Canada limits media cross-ownership

CRTC limits cross-market media ownership
by Barbara Shecter, Financial Post

The Canadian federal broadcast regulator has unveiled a new policy restricting private broadcasters from controlling more than two types of media in the same market.

The rule applies to local radio stations, local television stations and local newspapers.

For example, a company that owns a TV station and a newspaper in Calgary could not buy a radio station there.

The Canadian Radio-television and Telecommunications Commission (CRTC) made the decision to restrict cross-ownership of media properties following a week of hearings last fall. The public hearings were convened after a handful of billion-dollar transactions that brought together companies including CTVglobemedia, owner of the CTV network and the Globe and Mail newspaper, and radio and television broadcaster CHUM Ltd.

"The trend toward greater consolidation in the broadcasting industry has raised concerns that a large ownership group could achieve a dominant position through acquisitions, which could bring about a reduction in the diversity of local, regional and national content," the CRTC said in a statement Tuesday that accompanied the release of the new rules.

Although no companies will be hit by the new rules in regard to what they already own, the policy will affect what analysts had expected to be the next round of consolidation a few years from now.

"Rogers can't buy Canwest; Canwest can't buy Corus," said one analyst, noting that Canwest Global Communications Corp.'s chain of metropolitan newspapers and TV stations would overlap with local radio stations owned by Rogers Communications Inc. and Corus Entertainment Inc.

The CRTC is also imposing limits on future acquisitions to make sure media companies do not control more than 45 per cent of the total audience share as a result of a transaction.

On the TV-signal distribution side, the regulator will prohibit transactions between cable or satellite companies that would result in one company effectively controlling the delivery of programming in a single market.

In the United States, the Federal Communications Commission - the CRTC's counterpart - voted last month to overturn a 32-year ban on cross-media ownership of broadcast and newspaper interests in a single market among the country's 20 largest cities.

Konrad von Finckenstein, the chairman of the CRTC, said Tuesday that comparisons between the two countries and their policies are not valid.

"We're talking about local, small markets where there are only three options (for news and information) and suddenly they're all owned by the same (company)," he said. "It's very different from when you're talking about Los Angeles" where the number of media options are much greater.

Moreover, the loosening of restrictions within the U.S. is not a certainty.

Opponents concerned that the relaxed regulation on media cross-ownership would open the floodgates to consolidation have threatened to overturn the FCC, either in the Senate or the courts.

In Canada last year, Montreal-based Astral Media Inc. became this country's largest radio operator through the $1.08-billion acquisition of Toronto-based national broadcaster Standard Radio. Astral also has stakes in pay-TV and specialty stations including the Family Channel and Teletoon.

The deal followed Canwest's Global Communications Corp.'s $2.3-billion purchase of specialty TV operator Alliance Atlantis Communications Inc., with partner Goldman Sachs Group Inc. The CRTC blessed the union last month with minor changes.

Von Finckenstein said the new rules unveiled Tuesday are intended to present "clear, concise" rules that take the guesswork out of future consolidation.

Two newspapers - the Globe and Mail and Canwest's National Post - are exempt from the rules because they are national rather than local newspapers.

"On first blush, (it) doesn't look like anyone in Canada is affected by this," said Adam Shine, a media analyst at National Bank Financial. "Neither Canwest nor Quebecor Media own any radio assets. As for CTVglobemedia, they own a national newspaper not a local newspaper."

The CBC is also unaffected by the new policy. Separate hearings will be held later for the public broadcaster.

On the distribution side, the new rules would prohibit at least one combination, said an analyst who asked not to be named. Satellite-TV distributor Star Choice could not buy Bell ExpressVu, Canada's second satellite TV provider owned by Bell Canada Inc. Star Choice is owned by cable operator Shaw Communications Inc., which would become the single broadcast distributor in British Columbia and Alberta under such an arrangement.

The only way such a marriage could take place would be if telecommunications firm Telus Corp. establishes a "viable" TV service in those provinces, said the analyst.

The CRTC's new policy did not address the issue of foreign ownership of media properties. It also left untouched the rules that govern how many radio or television stations can be owned in a given market. In the case of television, the limit is one station per local market - although some exceptions have been made. Canadian broadcasters are permitted to own as many as four radio stations in large markets, and three in smaller markets, divided along the AM and FM bands.

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