Source : Vancouver Sun

CanWest, Bell Canada say foreign investment rules should be reviewed

by James Baxter

OTTAWA – Canada is a big country but a small media market, so cross-ownership and access to foreign capital are needed if Canadian companies are going to succeed on a global scale, senior executives from CanWest Global Communications told parliamentarians Tuesday.

Kenneth Goldstein, CanWest's executive vice-president and chief strategy officer, told the Commons heritage committee that recent media consolidation is strictly a reaction to years of uneconomical "fragmentation" of newspapers, radio, television and the Internet.

"Canadian media are attempting to counter the effects of fragmentation by re-aggregating fragments in order to maintain economies of scale," Goldstein told the committee during the four-hour hearings into the cross-ownership of media and rules governing foreign investment.

"Cross-media ownership is about adding value and improving quality to ensure that there are Canadian voices in an increasingly borderless media market. If we artificially chop the Canadian media market into uneconomic pieces, then Canadian media will not be able to compete with media from everywhere that will be coming into Canada, and that will ultimately lead to a reduced ability to tell Canadian stories to Canadians and to the world."

To combat this, Canadian media companies should be able to woo foreign investment, said Geoffrey Elliot, CanWest's vice-president of corporate affairs.

"The Canadian market alone does not provide scale opportunities to match the market power of foreign media conglomerates," said Elliot. Foreign direct-investment limits in Canadian media companies should be raised to 49 per cent from 20 per cent, he said, but not without a reciprocal liberalizing of ownership rules in other countries, notably the U.S. and European Union.

Elliot said current World Trade Organization negotiations offer a good opportunity for Canada to get the kind of international ownership rules that are best for the country. "In order to grow, and ultimately to survive, Canadian media companies like CanWest need additional flexibility to acquire strategic positions in broadcasting assets located in other countries."

CanWest owns the Global television network and the Southam chain of newspapers, including The Vancouver Sun and The Province.

The executives from CanWest and Bell Canada Enterprises, which owns CTV, the Globe and Mail and the Internet service Sympatico, said plans to review foreign ownership in the telecom sector announced last week should not go ahead unless combined with similar reviews for cable and broadcast interests.

But consolidation is eroding the credibility and quality of news coverage in Canada, said University of Ottawa professor Marc-Francois Bernier. He argued that the government has an obligation to ensure that the news media be seen as a public trust rather than as a bottom-line-focused business for large conglomerates. He said the news media should be treated as a profession, self-governed and regulated like medical and legal professions.

"The law does not belong to the lawyers and the law firms," said Bernier. "Medicine does not belong to the doctors.

"[The news media] must be seen as a matter of public trust," he said.

Toronto Liberal MP Sarmite Bulte agreed that the media is a public trust and equated media consolidation to the debate over bank mergers. She said in the case of banks, the government blocked the mergers in the late 1990s because it was decided that public interest outweighs corporate interests.

"At some point, efficiencies don't matter," she said.

Canada should take a lesson from Britain, which has last week introduced legislation to limit cross-ownership in media, said Ian Morrison, a representative for the Friends of Canadian Broadcasting, a not-for-profit lobby group. He said preventing cross-ownership within markets is the only way to ensure that journalists can serve the public interest effectively.

"As powerful owners press a shrinking pool of journalists to pump out work for all of their different platforms, two things will happen: the quality of work will suffer, and fewer journalists will be prepared to stand up to the owners as the number of doors to knock on diminishes," said Morrison.

He said that at the very least, the Canadian Radio-television and Telecommunications Commission, which oversees the Broadcast Act, should require television and newspapers to maintain separate newsrooms.

© Vancouver Sun