Source : National Post

New CRTC Policy; Broadcasters can only own two media in market

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

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'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% of the total audience share as a result of a transaction.

The commission pegs CTVglobemedia's audience share of the English-language market at 37.4% and Canwest's a 26.3%. The French-language market is dominated by Quebecor Inc., with a 32% share, followed by Astral with 23.2%, according to the CRTC.

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.

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 Can-West'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.

CRTC chairman Konrad von Finckenstein said the new rules 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.

Labour and artistic groups complained that the new policy does little to rein in large media companies, while Glenn O'Farrell, president of the Canadian Association of Broadcasters, said the industry group was disappointed at "arbitrary" audience share figures, which will put some transactions under greater scrutiny.

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.

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.

© National Post

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