GATINEAU – More concerns about Rogers Communications’s proposed acquisition of Shaw Communications were shared with the CRTC during day three of the hearing, Wednesday.
While the day’s presentations showed the deal definitely has its supporters, it also highlighted the many concerns there are about the consequences of the deal in its current form on the Canadian broadcasting system generally, and on independent broadcasters and consumers specifically.
TLN Media Group Inc. and Ethnic Channels Group Limited, who presented together to highlight issues specific to Canadian ethnic independents, told the Commission that despite their opposition to the deal in their written submission, they have since come around.
Aldo Di Felice (above, left), president of TLN Media Group, said they reflected further and have now accepted “the broadcasting landscape is changing and that this transaction is a necessary response to those changes,” and as such support the application.
They do still, however, have concerns about it.
While they commended the efforts Rogers is making with regards to independent programming services, “our understanding following questions by the Commission is that Rogers does not propose to extend any protections of continued carriage, revenue stability or consumer packaging availability to Canadian independent ethnic services,” Di Felice said.
Slava Levin (above, right), CEO of Ethnic Channels Group, noted Rogers has maintained its position that the CRTC’s existing rules and regulations are enough to “alleviate any concerns associated with combining Rogers’ and Shaw’s BDU (broadcasting distribution undertaking) operations.”
“Unfortunately, the practical reality is that these rules offer very little protection for independent ethnic discretionary services,” said Levin.
“None of these rules mandate continued carriage and, as we highlighted in our intervention, the standstill cannot be used to create an effective access right,” he said. “They also provide no packaging certainty, and the provisions in the code designed to ensure vertically-integrated players don’t make packaging decisions that favour their own services over independently-owned channels don’t really come into play for ethnic services.”
Levin told the Commission that to be successful, Canadian ethnic discretionary services need to be carried on Bell, Shaw and Rogers.
“Assuming this merger is approved, it would be impossible to develop a viable business plan to operate a domestic Canadian ethnic television service without carriage on the combined Rogers-Shaw,” he said.
“This is what keeps us up at night. Without the necessary safeguards in place, there is no assurance that our services – or those of other ethnic television channel operators – will continue to be available on terms which allow us to survive.”
TLN and ECG propose the Commission require subscriber revenue for ethnic programing services not decrease for five years, said Kevin Goldstein (above, centre), TLN and ECG’s regulatory counsel. They are also asking for a ban on negatively repackaging ethnic services for five years.
During questioning, Commissioner Claire Anderson (right) asked TLN and ECG about a suggestion they had made “that after the transaction the only recourse for independent Canadian ethnic services against unfavourable treatment would be to file an undue preference complaint and face the overwhelming resources of Rogers and Shaw in trying to advance such a complaint.”
In response, Goldstein indicated the undue preference complaint process “is a fairly involved process that takes a significant amount of time. It also has an extremely high bar to meet, effectively that you have to be able to demonstrate material adverse harm.”
The problem is some of these issues are not that harmful on their own, “but when you combine them, it becomes death by a thousand cuts or probably more like 50 cuts in this instance.”
He said very clear guidelines are needed to “remove a degree of subjectivity to the analysis.”
Di Felice, added that invoking such “an adversarial process to resolve disputes is, for the reasons that Kevin just pointed out, a very dangerous thing for a small independent broadcaster to do… even if the uncertainty of that process results in a favourable decision for the broadcaster, ultimately there is the possibility of ruining the relationship with the carrier.”
“In our case for example, despite the fact that we may have unresolved disagreements we’ve never invoked the… formal process with Rogers… and certainly not with Shaw as well,” he said.
Di Felice, Levin and Goldstein all emphasized to the Commission they are only looking to be treated the same as they are today for a finite period. This way they will know they will not be worse off because of the transaction.
“Rogers will be better off and stronger as a result of this merger, and we support that. We don’t want that to subsequently trigger our being worse off,” said Di Felice.
Even the status quo is receiving opposition from Rogers though, De Felice indicated.
“I think Rogers pointed out that they do, and we compliment them on carrying many dozens of Canadian ethnic services, and if that’s the case we just wonder why we cannot hold them to continue to do that and ensure that Canadian ethnic communities continue to be, in a post-merger world, served at least as adequately as they are now,” he told the Commission.
“Maintaining the status quo shouldn’t be a challenge.”
Cogeco also took issue with processes already in place at the Commission and on Wednesday, reiterated and expanded on several concerns brought up during day two of the hearing.
The company, for example, urged the Commission to address the dispute resolution process currently in place. A central issue Cogeco highlighted is that the process can be quite lengthy (this sentiment was shared by interveners yesterday).
Independent distributors in such cases “must assume the risk of retroactive rates and suffer financial losses due to their inability to recoup costs from subscribers in the event they are higher than anticipated,” said Paul Beaudry, vice-president of regulatory affairs at Cogeco.
“If the process drags on, we build a snowball effect of a retro payment that we’ll have to pay eventually, which to a small player like us can end up being significant, so as we see that snowball grow in front our eyes there’s a point where we feel like we’re in the corner and we just have to accept, whereas a larger player like Rogers or an even bigger player like Rogers/Shaw, for them it’s peanuts so they can drag it on and get the best possible deal for themselves,” said Frédéric Perron, president of Cogeco Connexion.
Other issues Cogeco addressed include Rogers’s plans for satellite.
Cogeco told the Commission it is concerned Rogers will not continue to operate Shaw’s satellite relay distribution services.
“Cogeco, like many other independent BDUs in Canada, relies on Shaw’s satellite relay distribution services in both Quebec and Ontario,” Beaudry said.
When questioned about satellite by the Commissioners, Beaudry said it was concerning Rogers did not “seem to be overly committed to it.” He indicated Cogeco agrees with the Canadian Communication Systems Alliance, which indicated Rogers should be compelled to continue to provide the service as a condition of licence.
Public Interest Advocacy Centre and the National Pensioners Federation (PIAC-NPF), which advocate for consumers, also appeared at the hearing Wednesday and took issue with the benefits Rogers says the deal provides.
“The main thing that Rogers has not grasped is that, for the size and importance of the transaction, they have not offered enough to the broadcasting system,” said John Lawford, executive director and general counsel at PIAC.
Lawford referred to Rogers’s posture as “arrogant” and called on the CRTC to deny the transaction unless considerable changes are made “to make it one that improves the broadcasting system and consumers’ material experience of broadcasting including prices, billing, content, usability, etc.”
Yuka Sai, a PIAC staff lawyer, expanded on a point made by Telus yesterday, which indicated that what Rogers was offering to do if the transaction is approved is not really anything they would not have done anyways.
For example, because Rogers already offers its Connecting For Success program in the east, it would be expected “as a cost of doing business, that they would offer the same program in the west,” Sai said. To be an incremental benefit, “the program would have to be improved – for example, Connected for Success Plus where the “plus” includes seniors who are not recipients of social payments but are on fixed incomes.” Sai said even if it was considered incremental, the program has limitations including that it is voluntary, which means “there is no guarantee it will be continued.”
PIAC-NPF also highlighted issues with the tangible benefits Rogers outlined in its application.
As brought up on the first day of the hearing, the value of the transaction does not include Shaw’s terrestrial video on demand and pay-per-view undertakings, the licences for which Rogers is not acquiring.
PIAC-NPF argue it should.
“According to PIAC-NPF’s revised valuation, the appropriate tangible benefits payment should be at least $23,387,653,” said Lawford.
He argued it is appropriate to account for the licences that are being surrendered because of the size of the transaction.
“Unlike past transactions, which may have overlooked the value of surrendered licences, this present Rogers-Shaw transaction is massive in scale and fundamentally changes the competitive landscape,” he told the Commission.
When asked further questions about the tangible benefits package by Commissioner Ellen Desmond, Lawford explained that, in the event the amount of the tangible benefits remains the same, Rogers’s proposal for that funding is fine. “If the number is $5.7 million, we believe that the allocation that Rogers has chosen is appropriate,” he said.
Should that amount be increased, however, PIAC-NPF have recommendations for how that additional funding be allocated, including that some of the funding go to the struggling Broadcasting Participation Fund.
Screenshots from CPAC’s live feed.
