Monthly Archives: August 2012

| Opinion, Radio, TV

“Say No To Bell”: The hypocritical campaign against Bell/Astral

After staying silent for months following the announcement in March, a small group of cable companies has started a very public campaign to get people to oppose the proposed purchase of Astral Media by BCE (Bell).

Full-page ads from Say No to Bell (Quebecor, Cogeco and Eastlink) appeared in major newspapers on Tuesday.

It’s called Say No To Bell (Dites non à Bell), and it launched Tuesday with a press conference in Ottawa with the CEOs of Quebecor (which owns Videotron), Eastlink and Cogeco. They gave the usual arguments against concentration of media ownership, saying Bell could abuse its dominant position to unfairly harm competitors, consumers and even advertisers. Specifically, it said:

  • “When too much power is concentrated in one company it often means higher prices and poorer choices for consumers”
  • “If Bell Canada controls all the most popular content, they could charge you whatever they want to watch it.”
  • “A Bell/Astral merger could lead to an organization so dominant that no other company could compete with it to buy sports broadcast rights”
  • “To get popular channels, you could face pressure to pay for other Bell Canada channels that you are not interested in watching.”
  • “This merger could mean escalating costs for commercial advertising on television and radio and forced buys on multiple Bell Canada advertising platforms for Canadian advertisers.”
  • “Bell Canada could use its power to pressure consumers to buy their services exclusively in order to get the content they love, and buy more services than they need.”
  • “If the deal goes through, it poses a serious threat to the future health of the broadcast industry in Canada. Jobs will be lost in the TV production and arts sectors. Young people hoping to build a career in these fields will see fewer opportunities as production is centralized.”
(They also point to a list of quotes from various media writing about the deal, including three from me.)

All that stuff sounds pretty scary. But it’s also a lot of “could” and very little “will”. And the statements seem to ignore that the CRTC has specific rules that are designed to prevent most of the things they worry about. Distributors are not allowed to show undue preference to affiliated channels, and they are required to carry channels owned by competitors (and include those channels in packages where their own channels are included). Specialty channels, meanwhile, are not allowed to charge excess fees, nor refuse to offer their channels individually.

That’s not to say there aren’t legitimate worries here. Media concentration wouldn’t be happening if it didn’t result in a significant advantage. Larger companies are more efficient (centralizing paperwork and technology, for example), and even though there can’t be any formal advantage given to affiliated services, it happens in practice. (Cogeco gave the example of Bell’s RDS2, which it said was withheld from it for months until an arbitrator imposed a deal.) There are also advantages to be had in areas the CRTC doesn’t regulate, like online video.

Chart of Canadian market share by the Say No To Bell campaign.

Hypocrites

But arguments against media concentration are a bit rich coming from Quebecor and Cogeco. (I’ll leave Eastlink out of this since I don’t know them very well and they’re not a vertically integrated company.)

Quebecor’s name is practically synonymous with convergence and media concentration. It owns the largest private television network in Quebec, the largest newspaper (in terms of circulation), the largest cable company and the largest magazine publisher. It has been scooping up independent weekly newspapers in Quebec as it fights a war with Transcontinental in that industry. And it has absolutely no qualms about using its convergence power across different media.

Though Quebecor seems concerned with how big a combined Bell/Astral would become, Quebecor’s French-language television market share would still be higher, at 29.6% to 26.8%. (Say No To Bell prefers to speak of revenues, which skews heavily in favour of Astral in both languages because Astral owns the expensive premium movie services The Movie Network and Super Écran.)

Cogeco, meanwhile, is ill-placed to talk about the negative effects of market share. It was just last year that it purchased Corus Quebec, combining two of the three major players in radio in this province. As if that wasn’t enough, it asked for – and received – an exemption from the CRTC to allow it to own three French-language FM radio stations in Montreal, in addition to an English FM station and a French AM station. Combined, Cogeco-owned stations have a 51.4% market share among francophone Montrealers according to ratings data from BBM Canada. Counting only commercial stations, that market share jumps to 65%. In Quebec City, Cogeco has a 40% commercial market share, nine points more than its strongest competitor.

And even then, it applied to the CRTC to launch two more AM radio stations in Montreal, both heavily subsidized by the Quebec government. (One application was withdrawn when it turned CKAC into an all-traffic station, the other was denied because of a lack of acceptable alternative frequencies.)

These are the people warning about concentration of media ownership.

Perhaps the biggest example of hypocrisy is when Quebecor and Cogeco were asked during the press conference whether they tried to buy Astral. Cogeco’s Audet refused to answer the question, saying it was irrelevant. I take that to mean they probably did try, but lost to the big pockets of Bell.

Bell/Astral rounding up support

It’s interesting that none of these three companies has yet submitted a formal intervention to the CRTC in this case (or if they have, those comments haven’t been published yet). But supporters of the deal have been flooding the commission with comments. Of the more than 450 comments about Bell’s purchase of Astral, most are from organizations that have dealings with one or both companies, and support the purchase either because of the tangible benefits package they would receive in it or just out of some apparent sense of corporate loyalty. (The number of them and their similarity suggests that Bell is pushing its business contacts to submit them, and it’s not clear what incentives they’re using.)

Among those to send their support are charities like the Saskatoon SPCA and Canadian Cancer Society, TV producers like Novem, Groupe Fair-Play and Zone 3, territorial legislators (because of the proposed upgrades to Northwestel) and major advertisers like Loblaws.

The CRTC accepted comments on this application until 8pm ET on Aug. 9, with hearings to take place in Montreal on Sept. 10. The Competition Bureau, which also has to approve the deal, issued a statement Tuesday saying it is “aware that a number of serious concerns have been expressed” and that “we are actively reviewing these concerns.”

Let’s hope both regulatory bodies can sort the truth from the BS being thrown at them from both sides.

Coverage

Other reactions

Bell responded to the campaign with a press release focusing on how the acquisition would increase, not decrease, competition in Quebec.

Even though the purchase was announced in March, and the CRTC application published a month ago, other groups are only now making their voices heard in the Bell/Astral acquisition debate. (Though this is also because many of them filed interventions at the last minute.) Among them:

Telus joins in

Even though it was days after the deadline for comments to the CRTC, Telus also issued a public statement encouraging a stop to the deal. Telus filed an intervention with the CRTC making a similar call.

Looks like it’s working

A poll by Forum Research shows 60% of Canadians oppose the Bell/Astral merger. Is that just a matter of their distaste for large corporate mergers, or evidence that the Say No To Bell campaign is working? Either way, I predict lots more full-page newspaper ads.

| TV

The beginning of the end for over-the-air TV

See this map full-screen

  • Red: CBC
  • Blue: Radio-Canada
  • Yellow: TVO
  • Purple: TFO
  • Green: Télé-Québec

Small dots are transmitters being shut down (text appears in grey), large dots are transmitters that will keep running; dots marked “A” are privately-owned affiliates unaffected by this move.

This is a map I created (through a combination of a list from the CBC and Industry Canada’s database) of all 658 CBC and Radio-Canada television transmitters in Canada, plus those of provincial public broadcasters TVO, TFO and Télé-Québec. As of today, more than 600 CBC and Radio-Canada transmitters are no longer licensed by the CRTC and are in the process of being shut down if they aren’t already. Ditto for more than 100 TVO transmitters and four TFO ones.

The CBC’s mass shutdown of television retransmitters (all of them analog) is part of a budget-cutting process that is expected to save $10 million a year in maintenance costs.

The CBC littered the country with television retransmitters, most of them low-power, from 1977 to 1984 as part of its Accelerated Coverage Plan. The goal was to make sure that every community of 500 people or more was served by a CBC and/or Radio-Canada television transmitter (depending on their mother tongue).

But the transition to digital television and the need to cut costs has made the case for keeping these transmitters running much weaker. For one, more than 90% of Canadian television viewers have a subscription to a cable or satellite service. And most of the remaining viewers will be served by one of the 27 digital television transmitters running in markets where CBC and Radio-Canada offer local programming.

(This includes CFYK in Yellowknife, the flagship station of CBC North, which until now has been operating as an analog station. The CBC has replaced it with a digital one, CFYK-DT, effective Aug. 1.)

According to the CBC, only 2% of Canadian television viewers will be affected by this shutdown. The rest either have a television subscription or are within range of one of its digital transmitters.

What’s more, the CBC says in its submission to the CRTC, maintenance is becoming more difficult and expensive because of the lack of availability of spare parts for analog transmitters. Since the U.S. has already undergone a complete transition to digital, there’s little demand for analog transmitter servicing, and the companies that once did that have stopped. Price for parts has increased, in some cases as much as 100%, the CBC says.

And so, with the CRTC’s reluctant blessing (the commission explains in its decision that its licenses are authorizations to operate stations, and it cannot force a broadcaster to operate a station it doesn’t want to), the 607 analog retransmitters were remotely shut down Tuesday night by CBC technicians, the satellite feeds to them replaced with color bars. The equipment will be removed, says Martin Marcotte, director of CBC Transmission.

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