, a professor of media policy at McGill University in Montreal. “If anything, it indicates that [the CRTC chairman] may be the one behind the initiative.”
Amid concerns that consolidation is happening too quickly for regulators to keep pace, the Canadian Radio-television and Telecommunications Commission (CRTC) said it is prepared to consider “alternative mechanisms” including “appropriate safeguards” to ensure there is a diversity of editorial voices in Canadian broadcasting.
The language is intentionally broad and does not indicate that the regulator is either looking to clamp down on mergers — nor loosen the rules — only that the regulator is soliciting opinions, a source in Ottawa said.
At industry hearings on the future of conventional TV broadcasting last November, the country's major broadcasters argued they are facing many new competitive threats, such as the Internet, which are throwing their long-standing business models into disarray.
Executives at CTV and Global and CHUM have argued Canadian media companies must be allowed to get bigger through consolidation in order to compete more effectively with other media and ensure stability in the industry.
Submissions on the proposed purchase of CHUM by CTVglobemedia, owner of CTV and The Globe and Mail, must be sent to the regulator by April 5. The hearings are expected to draw a wide cross-section of players, from broadcasters and labour groups to cable companies and TV producers.
Florian Sauvageau, director of the Centre for Media Studies at Laval University in Quebec, said the decision to discuss guidelines that may also be used to evaluate the proposed takeovers of Alliance Atlantis and Standard Broadcasting is a wise move for the CRTC.
“This should have been done a long time ago,” said Mr. Sauvageau, who authored a report on the broadcasting sector for the Mulroney government that called for a more detailed CRTC policy on concentration. While the regulator sets limits on how many TV and radio stations can be owned in any given market, its policies are limited in dealing with large media mergers, Mr. Sauvageau said.
However, by using the CHUM deal as a platform for a broader debate on media consolidation, the CRTC risks opening up a “can of worms” where proponents and opponents of mergers simply attack each other's opinions, he said.
“There is a big threat that the debate will become an ideological debate,” Mr. Sauvageau said. “But they have to manage that.” |