IN ITS FULL DECISION to deny Bell Canada’s request to purchase Astral Media, the CRTC addressed a number of the issues which arose over the months-long process and public hearing held in Montreal during the week of September 10th.
The rest of the industry would probably do well to heed the advice doled out in this decision.
THE CRTC WON’T COUNT THE YANKS: “For clarity, the Commission considers that ‘total television share’ is based on viewing to Canadian commercial television services, consistent with the Commission’s Communications Monitoring Report (CMR) and past practice. While the Commission recognizes that non-Canadian services form part of the broadcasting environment, its mandate is to support a healthy, diverse Canadian system. Furthermore, tuning to popular U.S. programming is already included in viewing to Canadian services since U.S. programming is broadcast on Canadian services, especially in the English-language market. Given that the DoV policy was intended to guide Commission decisions on transfers of ownership, the Commission does not consider it relevant to include services over whose ownership it does not have direct jurisdiction…
“Based on the figures in the 2012 CMR, in the English-language market, BCE’s services captured 33.7% of viewing to Canadian services, Astral’s services garnered 6.0% and the joint ventures another 3.0%. The combined BCE/Astral viewing share, including joint ventures, would therefore be 42.7%.”
BUT IT WILL COUNT THE JVs: “In the case of the joint ventures, even in the absence of clear cut control, it would be unreasonable to separate a 50% ownership position from the significant role in the operation and management of the services that such a party would possess. Moreover, a 50% owner could benefit from significant participation in decisions relating to the distribution of these services. Therefore, the Commission has included viewing to the joint ventures in its calculation.”
BELL/ASTRAL WOULD JUST BE TOO BIG, THE TEMPTATIONS, TOO TEMPTING: “In English-language television, a combined BCE/Astral would control an unprecedented amount of total revenues and viewing. In addition, BCE would increase its already significant share of Category A discretionary services which, as must-carry services, would give BCE considerable negotiating power with other distributors. The acquisition of Astral would add popular and successful discretionary television services, resulting in an increased presence by BCE in the most attractive genres – movies, sports and premium content – that drive a significant component of demand for Canadian television services. These genres are consistently popular with Canadian viewers and feature exclusive and/or live programming unavailable elsewhere. Finally, the ability to negotiate for every program rights window with programming suppliers and advertisers, when combined with BCE’s size and ability to ‘bulk buy,’ could ultimately reduce, rather than increase competition.”
AND NOT JUST IN THE ENGLISH TV MARKET: “The Commission is of the view that BCE did not demonstrate how the proposed transaction, which would result in the vast majority of French-language programming services being held by two large, vertically integrated competitors, would invigorate competition. Moreover, BCE’s proposal did not adequately address the potential negative impact that this transaction could have on independent entities.:
NOT ENOUGH FLESH AROUND THE RADIO BARE-BONES: “With respect to radio, the Commission considers the timing and lack of details of BCE’s divestiture plan did not afford an opportunity for interveners to comment meaningfully. While the plan respected the letter of the COP, the decision to include certain Bell Media radio stations in the divestiture plan can be viewed as an attempt by BCE to trade underperforming stations for successful ones, which would not provide a benefit to the Canadian broadcasting system or create the conditions for healthy competition.
“…While much of the discussion at the public hearing focused on television, the Commission notes that BCE, aside from its proposed tangible benefits, made no firm commitments regarding additional local and spoken word radio programming, or promotion and airplay of emerging Canadian artists. Further, BCE did not provide details on its plan to invest in Astral’s radio operations and news. As such, the Commission is not satisfied that BCE discharged its burden to demonstrate how the combination of the Bell Media and Astral radio stations would be beneficial to Canadian radio listeners and the radio sector as a whole.”
BLEAH ON BENEFITS: “In particular, BCE did not demonstrate that the Northwestel broadband proposal would benefit the broadcasting system. In addition, this proposal, as well as that relating to a new Category C news service, would not primarily benefit third parties. Further, BCE did not demonstrate that the programming commemorating Canada’s 150th anniversary celebration would not be undertaken in the absence of benefits funding.”
OVER-THE-TOP? OVER-EMPHASIZED: “BCE did not demonstrate that it needs to be bigger to compete with foreign services. The Commission does not consider that there is compelling evidence on the record to demonstrate that foreign, unlicensed competitors are having a significant impact on negotiations for program rights by Canadian broadcasters.”
CONTENT FOR ALL? NOT BUYING IT: “While BCE submitted that it would be in its own best interest to make content available as widely as possible, the Commission shares the concerns of many interveners about the ability of a distributor with the content properties of a combined BCE/Astral to exert market power in an anti-competitive manner. These concerns are based on the business incentive of a vertically integrated entity to give an undue preference to its own distribution facilities by restricting access to its programming services or offering them at above market rates to its competitors. The market power of a combined BCE/Astral could threaten the availability of diverse programming for Canadians and endanger the ability of distribution undertakings to deliver programming at affordable rates and on reasonable terms on multiple platforms.”
NO SPECIAL TREATMENT: “While certain interveners proposed safeguards to address these concerns in the event of an approval, the significance and breadth of the broadcasting assets of a combined BCE/Astral are such that safeguards to properly supervise this level of market power would be extensive and unduly burdensome. The Commission does not consider that such a level of interference would be consistent with the regulatory policy set out in section 5(2) of the Act. The Commission further considers that the onus was on BCE to propose adequate safeguards to address these concerns. In this case, BCE failed to do so.”
FUTURE APPLICANTS, MAKE SURE YOUR CAKE IS FULLY BAKED BEFORE THE HEARING: “The Commission notes that the applicant made amendments to its application after its publication, which were added to the record and indeed considered by the Commission in this case. However, going forward, applicants should ensure that their proposals are complete when submitted… Proposals should not be amended at the oral phase of the public hearing. The Commission considers that last-minute changes undermine the ability of the Commission to test and clarify proposals, and diminishes the ability of the public to meaningfully comment on applications.”
– Greg O'Brien
