GATINEAU – Be careful, dig deeper and have a look around at what other information is out there, the final submissions from several interveners tell the CRTC as the Regulator writes its decision allowing Shaw Communications to buy Canwest Global.
No CCAA discount
The Directors Guild of Canada insists in its submission that Shaw should be forced to pay the full 10% tangible benefits package – and for that matter, the company should be paying based on an even higher valuation of Canwest.
While the Commission and Shaw settled on a transaction valuation of $2.047 billion, that’s actually an amazing bargain, writes the DGC. “The assets that Shaw has purchased for $2 billion have ALREADY generated $268 million in operating profit before the end of the third quarter! If one multiplies that figure alone by the blended 9.5 times EBITDA that (Shaw CFO Steve) Wilson says Shaw paid for Canwest, one gets a valuation of greater than $2.5 billion,” reads the DGC reply.
“That implies a paper profit of more than half a billion dollars while waiting for CRTC approval. And yet the Commission is talking about a CCAA discount. In these circumstances, that would not only be unacceptable, it would be an unfortunate precedent.”
The group also says this means there should be no discount when it comes to applying the usual 10% calculation on tangible benefits. Shaw’s final $180.1 million package submitted is about 8.8% of the agreed valuation.
“This is not to criticize Shaw but the Commission should not be adding to the Shaw shareholders’ wealth at the expense of the Canadian broadcasting system by awarding them a $25 million gift via a novel ‘CCAA discount’ process. In short, the DGC does not oppose this transaction, but objects strongly to the notion of any sort of discount being applied given the circumstances,” says the DGC.
Free satellite gear will hurt other operators
The Canadian Cable Systems Alliance does not want to see one of its members’ biggest competitors, Shaw Direct, be able to give away free satellite TV equipment in rural markets. Shaw’s benefits package earmarks $15 million in free gear to be given away to fill gaps in coverage for some (mostly rural Canadians) left without TV after the digital transition next year.
“CCSA was disappointed to hear the Commission, of its own motion, suggest that Shaw amend the tangible benefits package associated with its acquisition of Canwest to apply $15 million to the provision of free satellite dishes, receivers and a ‘skinny’ package of Canadian OTA television services to viewers in the so-called ‘non-mandatory’ markets.”
Despite Shaw’s reassurances that it does not want to take paying subscribers away from anyone – but also noting it would need the co-operation of other carriers to make sure that doesn’t happen, the CCSA voiced its strong opposition (while renewing its push for a fund to help the delivery of costly HD TV signals).
“CCSA understands the Commission’s strong motivation to find a solution to one of the broadcasting system’s more pressing problems, the possible disenfranchisement of viewers as a result of the OTA digital transition,” it said.
“Nonetheless, we are dismayed by the Commission’s eagerness to advance such a proposal without any regard to principles of competitive neutrality or the potential impacts of such a solution on other stakeholders.”
The CCSA figures the CRTC will ask Bell for the same and then there would be $30 million worth of satellite equipment available for free to Canadians.
“It takes little imagination to foresee the marketing campaigns that will surely follow; campaigns that will urge new customers to upgrade their video packages, to switch their High Speed Internet services and to switch their telephone services,” says the CCSA submission.
“Surely it is not the Commission’s intention to drive smaller BDUs out of business simply because it has discovered a ready solution to the problem of continued access to local OTA signals in non-mandatory markets.”
Other interveners, such as Telus, the Canadian Media Producers Association re-iterated their demands for non-exclusive content, a continued separation between Canwest and Corus’ programming teams and other safeguards which should be built into the approval.
A decision is expected by October 25.
– Greg O’Brien
