CALGARY – When Shaw Communications completes the purchase of Canwest Global, the vertically integrated entity will be so large and influential that some safeguards have to be attached as new conditions of license, a number of interveners told the CRTC Wednesday during its hearing into the deal.
Two of them, Telus and Pelmorex (owner of The Weather Network and Météomédia) brought lists of what those safeguards should be. Another, the Canadian Media Production Association, asked the Regulator to ensure the new company (controlled by the Shaw family) negotiates Terms of Trade in good faith – and doesn’t get cozy with Corus Entertainment (also controlled by the same family).
As a small, independent broadcaster, Pelmorex is worried it won’t carry enough clout with such a large entity as the new Shaw/Canwest. In fact, it showed commissioners just how few unaffiliated Canadian channels there are on a typical Shaw Cable system.
Using the company’s Victoria, B.C. system as an example, Pelmorex noted that just nine of 120 channels were Canadian, not affiliated with any BDUs and not pubcasters. “Nearly 80% of the channels are BDU-owned,” said Paul Temple, SVP strategic and regulatory affairs.
“The magnitude of the Shaw-Canwest transaction invites a whole new industry structure in which the threat of self-dealing becomes pervasive. Independent Canadian services share of viewing to licenced Canadian English language TV is 66.8% today and will decrease to 9.4% with the change in control of Canwest and CTV. That is this hearing’s central issue. It requires safeguards. They must start here,” added Pelmorex president and COO Gaston Germain.
To that end, the company proposed six safeguards to be applied to Shaw BDUs falling under carriage, packaging, affiliation agreements, auditing, access to information and dispute resolution.
The first four would be reporting requirements where Pelmorex hopes the simple reporting of the data (and making some of it public) will show “actionable red flags,” said CEO Pierre Morrissette.
“Numbers is what gets attention,” added Temple. “If they are reported and monitored… undue preference will display itself over time… (and) they’ll be self-correcting it.”
Telus pronounced itself pleased with Shaw’s plan to make content available to competing distributors, but frets that such a plan won’t be in writing when the CRTC issues its decision on the merger, not to mention other ominous possibilities of undue preference it provided in a list to commissioners.
“Examples of behaviour of a vertically integrated carrier which should be deemed to constitute undue preference,” said Telus’ appendix to its comments Wednesday include:
• Exclusivity of content on any carriage or distribution platform
• Discriminatory content arrangements which do not make available on fair and reasonable terms, including with respect to issues of formatting (e.g. only in 380p instead of HD 1080i, or with embedded advertising vs. not) or price.
• Refusing to sell advertising on the key prime time show or major events on the vertically integrated stations.
• Lack of a notice period of a new service launch such that the vertically integrated carrier benefits from an exclusive until such time as the service can be made available to competitors.
• Undue discriminatory pricing. The benchmark to be used to determine whether pricing is unduly discriminatory should be a sample of terms provided to other carriers, both vertically integrated and non-vertically integrated. Pricing complaints should be referred to an independent commercial arbitrator.
Clearly Telus isn’t anticipating smooth sailing once Shaw controls Global TV and all of the Canwest specialty channels.
Independent producers had their own worries, too, but no chart, as Telus and Pelmorex had.
While independent content producers create, incubate and make the TV that people like and broadcasters earn their living airing, the sheer size of something like Shaw/Canwest is daunting to the members of the CMPA (formerly the CFTPA).
“Large media companies now effectively control the copyrights,” said CMPA president and CEO Norm Bolen. “Independent producers have no leverage in their dealings with broadcasters. They’re cornered on rights.
“Independent producers need and want a strong Canwest, but not at any cost.”
Key to the CMPA – as it’s been for a number of years – is finalizing a Terms of Trade document for all broadcasters. These talks have been proceeding at a glacial pace says the group, which also brought up Corus Entertainment’s submission to consultations on the national digital economy strategy. There, the Shaw family-owned broadcaster asked for the elimination of the use of independent production under the Broadcasting Act, and permanently dropping ToT talks.
The CMPA wants the Commission to send along an observer to the talks and for the CRTC to pressure the broadcasters to sign on the ToT dotted line. This issue will definitely be front and centre during the broadcasters’ group licensing proceeding in 2011.
CRTC chair Konrad von Finckenstein gave the CMPA some hope this week, however, telling Shaw on Tuesday he expects to see a deal on this front. At license renewal time, said the chair, “I expect you and CTV and City to come before us and say ‘here is a deal.’”
“Broadcasters and producers are in the rights exploitation business,” added the CMPA’s COO and chief legal officer John Barrack. “Independent producers are fearful above all else that our window of opportunity will close for another five years. If this is allowed to happen, then a key element of the broadcasting system will simply cease to exist in any meaningful way.”
The CMPA also cautioned the Commission on allowing Shaw/Canwest get too close with Shaw family-owned Corus Entertainment. “The real issue is competition, particularly in the women’s programming field,” added Bolen.
“Competition between Canwest and Corus is one of the best things in the industry right now,” he explained, and if the two collude, that means producers suddenly have one less door to knock on.
Shaw reappears in front of the Commission this morning for its final oral reply to the interveners.
A decision is on the transaction will come before the end of October. Chairman von Finckenstein said a decision would be rendered within 35 days of the beginning of the hearing.
