“The more you know about Bell, the more you don’t like the deal,” Mr. Bozinoff says. “I don’t know that it is obvious to people that there are economies of scale involved. They are reacting to the fact that Bell is getting bigger and will have more say over their choices.”
And in the past week, a consumer-focused group called Stopthetakeover.ca launched its own online drive to scuttle the deal by appealing to the country’s Competition Bureau and Industry Minister, both of which have the power to alter or outright kill the deal.
The group – whose membership roster includes anti-poverty groups and unions – argues that Bell will use its size to dominate smaller rivals, charging them high rates for programming that will eventually be passed to consumers.
While people often talk about vertical integration as if it were a new phenomena, history is rich with examples of governments stepping in to break up companies that controlled too much of the content they existed to distribute. In the early 1900s, the Canadian government busted up the cozy relationships that telegraph companies had developed with news agencies. In the 1940s, the United States took a dim view of the way Hollywood studios controlled the theatres where its films were shown, and busted up the system.
“You don’t have to go into fantasyland looking for answers as to why this might be a bad idea,” says Dwayne Winseck, a communications professor at Carleton University who wrote some of the material the group has used to make its anti-merger point. “Just maintaining the normal rules of the markets, we know that too big is too big. It impacts pricing and it impacts innovation.”
Prof. Winseck – who says the deal shouldn’t be allowed to proceed because it would make Bell too dominant a player in Canada – says Canadians have been willing to give media companies a free pass because there is a perception that the Canadian broadcasting market is small and in need of large corporate heroes.
But the country is eighth in the world when it comes to generating revenue in the telecom, media and Internet sectors – it pulled in $34.4-billion last year, putting the country between Italy and South Korea.
“Bell presses all the time that we need big players with deep pockets to compete with global behemoths,” he said. “I say this is a big myth they perpetuate, but we allow these arguments to provide cover for consolidation. People who usually puke when you drop a nationalist card accept it all the time in this area.”
Not everyone is against the merger: Troll through the interventions filed with the CRTC, and you’ll find plenty of praise from TV producers and community groups across the country – almost all of whom, it must be said, have a direct financial stake in Bell’s success. This week, Bell announced it was creating a $15-million production company with the Cirque du Soleil, though it would revisit that if the deal fell through.
For decades, that’s just how the small world of Canadian broadcasting has operated, all to ensure a strong home-grown industry.
But today, says Prof. Picard of Oxford, that rationale may have run its course. “If you look at media, Canada has always allowed levels of concentration that are two to three times higher than those found in Europe and in the United States. And understandably so – the idea that Canada had to protect against the U.S. certainly made sense, and it had to be competitive against the U.S. if it was going to produce its own.
“It’s had a very good record, in terms of producing Canadian content, and done very well. But is more concentration needed to continue doing that?”