Broadcasting Notice of Consultation CRTC 2010-498
Application by Shaw Communications to transfer control of Canwest Global’s broadcasting entities to Shaw
ACTRA National Presentation
22 September 2010
Appearing: Joanne Deer, ACTRA National Director of Public Policy and Communications
Thank you, Mr. Chair, Vice-Chairs, Commissioners and staff. My name is Joanne Deer, I am ACTRA National’s Director of Public Policy and Communications.
As you know, ACTRA brings to this hearing the concerns of twenty-one thousand professional performers who work in film, television, sound recordings, radio and digital media.
We’re also speaking for the seventeen thousand members of AFM Canada, the foremost organization of professional Canadian musicians.
We are happy to be appearing here in the company of our fellow unions and guilds – the WGC and DGC and with the Canadian Media Production Association. We each represent our own distinct memberships and we take different views on some details. However, we share the common goal of a healthy and robust Canadian broadcasting system that provides audiences with a range of good-quality scripted Canadian television.
Together our organizations represent the creators of original English-language television programs, feature films and digital media content. These creative Canadians give us all an important voice, and reflect the diversity of our country from coast-to-coast-to-coast, to ourselves and to the world.
In this particular process, the unions, guilds and CMPA agree on several core principles:
We support Shaw’s purchase of Canwest and urge the Commission to APPROVE the application. However, this support is contingent on a fair return to the broadcasting system in the form of tangible benefits, as required by the Commission’s Benefits Policy. These tangible benefits must be ten percent of the full value of the transaction, or $205 million.
I think we were all surprised to hear Shaw concede yesterday that the value of the transaction is approximately $2.5 billion.
We were also happy to hear the Chair confirm that the benefits period would be the traditional seven years.
So now the key issues for us remain ensuring that the amount of the tangible benefits package is calculated at the full ten percent and the types or benefits that are in that package.
We heard the Chair yesterday ask Shaw to refile its proposed benefits package and we would like to request an opportunity to formally to respond to that new package. In the meantime we offer the following remarks based on our previous knowledge of Shaw’s proposed benefits.
Shaw has repeatedly asked for special consideration and ‘a discretionary application of the benefits policy.’
We appreciate that the Commission can use discretion in its application of its tangible benefits policy, but it is incumbent on the applicant to make a compelling case as to why the Commission should deviate from the policy and past practices. Shaw has repeatedly failed miserably on this test and we cannot see any justification for the Commission to give any special consideration or ‘discounts’.
We agree that Shaw’s purchase of Canwest and its commitment to the conventional Global Television network is a benefit to the system. And that’s why we support the application. For similar reasons, we’ve also supported other acquisitions in the past. But, these are all intangible benefits.
No matter how substantial the intangible benefits of any acquisition are, they do not eliminate the need for tangible benefits.
Intangible benefits are part of the Commission’s deliberation as to whether to approve the transaction; tangible benefits constitute the conditions of that approval.
Tangible benefits are required because the transfer of broadcasting licences does not take place through a competitive CRTC application process. In place of a private auction of assets, the alternative in these cases would be for the CRTC to take back the licences and to issue a public call for applications to acquire them. Of course applicants would have to demonstrate they have the necessary financial resources to operate the services, and perhaps to acquire the stations and equipment. But, success will come to the financially-qualified applicant offering the best deal in terms of Canadian programming content – judged by elements such as time, scheduling, money, genres and so on.
We reject categorically Shaw’s assertion that the CCAA process overseen by RBC is any kind of substitute. That may have been about who would offer the best deal to Canwest stakeholders. It was certainly not about who would offer the best deal to Canadians. It is the Commission’s duty to get the best deal for Canadians by upholding the objectives of the Broadcasting Act.
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. But it was not – Shaw made a calculated business decision. In its own response to interventions, Shaw describes itself as a “strategic investor” that is keen to take on “financially stable and increasingly strong Canwest” in order to compete.
If this transaction is approved Shaw will solidify its position as a very large, vertically-integrated communications and broadcasting company, well-positioned to thrive in the new broadcasting environment. This transaction and Bell Canada’s more recent acquisition of the broadcasting assets of CTVglobemedia leave no doubt that our broadcasting system has changed. Broadcasting is now about television, the Internet, smart phones, iPads and more. It’s about the integrated home computer and entertainment system, and about delivering content to customers at home, on the streets, or in cars. If this application is approved, Shaw will have a finger in every slice of the converged pie.
And by Shaw’s own testimony yesterday – it NEEDS to acquire Canwest and its content assets to compete and to survive.
We also do not agree that ANY discount should be considered based on the CCAA proceeding.
Canwest’s television assets only got sucked into the CCAA process because it chose to tie regulated assets to their unregulated assets – namely publishing. The Commission has acknowledged that Canwest’s TV assets were and are profitable.
Let’s look at Canwest Media – these assets were never under CCAA protection. In a May 3 conference call Shaw announced that these properties were in fact seeing 40% profits.
In July 2010, Canwest announced total profits from television and Canwest Media of $268 million for the first nine months of the year. By all general indicators television advertising revenues are on the upswing. Add in Shaw’s power to distribute valuable content across multi-platforms and it looks to us like Shaw got Canwest at a bargain basement price, and is now set to reap the benefits as the cyclical TV industry turns around.
In short, there’s no case for a ‘deal’ here, and we would submit that a “CCAA discount” in this case would be a dangerous and unfortunate precedent.
Now let me make a few comments about the contents of the benefits package.
We’d like to stick to the Commission’s definition that tangible benefits are new benefits that are seen on screen or that have a social value. The Commission also accepts as benefits only those initiatives that wouldn’t otherwise be realized and it rejects capital expenditures. Clearly, expenditures on digital transmitters do not fit this definition.
An acceptable package for ACTRA would follow the Commission’s traditional tangible benefits package and breakdown. A minimum of seventy-five per cent should be directed to the creation of original, scripted, Category 7 drama, ten-point drama and comedy by independent producers. The balance can go to social benefits and/or in this case, to the new morning newscasts.
The Commission must deny Shaw’s request to include the ninety-six million in outstanding benefits payable when Canwest-Goldman Sachs acquired Alliance Atlantis Communications Inc. as part of the tangible benefits package from this transaction. The 1999 policy is clear; these benefits are not “new” and; they were never in jeopardy, since the assets they are tied to continue to be very profitable and were not subject to bankruptcy protection. We weren’t in the room, but we find it hard to believe that this liability was not factored into Shaw’s negotiations with the Noteholders and with Goldman Sachs. When Shaw acquired the assets, it also acquired responsibility for the outstanding benefits.
Finally, I want to say a few words on vertical integration. I think we were all somewhat assured to hear Shaw provide several assurances yesterday:
- we were told that Shaw wouldn’t pursue exclusivity deals
- it was stated that Corus would maintain a separate corporate structure
Why not put these in writing and codify them in the conditions of approval?
We would also be more comfortable if Shaw’s broadcasting and distributing assets also had a separate corporate structure and we encourage the Commission to consider that as a condition.
One of the best safeguards that can be put in place to ensure balance in the system is Terms of Trade. I’m sure the CMPA will speak more to this issue – but I want to express ACTRA’s full support of independent producers’ efforts to reach equitable terms to secure fairer deals for program rights. We also appreciate the Chair’s strong words yesterday about the importance of concluding Terms of Trade before licence renewals.
While this transaction doesn’t cross any of the thresholds for the Commission’s carefully constructed Diversity of Voices Policy, it comes perilously close. This is a momentous transaction that will reshape the Canadian broadcasting system. Let’s proceed, but with caution.
Let me conclude by saying that Shaw’s purchase of Canwest wasn’t just a selfless gift to Canadians. Was it the only outcome? Probably not. Was it the best deal? Who knows. What we do know is that Shaw will benefit immensely from this deal- by it’s own admission this deal is “critical”.
As one of Canada’s communications giants, Shaw can well afford to do its part and give a fair return to the Canadian public in exchange for the privilege of acquiring these valuable broadcasting licences. And what’s fair according to the CRTC’s own rules is a tangible benefits package of at least $205 million. Thank you.
