Brad Shaw’s ker-ching moment. The Globeand Mail’s David Milstead reports that Brad Shaw’s CEO pay packet doubled this year to $12 million (the average compensation for CEO of a TSX company is $7.65 million). If the Rogers-Shaw merger is approved, the son of company founder J.R. Shaw will oversee a $26 billion sale to the Rogers family. He also boasts one of Canada’s top corporate pensions at $134 million.
The Conservative Party shadow Minister for Digital Government Rachael Harder Thomas will no doubt have something to say about the federal government’s Online Harms Bill when it is tabled some time in 2022. She made the news last week by spreading misinformation about Covid vaccines, a second occurrence in her case.
The lobby organization Open Media was written up in Le Devoir but not in a good way (an English translation can be downloaded below). Ulysse Bergeron reports that the organization known for its sensationalist fundraising appeals in opposing regulation of the Internet is heavily funded by impacted tech companies Google, Twitter and Canadian ISP provider Tek Savvy. Open Media was harshly critical of the CRTC decision on Internet wholesale rates that retailer Tek Savvy pays . Open Media’s Board of Directors is chaired by Dylan Blanchard, until recently a senior executive at the Toronto-based Internet giant Shopify. The Board includes a second Shopify executive and a former employee at Tek Savvy.
In US Congress federal aid to journalism was on the cusp of success when it fell along with the rest of the Democrats’ $1.75 trillion Build Back Better omnibus legislation. Centrist Democratic Senator Joe Manchen (W.Va.) appeared on Fox News to announce his firmly decided opposition to the Bill, ending lengthy negotiations to pass the legislation.
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.
All powerful US Senator Joe Manchin is said to favour government subsidies to journalism currently part of President Biden’s Build Back Better legislation.
December 19, 2021
Hey Google, Search this: France is vying with Australia for the title of feisty small sovereign nation (desolé) taking on Big Tech, having recently slapped Google with a $725 million fine for failing to negotiate seriously France’s implementation of the 2019 EU Copyright Directive for online platforms and publishers.
“American exceptionalism” means a lot of different things including staying at the back of the pack of jurisdictions pursuing Big Tech on pay-for-news-content and other monopoly abuses.
Government backstopping to those private negotiations through legislated binding arbitration: Australia and the EU Directive as implemented in France. A Canadian Bill is on its way early in 2022.
Direct government subsidies to news outlets, usually as a per journalist salary subsidy: several European countries for years, Canada, and perhaps the US if the BBB legislation gets through the Senate.
Tax laws that incent philanthropic donations to journalism projects: widespread in the US which has a long history of favourable tax regimes and billionaire patronage. The Canadian federal government made this move in 2019 with little effect so far.
Limited tax deductions for customer subscriptions: again legislated by Ottawa in 2019 but Canada Revenue Agency isn’t scheduled to report statistics until 2024.
A recent story in Canadaland “Trudeau’s $10 million top-up fund” is written as an exposé of federal funding of journalism and states that “government approved news organizations are not limited to receiving money from just one fund —many tap several of these initiatives at once, and some of the biggest media brands in Canada have successfully applied for all of them.”
The story cites Postmedia (120 daily and weekly newspapers), Black Press (120 Canadian publications) and magazine publisher St. Joseph’s as examples of big media brands tapping federal funding.
But the story neglects to mention that media companies owning multiple publications can only claim from one fund for any single publication. And there are four federal funds dedicated to four different types of publications.
Here’s how it works:
The Journalism Labour Tax Credit (JLTC) is available to daily newspapers. The $95M annual program made a lot of political noise when it was introduced in 2019. The Fund was administered initially by an independent third-party committee tasked to determine who was a legitimate news organization and not a political action group. Now payments are processed by the Canada Revenue Agency. The program amounts to a $14,000 annual salary subsidy, per journalist. All major dailies in Canada draw from this Fund.
A second fund the “Aid to Publishers” (ATP) program is administered by Heritage Canada. ATP pays annual grants to eligible magazines and free weekly newspapers providing “high quality news content.” Its annual budget is about $70M. About 750 publications qualified last year.
Aid to Publishers has existed since 1867. Originally it was a postal subsidy for the distribution of news to rural areas.
Due to the Pandemic-induced acceleration of the decline in advertising revenues, the Liberal government introduced an Emergency Support Fund in May 2020 that included a temporary 25% increase in the ATP program worth $15M for fiscal 2020-21. It was extended in July 2021 for the fiscal year ending March 31, 2022 at a cost of $10M. It would not be accurate to characterize the ATP top-up and the ATP as separate funds.
Importantly, publications funded by JLTC are ineligible for ATP funding, and vice versa.
Finally, the Emergency Support Fund also included a new $45M funding envelope for about 800 publications ineligible for either the JLTC or ATP, but similarly hard hit by the Pandemic’s plunge in advertising revenues.
Dubbed the “Special Measures for Journalism”(SMJ), the funding goes to Canadian publications such as trade journals, lifestyle publications or other titles that do not publish sufficient news coverage to qualify for the ATP or JLTC. The SMJ was extended for the current fiscal year at a cost of $21.5M. There is no indication from the federal government that this program is here to stay: it is part of the Pandemic “recovery fund.”
Again, the same publication cannot draw from more than one fund.
I have not cross compared LJI recipients against other journalism funds, but it’s likely there are some LJI recipient publications drawing from one of the other journalism funds. However it ought to be noted that the LJI’s purpose is to expand news coverage to neglected communities or beats, as opposed to the other funds subsidizing existing coverage.
The Canadaland story also takes aim at a handful of publishers: the Chinese language newspaper Ming Pao (too pro-China); The Walrus magazine (too close to the Liberals); and of course Postmedia (too everything).
The very big and very right-wing Postmedia is a favourite piñata for mainstream media haters (it vies with Bell for that distinction). One of the darts sent its way in the article deserves some comment because it’s misleading.
The story cites the significant dollar amounts that Postmedia (the biggest newspaper publisher in the country) has drawn from the journalism funds, how many community newspapers and jobs it has cut, and “a $52.8 million net profit in January [2021].”
I suppose the implication is that Postmedia is lining its profitable pockets with federal cash. The $52.8M figure however is exceptional as an operating income figure: it is cherry-picked from one quarterly report, Q1 2020-2021. I have posted below a spreadsheet of key debt, dividend, cost-cutting, revenue, profit and loss figures from Postmedia’s annual reports over the last four fiscal years ending August 31. You can draw your own conclusions.
Also, the $52.8M figure comes from the fiscal quarter in which Postmedia accrued a one-time $63M non-cash accounting gain on merger of its pension plan negotiated with its major union Unifor which resulted in an inflation-indexed (and more secure) pension for employees and a significant reduction in future unfunded pension liabilities for Postmedia.
This is good place to disclose: before retiring from Unifor after 33-years as a union rep, I assisted union locals in negotiating collective agreements with many large and small Canadian media companies, including staff contracts at the National Post, the Toronto Sun and other Postmedia newspapers.
Speaking of persons Australian, Wikileaks founder Julian Assange has been ordered extradited to the US by the British High Court, discounting his mental health defence. The US wants to put Assange on trial for an alleged conspiracy with US Army Intelligence analyst Chelsea Manning to hack military secrets published by Wikileaks, a charge Assange denies. Unless the High Court order is reversed, a trial promises to be a David v. Goliath collision between press freedom and military secrecy and security.
The US philanthropic local journalism initiative Report for America announced a major expansion of its internship program to 325 posts in 270 newsrooms in 50 states. The non-profit group is underwritten by private funders, including the Knight Foundation, the Walton Family Foundation (Walmart), Google and Facebook.
An under-investigated policy issue is how much money might be delivered by a Media Bargaining Code requiring Google and Facebook to share revenue with Canadian media outlets, otherwise known as pay-for-content.
The Liberal government has promised such a Code early in the new year, inspired by the Australian government’s move last March.
But we still don’t know the final negotiated value of those Australian media deals. The examples cited in Turvill’s article suggest much lower results than Murdoch was hoping for. An Australian industry analyst offered up the figure of $CDN 190M as the aggregated settlements with Google and Facebook, covering both print and broadcast.
Canadian publisher expectations from a legislated Media Code have now been drastically revised from $620M to less than a quarter of that figure at $100M to $150M, according to Turvill. That implies their recent crop of deals with Google and Facebook is worth even less than the revised figure, suggesting the platforms are having their way.
What’s going on is Google and Facebook stealing a march on government regulation by negotiating confidential deals, one financially desperate publisher at a time. The strategy must be to establish a low “market price” for aggregated news on their Platforms before any Australian-inspired arbitration process sets it higher.
There is of course no “market price” in a monopoly, other than what the monopolist tells you it is.
As well, the exclusive focus of the Platforms’ negotiations for news articles ignores the indirect value of the ad revenue Google and Facebook earn by attracting news readers to their websites before they even know what they want to read.
The pay-for-content deals also ignore the anti-competitive duopolies over Search and Social advertising that have made Google and Facebook so rich and news media so poor.
If you want to read more about Facebook’s deals with Canadian publishers, check out an excellent feature article by The Logic’s Martin Patriquin, particularly the last few paragraphs.
#JournalismIs essential to democracy. The next few months of the legislative agenda in Ottawa promise an intense chapter in the history of Canadian media as three Heritage Bills are scheduled to hit the order table; a revised Broadcasting Act, a Platform pay-for-news-content Bill, and online harms legislation.
There’s a cross connection between the three Bills: both the Broadcasting Act and the Platform Bill respond to the declining financial viability of news journalism. Conversely much of the political fuel for the online harms legislation is about anti-journalism, meaning the misinformation and online intimidation that pollutes social media platforms.
A Nanos poll says almost 80% of Canadians have had enough of online toxicity and want something done about it. That will embolden the Liberals to bring forward what will inevitably be a controversial Bill.
Doctor Media, heal thyself. A nice muckraking piece by Jon Horler says that 1 out of 10 television news panelists is a lobbyist with undisclosed conflicts of interest, but presented by the host network as a “strategist” or some other banality.
I have to admit I’m enough of a journalism homey that I mostly see the integrity of the flip side 9-out-of-10. But kudos to Horler for challenging the networks to be transparent.
Kevin. Not a Pearl Jam song. But rather Kevin Chan the face of Facebook in Canada. Martin Patriquin has written a terrific feature that tees off like a typical is-he-really-a-corporate-bad-guy profile but ends with a bang. Great read.
There’s a helpful article in the National Post regarding Finance Minister Chrystia Freeland’s stick handling of the yet-to-be implemented Digital Services Tax owed by American tech giants Google, Facebook and Amazon for their monetization of personal data harvested from Canadians online.
The three per cent digital services tax —legislated by the Liberals in 2021 and supported by the Conservatives in their election platform— was scheduled to be implemented January 1, 2022. It was expected to raise $700 million annually in government revenue, rising to $900 million when fully implemented.
Despite the original purpose of the tax being described as an instrument to get American Big Tech to pay its “fair share” for cornering the digital advertising market (thus disrupting the financial viability of media companies around the world), most sovereign governments including Canada signalled very early that a Digital Services Tax was less an “audience tax” than a down payment on a minimum corporate tax for foreign tech companies.
Now that OECD nations including the US and Canada have agreed in principle to a minimum corporate tax beginning in 2024, it’s likely the audience tax will be repealed. Other countries like Turkey have already done so in an effort to resolve trade issues with the US. For now, Freeland is pausing the collection of the Canadian Digital Services tax pending the implementation of the corporate tax in 2024.
The Finance Minister might displease the US administration by not cancelling the 3% tax outright, but likely she is keeping her powder dry until 2024. Also perhaps the latest eye gouging from the Biden administration on Buy America and lumber has something to do with it.
The headline is that City-TV stations in Vancouver, Edmonton, Calgary and Winnipeg will double their “journalist” headcount (plus an additional 12 non journalists) to beef up news coverage capacity at those four stations.
This is in addition to the commitment Rogers previously made in its merger application to hire 6 Indigenous journalists (one in each major market) to cover First Nations, Métis and Inuit issues and;
Hire two western-based journalists to cover Parliament Hill.
Rogers is willing to make these commitments as a condition of merger approval until their station licenses expire in 2023 but wish to keep their powder dry on anything further, pending the CRTC’s upcoming licensing hearings.
The additional reporters will increase news gathering capacity in each coverage area and Rogers has committed to broadcasting 12 news specials in each of the four western City-TV markets, every year.
The precise number of the “doubled” newsroom staffing is unknown thanks to Rogers claiming “competitive confidentiality” which the CRTC has granted in posting a redacted version of Rogers’ submission.
The CRTC’s reflexive shielding of the most mundane “competitive” information has been going on for years and does the regulator no credit.
Without a doubt, all of City-TV’s competitors (including Bell CTV and Global) know exactly how many videographers and reporters are employed by their rivals. It’s hard to keep something like that secret without demanding that journalists appear masked on air.
How all of that stacks up against the 162 television salaries (estimating $80,000 each) you can fit into $13 million is something we will have to keep guessing at. Depending on what Rogers means by “journalist” my wild guess is 95 new hires in total.
However, Rogers has also read the room on the impact of the $13 million de-funding of Global News.
“Rogers has proposed an exception be made to this allocation [of 40% of the $26 Million package to Certified Independent Film Production Funds] and request that [$8,518,400] be redirected to the Independent Local News Fund (ILNF) as a lump sum payment upon close of the transaction.”
If approved, this transfer would partially mitigate the $13 million switch in local expression funding from Global News to City TV while leaving the shortfall in the hands of the Commission’s review of the ILNF funding envelope.
CRTC Commissioner Ian Scott, looking for a little help on the file.
November 29, 2021
The dust has settled after a week-long CRTC hearing reviewing the $5 billion broadcasting distribution end of the $26 Billion Rogers-Shaw merger.
Don’t be surprised if we wait a long time for the decision, long enough for the Competition Bureau and the federal government to first rule on the other 80% of the deal that isn’t in the CRTC bailiwick, namely the Internet and Wireless assets.
If the merger gets that first green light the next question is what will CRTC Chair Ian Scott and his four commissioners do with Rogers’ proposal to buy Shaw’s cable and satellite broadcasting operations in the western provinces?
The dramatic increase in Rogers’ share of the broadcasting distribution market —from 20% to 47% of the English language market, with Bell in second place at 28% — is the hottest of potatoes for the Commission.
Even in an industry as heavily regulated for competitive fairness as Canadian broadcasting, market power is an insidious enabler of economic bullying, especially in the negotiations between the cable companies and scores of programming services making deals for the video content distributed to millions of Canadians.
Every extra dollar that an omnipotent Rogers Cable squeezes out of other Canadian media companies means 30 cents less spent by those programming services on Canadian Programming Expenditures, including local news, drama, documentaries and the like, the very reason for the Broadcasting Act’s existence.
The opponents of the merger tap into something very real: our healthy distrust of concentrated corporate power. Bigger is not better, the wisdom goes, it’s inherently dangerous.
On the other hand, the Rogers pitch to the Commission on market concentration is this: the “market” is global, not Canadian. In the age of Internet TV giants and multi-billion dollar capital spending on broadband infrastructure, Canadian media companies need economies of scale.
In fact the Shaws defend their decision to sell to Rogers as an admission they don’t have the scale or capital to compete in the race to build today’s Internet Protocol TV platform and the fibre-to-the-home and 5G hardware that supports it.
Rogers argued before the Commission that if Canada doesn’t have a national champion capable of delivering Internet video through cable subscriptions, Canadians will cut the cord even faster, the regulated broadcasting system will crumble, and so will a system designed to cross subsidize Canadian news, sports, and entertainment. We’re not monopolizing the Canadian broadcasting system, says Rogers, we’re saving it.
But like a lot of government regulation, much depends on what we think will happen, because we often don’t know what will happen. It’s the regulator’s comfort (or delusion) that today’s hypothetical problems can always be fixed later.
Here’s another trite but true observation about regulators: they don’t as a rule begin their day blue skying about the ideal model of their industry. They take a look at the market direction of the industry and then mitigate and modify in the public interest.
I would be surprised if the Commission turned Rogers down, but they do have few conditions they could impose:
First, they could require Rogers to divest some broadcasting assets. It’s not easy to imagine which of Shaw’s cable or satellite assets could be sold off and operated as a viable business on its own. More likely by the time the Commission writes up its decision, the federal government will have already forced Rogers to sell off Shaw’s Freedom wireless division.
Second, the Commission could answer the pleas of the many programming services who asked for stronger bargaining rules under the CRTC’s Wholesale Code that regulates negotiations between big and small media companies over the “fair market value” of content distribution. Much of the week long hearing was a deep dive on what that might look like.
And there are other caveats and consolation prizes they might think up.
But one thing I will predict (and it isn’t rocket science): if the Commission says it’s okay for Rogers and Shaw to merge into a super media company owning 47% of the English language broadcast distribution market, it is opening the door wide to the remaining media companies to do the same.
Expect Bell and Telus, who already share a wireless network across Canada, to walk right through that doorway.
MediaPolicy.ca 