Massive AOL Time Warner, Canadian Heritage deal goes unnoticed by industry, unannounced by feds

Details of a massive new $221 million five-year investment by AOL Time Warner Inc. in Canadian cultural industries including television, film, new media, and music are just beginning to come to light after a media release late last month went all but unnoticed in the media or by industry insiders. The release outlines the results of an agreement between the department of Canadian Heritage and media behemoth AOL Time Warner that clears the way for federal approval of the January 2001 merger of giants America Online Inc. and Time Warner Inc. Under the terms of the agreement, signed under the Investment Canada Act, AOL Time Warner will pump $180 million over five years into film and television production, including training and employment; another $22 million into the production, distribution and marketing of Canadian music products; and $4 million into Canadian-owned and controlled record companies to produce, distribute and market Canadian music here and abroad. As well, the company has committed $15 million for the sponsorship of non-profit and charitable institutions, educational programs, festivals and events related to Canada's film, television, music, new media and magazine publishing sectors; the promotion of AOL Time Warner's Canadian film, TV and music products on dedicated and third-party web sites; as well as internship programs for young Canadians in the filmed entertainment and music businesses. TV, music and new media players tell Decima Publishing that they haven't heard of the investment, which was not announced by the government or widely spread by AOL Time Warner. The media release, which outlines the program, was only posted to Warner Music's Canadian web site, and only the Canadian Recording Industry Association's Brian Robertson has thus far expressed any familiarity with the broad outlines of the deal. Some observers are calling for greater transparency in future negotiations of this nature, and drawing parallels with a similarly quiet process last winter when Vivendi's takeover of Seagram was approved on nearly identical terms (CCR, Feb.1/01 and Oct. 26/00). That benefits package raised questions at the time about the net new benefit to the Canadian cultural sector. Some observers questioned whether the $300 million attached to that deal would have been spent regardless of whether it was part of a benefits package or not. Similarly, that package also went unpublicized in the cultural community until questions by Decima Publishing brought the deal to the fore. At the time, Heritage ADM Michael Wernick told Decima: "To be fair, (Vivendi) only put out their release a few days ago, so it will take a bit of time for people to figure it out and get a handle on it." Already, in the case of the AOL Time Warner announcement, some players such as the Canadian Film and Television Production Association's (CFTPA) president/CEO Elizabeth McDonald are questioning how the funds will benefit any but AOL Time Warner's subsidiary companies in this country. McDonald wonders whether the money will be spent at arm's length from the parent company, and how it will stimulate new television production. Decima Publishing's inquiries were the first the CFTPA has heard of the giant investment. The announcement, with its attendant $15 million for non-profit organizations, also came as a surprise to the Media Awareness Network's Jan D'Arcy when contacted by Decima Publishing today. Her organization, which provides media and Internet literacy training on a not-for-profit basis, seems a likely recipient of at least some funding, but there are currently no details upon which to base any hopes for cash. The AOL Time Warner media release indicates that the funds will be administered by two Warner Bros. executives - Dianne Schwalm, senior VP of Warner Bros. Entertainment Inc., and Garry Newman, president of Warner Music Canada Ltd. Two other unnamed executives will also be on the team of administrators. A Warner Bros. spokesperson in Toronto informs Decima Publishing that comment will need to originate from New York City. The appropriate representative was not available for comment at press time. Further details and reaction to this story are available in the Feb. 7 /02 edition of CCR affilaite publication Canadian NEW MEDIA.

Massive AOL Time Warner, Canadian Heritage deal goes unnoticed by industry, unannounced by feds

News | 01/31/2002 5:00 am EST

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