The CRTC, which sets rules regarding concentration of ownership in broadcast media, decided it could simply ignore them in a ruling on Friday that gave Cogeco the right to buy almost all the assets of Corus Quebec.
Specifically, Cogeco would buy 11 stations for $80 million, including Montreal's 92.5 the Q (formerly Q92), CFQR-FM.
- CJRC-FM Souvenirs Garantis 104.7 in Gatineau
- CIME-FM 103.9 in St-Jerome
- CHLT-FM Souvenirs Garantis 107.7 in Sherbrooke
- CKOY-FM 104.5 in Sherbrooke
- CHLN-FM Souvenirs Garantis 106.9 in Trois-Rivières
- CFOM-FM Souvenirs Garantis 102.9 in Quebec City
- CFEL-FM ("CKOI") 102.1 in Quebec City
The biggest problem with the acquisition is that it would violate a CRTC rule that says one company can't own more than two stations in each language on each band in each market. Cogeco was willing to get around this by selling stations in Quebec City and converting one in Sherbrooke into a retransmitter of Montreal's CKAC sports station.
But it wanted an exception in Montreal. CHMP 98.5 is the flagship station of the Corus talk radio network, and Rythme FM (CFGL) and CKOI are the No. 1 and No. 2 music stations, making them a whole lot of money. Cogeco said that a requirement to sell one of those stations would torpedo the whole deal (CKOI alone represents half the cost of the acquisition), and promised that in exchange for this special consideration they would hire journalists throughout Quebec and create a talk-radio news agency.
And the CRTC caved. Well, mostly.
They didn't buy the idea of turning Sherbrooke's CKOY FM into a retransmitter of Montreal's CKAC sports station, and gave Cogeco a year to find a buyer for it. They also made a strict condition that Cogeco's plan for a news agency continue, so they can't pull a bait and switch.
That part is good news. The idea of Cogeco Nouvelles sounds good. At least the part about them hiring 33 full-time journalists and spending $3 million a year on news sounds good. The part about sharing content sounds a lot like the regional stations will all take the majority of their content from Montreal and insert a bare minimum of local stories just to justify their license.
But still, considering how little actual journalism comes out of private radio in Quebec, on the whole this is good.
There are also a few additional incentives to sweeten the deal, like this: Cogeco will "provide its services free-of-charge to groups operating fewer than three French-language radio stations in Quebec’s small markets as long as they agree to supply COGECO Nouvelles with news from their markets. The service’s content will also be available free-of-charge to community radio stations."
But as nice as all that is, and I hope Cogeco Nouvelles succeeds, the problem of radio competition remains. Instead of three players in the Quebec francophone (popular) music scene in Montreal, there would be two, representing an astonishing 95% of advertising revenue in the biggest market in Quebec. And that's true for both the French and English-language markets in Montreal. If you discount jazz, classical and CBC/Radio-Canada's stations, the two will own all seven music stations (four francophone, three anglophone) in Montreal.
Much of the debate at the CRTC seemed to be about Astral Media, which owns the NRJ and Rock Détente networks and is seen as a major player in the regions. But rather than acknowledge that there's a serious problem with Astral Media owning stations that should be competing with each other (this is particularly true in Montreal's anglophone market, where Astral owns CHOM 97.7, CJFM 95.9 Virgin Radio and CJAD 800), the CRTC decided that the best response was to create an even bigger behemoth in Cogeco.
With the acquisition, Cogeco stations would have an astounding 46.6% market share in the Montreal francophone market and 22.4% in the anglophone market, or 41.3% total. Astral, meanwhile, has a 31.4% share in the francophone market and a 55.4% share in the anglophone market. Note that all these numbers don't exclude CBC/Radio-Canada stations. When you consider just commercial stations, or as a share of ad revenues, those numbers are even higher.
The suggestion that this would somehow "restore a competitive balance" is silly.
The Montreal-less network
There's also a problem that isn't being considered very well here: While Cogeco argues that regional talk-radio stations need the resources and "expertise" of Montreal's 98.5 FM, it also plans to sell stations in the regions to a third party that won't be able to setup a Montreal station if they want to build a network.
For example, CKOI is a brand network in Montreal, Sherbrooke and Quebec City. As part of the acquisition, Cogeco will have to sell the Sherbrooke and Quebec City stations in this network, but not the Montreal one. And there isn't exactly a lot of extra space on the dial for someone to setup a new francophone music station in Montreal. So not only would anyone who wants to buy these stations have to change their brands (along with the Rythme FM station in Quebec City), but they wouldn't be able to take advantage of whatever efficiencies Astral and Corus/Cogeco think they have found with multi-region brands.
Personally, I think music radio stations can do fine without needing to belong to a Montreal-network (some names are already popping up as potential buyers). But it's funny that Cogeco puts such a strong emphasis on the need for a Montreal flagship station for its talk radio network but has no problem with other people having radio stations in the regions without a Montreal-based moneymaker to keep them afloat.
In conclusion: Good for radio, bad for radio choice
I'm happy that the CRTC handled some of the issues I brought up in my criticism of Cogeco's plan. And I'm happy that Cogeco is planning to setup a regional radio news network and hire journalists.
But this is a step backwards for radio diversity in Montreal, at a time when the city desperately needs more competition in commercial radio.
The CRTC should review its rules for media concentration, particularly because the public seems to be abandoning the AM band and because Montreal's numbers suggest that commercial music stations aren't strictly segregated on the basis of language.
Montreal has seven commercial radio stations that all play popular music that sounds a lot alike. It should have more than two companies running them.
More coverage in:
- La Presse
- Presse Canadienne
- Rue Frontenac
- The Gazette
- Radio-Canada (Estrie)
- Hebdo Journal (Trois Rivières)
- Le Droit
UPDATE (Jan. 12): Almost a month after the CRTC's decision, and weeks before the transaction is set to close, Astral decides to appeal to the federal court to overturn it, saying it was "arbitrary and unreasonable" to change the rules at the last minute just for Cogeco. VP Claude Laflamme makes the point in the statement that "the sudden lack of predictability in the application of the CRTC policy penalizes all broadcasters which in the past decided not to pursue business opportunities in order to abide by the policy as formulated and as consistently applied."
La Presse quotes Cogeco as counter-arguing that Astral controls 75% of the anglophone market (they own CJAD, CHOM and CJFM, but that doesn't violate the CRTC's rules), and they shouldn't be pointing fingers about media concentration.
Note that while Astral suggests that Cogeco should have been forced to sell one of the music stations, it doesn't have its eyes on them because it already owns two francophone FM stations in Montreal (CITE Rock Détente 107.3 and CKMF NRJ 94.3)
UPDATE (Jan. 14): Corus says it will, of course, fight this appeal, and that the Cogeco deal is still set to close on Feb. 1.