Heritage, Industry committees likely to plug different policies on foreign ownership

The House of Commons Standing Committee on Industry, Science and Technology appears poised to make recommendations that are more in line with the demands of Canada’s largest cablecos than the status quo policy direction expected from the Standing Committee on Canadian Heritage. Reports by both committees are due out in weeks, and they are expected to come out with conflicting recommendations. The Industry committee is widely expected to recommend a liberalization of foreign ownership restrictions in the telecom sector and perhaps even extending that to the broadcasting system. The cable industry has long advocated a complete removal of foreign ownership restrictions for broadcast distribution undertakings (BDUs) (CCR Update, March 5/03; CCR, Dec. 5/02, Sept. 26/02, Sept. 13/01). Over several weeks of testimony, members of the Industry committee were told "yes," "no," and "maybe" to whether the restrictions that currently limit foreign ownership to 20% direct investment and 33% indirect investment should be changed. The Industry committee heard a rehashing of arguments that broadcast players gave before the Heritage committee. But insiders believe the two committees will come to very different conclusions. The Heritage committee appears to be siding more with broadcasters such as CHUM Ltd., Alliance Atlantis Communications Inc. and Astral Media Inc., which worry about non-Canadian influence over programming if foreign companies were allowed to own majority stakes in Canadian broadcasters. The Heritage committee is expected to suggest no changes to current foreign ownership restrictions in the broadcasting distribution and broadcasting industries (CCR, Dec. 13/02). Heritage committee chair Clifford Lincoln has already hinted that potentially conflicting recommendations from the two committees could cause confusion in the public mind (CCR, Dec. 5/02). The issue is potentially explosive, not only dividing the two Parliamentary committees, but also members of the telecom and broadcasting industries. In stark contrast to the position of CHUM, Alliance Atlantis and Astral Media, another private broadcaster, CanWest Global Communications Corp., called for the inclusion of broadcasters in any liberalization of ownership rules for telcos. Appearing before the Industry committee on the last day of hearings on February 27, CanWest Global president and CEO Leonard Asper noted that telcos don’t operate in a vacuum. "Because of those competitive linkages, CanWest opposes liberalization of foreign investment rules for telecommunications companies or for BDUs unless broadcasters are also included," he stated. He added that opening up broadcasters to outside investment should not hinder the Canadian television industry from meeting Canadian content commitments or properly supporting the cultural sector. But the Winnipeg-based broadcaster was contradicted by a telco in a neighbouring province that has entered the BDU business. SaskTel president and CEO Donald Ching, in an appearance February 25 before the committee, noted, "We believe that the current foreign ownership regulations are fair and reasonable, and that the public interest is best served when Canadians own and control one of this country’s primary infrastructures, telecommunications." However, the cable industry also has the support of another formidable ally – Competition Bureau commissioner Konrad von Finckenstein. On February 24, he repeated to the Industry committee the same suggestions he made before the Heritage committee – that restrictions be eased and the same rules applied to telcos and BDUs. During a February 19 hearing, there was again mixed reaction when an Industry committee member queried, "For the last couple of weeks, we’ve heard several arguments, but today we have the black and the white at the same table. Maybe the solution is somewhere to be found in the grey area. Can there be a solution that adds foreign capital into the system, but at the same time protects Canadian public policy objectives?" Representatives from the National Alliance of Communications Unions (NACU) responded, "What we’re trying to say is why do we need to take a step forward when maybe we should take a look back at what has happened in the past since the introduction of competition. I’m not sure there can be grey when majority ownership equals control." The NACU is a coalition of the Communications, Energy and Paperworkers Union of Canada, the Telecommunications Workers Union, the Canadian Auto Workers Local 2000 and the Atlantic Communication and Technical Workers’ Union. But McGill University professor Richard Schultz suggested there was a grey area and advocated a tiering approach based on market share. "If you’re below a certain market share level, then we’ll let you have greater access to foreign capital and see who will come in," he said.

Heritage, Industry committees likely to plug different policies on foreign ownership

Broadcast | March 13, 2003

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