Tuesday, May 17, 2022

CRTC agrees to let Rogers buy Shaw’s broadcasting services

The Canadian Radio-Television and Telecommunications Commission (CRTC) has agreed to let Rogers buy Shaw‘s broadcasting services, with specified conditions and modifications.

As a part of the transaction, Rogers will acquire 16 cable services based in western Canada, a national satellite television service and other broadcast television services.

The approval only applies to the broadcasting portion of the C$26 billion dollar merger between the two companies. Rogers’ acquisition of Shaw’s home phone, wireless and internet services is not part of this approval and is still being reviewed by the Competition Bureau and Innovation, Science and Economic Development Canada (ISED).

“Given the nature of this transaction, we have put in place safeguards aimed at addressing potential risks to the broadcasting system for both consumers and programming services,” announced Ian Scott, chairperson of CRTC in the press release. “Rogers must honour all existing contracts for Shaw customers. This adds to the safeguards already in place, which allow Canadians to subscribe to a basic television package and to select channels either individually or in small packages.”

Related: Rogers will not get Shaw’s wireless licenses, says Innovation Minister

The CRTC has determined that “Shaw and Rogers did not operate in the same markets prior to the transaction.” But to gain the CRTC’s blessings, Rogers has agreed to pay C$27.2 million — five times more than it had originally planned — to support media initiatives. The fund will help indigenous producers and equity-seeking groups. Benefits will be directed to the Canada Media Fund, the Independent Local News Fund, the Broadcasting Accessibility Fund and the Broadcasting Participation Fund, among others.

Rogers must also submit an annual report on its efforts to support local news, and produce an additional 48 local news specials every year. In addition, Rogers must distribute at least 45 independent English and French-language services on each of its cable and satellite services, and ensure that rural cable providers relying on Rogers’ network will continue to reliably service their regions.

“This approval is an important milestone and brings us one step closer to completing our transformational transaction with Shaw,” said Tony Staffieri, president and CEO of Rogers, in an email statement. “Together, Rogers and Shaw will accelerate investment in 5G and cable networks across Canada, offer consumers and businesses more choice and competition, and connect rural and remote communities faster than either company could alone.”

Finally, the CRTC mandates that Rogers must maintain or improve the quality of service to Shaw’s two million subscribers. Rogers also needs to adhere to current regulations to keep broadcasting access affordable for Canadians.

“Under current regulations, all licensed television service providers must offer an affordable basic package that costs no more than $25 per month. They must also offer channels either individually (“pick and pay”) or in packages of up to 10 channels.

In addition, over-the-Air (OTA) television provides a viable, free, and convenient way for virtually all Canadians (over 32 million viewers, or about 97% of the population) to access television programming,” wrote the CRTC to the publication.

Not great for competition, says expert

Although these are stricter requirements than what the deal initially entailed, some experts still believe that this will hurt broadcasting competition in Canada.

“On the basis of a concentration of ownership alone, that transaction should have been denied. Because there’s no evidence to support the idea that concentrated ownership, whether it’s in distribution, whether it’s in programming, is implementing section three [of Canada’s Broadcasting Act],” said Monica Auer, executive director of Canada’s Forum for Research and Policy in Communications (FRPC).

Auer noted that this issue signifies the Competition Act’s underlying problem.

“The notion of competition itself is so poorly defined, ” she said. “Whenever you have a regulator like the CRTC, saying ‘competition will fix the problem,’ what do they mean? Do they mean that it’s okay to have a duopoly where they’re just two companies competing very hard, and then you have lots of competition? Or does it mean that you have lots of competitors? Or do you look at the outcome and say that with three or four or five, we can actually measure a difference in the prices that consumers are paying?”

Although TV stations have always had issues with funding, the consolidation of media outlets will make it more difficult for creators to feature their media on conventional TV services.

“We’ve gone from having lots of different owners [TV stations] and doors to having very few doors. It’s the equivalent of having an apartment building filled with doors to having a house,” said Auer. “If you’re a general interest producer or creator and you want to get on to a conventional TV screen, you have maybe less than a dozen people whose doors you can knock on and of those, not many will have sufficient resources.”

Update: The story has been updated with comments from the CRTC.

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Jim Love, Chief Content Officer, IT World Canada
Tom Li
Tom Li
Telecommunication and consumer hardware are Tom's main beats at IT World Canada. He loves to talk about Canada's network infrastructure, semiconductor products, and of course, anything hot and new in the consumer technology space. You'll also occasionally see his name appended to articles on cloud, security, and SaaS-related news. If you're ever up for a lengthy discussion about the nuances of each of the above sectors or have an upcoming product that people will love, feel free to drop him a line at tli@itwc.ca.

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