Dissenters wanted safeguards in return for higher cable equity in analog channels

Two CRTC commissioners who voted against higher cable ownership of analog specialty channels say the regulator should have demanded tougher safeguards and ownership limits in return for its approval. While the vote to allow cable operators and their affiliates to increase equity levels beyond 10 per cent wasn't close, according to one insider, it did prompt commissioner Andrew Cardozo to pen a strongly worded dissent criticizing his fellow commissioners for giving the cable industry exactly what it wanted, without demanding anything in return. The rationale for the June decision was released Aug. 24, and included written dissents by Cardozo and commissioner Barbara Cram - PN-2001-66-1. Cardozo noted that several intervenors had stressed that if the ban on analog channel ownership was lifted, then effective safeguards should be introduced. Even the Canadian Cable Television Association (CCTA), he added, had been willing to accept certain safeguards. "One could say that cable got much more than it asked for and the broadcasters got much less… The impact of (this policy) clearly favours the interests of one sector of the industry (big cable), while seriously undermining the interests of another (mid-size and small specialty broadcasters)...In my view this is also one of the most radical shifts, if not reversals, in policy that the commission has taken, which was quite at odds with the majority of opinion expressed. Almost no intervenor called for a shift this drastic." (emphasis Cardozo's) Released June 7, the CRTC decision no longer requires cablecos to get prior approval before increasing their ownership in a channel beyond 10 per cent (CCR, June 21/01). However, the commission will continue to review applications by cable operators or their affiliates for authority to increase their voting interests in analog channels beyond thresholds of 30 per cent and 50 per cent. Cardozo refers to the guidelines as "pretty please principles" instead of "clear and unequivocal safeguards." He told CCR that the commission has no way of ensuring principles are adhered to. "If we had put them in regulation, then you would be able to make a complaint and we would look at it under that section of the safeguards," he says. "The commission may want to look at something if evidence mounts that some practice is happening a lot … but at the moment there is no recourse." CCTA president and CEO Janet Yale says that Cardozo's use of the words "pretty please" shows a lack of respect for his fellow commissioners. "I don't know what the difference is between a safeguard and a principle...," she says. "We certainly take seriously that we have to abide by them." She adds, "I find it very funny because Andrew himself says there should have been a specific list of safeguards. And then he says there should be very specific consequences to observe them. Did he list them? No. Why not? If it is so obvious, what they should have done, why didn't he list them and why didn't he come up with a specific set of remedies that he felt should apply for breach of any of those." Cardozo says he was simply pointing out that he would have preferred to see the principles stated as safeguards. "I wasn't looking specifically at punishments. I was saying that we would order a solution," he told CCR. "Now, we have no power to order a solution." The principles require that all specialty and pay services be distributed on fair and equitable terms, including those related to pricing, packaging, promotion and marketing/promotional costs. One safeguard proposed by the Competition Bureau was that a cap be placed on how many analog channels a cableco could own. But, in its rationale, the CRTC noted that "arriving at an acceptable basis or formula for any such limit would be extremely complicated," as well as "unacceptably arbitrary." Yale says the cable industry "could have lived with a cap" but adds, "I think the commission's approach is certainly a practical way to address the thing." Cardozo doesn't agree. "The market cannot know what the limit is until we decide to impose one on a particular transaction, after the fact. Will that then be the limit for all or for some?" he asks. "One good reason for clear policy is, in my view, that it prevents arbitrariness." The dissent of commissioner Cram, who supported a change in the previous policy, was based on the exclusion of ownership limits. She suggests initiating a new proceeding to deal with the issue. "In my view, ownership limits would provide more certainty to industry and lead to a more balanced broadcasting system as a whole," she writes. She adds that it would also reduce the regulatory burden on both licensees and the commission because any acquisition within the set limits could be dealt with administratively rather quickly. One dissent that was expected, but did not appear, was one from commissioner Andrée Wylie. In September 1996, Wylie dissented on a CRTC decision to exclude 13 of 17 English-language channels from access rules for at least three years. At the time, she noted that it was not a good thing to give cablecos the power to determine if those channels reached Canadian homes, particularly since one of them was wholly-owned by the country's second largest cable company - Decisions 96-600 and 96-612. Wylie wouldn't disclose to CCR if she voted for or against changing the policy on cable ownership of analog channels. "Even if that were the case (that she voted against the change in policy), I obviously chose not to tell the world, so I'm not going to tell you. If I had wanted to comment publicly I would have done it," she notes.

Dissenters wanted safeguards in return for higher cable equity in analog channels

Broadcast | August 30, 2001

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