BROADCASTING INDUSTRY FACES CRUCIAL WEEK Grant Robertson – Globe and Mail Canada's biggest broadcasters and publishers gather before the federal broadcast regulator Monday for the start of weeklong hearings on media consolidation – and the implications are significant for investors, audiences and the industry alike.
After three major takeovers in the media sector, the Canadian Radio-television and Telecommunications Commission is considering revamping consolidation rules, possibly in the image of Australia's.
Officially dubbed Diversity of Voices hearings, the process is an attempt to gauge where media consolidation is headed, and what impact mergers are having on access to the airwaves for producers, artists and the public.
The past 14 months have seen CTVglobemedia Inc. buy CHUM Ltd. for $1.4-billion, which prompted CanWest Global Communications and Goldman Sachs Group Inc. to purchase Alliance Atlantis Communications Inc. for $2.3-billion. Astral Media Inc. then bought Standard Broadcasting Ltd. for $1.1-billion.
This week's process is “a significant event for the Canadian broadcasting industry,” analyst Randal Rudniski of Credit Suisse First Boston Securities Canada Inc. said in a research note.
“Any decision arising from it will have a direct impact on the ability of sector participants to adapt new business models, pursue [merger-and-acquisition] activity and could affect their profitability over the long term.”
The recent spate of takeovers won't be impacted by these hearings, but it's uncertain what future deals could look like. Insiders say the CRTC is curious about a points system used by the Australian government to assess media consolidation, and whether it would work in Canada.
In Australia, each media outlet in a given market – including newspapers, commercial TV and radio stations – is worth one point. If any company owns multiple outlets, the collection of media assets are worth one point combined.
Should a particular market in Australia have less than five points in total, it is deemed to have an “unacceptable media diversity situation,” and further mergers can be suspended. In smaller markets the threshold is four points.
If a person or company controls a TV station, a radio operation and a newspaper in one Australian market, it is also considered an “unacceptable three-way control situation.”
Regulators here are said to like aspects of that system but broadcasters are skeptical. Due to location, Canada must compete directly with U.S. media, they argue, while Australia enjoys a geographical and cultural buffer. One industry executive, speaking on condition of anonymity, said the Australian system would only work “if a moat could be built around Canada.”
However, CRTC chairman Konrad von Finckenstein's opinions are well known – he wants clearer rules to dictate future deals. While at the helm of the federal Competition Bureau from 1997 to 2003, he spoke against unfettered media consolidation. And in doing so, he conjured the same words he used to name this week's hearings.
“You can't have a functioning democratic system … unless you have diversity of voices,” he said at the time. |