CRTC puts new restrictions on media ownership
Globe and Mail Update January 15, 2008
Canada’s broadcast regulator has put in place new rules on media ownership in Canada that will restrict how big the country’s broadcasters can get, following a year of unprecedented deals in the sector.
After hearings were held last fall to probe media ownership rules, the Canadian Radio-television and Telecommunications Commission introduced three significant rule changes Tuesday:
• No person or company will be allowed to control more than two of types of media in one local market, including local TV, local radio and a local newspaper.
• No company will be allowed to control more than 45 per cent of the total television audience in Canada, which could restrict the acquisition of specialty cable channels by major broadcasters.
“With these new policies, we have developed a clear approach to guide us in assessing future transactions in the broadcasting industry,” CRTC chairman Konrad von Finckenstein said in a statement. (The Globe and Mail)
• Deals between television distributors, such as cable and satellite TV companies, will not be allowed if they result in one company or person controlling the delivery of programming in a market.
While the changes don’t impact deals that have already been done, they will prevent companies from expanding through takeovers in the future.
For example, since CanWest Global Communications Corp. owns the Global TV network and local newspapers in several markets, it would not be able to expand into radio in any of those cities.
Similarly, CTVglobemedia Inc. owns TV and radio stations in dozens of Canadian cities, and would not be allowed to expand into local newspapers as a result.
For the purposes of the rules, the CRTC considers The Globe and Mail, which is owned by CTVglobemedia Inc., and the National Post, which is owned by CanWest, to be national papers, rather than local publications. As such, they do not impact the rule changes.
Those changes essentially preserve the industry’s status quo right now. However, the one alteration that could have the biggest impact is the new 45 per cent cap on audience share.
The trend in media takeovers in recent years has been for CTVglobemedia, CanWest, Astral Media Inc., Corus Entertainment Inc. and other broadcasters to expand in specialty cable TV channels. This would restrict how many channels those companies could buy in the future.
CTVglobemedia, which owns specialty channels such as TSN, MuchMusic, MTV and Bravo, is the closest to that 45 per cent cap. It currently holds roughly 37 per cent of the total television audience share in Canada, according to the CRTC.
The figure is calculated by adding up the audience share of each broadcasting asset owned by a particular company, according to BBM Nielsen ratings data, then comparing it to the total audience based on the same ratings compiled across the country.
The third major rule change, which restricts cable and satellite carriers from controlling the delivery of programming, would effectively prevent Shaw Communications Inc., which owns Shaw cable in the West and the StarChoice satellite service from buying the rival Bell ExpressVu satellite service.
Industry watchers have thought for some time that StarChoice and Bell ExpressVu would be better off if they were merged, but such a deal would now have to be executed by a company that is not already in the cable business. Though the cable operators could argue new TV services being launched by telephone companies such as Telus Communications Inc. are competitors, the CRTC does not see them as big enough yet to affect the rule.
The changes come after a period of record deals in the media sector in 2006 and 2007 that prompted the CRTC to clarify the rules on ownership.
The wave of takeovers began with CTVglobemedia Inc.’s $1.4-billion takeover of CHUM Ltd. in 2006.
That deal was followed by CanWest Global Communications Corp.’s $2.3-billion buyout of Alliance Atlantis Communications Inc. and Astral Media Inc.’s $1.08-billion purchase of Standard Broadcasting Ltd. last year.
“With these new policies, we have developed a clear approach to guide us in assessing future transactions in the broadcasting industry,” CRTC chairman Konrad von Finckenstein said in a statement.
“It is an approach that will preserve the plurality of editorial voices and the diversity of programming available to Canadians, both locally and nationally, while allowing for a strong and competitive industry.”