Debate heats up as commission ponders two or seven-year licence renewals for Shaw

Debate heated up at a CRTC hearing in Calgary Monday as parties disagreed over whether the commission should renew Shaw Communications Inc.’s broadcasting licences for two or seven year periods. Michael Hennessy, Telus Corp.’s senior vice-president of regulatory affairs, told commissioners Monday that Shaw should receive only a two-year renewal for 24 of its licensed cable systems in Western Canada ahead of a “massive shift in industry structure.” In a hearing that preceded the CRTC’s examination of Shaw’s $2-billion purchase of Canwest Global Communications—for which hearings are scheduled to start Tuesday—Hennessy said the CRTC should exercise caution on Shaw’s licence renewals. “No one has a crystal ball which enables them to see what the future will hold in five to seven years, given the speed of change and constantly evolving business models for new platforms,” Hennessy told the commission. “urely no one would have predicted the level of concentration, consolidation and vertical integration about to become the norm in Canadian broadcasting. It is possible that Canada is about to become amongst, if not the most vertically integrated, jurisdiction in the OECD ,” Hennessy said. But Shaw asked the CRTC for a seven-year licence renewal for its 24 broadcasting licences, which involves the company’s 22 community channels in Western Canada and Northern Ontario. “Long term renewals for our licensed cable systems are critical to provide confidence to our customers, industry partners and investors, and allow us to focus on maximizing our contribution to the system,” Brad Shaw, the company’s executive vice-president, told the commission Monday. Michael D’Avella, Shaw’s senior vice-president of planning, said future challenges in the broadcasting sector, including competition from international, unregulated “over-the-top” companies such as Google, Hulu and Apple, will require “regulatory certainty” beyond a two-year period. Shaw’s broadcasting licences expire Nov. 30, 2010. The commission took issue with late payments Shaw made to the Canada Media Fund (CMF). Shaw is legally required to pay into the fund, which has dedicated $323 million to funding Canadian television productions and new media initiatives—but Shaw was four months late on its payments. CRTC chair Konrad von Finckenstein said Shaw’s late payments to the CMF did not inspire confidence in the company or reassure him that a seven-year licence renewal is appropriate. “The only tool I have to get your attention is not to give you a full renewal,” von Finckenstein said. But Shaw executives assured the commission that as soon as they found out they were four months behind on the CMF payments they corrected the error and made up the difference. “Once the matter was brought to our attention, we took immediate steps to investigate, and full payment was made to the CMF within five days,” Jean Brazeau, Shaw’s senior vice-president of regulatory affairs, said at the hearing. Catherine Edwards, a spokeswoman for the Canadian Association of Community Television Users and Stations (CACTUS), said she is concerned that Shaw cannot meet the CRTC’s new community television policy, which requires more community access programming. In its new policy, the CRTC is requiring a minimum of 35 per cent community access programming during the 2011 broadcast year, 40 per cent in 2012, 45 per cent in 2013, and 50 per cent in 2014. Community access programming consists of programming that has originated with a community member not employed by the cable company and where community members can exercise creative control over the show. Edwards said Shaw has a total of about 10 studios in the 22 community television licence areas being considered for licence renewals. “We would ask how Shaw plans to meet these requirements in licence areas that no longer have studio facilities,” Edwards said. “Where can residents tape a program? Where can training be held? Will Shaw reopen studios in these license areas?” Edwards said the CRTC should request that cable companies report their community access expenditures by licence area instead of reporting expenditures for its entire network of community television stations. Following CACTUS’ presentation to the commission, Shaw told the CRTC that it would agree with the proposal to report community television expenditures by licence area. The CRTC will hold three days of hearings in Calgary, starting Tuesday, to review Shaw’s purchase of Canwest Global’s broadcasting assets. jmigneault@thewirereport.ca

Debate heats up as commission ponders two or seven-year licence renewals for Shaw

Broadcast | September 20, 2010

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