CRTC AIRS IDEA OF MEDIA LIMITS Grant Robertson – Globe and Mail Canada's biggest media companies have been asked to consider the prospect of new limits on the number of broadcast outlets they can own, which would freeze future industry consolidation in its tracks for several of them.
At federal hearings Monday into the state of media diversity in Canada, broadcasters were told to comment on the possible implementation of three scenarios that would essentially amount to a merger moratorium for companies such as CanWest Global Communications Corp., CTVglobemedia Inc., Shaw Communications Inc. and others.
Under one scenario, the Canadian Radio-television and Telecommunications Commission would take the unprecedented step of regulating cross-media ownership of radio, television and newspaper assets, limiting companies to a maximum of two of those three types of operations in any given market.
Another scenario would prevent companies from owning more than 25 to 33 per cent of the country's cable channels.
A third restriction would limit the growth of cable companies, preventing them from owning multiple cable and satellite TV services. At a time when they have already become major Internet players, such a clampdown could ease concerns that cable companies will soon control too many of the so-called gateways into people's homes.
The controversial proposals, raised during seven hours of testimony, left industry executives at several companies grasping for alternatives. They argued that the scenarios, based on rules implemented in Australia, would not work in Canada.
At a time when the federal government is getting out of regulation in the telecommunications sector, it appears to be talking about "micro-managing" the broadcasters and cable companies, said Jim Shaw, chief executive officer of Shaw Communications.
Regulatory experts say it's a long shot the CRTC would attempt to put such rules into action.
Because they are heavy-handed measures, several experts were surprised at the attention the commission paid to the matter Monday. Commissioners asked a number of pointed questions about their potential impact.
"What would you think if we did that," CRTC chairman Konrad von Finckenstein repeatedly asked the representatives of several major broadcasters Monday on the first day of hearings that are expected to last throughout the week.
The hearings were called by Mr. von Finckenstein in March after a wave of consolidation in the media sector that has topped $5-billion in deals. Nothing decided at these hearings will affect those deals.
The consolidation wave began last summer with the $1.4-billion purchase of radio and TV broadcaster CHUM Ltd. by CTVglobemedia Inc., parent company of the CTV network and The Globe and Mail.
That takeover was followed in January by the $2.3-billion acquisition of cable network operator Alliance Atlantis Communications Inc. by CanWest Global Communications Corp. and U.S. investment bank Goldman Sachs Group.
Astral Communications Inc. acquired radio giant Standard Broadcasting Ltd. in February. Rogers Communications Inc. then purchased CITY-TV for $375-million this summer, after regulators ordered CTV to sell off that asset from the CHUM deal, fearing CTV owned too many stations in several markets.
While the CRTC limits companies from owning more than one TV station in any given city, or more than two AM and FM radio stations, it does not clamp down on cross-media ownership.
But the regulator is now looking at recent rule changes in Australia, which has restricted ownership to two types of media in any market.
It is not clear how the regulator would enforce such rules, since the CRTC regulates radio and TV, but not newspapers. It could likely prevent a company with newspapers from buying further broadcasting assets, but would not be able to prevent broadcasters from buying print operations.
It is also not clear how serious the CRTC is about adopting any of the Australian model, though it asked numerous questions Monday about the impact such changes would have on the industry.
The rule changes would prevent CTVglobemedia from expanding further, along with CanWest, in several Canadian markets. Since previous media deals will not be affected by these hearings, existing assets will not be altered by the outcome, but future deals could theoretically be curtailed.
Executives with CTVglobemedia and CanWest both rejected the proposals, which were pitched by Canadian Broadcasting Corp. in submissions to the hearings, and set the agenda for the day's discussions.
CTV Inc. president Rick Brace questioned whether the regulator was rushing to clamp down on consolidation in Canada before figuring out whether it is bad for the industry.
"Where is the problem? Have we determined there is a problem?," Mr. Brace said after the hearings. "I would hope that within that process they really do an analysis to determine that there is a problem."
CanWest executives argued media consolidation makes big broadcast companies stronger and better able to withstand competitive pressures from the Internet and U.S. cable networks that are fragmenting Canadian audiences.
CanWest's vice-president of regulatory affairs, Charlotte Bell, said rewriting existing rules creates uncertainty for companies at a time when the evolution of the Internet is making it difficult to predict how the sector will look several years from now. |