HOURS BEFORE THE CMPA’s Prime Time in Ottawa convention assembled Canada's English and French producers, broadcasters, funders, regulators and digital platform experts, Bell Media made public its second application to the CRTC buy Astral Media, considered the last “independent” big Canadian broadcaster – and one with a long history of supporting Canadian film.
As it did when it reviewed and rejected Bell Media's first bid to purchase the Montreal-based TV, radio and outdoor ad company in 2012, the regulator will once again assess “the concentration of ownership and potential market dominance” that the larger company would have in both the English- and French-language television markets.
The application says BCE would divest itself of TV services Teletoon/Télétoon, Teletoon Retro/Télétoon Rétro, Disney Junior, MusiquePlus, MusiMax, Historia, Cartoon Network, Disney XD and Family Channel, including the related Disney Junior multiplex. After divestitures, Astral reckons the combined BCE/Astral viewing share would be 23% for the French-language market and 35.7% for the English-language market. The Competition Bureau has already approved the deal.
The CRTC has specified it will look at the following areas for television: “Category A discretionary services share; negotiating power with other distributors; presence in the most attractive genres (movies, sports and premium content); ability to negotiate program rights windows with programming suppliers and advertisers; and the potential negative impact that the proposed transaction could have on independent entities.”
With many independent TV, film and digital media content suppliers walking the corridors at Prime Time, Cartt.ca decided to ask some delegates if they're concerned about such concentration and market dominance in Canada's media industry.
Arnie Gelbart of Galafilm is a veteran Montreal producer. Currently busy with drama, he also has a long record in documentaries and youth programming and pointed out that Corus Entertainment would pick up all of Astral's children's channels except Family Channel and the Disney properties. Since Corus already owns Nelvana, that's a source of concern.
“It will be like a mono culture,” he said. “It's bad in nature and I don't think it's great in television, either.” If one ownership group disappears, producers will have fewer doors to knock on, Gelbart said, adding audiences may have to look at “safe content,” programming that doesn't take any risks. “Why allow concentration in Canada? That's not where you find original content. In the U.S., the market is much more diverse.”
Michael Hennessy, chief advocate for independent producers as president of the Canadian Media Production Association, has a slightly different take on what a Bell-Astral deal would mean. “There's a continuing nervousness and the nervousness goes to one simple thing: it's not necessarily a concern about vertical integration, it's simply a concern about consolidation. Because when you have consolidation, you have less buyers. There's always the fear that when you have less buyers, you're not going to maximize the value for your production.
“That in turn creates problems of being able to capitalize your business. That's a big issue. The producer's always interested in, 'How do you put together the financing to actually make a creative idea something that shows up on the screen?'”
Broadcasters at Prime Time made the point that they're often looking for producers to bring more money to the table when they pitch projects. But first, Hennessy says, both sides need a clear understanding of today's available revenue sources. “One of the things I tried to signal at the convention is that people are saying, 'Well, you're starting to build up international revenues because your shows are successful, and (others) should be able to share in that.' But you can't talk about that kind of sharing without (defining) the revenue streams.
“I would submit there's now a revenue stream on VOD; there are revenue streams on the dot-ca streaming services (like ctv.ca). There are probably… opportunities for the verticals. You know you have a lifestyle show about renovation and you do a deal with Canadian Tire. So on either side there are revenue opportunities,” Hennessy continued.
“Sometimes, partnering is the best way to really maximize that (opportunity) as opposed to hoping one party will maximize it. (In a consolidation) somebody says, 'One of our pots (of money) is shrinking,' without saying what's happening to all the other pots. And they say, 'To make up for the shrinkage in pot A we need to take (back) more of what we've been giving to you – to have more from a pot that's productive for you.'
“And again, when you live in a consolidated environment, where there are limited numbers of buyers (and) you're a seller – then you're dealing with people who have market power. That's the issue.”
But Hennessy also observes that without consolidation, “we might not have some of the successes we have in the market today, particularly in areas like drama, where to really drive a good big budget production, you really start at a minimum of $2 million an episode and go up. You need scale to be able to do that. It's a balance and… there are benefits to weigh.”
“You’ve got to ensure that there's competition in buyers, or else… when your budgets get squeezed, your creative hurts and when your creative hurts, your audience is the victim.”
Norm Bolen, past president of the CMPA and head pitchman for Starlight, The Canadian Movie Channel application now before the CRTC, says, “Vertical integration generally has reduced the number of doors available for producers and that's a fact. That causes some significant issues (such as) a less competitive marketplace, even though the broadcasters say, 'We're highly competitive.' There's less competition with so few big players. We've lost a lot of them over the years with all the players that have left the market.”
With more competition, he says broadcasters “had to be more concerned about whether the competition might get something before them. They had to be more attentive to what producers were offering… The other thing with vertical integration,” Bolen said, “is it just gave the broadcasters more leverage. They started… really pushing independent producers into a corner and dictated deals that were not fair. That's why the CMPA negotiated a Terms of Trade deal and I think that's re-balanced things to some extent.
“I also think the vertical integration hearings,” and the subsequent policy announced by the CRTC in 2010 to reinstate Canadian spending requirements for programs of national interest on the conventional broadcasters, “has had a really positive influence in the marketplace. That was one of the things that sparked a renaissance in Canadian drama production.”
Bolen agrees with Hennessy that consolidation brings benefits, but in the long term he wants “to see some small- and medium-sized players getting stronger so that we have a better mix and more diversity in the system. We're starting to see that a bit with companies like Blue Ant (owned by former Alliance Atlantis CEO Michael MacMillan) for instance.”
What do you think? Has vertical integration been a boon or bust? Let us know in the comments box below or in an e-mail to editorial@cartt.ca. Thanks!
