Commission asks Rogers to further consider proposals from interveners
By Amanda OYE
GATINEAU – Rogers Communications and Shaw Communications extolled the virtue of their proposed merger on the first day of the week-long CRTC hearing into the broadcasting side of the deal while Commission panel members grilled them on safeguards and the public interest.
“Joining forces with Rogers not only makes sense for Shaw, it makes sense for Canada,” Brad Shaw, executive chair and CEO of Shaw Communications told the Commission. “Combining the complementary assets of our two companies allows Rogers and Shaw to invest so much more than the sum of what our two companies can do apart.”
“This transaction puts in motion a business plan that will bring connectivity and dynamic innovation to a growing number of Canadians,” explained Ted Woodhead, senior vice-president of regulatory at Rogers.
Woodhead said the transaction will increase competition in the west, bridge the digital divide and present affordable options to lower-income Canadians living in the west. It will also “provide a platform for Canadian consumers and businesses to participate in the digital future and offer new opportunities for Indigenous communities and creators to connect with each other and the world,” Woodhead said.
CRTC chair Ian Scott (right) asked how the combination of Shaw and Rogers will create more competition.
Woodhead said greater competition will happen “at the fringes of Shaw’s network.” He indicated that increased scale facilitated by the transaction will mean the company is “able to invest in expanding services beyond the… fringe of the network to areas that are not addressed by anyone in some circumstances or only by one BDU (broadcasting distribution undertaking).”
Building on this discussion, the CRTC panel members questioned Rogers on concerns expressed about and by independent programmers.
During questioning, Rogers was asked extensively about additional safeguards that might address concerns expressed in written interventions and about additional safeguards directly brought up in written interventions. The responses given largely echoed the sentiment expressed in Rogers’s written reply: “There is no need for the CRTC to impose additional obligations/safeguards on Rogers/Shaw as a result of this transaction.”
Scott brought up a specific proposal from the Canadian Communication Systems Alliance (CCSA), which asked that as a condition of licence, the satellite and terrestrial relay distribution undertakings (SRDUs and TRDUs) included in the transaction be expected to comply with the CRTC’s wholesale code. Considering this, Scott asked Rogers if there were any new provisions that might be necessary, to which Woodhead responded there were “no further requirements,” and later specified Rogers opposes CCSA’s proposal.
Later Commissioner Monique Lafontaine asked what the implications would be for Rogers if the CRTC did impose the wholesale code as a condition of licence.
“This isn’t just Rogers stepping into Shaw’s shoes, this is Rogers stepping into Shaw’s shoes with regard to SRDU, becoming the largest terrestrial BDU in the country, having a national DTH (direct-to-home) service, so there’s a whole package here,” she said.
This package “would potentially allow Rogers to exert quite a lot of market power, so the question is would it be problematic? We’re hearing from you from your submission that everything will be fine, you’re going to treat everybody nicely, we want to continue to serve the rural and remote communities, so if it’s not a problem for the business to comply with the rules or to comply with fair dealings with the industry participants, why then would it be problematic to have terms such as the wholesale code imposed on these types of services?”
Woodhead responded by saying “as with every regulation there are costs associated with it, potentially,” but indicated they would provide the CRTC with a fuller answer by Nov. 29.
Commissioner Claire Anderson later brought up concerns expressed in written interventions about unequal bargaining power between independents and Rogers post-transaction.
The CRTC “has a comprehensive regime in place to deal with situations where negotiations break down and an agreement can’t be reached so in the event that a programmer felt that they were hard done by or something like that and broke off negotiations, they have access to a very long list of things that can happen,” Woodhead said.
“I’m freely willing to admit we’re becoming bigger in aggregate but there are ample protections in place to protect against that concern.”
There are a few things Rogers said it is planning on doing to help independents.
This includes partnering with Canadian independent programmers as everyone transitions to digital. “We know there are costs associated with this transition and that these programmers have concerns about the impact it will have on their linear revenue,” said Pam Dinsmore, Rogers’s vice-president of regulatory – cable. “This would be the case regardless of this merger.”
Dinsmore said Rogers is committing to distributing “a minimum of 40 independent discretionary programming services on each of our BDUs for a three-year period.”
Rogers will also provide product and development assistance, including helping independent producers “create new apps or other outlets so that they can offer their content on Rogers’ and on third-party digital platforms,” said Dinsmore.
Rogers will further help independent producers access set-top box data starting April 1, 2021.
Citytv was also discussed during the hearing, with a particular focus on news. Susan Wheeler, vice-president, B2B distribution and regulatory, Rogers Sports and Media told the Commission the “transaction represents a transformational opportunity for CityNews to grow its audience in Western markets where it is not as popular as other local news outlets.” She said Rogers will increase investments in its Vancouver, Edmonton, Calgary and Winnipeg newsrooms.
Written interventions, however, expressed concern that funding once allocated by Shaw to Corus’s Global television stations would be redirected to Rogers’s Citytv.
Commissioner Nirmala Naidoo asked Rogers how Canadians will benefit from Rogers’s local expression contributions being directed to Citytv. Wheeler said Citytv is less well known in the west than in Toronto – the increase in funding will allow the company to build up their services in the west and work on brand awareness.
“We’ve identified a number of initiatives that we think will not only provide better coverage to our local audiences, but it will also increase our profile and our engagement on multiple platforms,” she said.
The initiatives include launching 12 local news specials in prime time, creating an Indigenous news team and incorporating a western journalist into its Parliament Hill team.
When asked to comment on interventions suggesting Rogers be required to provide part of its local expression contributions to Global stations, Wheeler said it would not make sense for them to do so since Global is their main competitor and is in first place in many news markets.
“In terms of the impact of this additional money on Global’s ability to… continue its news coverage, I don’t think it will be that material… although it will have a material impact on Citytv’s ability to enhance its coverage,” Wheeler said. She indicated this is a good thing for the system “because it will provide better editorial competitiveness in the market.”
Towards the end of the day, discussion turned to the value of the transaction.
Commissioner Ellen Desmond said interveners have suggested the value of the transaction should include Shaw’s terrestrial video on demand and terrestrial pay-per-view services.
“We don’t agree with that, and we don’t believe it is consistent with Commission precedent. The Commission didn’t do it in the BCE/MTS proceeding, it didn’t do it when Rogers bought Aurora Cable and it did not do it when Rogers bought Mountain Cable,” Woodhead said.
Desmond asked if the CRTC did include those services in the calculation of the value of the transaction, would Rogers’s desire to move forward with the transaction change.
“We haven’t contemplated it,” Woodhead said. “I think this is more properly something for a policy proceeding if the Commission is going to deviate from past practice and change the rules of the game.”
Desmond requested further information on the revenue for the services in question, as well as a new value of the transaction that takes the revenue from the two services into account.
“We will do that, again under objection,” Woodhead said.
CRTC legal counsel Christina Maheux then asked about the possibility of former Rogers CEO Joe Natale assuming a contractor position in relation to the transaction.
Edward Rogers indicated “the termination arrangements with Mr. Natale are still being worked through.”
Maheux told Rogers the amount of the consultation fee if any, will need to be included in the calculation of the value of the transaction in accordance with the Commission’s approach.
Stemming from this discussion was talk about the tangible benefits associated with the transaction.
Wheeler indicated at the beginning of the day Rogers committed to supporting film festivals in B.C. and the prairie provinces.
Desmond asked how any additional tangible benefits might be allocated if the value of the company is determined to be higher than reported therefore increasing the amount of tangible benefits required.
Woodhead said Rogers would increase the amounts allotted to the festivals they have already indicated would receive funding but added they had not contemplated the need to allocate additional funds.
The day wrapped up with a quick discussion about CPAC, which will continue Tuesday when CPAC is due to present at 9 a.m. MT/11 a.m. ET.
Screenshots from CPAC’s online feed.
