Production groups argue against Shaw’s carry-over of $95 million for benefits

Production groups lined up before the CRTC Wednesday in opposition to Shaw Communications Inc.’s plan to include $95 million in past benefits in its $203 million benefits package arising from the purchase of CanWest Global Communications Corp.’s broadcasting assets. The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), the Writers Guild of Canada (WGC), the Directors Guild of Canada (DGC) and the Canadian Media Production Association (CMPA) all told the CRTC Wednesday that they support Shaw’s proposed purchase of CanWest if it agrees to pay out tangible benefits to the broadcasting industry worth 10 per cent of a transaction valued at $2 billion. Shaw told the CRTC Tuesday that it would pay out $203 million in tangible benefits to support the broadcasting industry, but the package includes $95 million in tangible benefits funds that Canwest had yet to pay as a result of its purchase of Alliance Atlantis Communications in 2007. The cultural and production groups said the $95 million in past benefits should not be included in the new package. Shaw maintains that its purchase of Canwest includes “intangible benefits” to the Canadian broadcasting system such as allowing the broadcaster to emerge from creditor protection, creating new jobs with a financially healthier Canwest Global and reestablishing Canadian ownership in the company. Shaw says that due to the intangible benefits arising from the deal the company should not be required to pay tangible benefits worth 10 per cent of the transaction. “In its bid to convince the Commission to swap off tangible benefits for intangible benefits, Shaw has painted its acquisition of Canwest as a form of nationalistic altruism for which we should be grateful,” Joanne Deer, ACTRA’s national director of public policy and communications, told the commission Wednesday. “But it was not. Shaw made a calculated business decision.” But CRTC commissioner Peter Menzies said that the deal’s intangible benefits to the Canadian broadcasting system should be taken into consideration. “Hundreds of people have been laid off in the years leading up to this ,” Menzies said. He suggested that Shaw’s purchase of Canwest could create new opportunities for journalists, especially in the six markets where the company has pledged to invest $43 million from its benefits package in morning newscasts. The CRTC requires companies to pay a “tangible benefits” package when it approves a transfer of ownership or control of broadcasting assets to ensure public benefits from the transaction. Shaw officials told the commission Tuesday that it should not have to pay the full 10 per cent in tangible benefits because Canwest was rescued from creditor protection—and that it will cost Shaw significant capital to rebuild the company. “Surely an avoidance of a reorganization of Canwest under does present a net benefit to all players in the broadcasting system, including all the people that you represent,” CRTC chair Konrad von Finckenstein told the cultural groups Wednesday. But the cultural groups maintained that the broadcasting arm of Canwest, apart from its debt, remains healthy. “Canwest's own third quarter press release on July 15, 2010, which announced that for the nine months ending May 31, 2010, television revenue was up seven per cent from the prior year and operating profit was up 33 per cent, and that these results are indicative of the industry-leading revenue performance of CanWest's specialty and conventional television operations,” Kelly Lynne Ashton, director of policy with the WGC, told the commission. Speaking on behalf of independent producers, the CMPA said the CRTC should establish fair terms of trade between producers and broadcasters through the group licensing renewal process. The commission is preparing to implement a new broadcasting framework by the end of August of next year, and broadcasters are expected to submit applications for group licence renewals in November or December. A hearing is expected in the spring of 2011. “At the end of the day, BDUs , broadcasters, and producers are in the rights exploitation business,” John Barrack, the CMPA’s chief operating officer, said Wednesday. “Broadcasters need access to rights to run successful businesses. So do independent producers. It’s all about fair and equitable allocation of those rights.” Norm Bolen, the CMPA’s president and CEO, asked the CRTC to prohibit any overlap—where the same program is broadcast on multiple channels—between the Shaw and Corus-owned broadcasting services. The Shaw family owns Corus Entertainment. “We’ve seen increasingly … more and more program sharing across many channels,” Bolen said. He added that market saturation with the same programs leaves less airtime available for new shows made by independent producers. CRTC commissioner Rita Cugini asked Bolen whether sharing programming across multiple channels would be counter productive for distributors if content saturation leads customers to drop channels. But Bolen said communications companies keep up the practice by spreading out programming at different times of the day on different channels. Telus Corp. also addressed the commission Wednesday and said the CRTC should ensure that distributors cannot block competitors from purchasing their content for new media platforms. “Telus welcomes Shaw’s commitment to making content available to all distributors on all platforms,” Michael Hennessy, Telus’ senior vice-president of regulatory affairs, told the commission, referring to Shaw’s pledge on Tuesday to share programming. Telus expressed concern that its ability to advertise its services on television could be compromised if its main competitors, Shaw, Rogers Communications Inc., Quebecor Media Inc. and Bell Canada, own significant broadcasting properties. CRTC commissioner Marc Patrone said he found it hard to believe that Telus’ competitors would not accept its advertising dollars. But Hennessy said Telus’ competitors could choose to lose out on advertising revenue in order to impede the company’s ability to compete against their other operations. Shaw could lose revenue on advertising but make up the difference in other areas by limiting Telus’ advertising, he suggested. “What you left on the table on the broadcasting side, you intend to make up, and more, on the wireless side or the Internet side, or just the bundle side as a whole,” Hennessy said. Telus does not have broadcasting assets or compete with broadcasting entities, and the company should be free to advertise on other distributors’ channels, he added. The CRTC’s review of Shaw’s acquisition of Canwest Global concludes Thursday. jmigneault@thewirereport.ca

Production groups argue against Shaw’s carry-over of $95 million for benefits

Broadcast | September 22, 2010

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