CRTC approves Shaw-Corus deal, with no tangible benefits

The CRTC has approved the acquisition of Shaw Communications Inc.’s media division by Corus Entertainment Inc., and decided not to require Corus to pay any tangible benefits, a contribution which could have amounted to $265 million had the regulator decided otherwise. The commission said in a press release Wednesday afternoon that both Shaw and Corus have “been effectively controlled by the same person, Mr. JR Shaw,” since Corus was founded in 1999. “Since that time, although they have operated under separate management teams and are overseen by distinct boards of directors, control over both entities has effectively rested with the same person from a regulatory perspective,” the CRTC said. As a result, it said, “this change in ownership does not result in a change in effective control of either entity, which continues to be exercised by Mr. JR Shaw.” That means the regulator won’t issue any new broadcast licences or require tangible benefits. When it approves acquisitions in the broadcasting industry, the CRTC generally requires the purchasing company to contribute a proportion of the value of the sale toward initiatives that benefit the broadcasting sector. For transactions in the TV industry, that proportion is usually 10 per cent, meaning the Shaw Media sale could have netted $265 million in tangible benefit payments, the Wire Report wrote in January. The $2.65 billion deal involves 19 Shaw specialty TV channels, including Food Network Canada, HGTV Canada and Slice, as well as the Global conventional television network with 12 local stations. In a dissenting opinion, commissioner Raj Shoan said the acquisition warranted a full public hearing. “With this transaction, three companies will control over 80% of the television viewing audience in Canada’s English-language television market. It’s difficult to envision a market more consolidated than this one,” he wrote. “In my respectful view, given this degree of consolidation, the Commission should have thoroughly examined through a public hearing whether elements of market dominance could disadvantage, or potentially cripple, certain segments of the industry and inhibit meaningful competition in the Canadian broadcasting and production sectors.” In its decision Wednesday, the CRTC said that it decided to hold a consultation process in which interested parties could file written interventions as opposed to a full in-person hearing, because holding an appearing hearing would not have been in the public interest. It would have delayed the processing of the application and provided “little, if any, benefit to the Commission in its consideration of the application” as well as created “unwarranted market and regulatory uncertainty concerning two publicly traded companies,” it added. The Canadian Media Producers Association (CMPA) said in a press release Wednesday that it “fears that, with approval of this transaction, Corus will use its greater negotiating power to extract even more rights and revenues from independent producers.” CMPA president and CEO Reynolds Mastin said in the press release that the decision “sends a shiver down the spine of Canada’s independent producers, who now face the hard realities of a hyper-consolidated broadcasting sector.” In its intervention, the CMPA had asked the CRTC to impose “competitive safeguards” on the deal, one it said would reduce competition among buyers of TV programs and negatively effect independent producers. In its decision, the CRTC responded that “imposing additional safeguards on the Shaw Media and Corus licensed subsidiaries as a result of this transaction would raise fairness issues and be unduly burdensome.” It acknowledged that “the structural separation that currently exists between Shaw Media and Corus may have provided independent producers with an opportunity to pitch ideas to both Corus and Shaw Media independently” and that its elimination “may result in fewer avenues.” Regardless of whether there are fewer “doors” for producers to knock on, the CRTC said, “the Commission considers that well-capitalized independent producers who can distinguish themselves with compelling content proposals will position themselves for opportunities and achieve success.” Overall, the transaction “contributes to a sustainable, healthy and competitive Canadian broadcasting system which can only benefit independent producers,” it added. “Although the Commission recognizes that the proposed reorganization could have a negative impact on some parties, the impact is not undue and is outweighed by the overall benefits,” the CRTC said. The Public Interest Advocacy Committee (PIAC) was among those who argued the deal should trigger the payment of tangible benefits, something Shaw disagreed with. Wednesday’s decision noted that CRTC policy states that tangible benefits are generally not required in cases “for those ownership transactions that did not involve a change in effective control,” and added the regulator “sees no reason to make an exception…in this instance.” The CRTC added that some of the concerns raised by interveners can be brought up during the broadcasters’ licence renewals proceeding, which will include an in-person public hearing. In a press release following the release of the decision, Corus said that it plans to close the deal on April 1. “This marks the final milestone in the approval process for this transformational acquisition. We will now begin the important integration work to bring together our winning combination of brands, assets and talent that will become the new Corus,” Corus president and CEO Doug Murphy said in the release. — With reporting Anja Karadeglija at akarad@thewirereport.ca and editing by Shruti Shekar at sshekar@thewirereport.ca

CRTC approves Shaw-Corus deal, with no tangible benefits

News | March 23, 2016

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CRTC approves Shaw-Corus deal, with no tangible benefits

News | March 23, 2016

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