Canada’s telecom regulator has approved Rogers Communications Inc.’s RCI-B-T takeover of Shaw Communications Inc.’s SJR-A-X broadcasting services with some conditions attached, clearing the first of three regulatory hurdles facing the $26-billion takeover.
The Canadian Radio-television and Telecommunications Commission said in its decision on Thursday that the deal, with the conditions it has proposed, is in the public interest because it would advance the objectives of the Broadcasting Act. Those goals include encouraging the development of programming that reflects Canadian attitudes, opinions and values.
“Canadians as consumers will benefit from this transaction,” the CRTC’s decisions reads.
The conditions set out by the regulator would require Rogers to pay $27.2-million to the Canada Media Fund, which finances the creation of Canadian content, the Independent Local News Fund, which supports independent television stations in producing local news, and specific independent production funds, such as the Rogers Documentary Fund and the Shaw Rocket Fund.
Consumer advocates expressed dissatisfaction with the ruling. John Lawford, executive director of the Public Interest Advocacy Centre, an Ottawa-based consumer advocacy group, said it was disappointing that the regulator appears to have ignored the potential cost impact on consumers.
“Shaw customers should get set for higher TV and internet prices, and a ‘forced march’ to Rogers’ Ignite TV platform,” Mr. Lawford said in a statement.
Innovation, Science and Industry Minister François-Philippe Champagne said earlier this month that he won’t allow Rogers to acquire all of Shaw’s wireless licences because doing so would go against Ottawa’s desire to preserve competition in the wireless sector.
Mr. Champagne said on Twitter that Thursday’s decision does not change his position. “I will reject any deal that doesn’t ensure affordability for Canadians and a competitive wireless market,” he said.
Shaw’s broadcasting distribution business includes a satellite TV service called Shaw Direct, and cable television services in British Columbia, Alberta, Saskatchewan and Manitoba. More than two million Canadians subscribe to Shaw cable and satellite TV.
BCE Inc., which owns Bell Canada, and Telus Corp. had asked the CRTC to reject Rogers’s application, arguing the combined entity’s greater scale in the broadcasting distribution market would give it too much control over the availability of programming. (Broadcasting distribution refers to the delivery of television channels through cable, satellite or internet protocol networks.)
The CRTC is one of three federal bodies whose approval is required for the takeover to proceed. The Competition Bureau is reviewing whether the merger would substantially reduce competition, while the Ministry of Innovation, Science and Economic Development (ISED) is examining the transfer of spectrum – licences to the airwaves used to transmit wireless services – from Shaw to Rogers.
In early March, after Mr. Champagne said he would not allow all of Shaw’s wireless licences to be included in the takeover, Rogers CEO Tony Staffieri said the wireless giant will work with regulators on a solution that preserves Canada’s fourth-largest wireless carrier, Shaw’s Freedom Mobile.
The Globe and Mail previously reported that Freedom Mobile founder Anthony Lacavera has made a $3.75-billion offer to buy back the wireless unit, and that rural internet provider Xplornet Communications Inc. is in talks with Rogers about potentially acquiring the business.
Mr. Staffieri called the CRTC’s approval “an important milestone” that brings the company a step closer to completing the takeover.
“Together, Rogers and Shaw will accelerate investment in 5G and cable networks across Canada, offer consumers and businesses more choice and competition, and connect rural and remote communities faster than either company could alone,” Mr. Staffieri said in a statement.
Both Rogers and Shaw said they expect the deal to close by the end of June.
“We appreciate the CRTC’s thoughtful inquiry and remain committed to working with government and regulators to achieve a successful completion of our proposed transaction with Rogers,” Brad Shaw, executive chair and CEO of Shaw, said in a statement.
OpenMedia, an organization advocating for widespread inexpensive internet access, called the CRTC’s decision “tone-deaf.”
“The CRTC claims their modified version of the deal is in the best interest of Canadians; in what world is that true?” Matt Hatfield, campaigns director at OpenMedia, said in a statement. “Every single guarantee Rogers is making to secure our watchdogs’ co-operation is a short-term payment or unenforceable promise; the long-term outcome is clearly a net loss to everyone outside the Rogers and Shaw families.”
Other conditions attached to the CRTC’s approval include that Rogers must distribute at least 45 independent English- and French-language services, and that it must air 48 prime time local news specials each year.
The telecom and media giant is also required to report to the CRTC on its progress regarding the company’s commitments to increase the number of journalists it employs and create an Indigenous news team, among other conditions.
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