CALGARY – While it’s still falls below the norm, Shaw Communications today dramatically increased the amount of money it plans to spend on tangible benefits once its acquisition of Canwest Global is approved.
Company executives appeared before the CRTC Thursday morning in Calgary in their final oral reply to the week’s interveners and announced $72 million had been added to the company’s original package of benefits proposed coming into the hearing.
When broadcasting companies change hands, the Commission normally requires that 10% of the purchase value (in this case $2.047 billion) be set aside to spend on projects that are deemed in the public good and which wouldn’t be done in the normal course of business.
Today Shaw presented a revised package worth $180.1 million, which is over and above the $95 million in benefits still to be paid from Canwest’s acquisition of Alliance Atlantis (the original application contemplated including that $95 million with the new deal). The details of the overhauled package are:
• $23 million for construction of DTV transmitters in non-mandatory markets, as originally proposed in our application (unchanged)
• $15 million to provide satellite-delivered local broadcasting services to former "over-the-air" households in markets without digital broadcast transmissions. Shaw will provide satellite receivers and free . programming to qualifying households so that they can receive local and regional over-the-air signals on our satellites (this is brand new to the package)
• $45 million for the production and exhibition of new morning newscasts in Regina, Saskatoon, Winnipeg, Toronto, Montreal, and Halifax (this is a $2 million increase from the prior package announced Tuesday)
• $79.1 million for new independently-produced “programming of national interest,” including 8-point drama, for the over-the-air network and specialty services. Within this benefit, $3 million will be allocated to media accessibility, including video description of all national interest programming funded under the benefits initiative (this is an increase of $55 million)
• $18 million to create new media content to complement and reinforce our other benefits initiatives in connection with programming of national interest and news
The total benefits package works out to about 8.8% of the purchase price. Shaw believes that since “this transaction saves the Global Television Network,” as CEO Jim Shaw said – and that it has spent millions in lawyers and other fees getting the deals done and the court cases settled, that it deserves a discount on the benefits package.
Not everyone agrees.
“We’re happy that Shaw has put more money on the table,” said Mario Mota, vice-president broadcasting policy and regulatory affairs with the Canadian Media Production Association.
However, the difference between the level Shaw is offering and the full 10% which is the norm is still substantial, said Mota – $25 million. “That’s pocket change for a company like Shaw… about two days worth of revenue for it.”
“$25 million goes a hell of a long way in supporting Canadian production. That would probably leverage between $75 and $100 million in new content. Those are new dollars into the system, really good paying job for actors, creators, tradespeople…”
The problem CMPA and others have is they believe the discount shouldn’t apply because Canwest wasn’t in CCAA protection because of its profitable TV business. It was debt brought on when the company purchased the national chain of newspapers from Conrad Black nearly a decade ago.
Mota also pointed out problems he sees in the allocation of the benefits package – where he calculated the amount to be spent on screen versus the amount on social benefits will be about 50-50. The norm is more like 85% on-screen and 15% social, something just enforced by the CRTC during the acquisition of S-Vox by Zoomer Media.
“If (the Commission) requires Zoomer Media to go from a 70-30 to an 85-15, which is what it did in that decision, how can it approve the transaction at 50-50 with far more dollars at play and with an acquirer who’s got multiple times more resources?”
The Canadian Cable Systems Alliance said it is spooked by portion of the revised benefits package which will see $15 million worth of satellite gear and programming given away to Canadians who can’t get access to off-air television once the digital transition is complete.
The Commission estimates there are about 31,000 Canadians who would be “unreachable” by off-air TV.
CRTC chairman Konrad von Finckenstein said he was very pleased to see this proposal added and offered up his staff to help make it work. “I want this program to succeed,” he told Shaw executives.
Free gear in the market from a competitor though, is something that frightens Canada’s independent cable sector.
"While we understand why the CRTC would jump at the chance to resolve one of the major political issues in front of it, we are, nonetheless, dismayed at the Commission’s willingness to turn its eyes away from the impact this is likely to have on small terrestrial BDUs in rural areas,” said the CCSA’s VP corporate and regulatory, Chris Edwards, in an e-mail to Cartt.ca.
“We are especially troubled, first, by the Commission’s offer to give Shaw whatever regulatory assistance may be required to facilitate the roll-out of this Shaw Direct ‘FreeSat’ option and, second, its suggestion that this can and should be a great opportunity for Shaw Direct to gain and upsell new customers to its full DTH service (which von Finckenstein mused about towards the end of the hearing on Thursday).”
Shaw Communications president Peter Bissonnette, however, said he doesn’t want to take paying customers away from itself or other carriers. He told the chair that this project will require some help from the CRTC to administer – and from competing providers to make sure only those who have fallen through the cracks can gain access.
“We would have to do some kind of industry collaboration with the other satellite provider,” Bissonnette told the chair. In a later conversation with Cartt.ca, he also said Shaw does not want to use this proposed program to take customers away from independent cable operators and wants to collaborate with them as well to make sure the program only fills gaps not otherwise served.
“We want to make sure the (satellite equipment) goes to the right people,” he added. And even then, the only programming Shaw Direct would provide would be the off-air signals those Canadians had been able to receive before the transition.
Those assurances are not enough for the CCSA. “We appreciate the Commission’s concern, at least, for ensuring that this service is not made available to existing BDU customers but we did not hear any satisfactory response as to how that aspect of the offering could be controlled,” added Edwards. “It is absolutely critical that the smaller BDUs’ customers not be permitted the option of dropping their existing service to take a smaller, cheaper, essentially subsidized DTH ‘FreeSat’ option.”
Final replies on this proceeding are due Thursday September 30. A decision will come before the end of October.
