Shaw says there ‘is no codified or statutory requirement’ for 10 per cent benefits

Faced with industry opposition to its proposed “tangible benefits” package arising from its acquisition of Canwest Global Communications’ broadcasting assets, Shaw Communications Inc. is arguing that there “is no codified or statutory requirement” to pay 10 per cent of the transaction in benefits. Responding to interventions through a reply on the CRTC website, the company said its critics wrongly assign a monetary figure to the benefits arising from the deal, and reiterated that preventing the dismantling of Canwest is a significant “intangible” benefit to the public. “It is wrong to assert that an acquisition does not serve the public interest in the absence of the levy of 10% of the value of the transaction as tangible benefits,” Shaw wrote in a reply to comments as part of a CRTC proceeding on the company’s purchase of Canwest’s assets. “There is no codified or statutory requirement with respect to benefits. The benefits ‘policy’ is just that—a policy. Therefore, Shaw respectfully reiterates its position that the Commission should exercise discretion in determining how the benefits policy should be applied, taking into account the particular circumstances of this case.” The CRTC requires companies to propose a “tangible benefits” package when it approves a transfer of ownership or control of broadcasting assets to ensure public benefits from the transaction. Traditionally, tangible benefits packages represent 10 per cent of the transaction and are used to fund independent performers and producers. Initially in May, Shaw proposed a $50.6-million package for the “change in control” of Canwest, but the commission came back to Shaw, asking how it would spend 10 per cent of the transaction. Shaw then proposed a $203-million benefits package, which includes an outstanding $95 million leftover from the 2007 Canwest-Alliance Atlantis deal, $23 million for digital transmitters in non-mandatory markets, and $43 million to produce morning newscasts. Shaw said that its purchase of the Global network prevented the closure of some local stations. “Shaw’s Acquisition prevented the scenario in which additional stations would have to be sold or closed. The potential to preserve an insolvent holder of multiple broadcasting licences in its current form, rather than dismantling them and selling them off piecemeal, is a clear and quantifiable benefit,” Shaw wrote. In an email statement to The Wire Report, Stephen Waddell, national director of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) said Shaw has yet to prove it shouldn’t pay 10 per cent of the $2-billion figure. “No one says Shaw's purchase of Canwest doesn't bring intangible benefits to our broadcasting system, but that doesn't exempt them from their obligation to provide tangible benefits. Shaw has yet to produce a compelling argument that those tangible benefits should be any less than $200.5 million,” he said. The Canadian Media Production Association (CMPA) told The Wire Report in August that it was concerned about the inclusion of $95 million from Canwest’s outstanding benefits, and qualified those funds as a “done deal.” But Shaw stands behind its proposal. “Shaw’s commitment to assume responsibility for the remaining $95 million of the outstanding Alliance Atlantis benefits is a legitimate benefit,” Shaw wrote. “Shaw submits that it would be unfair to impose another level of benefits over and above Shaw’s commitment to assume the obligation to expend the $95 million in remaining benefits, given the steps taken by Shaw to remove the economic uncertainty surrounding all of the Canwest ownership, including the CWI properties.” The CMPA, which will present its position at the CRTC’s public hearing set for Sept. 20, declined to comment for this article. As part of its benefits package, Shaw is also proposing to convert all of Canwest’s transmitters to digital, including those located in non-mandatory markets, in advance of the CRTC’s digital transition deadline of Aug. 31, 2011. But interveners, including Telus Communications Co., described the proposal as “the cost of doing business,” not as a tangible benefit. Telus declined to comment on Shaw’s reply prior to the hearing. Shaw wrote that converting transmitters in non-mandatory markets will “kick start” the Canadian broadcasting industry as it moves forward with the transition. “It will have a significant positive economic multiplier effect, not the least of which will be generated by the competitive pressures it puts on other private sector and public sector over-the-air broadcasters to match Canwest’s commitment. In this regard, Shaw’s proposal represents, in our view, a key solution to break the ‘logjam’ that is currently existing with respect to the DTV conversion.” Catherine Edwards, a spokeswoman for the Canadian Association of Community Television Users and Stations (CACTUS), said in an interview CACTUS supports Shaw’s commitment to convert the transmitters, but added that it should offer “multiplexed” space to other broadcasters on their new digital transmitters. Multiplexing allows one transmitter to broadcast several channels. In its reply Shaw said it would consider the option in certain markets, but offering the service would preclude it from offering high-definition (HD) services. Edwards said it is possible to multiplex HD channels with standard definition channels unless the HD channel uses more capacity—such as sports channels. Edwards took issue with Shaw’s proposal to allocate a large portion of the benefits money, including $24 million to for scripted programs, to develop “one time” Canadian content. “We didn’t think the whole rest of the $200-million benefits package should go toward programming that is going to be made once, viewed and then is gone,” she said. “We thought some of it should go to structural changes to enhance the Canadian broadcasting system ... because the spending on community television goes on infrastructure and overhead. It means the community can use the facilities for years.” In a submission to the proceeding, the Writers Guild of Canada (WGC) argued Shaw’s proposed $43 million to fund local news should not count towards the tangible benefits. But Shaw disagreed, arguing that Canwest cannot offer local morning news without the funds. “Given the objective of the Act to ensure that the broadcasting system provides local programming and the Commission’s strong support of local media as a critical component of diversity of voices, the proposed morning newscast benefit is entirely appropriate,” Shaw wrote. Shaw added that it intends to direct a portion of the funds to news initiatives in Halifax and Montreal. kfournier@thewirereport.ca

Shaw says there ‘is no codified or statutory requirement’ for 10 per cent benefits

Broadcast | September 15, 2010

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