I’d thought about it. Some people had asked me about it. Others suggested it to the CRTC in their written submissions. And the CRTC asked Bell about it in a letter after it filed its application. But until Monday afternoon I didn’t think it was seriously an option that the commission might consider imposing.
Could the CRTC force Bell to keep CKGM (TSN Radio 690) and sell one of the other English-language Astral radio stations in Montreal, as a condition of approving the larger Bell-Astral deal?
Learning from the very negative public reaction from its initial proposal last year to turn CKGM into a French-language radio station, this time Bell is asking for an exception to the CRTC’s radio common ownership policy so it can keep it in English while still owning three other stations in the (currently) five-station market. This puts the commission in an awkward position if it accepts the purchase deal. Does it give the exception, giving one company control of four of five commercial stations and 75% of the commercial audience share? Or does it deny the exception, forcing Bell to sell the money-losing station to someone else who would most likely change its format? Bell convinced thousands of listeners that the former is better, putting together a Save TSN 690 petition and getting the same fans who were cursing its name months earlier to be suddenly singing its praises.
A background in common ownership
The CRTC’s common ownership policy, often incorrectly or incompletely explained, has two rules for radio:
- One company can’t own more than two AM stations and two FM stations in a single market
- One company can’t own more than three stations total in a market with fewer than eight commercial stations
French and English stations are considered in separate markets even if they share the same geographical area. Montreal’s English market, with only five commercial stations (though soon to be six) meets that second criteria, while the French market, with 11 commercial stations (soon to be 13 or even 14), doesn’t.
The policy is just that, a policy, and exceptions have been granted before. The most on-point one is one that was granted to Cogeco in 2010 that allowed it to keep three French FM stations in Montreal after it acquired most of the Corus Quebec network. This was allowed in exchange for Cogeco setting up the Cogeco Nouvelles radio news service, with CHMP 98.5 FM in Montreal as its flagship station. That station is now the highest-rated in Quebec. The second-highest-rated, CFGL (Rythme FM) 105.7, is also owned by Cogeco.
The irony here is that this request was strongly opposed by Astral Media (it even threatened legal action to stop it), it was supported by third parties because it would put Cogeco in a position to better compete with Astral, and Cogeco is a fierce opponent of the Bell/Astral deal because of increased concentration of ownership. (Cogeco hasn’t said much about the request for an exception, perhaps seeing how hypocritical it would look.)
Now Bell/Astral is using the Cogeco decision as a precedent to get the same treatment in English. Astral argues this should be an easier decision because unlike CHMP, CKGM is a money-losing station, its audience is tiny, and it’s on AM.
And Cogeco, the one company that you’d think would be most against allowing Bell to own four of the five stations in this market, is silent on the matter. Cogeco CEO Louis Audet told me on Wednesday after the company’s appearance before the CRTC that “we’ve kept away from that” and “it’s up to the commission to decide.”
The third option
Saying that she wanted to “explore all alternatives”, the CRTC’s Quebec regional commissioner, Suzanne Lamarre, questioned Bell about the possibility of keeping CKGM and selling another station. (You can read the transcript of that hearing here, starting at Paragraph 787)
“Shouldn’t we be concerned about so much concentration of ownership in one particular language, that language being in the official language minority group? Shouldn’t we be worried about that?” Lamarre asked.
Bell’s answer at the hearing was that adding the tiny audience of CKGM to the large audience of Astral’s stations would be a small increment.
And it’s true. CHOM, CJAD and Virgin Radio already have 70% of the market to themselves as a group, and they’ve been under common ownership since Standard Radio bought CHOM in 2002. (Standard Radio’s assets were sold to Astral in 2007.) The CRTC said that was okay.
But Lamarre seems interested in exploring this option. It was actually asked to Bell when it filed the revised application. Bell’s written response was that if it had to sell a station, it would be CKGM, which is the only unprofitable one and also the lowest-rated. The other stations operate together, sharing resources, so splitting them would be too difficult.
Lamarre didn’t seem satisfied with that answer. “You jump to the conclusion that should you not get the exception for CKGM, CKGM is finished, but have you not considered the possibility that the Commission may require that you keep TSN 690 operating in its current format and yet not grant you the exception?”
This is a bit of a curveball. Bell has made proposals to safeguard TSN 690 in exchange for the exception to the policy. Could the CRTC accept those proposals but not grant them the exception? Sounds like kind of a dick move (punishing Bell for trying to save the station), but they could do it. They could, in essence, both order Bell to keep TSN 690 on the air in its current format and force it to sell one of the other stations.
What the CRTC can and can’t do
There are misconceptions about what the CRTC does. One of them concerns formats of radio stations. Normally, the commission doesn’t regulate format for commercial stations. So if TSN 690 wanted to switch to a conservative talk-radio format, it could. If CHOM wanted to go country music, it could. The only limitations are conditions of licence, which indicate what type of station it is (commercial, campus, community, ethnic, native, etc.), what language(s) it operates in (this is why Bell can’t unilaterally change TSN 690 into RDS 690), and any special conditions. Some stations are licensed under a specialty format, such as CKLX-FM, which is why it still needs permission from the CRTC to change format from jazz to talk even though it has already rebranded itself as Radio X Montreal.
The CRTC also won’t change a licence it has given someone without their consent. The CRTC issues licences for up to seven years, and so long as stations comply with their licences, they should expect that their obligations won’t change until that licence expires.
But the flip side to all of this is that the CRTC can impose conditions on the Astral purchase. And those conditions could include commitments in terms of format, or funding, or licence changes, or the sale of stations. So the CRTC could say that as a condition of the Astral deal, Bell has to keep TSN 690 running for seven years and sell one of the other Montreal stations.
And Bell would do it, because changes to its plans in the Montreal radio market are not going to be allowed to derail a $3.38-billion acquisition deal. Bell confirmed this by saying this issue “is not at the heart of the application per se.”
But Bell is also perfectly willing to throw TSN 690 under the bus if it needs to:
“I’d like the Commission to consider that we wouldn’t be deriving a significant commercial advantage through the exemption and we didn’t want in any way to jeopardize the bigger transaction with this request,” Bell regulatory VP Mirko Bibic said. “So that’s why we kind of said, okay, look, we’re going to apply for the exception because we do want to respond to the community, but we also are prepared to return the licence or sell this particular station. We feel it would be unfair in the circumstances to ask us to sell another station and to keep this station because the other stations do have a passionate listenership as well.”
Profitable vs. unprofitable
But Lamarre continued:
“The Commission could go as far as either identifying the station it wants you to divest or give you a limited choice of what you should be divesting, and in your brief you did mention that granting you the exception would not hurt new entrants in the market, but if you had a profitable FM station to sell in the market of Montreal, wouldn’t that be a missed opportunity for the Commission not to take that possibility, that opportunity to get possibly a new owner in the English Anglophone market?”
That prompted a clearly irritated Bell CEO George Cope to step in with a quick response: “we’re not in the business of selling profitable businesses and maintaining unprofitable businesses. That’s not a business.”
Lamarre then dug up some things that Bell, represented by many of the same people, said at a 2011 hearing in Montreal in which they asked to move CKGM from 990 to 690, a request they were granted despite fierce opposition for that frequency. At the time, Bell said it was committed to the Montreal market, to TSN Radio in Montreal, and that the frequency change (combined with the acquisition of Canadiens broadcast rights) would put it on the road to profitability. Now, only months after changing frequency and only a season and a half of Canadiens games, “it sounds like you’re willing to throw in the towel already,” Lamarre said. Bell didn’t agree with that assessment, prompting an exchange in which Lamarre, Cope and Bibic debated whether it was consistent for Bell to say it was committed to the (still unprofitable) station in 2011 and is now unwilling to part with a more profitable station it is purchasing in order to keep it.
Bibic cited public support for the exception, but Lamarre correctly pointed out that the vast majority of those comments aren’t actually in support of Bell owning four radio stations. Instead, they merely support keeping TSN 690 in its current format by any means necessary. (In fact, I should point out, a few of the comments Bell submitted in its favour even opposed the larger Astral purchase or demanded Bell sell another station.)
Astral COO Jacques Parisien, by now also getting a bit testy too, chimed in with his own take:
“As the operator of the three other English stations in this market, I question if the public interest is better served by selling one of these three stations and jeopardizing the other two. And I really don’t get it as far as the Canadian broadcasting system benefiting from selling one of these three stations and, you know, messing up a market that is going pretty well. … I don’t see how the public interest in Montreal would be better served by jeopardizing the two orphan stations after selling the one you will identify that is an actual station. And I don’t see how the Canadian broadcasting system benefits from that.”
I wonder whether Bell and Astral aren’t exaggerating the situation here. Yes, Astral’s stations are operated as an integrated unit, sharing office space and resources. But Bell is perfectly willing to split up sister stations in Toronto and Winnipeg. And in the end, running a music radio station isn’t that difficult. (Running it well is what’s hard.) A company like Cogeco could probably easily absorb a radio station like CHOM, and other companies could also take over programming without too much difficulty. They’d need to hire new people to read the news and maybe handle traffic (if they don’t continue outsourcing that), and would need new studios, more management, more promotions staff and other shared back-office functions. But would CHOM really be hampered because Terry DiMonte’s cheques are written by a different company, or because their studios are in a different building than CJAD’s?
Speculation: Who would buy what?
If the CRTC does decide to impose this, it could either dictate which specific station Astral has to sell, or allow it to choose. Market-wise, there’s not much difference between the three. Each has between 15% and 25% of the market, depending on how you count it. But CJAD is a far different animal from CHOM and Virgin. Lamarre specifically referenced FM stations in one of her questions, which suggests they would order the sale of one of the FM stations. This would make sense because the FM stations are more valuable, more profitable, and because there’s no room for more FM stations in Montreal, but might be room for more AM stations (including an independent CJAD competitor set to launch this year).
Between Virgin and CHOM, there isn’t much contest. Virgin has the higher ratings, and is part of a national brand (though that hasn’t stopped it from putting its Virgin Radio station in Vancouver up for sale). Which means CHOM would be more likely to be put on the block.
Who would buy it? Just about anyone, really.
Paul Tietolman of Tietolman-Tétrault-Pancholy Media previously expressed interest in buying CJAD if it came available. He wasn’t backing away from that suggestion this week when asked about it. TTP would also be a likely bidder for a music station. Cogeco could buy it, since it has only one English-language radio station, but the CRTC might not look too fondly on going back to only two players on FM. Rogers, Newcap, Dufferin, Pattison and a bunch of other companies might be interested in buying.
But this is all just speculation. The CRTC hasn’t made a decision. And there’s no reason to believe that ordering Bell/Astral to sell one of Astral’s stations is more or less likely than any other option on the table. It could deny the Bell/Astral acquisition again, keeping the status quo. It could approve it and allow the exception, especially since there’s been so little opposition to it. It could approve the acquisition but deny the exception and let Bell choose which station to sell. Or it could decide on something completely different.
Joe the Mover to the rescue
Joe Gagnon, the president of Westmount Moving and Warehousing, is the only intervener presenting at this hearing specifically about the TSN 690 exemption request. Gagnon, who spoke at the commission on Wednesday, told them that as both an advertiser and as a listener, the station is irreplaceable and deserves special treatment to be kept alive. “Montreal is a sports town with three major sports franchises to support,” his presentation to the commission says. “The need for all-sports radio programming is high, and the folks at Bell and TSN 690 do a fantastic job like no other I have heard.” As an advertiser, Gagnon notes the high loyalty of the station’s listeners, and says that while his ads on that station might not result in as many calls as he would get for ads on a station like CJAD, the calls he gets from TSN listeners are more likely to result in actual business. (Westmount Moving is the official moving company of the Canadiens, which might also help win Habs fans over.)
Gagnon’s comments lead a story in Thursday’s Gazette. I sat down with him after the presentation to get more of his thoughts on the issue. And his answers surprised me.
“They are all institutions,” Gagnon said of the four radio stations that would be under Bell’s umbrella in this market. He said that any time a station changes ownership, there’s a risk to it, and he repeated Parisien’s thoughts that forcing Bell to divest one of the Astral stations might hurt that station in the short or long term.
Gagnon said the four stations offer four different types of programming and so are not being directly competitive with each other. “If it’s not broken, don’t fix it,” he said.
But what about Bell’s market power? Wouldn’t he be worried that they’d hike ad rates if they were the only game in town?
Gagnon said he’s not worried. “I just think common sense prevails,” he said. “People like me won’t advertise if we can’t promise a return. I’m not oncerned that my prices will go through the roof.” He said he would just advertise on Google or through other media if radio advertising ended up costing more than it was bringing in in extra profits.
Bell: No offers for CKGM
During its presentation on Monday, Bell was asked if it had received any offers to buy CKGM with the intention of keeping its format. It was an odd question, because Bell hasn’t indicated a desire to sell the station. But the question is relevant because Bell argues that if it’s forced to sell, a new buyer wouldn’t keep the money-losing all-sports format.
The response came in writing on Wednesday: There have been no formal expressions of interest. But, “late last year, two parties made informal inquiries about CKGM” without following up. The names of those companies are not disclosed.
Also provided on Wednesday were other answers related to the CKGM exemption request:
Canadiens games until [REDACTED]: The CRTC asked when the deadline is for the current broadcast rights deal for the Canadiens. You’d think it would be a straightforward question to answer, since Bell issued a press release in 2011 saying the deal is for seven years. But the answer to that question (which I’m guessing was about 10-15 words) was redacted because of its “commercially sensitive nature”. So clearly it’s more complex than saying after the 2017-18 season.
What is all sports? The CRTC asked for a definition of what constitutes an “all-sports format”, to be included as a condition of licence. Bell’s provided definition says that it should be “dedicated to sports with the majority of the programming drawn from subcategory 12 (Spoken word — other).”
What happens in seven years? Bell has promised to keep the all-sports format for seven years. But what happens after those seven years? Does it still get to benefit from the exemption even after it eventually changes formats? Lamarre asked, if the format promise was for seven years, shouldn’t the exemption also expire after seven years? Bell’s response was that it would have to re-apply to the CRTC to change its licence to remove the format provision after those seven years (when its licence expires and will need to be renewed), and that the commission could decide then if the exemption should still apply. This answer means that even after seven years, Bell will either need to keep the all-sports format, sell one of the four stations, or convince the CRTC that its new plan for the station is important enough to warrant an extended exemption from the rules. (Of course, a lot can change in seven years.)
Is amateur sports a proper benefit? Bell has also promised to donate a total of $245,000 to third parties as a goodwill gesture. This includes $105,000 ($5,000 per student for three students a year for seven years) in scholarships for sports journalism at Concordia University, and $140,000 ($20,000 a year for seven years) to amateur sports in Montreal. These aren’t listed as part of the formal “tangible benefits” package for the Astral purchase, which have rules for what they can be spent on, but nevertheless the CRTC was concerned that the amateur sports donation might be inappropriate because it does not benefit the broadcasting system. Bell explained that it believed the donation to be in the public interest, but was willing to reallocate all that money so the entirety would be spent on the sports journalism scholarships. Funding to help journalism programs is considered a proper Canadian Content Development contribution.
So how will the CRTC decide?
Before you ask, I don’t know. They don’t whisper to me in the halls. The commission is very skeptical of the Astral acquisition as a whole, but that won’t mean they won’t approve it this time, with or without serious conditions. Lamarre floated the idea of asking for another station to be sold, but that’s one of a few options she wanted to explore. She has a clear idea of what people want (they want the station to survive, but don’t really care whether Bell owns CHOM or not), but there are a few ways of giving them that. And in the end, opposition to the exemption request has been virtually non-existent. Even the owners of the only other station in the market, and the owners of a licence to operate a new English-language station in Montreal, did not see fit to comment to the CRTC on the request.
If it’s anything like last time, a decision should be expected within a month or two of the end of the hearing on Friday. So we should know by mid-summer what the fate is of Bell, Astral, CKGM, CHOM, CJAD and CJFM (Virgin).
- The Toronto Star for some reason wrote a story about the part of the hearing devoted to TSN 690. I heard a few comments from journalists suggesting that the CRTC was spending too much time about this minor part of a huge acquisition. But fans of the station might disagree.
- A Gazette editorial calling for the CRTC to grant the exception to Bell. It calls the Common Ownership Policy “a niggling bureaucratic regulation.”