Radio & Television

ANALYSIS: Broadcasting Act amendments have no reference to Canadian ownership

By Doug Barrett

FOR SOMEONE AS QUEASY as me worrying major chunks of the Canadian broadcasting system might end up in the hands of foreign owners, Denis Carmel’s article (Will Bill C-10 do away with Canadian Ownership?) last week was not particularly reassuring.

Mr. Carmel quoted a statement provided by the Department of Canadian Heritage which said:

“The Bill makes no changes regarding the requirements for Canadian ownership and control of traditional broadcasters. The CRTC will continue to license traditional broadcasters. Only Canadian individuals, companies and organizations, as defined in the Direction to the CRTC on the Ineligibility of Non-Canadians, will be eligible to hold a licence”.

According to the Heritage statement, the new version of objective 3(1)(a) updates the broadcasting policy to assert that all broadcasters will contribute to the system: “each broadcasting undertaking shall contribute to the implementation of the objectives of the broadcasting policy set out in this subsection in a manner that is appropriate in consideration of the nature of the services provided by the undertaking.”

The previous version of section 3(1)(a) “the Canadian broadcasting system shall be effectively owned and controlled by Canadians” concerned the nature of the system; the new version concerns the contribution of each undertaking. The one version has nothing to do with the other. It is not an updating of the policy; it is a flat out replacement of a fundamental element with something completely different. And to be clear, not only has Canadian ownership been a fundamental element, it is actually the very first principle in the policy.

As a result of the new legislation, there will remain no reference to Canadian ownership whatsoever in the Act. So let’s follow the Department’s lead and look at the Direction on the Ineligibility of Non-Canadians to hold licences. First issued in the 1970s, the current iteration dates back to 1997. Virtually every major broadcasting asset in the system has traded hands under its provisions. That is to say the purchaser was required to be Canadian owned and controlled. Numerous decisions of the CRTC have considered whether an applicant for a broadcasting licence complied with the provisions of the Direction.

In one section of the Broadcasting Act (both current and proposed versions) the Governor-in-Council is given the right to issue Directions to the CRTC relating to “any of the objectives of the broadcasting policy set out in section 3(1).” In a separate section it is authorized to direct the CRTC “respecting the classes of applicants to whom licence may not be issued ….” While the current Direction on the Ineligibility of Non-Canadians is issued under the latter power, I would argue that it could only have been issued if the policy on Canadian ownership under the Act was clear – as it has been until the tabling of Bill C-10.

With the proposed removal of section 3(1)(a), and with the complete absence of any mention of Canadian ownership, I fear a foreign applicant wanting to purchase a licensed Canadian broadcaster might have a technically appealable case against a CRTC denial based on the Direction. (Note: I make no comment here on the applicability of the Investment Canada Act as that would be well beyond the scope of this discussion).

“The government of the day has an unlimited right to rescind the Direction at any time without formal Parliamentary approval.”

The Heritage statement quoted by Mr. Carmel claims that the Bill makes no changes to the requirements for Canadian ownership. While this is correct, the Bill removes the underlying policy nexus for issuing the Direction and offers no replacement. And it’s clear what the Governor-in-Council giveth, the Governor-in-Council can taketh away. What this means is the government of the day has an unlimited right to rescind the Direction at any time without formal Parliamentary approval. What this government wants to do with ownership policy may well not be what the next government wants to do.

Let’s look back at how the Broadcasting and Telecommunication Legislative Review panel approached this issue. I acknowledge that in recommendation 55 the report proposed “reference to the sector as a single system that shall be owned and controlled by Canadians be removed from the Act”. As I was concerned about the thinking behind this recommendation I spoke to a member of the panel, Peter Grant. He gave some context for this by referring to other parts of the report that do not appear in Bill C-10.

The BTLR report assumed traditional broadcasting undertakings that were licensed by the Commission would continue to be bound by the ownership direction. However, unlike traditional broadcasters, online programming services would not be licensed but would be subject to the registration scheme proposed by the report. Thus, they would not be subject to the direction and would not have to be Canadian owned. He also directed me to the language of recommendation 53 which proposed a complete rewording of section 3 of the Act but which was not adopted in Bill C-10. The proposed wording would have specified the media communications sector should consist of consist of Canadian-owned and -controlled companies alongside foreign companies, a clear indication that Canadian ownership should remain a vital issue in the newly designed system.

Instead of some revised form of formal recognition of this important vitality, it has simply vanished. Intriguingly, the documents issued by the Minister in relation to the Bill, both the substantive preamble identifying all the major amendments, and the press release accompanying the issuance of the legislation, are completely silent on the question of Canadian ownership. It’s as if the removal of a fundamental principle underpinning the system for almost 50 years is a complete non-issue. From my perspective, maybe they were hoping nobody would notice.

Doug Barrett is a veteran of over 30 years in the Canadian media and entertainment industries and since 2008 a professor in Media Management Schulich School of Business of York University. He is also the Principal of Barcode SDG, a strategic advisory firm. He was also president and CEO of PS Production Services from 2006 to 2013 and prior to that spent 20 years as one of Canada’s most successful entertainment lawyers, serving as senior partner at McMillan LLP. From 2004 to 2008, he served as chair of the board of directors of the Canadian Television Fund and has also served on several additional industry boards.