Bell says there are no safeguards that will fix the problems with the proposal
By Amanda OYE
GATINEAU – Intervenors delved deeper into concerns about the impact of Rogers Communications’s proposed acquisition of Shaw Communications on local news and competition Thursday, during day four of the CRTC hearing on the matter.
At the hearing Unifor, a union that represents 5,000 workers in the broadcasting and film industries, presented the Commission with a perspective on what the approval of the transaction could mean for employment and labour in local journalism.
The “broadcast sector in Canada is facing an employment crisis,” said Katha Fortier, Unifor assistant to the national president. She told the Commission that from 2014-2020, the number of members they have working in broadcasting decreased 23%.
“The worrying trend of chronic job loss has been worsening year after year, and we are concerned that the proposed Rogers/Shaw takeover will only make things worse,” she said.
Like other intervenors, Unifor indicated the redirection of the $13 million Corus receives from Shaw to Rogers’s Citytv stations is cause for concern.
Corus’s Global stations “will now be looking to the Independent Local News Fund (ILNF) for support, at the expense of many other small communities,” said Unifor media sector director, Randy Kitt.
Furthermore, the ILNF cannot make up for that funding loss alone, he said. “All the while Rogers makes no firm commitments to maintain or increase original local news programming or staffing levels. $13 million at an average of $80,000 per job would equal 162 jobs. Simple math, but frightening consequences, if that funding disappears.”
When questioned further about the issue by Commissioner Nirmala Naidoo, Kitt specified they are not suggesting the 162 jobs definitely will be cut, but demonstrating it is possible. “Without firm commitments, and conditions of licence, if it’s left to the corporation… we’re worried that those jobs could be lost,” he said.
“We’re saying that the Commission needs to put conditions on these employers for commitments because all we’re hearing now is aspirations.”
Unifor wants the CRTC “to ensure that at the very least, the combined new entity should be required to maintain the same employment levels in the broadcast segment as the sum of the two pre-takeover companies,” Fortier said.
“In other words, the proposed takeover should not lead to a net decrease in employment within the broadcast segment. In fact, we believe that, given the amount of money Rogers will make if the deal goes through, we should expect to see a significant increase in employment in its broadcast segment.”
Unifor is far from the only one with concerns about the ILNF. The Commission heard earlier in the week about how CHCH benefits from the fund when the Independent Broadcasters Group presented. Cal Millar, president and co-founder of Channel Zero the licensee of CHCH elaborated on this Thursday.
He told the Commission if it allows Rogers to redirect the funding from Global to Citytv and also classifies “Corus as an independent for the purposes of the ILNF, true independent stations would lose 60% to 80% of their ILNF funding.”
“Needless to say, that would be catastrophic,” he said.
When asked by Commissioner Ellen Desmond to speak further about CHCH’s reliance on the ILNF, Millar spoke of the quality and quantity of news they are able to put out.
“In the case of CHCH News, we’re very proud of the organization, acknowledging that we receive substantial support from ILNF, but we’re able to use that money to create not only the 25 hours [of news per week], which is a quantitative measure, but I think more importantly is the qualitative measure of that news where in the Toronto-Hamilton extended market, which is the market we operate in, CH’s 6 o’clock news regularly finishes second in the marketplace,” Millar told the Commission.
“The ILNF gives us that stable base on which to plan, to commit to resources beyond what an independent broadcaster would otherwise be able to do.”
Millar also noted this is not the same for broadcasters in other markets. “In other markets it is even more crucial to be able to just contribute, to be able to manage to create news for communities that would otherwise not be able to receive news,” he said. In the case of CHCH, without the ILNF funding they would continue to make news but would make less of it and would not be able to do it as well as they do now.
Both Unifor and Channel Zero made requests of the CRTC in the event the deal is approved. This includes, for example, that Corus not be allowed to access the ILNF funds, at least initially.
“There aren’t enough band aids in the box to stop the bleeding that’s going to result” – Robert Malcolmson, executive vice-president and chief legal and regulatory officer, Bell
Another intervener Thursday, however, told the Commission there were no safeguards or conditions the Commission could put on the deal that would mitigate the consequences of the market power the deal would give Rogers.
“The market power that Rogers seeks to acquire will have a long-lasting negative impact that will echo throughout this interdependent ecosystem,” said Robert Malcolmson, executive vice-president and chief legal and regulatory officer at BCE and Bell Canada.
Malcolmson said right now, with three large distributors, there is a relatively balanced English-language BDU market. “Bell and Shaw each have a 27% market share and Rogers has 20% – this market equilibrium ensures that access to BDU platforms is competitive and that broadcasters seeking to reach Canadians are not unduly dependent on one dominant BDU,” he said.
“Approval of the Rogers application will destroy this balance. Having secured a combined 47% market share, the Commission will be handing control over the market to one player – Rogers.”
Malcolmson said Bell strongly disagrees with intervenors who suggest safeguards and enhanced benefits can compensate for the new market power Rogers would gain from the approval of the transaction.
“Even if the Commission is prepared to change existing safeguards or reintroduce packaging and carriage regulations, it is highly unlikely that these changes, however well intended, could ever fully address the market power that Rogers will be able to leverage,” he said.
Malcolmson told the Commission Bell did think about behavioural remedies that would, in addition to the ones that already exist, allow the transaction to go ahead while also replicating the balance in the market he previously mentioned, but found none were realistic.
“There aren’t enough band aids in the box to stop the bleeding that’s going to result, and the bleeding is not just going to just flow to the BCE’s of the world, the bleeding is going to flow throughout the system to the creation and presentation of Canadian programming and the funding of Canadian programming,” Malcolmson said.
Bell used the market in Quebec to illustrate what they believe could happen if the transaction is approved.
“If you’re Videotron as a BDU, adding a TV and Internet subscriber brings in well over $100 of revenue a month, whereas by comparison, selling some TV content via your distribution channels might bring in pennies or dollars depending on what that content is,” said Sarah Farrugia, vice-president of content and business intelligence at Bell Canada.
“So, as your market share gets higher you reach a tipping point where keeping the content for yourself and gaining the subscriber benefits that that content exclusivity provides to you outweighs the benefit of reselling your content to others in the market.”
Farrugia used Videotron’s Club Illico and Vrai as examples.
She said both products are exclusive to the company’s BDU set top boxes and noted that while there are direct to consumer products now, those versions are not built in a way that is compelling to consumers.
“And the way they’ve done this is by pricing these services significantly higher than they do to their own Helix customers, they offer fewer streams, and they also limit the number of end points over which these services are offered in a direct to consumer manner.”
Farrugia told the Commission that when Quebecor first launched Vrai it was only available on their BDU platform, and said it was only after BCE launched a complaint that they put out the direct to consumer product.
Another example Farrugia gave of the consequences of Quebecor’s market power in Quebec is Quebecor pulling TVA Sports from Bell TV right before the NHL playoffs. “I don’t believe they would have done this had they not had the market share that they do in the Quebec market,” she said.
Furthermore, “for years, Quebecor managed to withhold TVA VOD content from Bell simply by setting a price that was untenable in the marketplace making it really unviable for us to purchase that content,” Farrugia told the CRTC. They eventually agreed to the price “however, the result of that is to this day we’re paying well above market prices for that content.”
On the programming side, Ben Keys, director of content sales and distribution at Bell Media talked about Super Écran, a Bell SVOD and linear channel.
“About three years ago [Videotron] repackaged Super Écran reducing our subscribers and penetration, and about a year after that they also refused to pay our commercial rates for multiplatform rights, which resulted in them no longer offering Super Écran VOD on their set top boxes,” he said.
“The result of those two actions over the course of just under three years is that our Super Écran subscriber count on Videotron has declined by over 60% and our penetration for that service is now less than half of what it was before those actions were taken.” Keys said “it is safe to say” those actions benefited Club Illico.
Noting Bell has recommended the proposed transaction be denied, Commissioner Claire Anderson asked for the company’s thoughts on the fact that independents have told the Commission at the hearing it is not in their interest for the deal to not go through.
“I don’t envy the position the independents find themselves in,” Malcolmson responded.
“I think the independents are, I don’t know if terrified is the right word, but they’re gravely concerned about their future and I’m not sure they’re sharing with you their inner fears about what’s going to happen.”
The hearing continues tomorrow with Rogers and CPAC’s replies at 9 a.m. MT/11 a.m. ET.
Screenshot taken from CPAC’s online feed of the hearing.
