GATINEAU – Numerous intervenors in their final submissions to the CRTC continue to argue the merger of Rogers Communications and Shaw Communications is not in the public interest and should be denied, despite the fact Rogers offered some concessions in its reply on day five of the recent hearing into the matter as well as in other documents since submitted by the company to the Commission.
(You can read Cartt.ca’s coverage of the CRTC hearing here, here, here, here and here.)
The final submissions, which were due Monday, point to several problems the intervenors argue remain in Rogers’s application to acquire Shaw’s broadcast assets.
Telus, for example, took issue with the benefits Rogers indicated the transaction would have, arguing the company “failed to offer any meaningful benefits for the broadcasting system,” and furthermore that the relevant intangible benefits included in the application “largely consist of investments that are already being made, or that will be made irrespective of the merger.”
The Public Interest Advocacy Centre and the National Pensioners Federation (PIAC-NPF) make a similar argument in their final submission.
They note as an example the expansion of Rogers’s Connected for Success program to Shaw customers. It is not an incremental benefit, they say, “It is simply Rogers’ business model, already in place in its present footprint, to the new ‘territory’ of Shaw’s footprint.”
PIAC-NPF say that while they brought this up at the CRTC hearing and indicated the program “needs to be improved in some material manner… to incrementally benefit the entire broadcasting system,” they did not see any changes in Rogers’s reply at the hearing, its undertakings or its responses to requests for information.
“Rogers could have and should have done far more for the broadcasting system in its Application,” PIAC-NPF argue.
Issues with Rogers’s proposed tangible benefits were also brought up in multiple final submissions, with Telus calling them “insubstantial” in relation to the value of the transaction even after Rogers submitted a revised value of the transaction and tangible benefits proposal.
Rogers provided a new calculation of the value of the transaction in an undertaking submitted to the Commission. The new value incorporates Shaw’s terrestrial video on demand and terrestrial pay-per-view services, which were previously left out because Rogers is not acquiring those services.
The revised tangible benefits package Rogers included in its undertaking amounts to $26.62 million.
Of that funding, the company proposed approximately $8.5 million be allocated to the Independent Local News Fund (ILNF) in response to concerns from interveners about Rogers’s decision to reallocate funding Shaw provides Corus for local news to Rogers’s own CityTV stations and the effect this will have on the ILNF if Corus seeks funding from it to compensate for the funding it no longer receives from Shaw.
In response, Channel Zero said “Rogers’ newly proposed tangible benefits contribution to the ILNF, while greatly appreciated by LITS (local independent television stations), cannot be viewed as a solution to this. The numbers simply don’t add up.”
Channel Zero points out figures provided during the proceeding suggest Corus receives roughly $13 million from Shaw for news, while current ILNF funding contributions are slightly over $20 million.
The $8.5 million, one-time contribution from Rogers “would not even make up for a single year of Corus-driven reductions in current LITS ILNF payments,” Channel Zero’s submission reads. “In fact, it would make up for less than eight months – nowhere near enough time to review, revise and implement a new ILNF framework, even if that was the right approach to take. Which it isn’t.”
Corus agrees the benefits of Rogers’s proposal are limited. The company indicated in its final submission that while the $8.5 million for the ILNF would help in the short term, there would still likely be reductions in funding to ILNF recipients.
In its final submission, Corus also addressed a comment made by Rogers at the hearing indicating the company does not believe losing the funds from Shaw would be material to Corus and its ability to maintain news coverage on its Global TV stations.
“We respectfully disagree,” Corus’s final submission says.
“The roughly $13 million obtained through the Shaw arrangement represents nearly ten percent of Global News’s total annual operating budget. Corus considers a ten percent budget reduction to be meaningful for a business segment with already negative operating margins. It is very likely that a budget reduction of that magnitude will lead to reductions in news coverage.”
As indicated in several final submissions, there also continues to be concern about the impact of the transaction on other broadcasters and about the overall market power the approval of the transaction will give Rogers.
Bell’s submission argues the impact of the market power a combined Rogers-Shaw would have can already be seen.
“At the hearing, we saw a number of independent programming services not providing further comments, changing their position and/or dropping out of the process entirely,” Bell’s submission reads.
“It appears they made carriage deals with Rogers. Facing the uncertainty of a BDU (broadcasting distribution undertaking) with that kind of potential market power, these services have essentially grabbed the deal they could get – especially as this hearing represented the last vestige of any negotiating power they would have against Rogers.”
Rogers did attempt to address concerns of independent broadcasters during the hearing. The company initially committed to carrying a minimum of 40 independent services on each of its BDUs for three years after the transaction closes. On day five of the hearing, the company indicated it would be willing to commit to a minimum of 45 as a compromise after some interveners argued 40 was insufficient.
Intervenors including Telus, Bell and the Independent Broadcast Group (IBG) argue in their final submission 45 is still not enough.
As IBG points out, Rogers’s proposal to carry a minimum of 45 independent services has the same flaw as its proposal to carry 40 – services are still at risk of being dropped.
“Rogers’ own submissions are that it carries 46 independent services and Shaw Direct carries 47,” IBG’s final submission reads.
This means “Rogers wants to continue to reserve the right to drop, or at least threaten to drop, independent services. And not just one or two,” the submission continues. “Rogers’ response to undertakings confirms that Rogers and Shaw do not carry the same independents. For example, both Shaw and Shaw Direct carry IBG member Sportsman Channel, but Rogers does not. Meanwhile Rogers carries independent channels that Shaw does not.”
Bell argued if the transaction is approved, program services will need Rogers to survive, which means it “will become the sole determinant as to what services are carried, and therefore, what Canadians get to watch.”
“Rogers simply ignores this fact and meagrely commits to carry 45 independent services and again tries to hide the issue of its market power by claiming this remedy is about preserving its commitments to existing independents given that Corus will no longer be exempted from the linkage requirements,” Bells submission reads.
“However, this solution is wholly inadequate. It ignores non-independents including Bell Media; it ignores third language services; and, is cleverly designed to preserve the market power threat over independents as well, as Rogers will not commit to carrying all independent programming services,” the submission says.
“Unless Rogers commits to continued carriage of all programming services carried by Rogers and Shaw today, its market share will enable it to use the threat of non-carriage to extract unreasonable and damaging concessions from all Canadian programming services.”
In its final submission, Bell also pointed to a response Rogers gave the CRTC in its reply to a question about whether it threatens to drop services as a negotiating tactic.
Rogers indicated it does not. Pam Dinsmore, Rogers’s vice-president of regulatory – cable, said to the Commission “I will honestly say that using that threat to drop is not our practice.” She later added, “the only instances where a channel has not made it is where the penetration has fallen to an extremely low threshold, and that would be the only occasion where we have made that determination.”
In response, Bell says its “own experiences with Rogers proves this is not the case.” The company included information its submission to illustrate this, however, it was filed in confidence and as such is not publicly available.
IBG also indicated Rogers’s reply does not line up with its own experiences.
The organization’s final submission points to an abridged version of a confidential document to illustrate this.
“This documentation shows that this threat has certainly been used more than once, and in at least in one instance, followed through on,” the submission says. IBG referred to BBC Kids, which it says was forced to close after Rogers decided to stop carrying it.
IBG indicates the tactic “is used judiciously, usually verbally, in IBG members’ experience, with services that have little ‘political weight’, perhaps even after Rogers has repackaged them causing losses in penetration: a perfect way to start negotiations on the ‘right foot’, leaving independents off balance, and ripe for concessions. And also importantly, as IBG has pointed out, as an attempt to circumvent rights to dispute resolution.”
The final submissions bring up numerous other concerns about the transaction, including concern about the length of time Rogers is willing to agree to things such as staffing commitments, and concern about the company’s unwillingness to accept proposed safeguards related to Shaw’s satellite relay distribution undertakings.
All of the final submissions made by intervenors can be found here.
