December 21, 2021
All good things must come to an end. Even for media policy nerds.
The final legal submissions in the CRTC’s hearing on the proposed $26 Billion Rogers-Shaw merger are filed at last. You can download those authored by the principal antagonists, below.
On paper this merger is poised on a knife-edge. Rogers has the onus —how heavy or light depends on the gut instincts of the Commission— to show that the merger of $5 Billion in broadcasting distribution assets is in the public interest or at the very least isn’t harmful to it.
Rogers has placed all of its casino chips on red: its number one argument by far is that a bigger Rogers will be the corporate champion Canada needs to build out its state-of-the-art video distribution system using its Comcast-licensed “Ignite” television platform that hosts both linear channels and streaming apps.
It is this Internet Protocol Television (IPTV) platform, says Rogers, that can fight back against cord-cutting and keep Canadian viewers in the regulated system which generates $3 Billion annually in the funding of Canadian content and local news. If Canadian television platforms are going to compete with streaming boxes, desk-tops, tablets and phones for viewers, their IPTV platforms have to be first-class.
Source: CRTC Report 2019-2020
While Rogers makes an appealing case for the technological pre-conditions of saving Canadian video content, Bell and Telus counter that IPTV platforms are expanding and upgrading all the time. Doing it faster is not a justification to double Rogers’ market share of the English language distribution to 47%, well ahead of Bell’s second place 28%, they say.
Bell piles on this too-big-is-too-dangerous argument, citing the Commission’s 2008 ruling setting general guidelines on how big is too big in media mergers. But Rogers says they are in compliance regardless of an increased national market share because it is only stepping into the shoes of Shaw in provincial markets where Rogers has no presence, so no harm done, especially to consumers.
Bell responds that the Commission policy is broader than just a consideration of market concentration in local markets and the Commission has to recognize that a twice-as-big Rogers will be buying programming from other media companies in national distribution deals, not provincial deals, and 47% is too much market power.
Bell elaborates that Rogers’ doubled size as a purchaser of Canadian programming from rival broadcasters and independent programming services for distribution on Ignite inevitably means more money for Rogers and less for broadcasters and specialty channels: every dollar of revenue lost to those broadcasters means 30 cents less spent on Canadian programming under CRTC rules.
Is Rogers’ “Ignite will save Canadian broadcasting” pitch enough to sway the CRTC?
The remainder of the major objections to the merger probably don’t threaten the application.
Telus argued during the CRTC hearings that a twice-as-big Rogers plans to shut its cable competitors out of platforming a Netflix or Disney Plus channel as well as withholding must-have hockey and baseball games broadcast on Rogers Sportsnet.
Telus believes it has spotted a loophole in the CRTC “undue preference” regulations that normally prohibit a big media company like Rogers from selling their shows (i.e. Sportsnet) on regulated linear channels exclusively to its own cable operation while cutting out rival distribution services but allows it so long as the content is streaming-only.
Telus (with some encouragement from Bell) also says a bigger Rogers could afford to pay Netflix top dollar to be the only Canadian television platform to host the movie app, using the same Sportsnet loophole.
Rogers says all this is tosh: it makes no business sense, Telus is mistaken about a loophole, and in any event they promise (at least so far as Netflix and foreign apps are concerned) not to do it.
Pro tip: don’t expect this to be a deal breaker for the Commission.
There are other important issues volleyed back and forth in the written submissions, but none are likely to sway the Commission’s final ruling.
For now we wait as its likely the Commission will prudently defer its decision until the Competition Bureau and the federal cabinet figure out what to do with the lion’s share of the proposed merger, the wireless and Internet service assets.
The Gemini truth-to-power award goes to CHCH-TV Hamilton (especially the last two pages).