Canadian regulators consider CTV/CHUM megamerger

by Antonia Zerbisias, Toronto Star

This morning, in an airless hearing room in Gatineau, Que., only the drone of the Canadian Radio-television and Telecommunications Commission in session will be heard.

But the actual soundtrack should be the thunder of a herd of horses stampeding out of a barn.

That's because, as CTVglobemedia seeks approval for its $1.4 billion purchase of CHUM Ltd., other CRTC decisions which could – and should – affect the deal are not being considered.

Among them, the results of the extensive over-the-air TV policy hearings of last year as well as the yet-to-be-held media concentration session scheduled for next fall, both of which would have a direct impact on media mergers.

"It's quite clear these issues should be dealt with prior to one of the biggest broadcast deals in the history of Canada," says Peter Murdoch, vice-president media for the Communications, Energy and Paperworkers Union of Canada (CEP). "The framework for this hearing is tainted."

(Conflict alert: The CEP represents Star workers. And Torstar, which owns the Star, holds 20 per cent of the shares in CTVglobemedia.)

What's more, two other mega-mergers now in the pipeline – CanWest Global's $2.3 billion takeover of Alliance Atlantis and Astral Media's $1.08 billion acquisition of Standard Broadcasting – will also be decided under the old rules.

So the CTVglobemedia-CHUM herd is just the first galloping over the horizon after the media concentration barn door is closed.

That's not the only reason media observers will be keeping their eyes on this hearing, which should last about three days.

Today is also the first time recently appointed CRTC commissioner Konrad von Finckenstein will preside over a CRTC public process – and, as the former Commissioner of Competition, he was no great fan of media mergers.

So, while the CRTC has rubber stamped every other deal that has come before it, sources say that CTVglobemedia may be in for a rough ride this week.

That despite its selloff this month to cable giant Rogers Communications of CHUM's six A-Channel stations, including the outlet in Barrie, as well as three CHUM specialty channels (SexTV, ACCESS Alberta and CLT Canadian Learning Television) in a $137.5 million deal.

Still, that leaves CTVglobemedia with five Citytv stations as well as its ratings powerhouse CTV stations in Toronto, Winnipeg, Calgary, Edmonton and Vancouver. If approved, the combination would create a duopoly with Global TV, with CBC TV lagging far behind.

Consider the effect in Toronto. Even though CTV promises not to duplicate more than 10 per cent of its programming on its two stations here during the broadcast day – that's 10 per cent more duplication than we already have. The combined company would also have a stranglehold on local TV news with CTV News, CityPulse and CP24.

It would also control nearly 40 per cent of the revenues in the specialty channel sector, which would give it unprecedented clout with advertisers and TV distributors.

"Why the federal competition bureau let that one pass, we can't understand," says Ian Morrison, spokesperson for the advocacy group Friends of Canadian Broadcasting. "If CTV gets approval to create this behemoth, what is this going to do for competition?"

But, of the more than 2,000 interventions filed at the CRTC, only a very few demand that the deal be blocked.

CBC does – but not rival private broadcaster CanWest Global, likely because it would not want its merger plans affected.

Friends of Canadian Broadcasting has no problem with CTV taking over CHUM's 33 radio stations, although it has concerns about how CRTC approval would "be gutting" the regulator's own 1999 policy on common ownership in any particular market.

That policy is why CHUM had to sell Toronto1 (now Quebecor's Sun TV) when it acquired the A-Channel stations and other assets from Craig Broadcasting in 2004.

Indeed, CTV's application twists itself into semantic knots over how one company owning two station licences in one city (Citytv and CFTO) is equal to covering the same market (Global in Toronto and its CH in Hamilton) from two stations licensed in two different cities.

"You've got to admire the chutzpah of (CTVglobemedia chair) Ivan Fecan and company," says Morrison, who feels that the Citytv stations should have been sold and the less lucrative A-Channel stations held.

Meanwhile, CEP maintains that citizens deserve more information before the deal is rubber-stamped while the Canadian Media Guild, which represents 6,000 media workers, insists it simply should be stopped.

Referencing the Broadcasting Act, which dictates that a broadcaster must, in exchange for its use of the public airwaves, serve to "safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada," the CMG points out how a giant corporation is in fact "answerable first and foremost to its shareholders."

And so, the more merged and converged our media become, the less competition there is. And with less competition, that "fabric" of Canada is weakened.

At the same time, each merger approved paves the way for the next merger to pass muster.

"Media companies now believe they need to operate on a massive multi-platform national scale," says CMG national president Lise Lareau. "So it appears we're headed for more and more consolidation and a virtual media monopoly in this country as each deal creates a rationale for the next.

"What's wrong with that? These deals are bad for local news, bad for advertisers and bad for consumers seeking real variety in their media. The fact is, no one benefits from consolidation, except shareholders."

The rest of the interventions are positive, glowing even – although many share identical wording as so often happens when powerful broadcasters "invite" support from arts and cultural groups as well as independent producers.

And it's true that, overall, CTV has been a good Canadian corporate citizen in recent years – although it, along with the entire sector, likely spends far more on U.S. programming than on domestic shows.

Still the phrase, "will ensure our broadcasting system has a strong wholly-owned Canadian company with size, experience, and financial resources to meet the growing competition from foreign and unregulated sources," crops up a suspicious amount of times in the interventions.

But not all interventions are so predictable.

For example, Moses Znaimer, one of the founders of the Citytv empire, is all for the deal because, as CTV promises, he believes it will restore and preserve its unique identity, or brand, lost when he left in 2003. (Znaimer, I am told, put in a pitch for the A-Channel stations but was outbid by the deeper-pocketed Rogers.)

Now the media guru in the bubble bath on all the bus shelters boasting about how he bought the classical music station CFMX – renamed CFMZ after himself – writes, "Citytv progressively gave up its eccentricities of style and subject, and its geographic specificity, and turned to the middle, where its new schedule structure, acquired programs, and network-like `look and feel,' soon rendered it another channel like the others.

"It is, paradoxically, the union of CTV and Citytv under single ownership that can reintroduce and enforce a disciplined separation between the two broadcast entities. CTV does not need a CTV 2 ... CTVgm says it well when they point out that `sameness destroys value for both citizens and shareholders'."

But the CEP's Murdoch doesn't believe that CTV is shelling out $1.4 billion merely to rescue a brand.

"With that kind of investment, I am sure they have other plans for it," he says, fearing programming and job cuts.

It's inevitable, of course. Not one media merger so far has proved beneficial to local news programming, for example.

"Good local news – whether it be TV, radio, newspapers or online – costs money and every time a consolidation happens, inevitably the people that gather and generate news for their own market get laid off, in the name of `centralization'," says Lareau. "These deals don't lead to more news, just more of the same news, on every single channel."

Which is why, as those horses disappear over the Gatineaus, Canadian citizens will be left in the dust.

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The media's job is to interest the public in the public interest. -John Dewey