Source : Toronto Star

Whatever CRTC decides, implications enormous

In a small featureless room in Hull, Que., bureaucrats and executives will begin deciding tomorrow who controls the sports you watch on TV.

Will it be CTV, which is seeking government approval of its $908 million takeover of NetStar Communications, giving it control of TSN, CTV Sportsnet, Outdoor Life, the French-language RDS network and a stranglehold on the cable sports business in Canada?

Or will CTV be forced to sell off either TSN or Sportsnet, with a variety of possible buyers ranging from CanWest Global to the Toronto Maple Leafs clouding the picture?

Or will it be the Disney Corp., which in partnership with CTV has already demanded that TSN be renamed ESPN Canada, really pulling the strings as some have suggested?

Whatever the five Canadian Radio-television and Telecommunications Commission (CRTC) panel members eventually decide, probably by March, their decision will have major implications for broadcasters, sports teams, viewers and advertisers.

"One way or another, this will change the face of Canadian broadcasting," says one industry observer.

It has already turned it upside down. A year ago, TSN was embroiled in a battle against Sportsnet, Canada's first regional all-sports network. Then came the biggest deal in Canadian broadcasting history.

If it goes through as is, the two will be part of the same empire, a prospect that has rival networks and parties such as Major League Baseball, the Vancouver Canucks and the Toronto Blue Jays crying foul.

They all claim the deal will create a virtual sports broadcasting monopoly, giving CTV an unfair advantage in securing rights and advertising. It will also reduce rights fees and thus impoverish Canadian pro sports teams, they say.

Some have charged that the deal will result in fewer games being available on free television like CBC and Global, while others have raised the spectre of American domination.

The deal's terms "demonstrate that ESPN will have a significant say in the operation" of the new network, a brief from Major League Baseball says.

So concerned about the issue is MLB that president Paul Beeston will address the commission, as will Blue Jays president Sam Pollock.

Also raising the blood pressure of nationalists is the fact that the two most powerful sports broadcasting entities in the U.S. – ABC/ESPN and Fox – will now be partners in the new network. (Fox owns 20 per cent of Sportsnet while ESPN owns 32 per cent of NetStar.)

Facing off against the dissenters are CTV, TSN and a host of amateur and pro sports groups, including the International Olympic Committee, the Canadian Hockey League, Canadian Football League and Canadian Curling Association. In addition, a variety of independent producers are also backing the deal, as are sports luminaries such as Wayne Gretzky, Ken Read and Jean-Luc Brassard.

The supporters are all echoing CTV's claim that the takeover will result in more air time for Canadian sports. The company says savings realized from the economies of scale will allow it to spend more on producing much-neglected amateur sports.

It also says that since Sportsnet and TSN (or ESPN Canada) will operate as complementary networks instead of competitors, Sportsnet will become a truly regional broadcaster.

Even though most of the arguments have been made in briefs filed with the CRTC, neither side has been shy about taking the gloves off.

To back its claim that reduced competition means lower rights fees, Major League Baseball accuses TSN of taking advantage of such a situation when CTV dropped baseball in 1996 and paying half the previous fee.

In its rebuttal, CTV calls the charges by the Jays and baseball "unfounded and highly exaggerated."

"Certain rights holders and (Friends of Canadian Broadcasting) seem to expect Canadian viewers and broadcasters to subsidize professional sports rights holders," it adds.

Sorting out the rhetoric will be the job of the five CRTC commissioners: vice-chair Andrée Wylie, Barbara Cram, David McKendry, Jean-Marc Demers and Andrée Noel. Their job is to follow the CRTC's mandate, which includes "ensuring that Canadians have access to reasonably priced, high-quality, varied and innovative" broadcasting.

It is a body that has shown two faces, at times turning a blind eye to networks that fail to live up to licence conditions, at others baring its teeth and flexing its muscles.

On the latter point, it upset two cable giants' plans, rejecting Shaw's bid to take over Headline Sports and Rogers' to double its 20 per cent stake in Sportsnet. It also slapped the CBC's wrists for devoting too much air time to pro sports and not enough to the amateurs. It recently came down on Sportsnet for not meeting its regional scheduling requirements.

"They have almost limitless power," says Ian Morrison of the non-profit lobby group and deal opponent Friends of Canadian Broadcasting. "The private broadcasters are very upset over how tough the CRTC has become lately."

On the other hand, the CRTC has a spotty record on enforcement once it has granted licences to broadcasters.

"The only consistent thing about the CRTC is its inconsistency," says one industry observer.

The CRTC has several options: It can approve the deal as is, reject it outright or order CTV to divest itself of either TSN or Sportsnet.

Though the popular belief is that the last scenario is most likely, Morrison raises another possibility.

"The CRTC is unlikely to roll over and give (CTV) what they want," he says. "They're more likely to attach certain conditions, such as allowing CTV to own Sportsnet while turning over the management of the channel to someone else."

If the CRTC creates conditions, it could be a nightmare for CTV. Under its deal with ESPN, any change could require CTV to buy out the U.S. network for about $200 million. It would then likely have to find a buyer wanting to pay more than a fire-sale price.

The CRTC's decision will be based on the arguments put forward by the following main players:

	CTV: The network, which also owns CTV NewsNet and the Comedy Channel, says that in addition to the aforementioned benefits, putting TSN and Sportsnet under one umbrella will result in more sports events being available to viewers. Money saved from duplication will be reinvested in production for the likes of amateur sports and Canadian football. It denies that ESPN's influence will increase.
	Major League Baseball: The deal will result in lower rights fees for pro teams, poorer broadcasts, fewer games available on TV and could lead to higher ticket prices, the league argues. It also questions how much control ESPN will have over the new network. The Toronto Blue Jays say the deal could even force some franchises to leave Canada.
	Other broadcasters: The CBC charges that the deal would remove sports programming from free TV and restrict it to expensive cable stations, reduce amateur sports exposure and give CTV a significant advantage over all competitors. It also estimates that CTV would control 95 per cent of all sports coverage in Canada, "meaning an effective end to competition. In addition, the CBC says the deal will kill affiliations with TSN, such as the arrangement that will see the two team up for the Olympics. Global, which earlier bid for NetStar, also raises the competition issue.

Friends of Canadian Broadcasting: The group charges, among other things, that giving one broadcaster a substantial advantage over the others is contrary to the CRTC's aim of maintaining balance in the industry. It calls the name change to ESPN Canada "a harbinger for a Canadian sports rights branch plant."

Missing from the debate is Maple Leaf Sports and Entertainment, owner of the Leafs and Raptors.

There could be two reasons for that: Because Leafs rights are so highly valued, they don't need to be concerned about the effect on fees, or they're simply waiting to pounce if the CRTC orders CTV to sell off Sportsnet.

The Leafs are just one of the groups rumoured to be interested if Sportsnet is sold off. Others include Global, the Jays and a group headed by Beeston.

© The Toronto Star