Review media mergers, Senate group urges Grant Robertson and Simon Tuck

Jun 22, 2006

Source : Globe & Mail

Report suggests setting market share threshold at about 35%

TORONTO, OTTAWA -- The federal government should automatically review any media merger that gives one company too much market share, possibly setting a threshold in the neighbourhood of 35 per cent, a Senate report says.

Canada's major media companies should also regularly state who their major shareholders are, either during broadcasts or in print, as a public service, said the report released yesterday.

The Senate's standing committee on transport and communications, which spent more than three years probing the state of the industry, concentrated in its report on ownership of the media.

The committee also looked closely at the Canadian Broadcasting Corp., suggesting the public broadcaster should be given enough government funding to operate as a commercial-free network. The CBC gets roughly $1-billion in federal funds, and makes almost $400-million on advertising.

"In general, the Committee has found that Canadians remain well served by their news gathering organizations," the report, issued yesterday, said. "There are, however, areas where the concentration of ownership has reached levels that few other countries would consider acceptable."

The report was met with skepticism by industry members. Gary Slaight, chief executive officer of Toronto-based Standard Radio Inc. said evaluating the footprint of a media company is difficult because there are many ways to determine market share, including revenue and audience size.

"There's a whole bunch of pieces in the pie, so I'm no really sure what they're getting at," he said. "And with audiences being so fragmented now, I think we're headed toward less media consolidation anyway."

Spokesmen for CanWest Global Communications Corp. of Winnipeg and CTV Inc. of Toronto declined comment on the report. However, one industry official echoed Mr. Slaight's concern that market share is a debatable number.

The report points out that Canada has a number of regulations designed to prevent foreign ownership of Canadian media, but few rules governing high levels of concentration of ownership of media properties within the country.

However, the committee also acknowledged an argument raised by some of Canada's biggest media companies in recent years that consolidation of news outlets can make them more financially viable.

"The current situation... is the result of a long and often difficult history of efforts by individuals to build strong and profitable news organizations," the report says.

Sen. David Tkachuk said the committee is concerned about the concentration of media ownership, but that it's not an easy thing to change. "The horse is out of the barn," he said.

The committee began looking at the industry in the wake of several major media deals, including CanWest's acquisition of most of Canada's major daily newspapers. Other major deals have included the creation of Bell Globemedia, which owns the CTV television network and The Globe and Mail.

The report also points out the dominant position held by New Brunswick's Irving family, which owns 15 daily and weekly papers and four radio stations in the province. Meanwhile, Montreal-based Quebecor Inc. holds nearly 50 per cent of the Quebec media market.

Sen. Joan Fraser, the committee's chairwoman, said the committee didn't call for a particular threshold for how much media one company can own in a given market, but that 35 per cent is a number that is "not far off" and seems to work well in other countries.

Though the report is one of the most exhaustive examinations of the Canadian media sector in years, the implications of its findings are unclear. Senate committee reports often get initial attention but do not necessarily lead to substantive policy changes. The government is under no obligation to follow the recommendations, and several such reports have been shelved after they were produced.

Arnold Amber, president of the CBC branch of the Canadian Media Guild, said the report should have been more forceful in setting the threshold to review media deals, rather than suggesting a rough 35-per-cent figure. "It's a little hazy," Mr. Amber said. "What's the tipping point?"

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