Vertical Integration hearings: Bolting the barn door after the horse has already left the stable

Written for The Globe And Mail The CRTC’s hearings on vertical integration begin Monday. For the next two weeks, this means that the four major vertically integrated media companies in Canada – Bell, Shaw, Rogers and Quebecor – could face tough questions about whether they have the clout to dominate telecom, media and Internet services across the country and, if so, what should be done to curb that potential?

The hearings were scheduled last November after the CRTC approved cable giant Shaw’s $2-billion take-over of bankrupt Canwest Media’s television assets (27 television stations, the Global network, 30 specialty cable and satellite channels). It was given added impetus after Bell’s $2.5-billion deal to acquire CTV and the A-channels was given the green light in March.

There is every reason to be skeptical about these hearings given that they are a classic case of bolting the barn door after the horse has already left the stable. It is also CRTC approvals all down the line that have allowed integrated media conglomerates to become the norm to begin with.

In the U.S., media conglomerates have become the exception (Comcast/NBC-Universal) after the disastrous AOL Time Warner merger, the collapse of the “old” AT&T, break-up of Viacom-CBC, and so on. Indeed, vertical integration is in retreat in almost every other developed capitalist democracy.

We should also remember that Bell attempted – and failed -- to extend its reach from the medium to the message from 2000 to 2006 by taking over CTV, CHUM, and the The Globe and Mail. The fate of Canwest was worse. Yet, we seem to be stuck in a time warp, with CEOs, Cabinet Ministers and the CRTC singing in unison that media conglomerates are all the rage, for much the same reason that they did back in the 1990s.

Be that as it may, Bell, Shaw, Rogers and Quebecor Media Inc. (QMI) do exemplify the trend in Canada. They are the “Big Four” and the hearings are all about them. They stand at the apex of a set of telecom, media and Internet markets that have grown greatly from $42-billion in revenue in 1998 to $73-billion today (in constant 2010 dollars). Read more »

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