CRTC needs ‘vigorous enforcement regime’ for vertical integration: Report

Vertical integration “raises competition and diversity issues” and regulators need a “vigorous enforcement regime” to protect independent channels, a new report commissioned by the Independent Broadcast Group (IBG) says. The report, by Hal J. Singer, the managing director of Washington-based legal and business consultants Navigant Economics, examines the American experience with vertical integration in a rebuttal to a report from University of Calgary economics professor Jeffrey Church. Bell Canada submitted Church’s report as part of its interventions to the CRTC’s vertical integration hearings held last month. The IBG filed Singer’s report as part of its final submission to the hearings, which were due Friday. Church wrote that vertically integrated companies’ efficiency between content and new distribution platforms leads to lower costs, better product quality and new products, which benefits consumers. He wrote that regulators “should continue their permissive policy stance regarding exclusivity with respect to broadcast content designed for ‘new media’” because firms need flexibility to adopt different business models for new services. Church argued that ex ante regulation could hamper the production of new services and content. Singer noted in his report that the U.S. Federal Communications Commission (FCC) adopted strict non-discrimination requirements to protect independent programmers from vertically integrated companies. Singer said Church “ignores the more subtle yet pervasive form of discrimination by VICOs against independent cable networks—tiering.” Tiering refers to the tier or package on which a distributor places a channel. At the CRTC hearings last month, independent broadcasters said vertically integrated companies place independent serviecs on lower-penetrating tiers, impacting channel revenue and viewership. Singer wrote that independent networks “are the most likely source of innovation in programming” and that the CRTC should create a regulatory environment that eliminates the possibility of discrimination from vertically integrated companies.

CRTC needs ‘vigorous enforcement regime’ for vertical integration: Report

Brief | July 11, 2011

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