Shaw hoping for regulatory approval of Canwest deal by September

Shaw president Peter Bissonnette says he hopes to see the CRTC approve the company’s acquisition of Canwest Global Communications Corp.’s broadcasting assets by September. “Our applications are filed, the commission has those, and we would expect it to be vetted by the beginning of June,” Bissonnette told The Wire Report in an interview. “We would expect that sometime between the end of July and the end of August there will be a public hearing and we hope there would be a decision before the end of September.” Bissonnette said he expects the CRTC to approve Shaw Communications Inc.'s $2 billion acquisition of Canwest’s broadcasting assets. “I think the CRTC will see this as very positive,” Bissonnette said. “We’ve taken two controlling American partners out of the equation at a great expense to Shaw. The commission clearly sees full ownership by a Canadian company, which they know as a good thing.” The deal includes Shaw’s acquisition of all equity interests in CW Investments Co., a Canwest subsidiary, from the New York investment firm Goldman Sachs Group Inc. for $700 million. Sheridan Scott, a partner with Bennett Jones LLP in Ottawa and former head of the Competition Bureau, said the CRTC will review the transaction with care. “Whenever you have a carrier coming together with content providers you have to worry about issues around unjust preferences, the implications of vertical integration and access to the cable system,” Scott told The Wire Report. Shaw currently offers cable television, digital phone and Internet services, and has plans to launch mobile wireless services in late 2011. With the acquisition of the Canwest Global assets, Shaw will also become a major broadcaster, adding to its roster a host of specialty channels and the Global TV network. At a panel discussion Thursday in Ottawa, Robert Rabinovitch, former president and CEO of the CBC, said the Shaw-Canwest deal illustrates how Canada’s foreign ownership restrictions have not leveled the playing field and have instead led to conditions that favour monopolies and high consumer prices. “I don’t see how controlling entry by non-Canadians spurs innovation, creates a level playing field, or results in protecting the consumer. To me, it’s almost an oxymoron. The two are completely different concepts. When you create barriers to entry, all you really do is create high prices, minimal innovation, and high monopoly profits,” Rabinovitch said at a panel discussion titled “Telecom in Canada: A New Owner’s Manual,” hosted by Canada 2020. “We’ve made a few families in Canada extremely rich. It’s not surprising that one of those rich families has basically stepped up to the plate to buy out another rich family, which basically went bankrupt. I’m talking about Shaw buying out of Canwest Global.” In response to Rabinovitch’s comments, Bissonnette said Shaw is doing Canadians a favour with its acquisition of Canwest, and that the move will benefit consumers. “We’re buying because it makes patently good sense to our shareholders and a positive impact on Canadians will happen as a result of this acquisition,” Bissonnette said. Some analysts have also criticized Shaw’s move to acquire content before launching its wireless network. “Time will tell whether the marriage of content and distribution makes sense,” Jeff Fan, an analyst with Scotia Capital, told The Globe and Mail this week. “In English Canada, it’s been relatively unproven … I don’t think Rogers Wireless or Rogers cable customers are buying their services because of content.” Previous deals between distributors and content producers—such as the unsuccessful merger of AOL and Time Warner in 2000—have not been successful. But some experts say the situation is very different today. “The fact that the people who did it in 1999 were wrong doesn’t mean that Shaw is wrong today,” Duncan Stewart, technology, media and telecommunications director of research for Deloitte Canada, told The Wire Report. But Stewart said Shaw’s move is unusual because most cable providers have opted to expand into wireless—where the business model is more familiar—not into content. He added that it makes more strategic sense to bundle wireless services with traditional wired services. “In the last three or four years, all of the cool kids in the wired world have focused more on getting into wireless and all the profits that it has, rather than going out and investing in content,” Stewart said. But Bissonnette said new ways of sharing content through smart phones and other devices over advanced broadband and wireless networks have completely changed the playing field. “We’ve heard all the disparaging remarks about AOL,” he said. “AOL was a different time, a different century almost.” In response to concerns that Shaw could have its hands full as it plans to launch its wireless network while juggling new content acquisitions from Canwest, Bissonnette said there won’t be an impact on Shaw’s dividends. “Our free cash flow from operations is tremendous,” Bissonnette said. He added that Canwest generates $900 million in revenues and that Shaw is not buying a startup company. Canwest’s television network and specialty content will give Shaw a competitive advantage by offering customers extra value, Bissonnette said. “It’s always interesting when you look at the acquisition of conventional broadcasters that have local news capabilities across the country,” Scott added. “That can sometimes provide a very promising source of content for the cable company.” Bissonnette told The Wire Report that Canwest’s television broadcasting assets will see more local programming. “I think we’re going to see creative approaches to news, I think we’re going to see more local programming that is relevant to Global and to the specialty services,” he said. “I think you’ll see more sharing of programming across specialty and network.” If the deal goes forward, it will bring Shaw to the content negotiating table for the opportunity to win rights to popular American shows and sporting events. It will also give Shaw the chance to try to exchange content with Rogers and other companies. Rogers, for example, has acquired the broadband rights to the World Cup, Bissonnette said. Scott said she does not expect the potential acquisition of Canwest to have much of an impact on the value-for-signal debate. Shaw and other cable companies were vocal opponents of paying anything for the carriage of free, over-the-air television signals. In March, the CRTC asked the Federal Court of Appeal to approve a proposed system that would allow broadcasters to force the distributors into negotiations, where they can determine the “value” of carrying the broadcasters’ over-the-air channels. The matter is still before the court. But Global, now expected to become part of Shaw, was a proponent of value for signal. “It’s a lot easier to come to an agreement with somebody when you have an harmonious relationship as opposed to an acrimonious relationship,” Bissonnette said. --With files from Simon Doyle jmigneault@thewirereport.ca

Shaw hoping for regulatory approval of Canwest deal by September

Broadcast | May 7, 2010

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