August 9, 2012
The Bell/Astral deal puts Canadians' choice at risk: It's time to reverse the tide
Bell claims in its application to the CRTC that a combined Bell/Astral “will not exercise market dominance in any sector of the broadcasting industry” (emphasis added, Bell, Reply, A14c). My submission on behalf of PIAC et. al. argues otherwise and that the transaction deserves very close scrutiny, and that key elements of it should be stopped dead in their tracks.
The key findings in the submission can be summarized as follows:
- a successful bid by Bell to acquire Astral would catapult it to the top of the ranks in radio, with revenues of $500 million, 106 radio stations, just under 29 percent of the market – twice the size of its nearest competitors: Rogers, CBC and Shaw (Corus). Notwithstanding such an outcome, this would not trigger regulatory intervention under the CRTC’s new ownership rules or its Common Ownership Policy. Consolidation in radio increased in the early 2000s before drifting downwards in recent years. Radio is unconcentrated by conventional measures. The Bell/Astral deal, however, would reverse the tide and result in the highest levels of concentration in the past twenty-five years
- there would be no direct impact on traditional television broadcasting.
- in the specialty and pay television market, Bell’s market share would rise sharply from 28% in 2011 to over 42%. This gives the CRTC ample grounds to intervene.
- across the total television universe, Bell’s position would be reinforced, rising sharply from 27% in 2011 to 35%. This, too, provides grounds for intervention.
- television markets worldwide tend to be more concentrated than often assumed. Canada is, at best, a middle-of-the-road performer on this measure, and often at the high-end of the scale. While concentration is slowly declining elsewhere, in Canada it is rising sharply; the Bell – Astral deal will compound the trend.
- Canada currently has the second highest level of cross media ownership and vertical integration among thirty-two countries studied by researchers in the International Media Concentration Research Project (Columbia University). It will be the highest amongst these countries if the CRTC does not pull the plug on the Bell — Astral deal.
The following figure shows the story.
Crossmedia Ownership/Vertical Integration Ratios — Canada # 1 amongst 32 Countries Surveyed Worldwide
Source: International Media Concentration Research Project with updates for 2011-2012 for Canada by author
Ultimately, the submission concludes:
- The CRTC probably has no choice but to give a pass to Bell with respect to its take-over of Astral’s radio assets. Bell meets the Commission’s requirements under the Common Ownership Policy, or at least will once it divests itself of ten stations in Vancouver, Calgary, Winnipeg, Toronto and Ottawa-Gatineau. This is unfortunate because, until now, radio has been one of the least concentrated and most diverse media in the country. The Bell-Astral deal will increase concentration significantly, whereas in most countries covered by the IMCR study, it is declining.
- Television is a different matter. There will be no direct effects on broadcast television. There will, however, be large and significant effects on the specialty and pay television and “total television” markets. Concentration levels in both of these areas are already very high by the CRTC’s own standards, historical norms, global standards and by CR and HHI standards used to measure media concentration in this submission.
- The impact will be most extreme in the specialty and pay tv market, where Bell will increase its share of the market from 26.6% to 42.2% — well in excess of every other major player in the market: Shaw (32.3%), Rogers (10.7%), CBC (4.1%) and QMI (3.2%). Together, these five companies will control 92.5% of this market. Out of the eighteen countries for which adequate data is available, Canada currently is the 11th most concentrated market. If the Bell – Astral deal is approved, we’ll fall down another notch to 12th place.
- The trend is similar with respect to the “total television” market, but not quite as pronounced. On the basis of the CR, it is already more concentrated than it has ever been in the last twenty-five years. In terms of the HHI, things could soon be right back where they were in 1984, when the HHI score was 2307.5 and the VCR all the rage. By my calculation, the HHI score is presently 1918, up significantly from three years earlier when it was 1,481. Should the Bell deal go through, it will have 35% of the market and the HHI score will be higher still at 2308.8 – one point more than twenty five years ago. The CRTC’s own concentration rules permit it to intervene actively in the face of such levels, and it should.
- Lastly, Canada already has the second highest levels of cross-media ownership consolidation and vertical integration in the 32 countries examined by the IMCR project. We don’t need to be first. The CRTC ought to oppose this venture on this ground alone, although it is unclear whether it even as the power, let alone the will, to do so. Concentration within and across the network media industries – demonstrably and empirically – has been extremely high, and is set to get higher yet.
It is time to reverse the tide.