Foreign ownership concerns still remain after CanWest appearance before CRTC

CanWest Media Works Inc. did little to ease trepidation over foreign investment in Canadian broadcasting despite assurances from company executives before the CRTC yesterday. The crux of CanWest's argument was that although Goldman Sachs Capital Partners (GSCP) would own 65% of CanWest's equity after it helps finance the broadcaster's purchase of Alliance Atlantis Communications Inc., it will only hold 33.3% of the voting shares. CanWest will also have three directors on its board compared to GSCP's two, and a minimum of five representatives on a reporting committee to GSCP's maximum of two. While these seem like significant safeguards against possible interference from a foreign owner, none were sufficient enough to allay interveners' concerns that GSCP is an American investment bank. Perhaps the least influenced of all the Monday afternoon interveners was the Canadian Communications, Energy and Paperworkers Union of Canada's VP of media Peter Murdoch, who categorically opposes the transaction. Murdoch told the commission that while it's often a shrewd tactic when intervening on a transaction hearing to advocate a best-case scenario and try to have some limitations added to the acquisition as opposed to rejecting it outright, the CEP said it could not in good conscious take such a path in this case. Murdoch also pointed to CanWest's recent decision to centralize its Global Television operations as an example of the broadcaster's lack of commitment to Canadians, and illustrated its impact by having CEP members and Global employees - some of whom will lose their jobs as a result of the centralization - sit behind him at the hearing. With foreign ownership and centralization on his mind, Murdoch tossed out the scenario where, in a few years, we might see CanWest once again centralize its operations, only this time the location will be Los Angeles. The CEP wasn't the only intervener concerned about the future. With GSCP expecting to meet certain financial goals as an investor, Monique Lafontaine, general counsel and director of regulatory affairs at the Directors Guild of Canada, warned the investment bank will be tempted to influence programming decisions down the road if revenues aren't reaching a certain level. The expected fallout of such interference is, the Guild fears, more American programming in primetime. And as the commissioners asked the interveners if they were at least somewhat appeased by the safeguards CanWest was proposing, there were still reservations. "These are the people who bring us American shows in the 8:00 p.m. to 10:00 p.m. time slot five nights a week," said Garry Neil, a member of the board of the Council of Canadians. During his opening remarks to the commission Neil also raised concerns about the implications of North American Free Trade Agreement's Chapter 11, "which provides foreign investors with a right to sue the Canadian government and seek compensation for government actions, including those of regulatory agencies such as the CRTC, which investors believe violate their rights under NAFTA," he said.

Foreign ownership concerns still remain after CanWest appearance before CRTC

Broadcast | November 20, 2007

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