On October 22, 2010, the house that Izzy Asper built—CanWest Global Communications—finally fell. It emerged from creditor protection as the whole shebang was formally handed to Shaw Communications by the CRTC (Canadian Radio-television and Telecommunications Commission) Decision 2010-782. Industry reaction to the $2 billion transaction was positive for three main reasons.
One, because it finally reasserts some financial soundness into the system after two years of instability. Two, because the CRTC at last imposed a deadline for the long elusive Terms of Trade agreement between independent producers and Corus/Shaw broadcasters, slated for the time of the 2011 licence renewals.
Terms of Trade agreements have been a joke across the industry for about 15 years. Everyone, including the CBC, always pledges that they’ll negotiate in good faith to create them, but ’casters are so powerful that nothing can really compel them to come the table and stay there. There’s no incentive and they know independent producers aren’t too likely to initiate a strike!
Now, for the first time, the CRTC has offered to get involved if no agreement can be reached by the deadline of licence renewal. After years of industry associations demanding that something be done, I suspect the Commission couldn’t stomach the risk to their own credibility any longer as they stood by and witnessed transparent abuse of power without a set of fair rules of engagement in place.
The third reason for cautious optimism is because the CRTC stuck pretty close to their own policy by imposing that close to 10 percent of the value of the transaction (remember that’s $2 billion) go toward a series of benefits for the community as a whole—the industry and creators. Typically, when transactions like these occur, broadcasters try to wiggle out of the benefits they have to offer up, or they’ll value them in blatantly self-serving ways. For instance, during the last hearings, Shaw tried to claim that the very fact that they were saving such a huge media asset should be factored into the assessment of tangible benefits. After all, they argued, wasn’t rescuing CanWest going to be a great benefit for all across the land? You could hear the loud thud of policy wonks’s jaws hitting floors over that one.
The CRTC held fast and valued the benefits’ worth at $180 million (a little less than the required 10 percent), $79 million of which will go towards the creation of new conventional and new media content in drama and hopefully documentary and other ‘national interest’ programming in priority areas. Shaw wanted a rollout over ten years but the CRTC pushed back and the roll out accepted now is seven years. The first year is a puny 1.5 million bucks; it ramps up to $18 million by year five and six, but it’s not clear who will administer this—whether it will be a new fund, or whether the existing Shaw Rocket Children’s Fund will be expanded and reformatted.
The sour note in the Shaw deal? The Commission thinks that since the transaction is not anticipated to accrue more than 35 percent of viewer share, they’re “satisfied that this transaction will not have a negative impact on the diversity of programming available to television audiences.” Thus, the CRTC failed to put in place safeguards to ensure that that Shaw/CanWest (e.g., Global, Food Network Canada, Slice TV, HGTV, History, Showcase) and Shaw’s affiliate Corus Entertainment Inc. (W Network, YTV, Viva, Cosmo) continue to operate competitively and separately. This is troubling, since that issue was the most high-profile concern everyone had, in the industry or not.
The time to attack this problem will be at the 2011 hearings on vertical integration. (CRTC Notice of Consultation, 2010-783). At that time, the Commission will be looking at anti-competitive “behaviour”: potential threats to diversity of voice; how benefit packages are implemented in incremental fashion (see above); and hopefully they’ll have a slew of terms of trade to table. Shaw will likely watch its p’s and q’s before then; nonetheless, the industry will have to be unrelentingly vigilant.
