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Bell’s CEO, George Cope has claimed that “anything that moves the pendulum away from regulation is a good thing for consumers, the concept of monopoly is . . . antiquated” (Paul Chiasson/Canadian Press)
Bell’s CEO, George Cope has claimed that “anything that moves the pendulum away from regulation is a good thing for consumers, the concept of monopoly is . . . antiquated” (Paul Chiasson/Canadian Press)

Opinion

Bell-Astral deal should be stopped in its tracks Add to ...

Bell’s bid to swallow Astral Media is not just a little deal, but a massive deal between the largest Telecom-Media-Internet conglomerate in the country with revenues of just over $22-billion, and Astral, the eighth-largest media outlet in Canada with revenues of $888.1-million in 2010.

If this deal goes through, we will have lost yet another independent and our position as having one of the most concentrated set of TMI industries amongst the developed capitalist economies will be yet further cemented ( see here).

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As the famous economist Ronald Coase noted as far back as 1937, there are two ways of dealing with uncertainty in business environments: the market or hierarchies. The fact that “Astral products currently represent Bell’s largest single content cost,” as the news release announcing the deal this morning notes and as Steve Faguy observes, is probably one of the most important elements of the transaction. No longer needing to rely on the market, Bell’s acquisition puts an over-weighted thumb on the scales of hierarchies over markets.

Instead of relying on the market as a way of acquiring and developing programming and content, Bell’s acquisition of Astral would simply absorb a significant part of the television and radio market into its sprawling hierarchy, in the hope that doing so will juice its efforts to drive more traffic over its broadband networks and thus feed its desire to have bandwidth, not content, serve as a key source of revenue.

Bell’s CEO, George Cope claims that “Anything that moves the pendulum away from regulation is a good thing for consumers, the concept of monopoly is . . . antiquated” is simply self-serving cant. Yet, it really is an open question as to whether or not regulators will turn back this deal. I have my doubts mostly because the CRTC seems incapable of identifying a merger or take-over it can’t justify. The arguments are always the same: Deep pockets are good for CanCon, Canada’s media economy is small relative to world standards, integration will give behemoths incentives to invest. All such claims are mostly bogus.

The CRTC’s 2008 Diversity of Voices decision set out some rules on the matter, but I’m afraid that they are too weak. That decision set out four major guidelines that would be used to evaluate mergers and acquisitions, but the most important one in the present case is Ownership Caps it set out. According to these new guidelines, any transaction that results in a single ownership group controlling less than 35 per cent of the television broadcasting and pay and specialty market will be seen as not diminishing diversity and approved. Those that fall into the 35-45 per cent range will be considered as potentially lessening competition and reviewed, while anything over 45 per cent will be seen as creating excessive concentration and rejected.

However, the problem is that the adopted thresholds are based on standards originally developed by the Competition Bureau for measuring competition in banking services. They have nothing to do really with important values related to diversity of sources and content, freedom of expression, and so forth that are relevant to assessing communication and media matters.

While Astral is the fifth largest television operator (after Bell/CTV, Shaw/Global, Quebecor/TVA, CBC, in that order) and second largest radio station owner (after the CBC) in Canada, it is but a pygmy alongside Bell. Bell has major and more often than not dominant stakes in the following TMI sectors (with ranking in each market indicated in parentheses): wired (1) and wireless telecoms services (3), Internet access (1), TV distribution (cable, DTH, IPTV) (3), broadcast television (2), pay and specialty channels (2) and radio (5).

For it’s part, Astral is the fourth-largest specialty pay television service provider in the country with 24 channels (e.g. the Movie Network/HBO Canada, Super Écran, Family, Disney Junior, Disney XD, Canal Vie, Canal D, VRAK.TV and TELETOON). It currently has just over 15 per cent of the market. Astral is also the second largest radio station ownership group in the country, with 83 stations and 17.1 per cent of the market.

Astral has also been important because in a country where vertical integration has moved from the margins to the norm, it was one of the most significant non-integrated actors. Astral is to television and radio what Telus is to telecoms: a large, indeed, dominant player in its own right, but without clout across the mediascape as a whole and thus a source of some diversity within each of the media sectors they operate.

If the Competition Bureau and CRTC approve the transaction, Bell will add 24 pay and specialty television services to the 29 it already owns (total 53 services) in addition to already owning the largest conventional television broadcaster, CTV, plus the second English-language network, CTV2 (the former A-channels). It will have 116 radio stations, whereas it currently has 33.

That adds up to:

  1. 40 per cent of the pay and specialty television market;
  2. a whopping 34.3 per cent share of the entire Canadian television universe;
  3. catapulting Bell from being the fifth ranked player in radio to top dog with over a quarter of all radio revenues;
  4. Bell's dominance across the TMI industries as a whole will be further cemented, rising from roughly 16 per cent of all revenues across the network/media industries to just under a fifth of all revenues (excluding wired and wireless telecoms).

The transaction will not cross the 45 per cent threshold which triggers outright rejection, but in pay and specialty television services, the fact that Bell will have 40% of the market comes damn close. A more reasonable standard would see this rejected on its own merit. As I’ve said a million times before, we already have one of the most concentrated markets in the world and we are no better for it. This deal should be stopped in its tracks

At the end of the day, and seen from the perspective of the media economy as a whole, this will also move levels of concentration among the “big four” (Bell, Shaw, Rogers, QMI) even higher.

Concentration levels among the big four for pay and specialty television services will move from roughly 84 per cent to just under 90 per cent. If we combine conventional broadcast TV with pay and specialty TV, the big four will go from controlling 77.5 per cent of the market to 85 per cent. And if we take the big view and look across the entire network media economy, levels of concentration amongst the big four will rise from the already historic all-time high of 52 per cent to about 55 per cent.

This is truly incredible. If we care at all about the health, diversity and range of voices in the Canadian media, such ventures need to be turned back.



Dwayne Winseck is a communications professor at the School of Journalism and Communication, Carleton University in Ottawa. Prof. Winseck been researching and writing about media, telecoms and the Internet in one way or another for nearly 20 years. You can read more comment on his blog, Mediamorphis .

 
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