Bell told: not this time

As noted back in the sunny days of July 2006, Canadian media behemoth CTV Globemedia (formerly Bell Globemedia (owners of CTV, the Globe and Mail and more; once part of the Bell Canada empire but Bell now only owns 15%), has been attempting to buy the CHUM/City group – operator of radio stations and a number of TV services, most notably Toronto’s CityTV. The transaction cleared competition approval recently, but the most significant hurdle was the necessity to receive the approval of the electronic media regulator, the CRTC. The need to receive the CRTC’s assent is a key principle of Canadian media law, and an elaborate system of policies, ‘benefits packages’ and more has emerged from the Broadcasting Act and the CRTC’s own proceedings. It’s certainly not a rubber stamp, and the public proceedings are epic affairs.

Here’s today’s press release and decision (2007-165). The summary is that the transaction can go ahead, but on condition that the CityTV stations (Toronto plus four other cities; each operating a similar format to the mothership) are sold. BG had offered to get rid of the (less successful) A-Channel stations but wanted to keep CityTV; as it turns out, the regulator has said that they will allow them to keep the A-Channels!

Two members of the CRTC dissented on the CityTV point, accepting the argument that in practice, allowing the CityTV stations to become part of the CTVgm universe would in fact enhance diversity and provide for a secure future for the stations. The rule that caused the majority to require divestment of CityTV is the ‘one station per market’ rule (i.e. in general, no corporation can have effective control of more than one station per market). While there are a number of prominent exceptions, they normally relate to broadly defined markets (e.g. CanWest own a station in Toronto and a station in nearby Hamilton, both in the ‘Toronto-Hamilton’ market), and the Commission wasn’t prepared to make the leap here.

The dissenting opinions are perhaps more interesting to study, as the majority opinion is more a restatement than an argument (by nature, of course!). Two particular points worth noting are as follows:

The asset evaluation study on the record of this proceeding puts an enterprise a value on the five Citytv stations of anywhere between $74 and $149 million. Based on the 10% rule, if a new buyer is found for the five Citytv stations ordered sold by today’s majority decision, that new buyer will be offering a benefits package of somewhere between $7.4 and $14.9 million. That is a long way from $80 million and is unlikely to produce much in the way of quality Canadian programming.

(the ‘benefits package’ relating to CityTV, i.e. investment in programming, talent schemes, etc would have been $80. However, there is a long tradition in Canadian media law of guarding against ‘buying a licence’….)

This is the age of new media, of Google, Yahoo, You Tube, Facebook, Joost and of dozens more unregulated enterprises emerging or in the development stage. Regulated enterprises like Citytv find themselves sufficiently challenged by the need to succeed financially while meeting legislated cultural imperatives without having to shoulder the additional burden of inflexible regulatory dictates.

This is a very interesting point and one that, I think, is starting to make its way into CRTC discourse – the idea that because conventional radio/TV has to compete with the totally unregulated Internet services (from the perspective of the Broadcasting Act, of course!), it is necessary to be flexible in applying law and regulatory policies to regulated broadcasters. Indeed, it was a major factor in the redrafting of Television Without Frontiers through the AVMS directive – an example is the decision to loosen advertising restrictions on the ‘linear’ (i.e high regulation) services.

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