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Broadcasting - Commission Letter addressed to Gretchen King (Community Media Advocacy Centre)

Ottawa, 21 October 2021

Our reference: 1011-NOC2021-0281

BY EMAIL

Gretchen King
Secretary
Community Media Advocacy Centre
laith.marouf@gmail.com

Re: Application 2021-0228-4 –  Application by Rogers Communications Inc. (Rogers), on behalf of Shaw Communications Inc. (Shaw), for Rogers to acquire all of the issued and outstanding shares of Shaw

Gretchen King,

This letter is in response to four procedural requests filed on 13 September 2021 by the Community Media Advocacy Centre (CMAC) as part of its intervention in relation to Broadcasting Notice of Consultation CRTC 2021-281. Consistent with the request made by CMAC, the Commission addresses each of its requests separately in this letter.

Procedural request #1

CMAC stated that in considering this application solely as a broadcasting notice of consultation, the Commission’s proceeding hampered participation in several ways, including by making the Broadcasting Participation Fund (BPF) the only avenue for compensation for public interest groups who elect to participate. CMAC also indicated that the Commission was aware that prior to this proceeding, the BPF was in a dire financial state, almost running out of funds, since it had already indicated that it would fund 75% of any upcoming claims and would still run out of money by mid-2022.

To fill the gap of funding available through the BPF, CMAC requested that the Commission, at minimum, order Shaw and Rogers to cover 25% of participation costs claimed by public interest groups. CMAC considers that as such, the Commission would help the BPF to continue for another year if it chose to have a higher percentage of the participation costs to be billed through the telecom participation funding mechanisms.

In light of the above, CMAC requested to delay the initial deadlines for interventions to 30 days after the publication of the Commission’s response to its procedural requests and publish all the information requested in its letter dated 13 September 2021. CMAC is of the view that this extension would allow interveners sufficient time to submit an intervention as part of a TBNC proceeding. CMAC stated that it would also compensate for the fact that the CRTC website was inaccessible or experiencing problems for 10 days over the 30-day intervention period.

The Commission notes that Rogers’ application strictly seeks to obtain the authority to effect a transfer in ownership and a change in effective control of Shaw Communications Inc. and its subsidiaries, pursuant to paragraph 4(4)(a) of the Broadcasting Distribution Regulations and paragraph 10(4)(a) of the Discretionary Services Regulations. This transaction does not require the Commission’s approval under section 16(2) of the Telecommunications Act as Rogers is eligible to operate as a telecommunications common carrier and can acquire other telecommunications common carriers.

With regards to the technical issue, the Commission notes that the form to submit an intervention was not accessible only for one night between 10 September 2021 and 11 September 2021, not the 10 days stated by CMAC. Further, no other intervenor raised any technical issues with the Commission that would have prevented the submission of an intervention in a timely manner.

In light of the above, the Commission denies CMAC’s procedural request seeking that the Commission reassign this proceeding from a Broadcasting Notice of Consultation (BNC) to a Telecommunications and Broadcasting Notice of Consultation (TBNC), and delay deadlines for Interventions.

Procedural request #2

CMAC specifically requested the following items:

  1. a schedule of subscription prices prior to the merger, and expected subscription prices after the merger, broken down by each service type (phone, cell, cable, etc.) and showing the impact of the merger for protected groups;
  2. a schedule of original programming aired on the community channels of Rogers and Shaw, indicating which shows are volunteer produced and which are professionally produced as well as the costs claimed for these productions;
  3. a schedule of Shaw/Rogers programming categorized as locally relevant and indicating the production costs and any benefit from diverted community television funds, as well as a schedule of original programming billed to the Independent Local News Fund and their production costs; and
  4. a schedule of employment equity numbers for both Rogers and Shaw prior to the merger, and the same numbers as expected after the merger. CMAC asked that these numbers be broken down according to the following groups: white – men/women, ethnocultural groups – men/women, Indigenous Nations – men/women, people with a disability – men/women, and the intersections of all. If not all of the employment equity numbers are available for all assets belonging to Rogers and Shaw, it asked that at least the employment equity numbers for Rogers’ and Shaw’s television and radio assets included in the merger be made public.

Subscription prices

Pursuant to section 3(1)(t)(ii) of the Broadcasting Act, distribution undertakings should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost. The Commission’s general approach to promoting affordability and subscriber choice in broadcasting services for Canadians has been through its support of a vigorous wholesale market. In Broadcasting Regulatory Policy 2015-96, the Commission noted that a healthy and dynamic wholesale market is one in which broadcasting distribution undertakings (BDUs) have the flexibility to package and set retail prices for discretionary services in the manner that they consider will best respond to customer demand and enable them to compete on an equitable basis with other BDUs.

Consequently, the Commission denies CMAC’s request for additional information regarding subscription prices.

Original programming on community channels

As indicated in Broadcasting Notice of Consultation CRTC 2021-281 (the Notice), the Diversity of Voices Policy aims to, among other things, further the objectives of the Broadcasting Act by ensuring that consumers have access to a diversity of programming that is of high standard, as well as to a plurality of editorial voices in local markets.

The Commission may wish to consider the applicant’s proposals and commitments regarding local and community programming. More specifically, the Commission may wish to consider the manner in which the proposed transaction may affect the level of locally reflective and locally relevant content that would be provided to Canadians under Rogers’s current proposals. In addition, the Commission may wish to consider how this transaction could improve access to and the representation of underrepresented communities in the Canadian broadcasting system.

As such, the Commission approves, in part, CMAC’s request for additional information regarding original programming on community channels.

In the Commission 21 October 2021 Request for Information Letter, the Commission asked that Rogers, for each of the licensed locations below, submit a list of original community programming produced by both Rogers’ and Shaw’s community programming services associated with the following licensed BDUs between 1 September 2020 and 31 August 2021, specifying which programs are access programs.

  1. For Rogers:
    • St. John’s, Newfoundland and Labrador
    • Saint John and Fredericton, New Brunswick
    • Barrie, London and Kitchener, Ontario
  2. For Shaw:
    • Winnipeg, Manitoba
    • Saskatoon, Saskatchewan
    • Red Deer, Alberta
    • Victoria and Nanaimo, British Columbia

The Commission also asked that Rogers, for the programming aired in the locations identified above, identify those programs that reflect and provide opportunities for equity-seeking groups (i.e., Indigenous Peoples, ethnocultural Canadians, Canadians with a disability, women and Canadians who identify as LGBTQ2+) to occupy key leadership positions or roles.

The Commission notes that CMAC was also served a copy of this letter.

Locally reflective news and community programming

In the Notice, the Commission indicated that it may want to consider the possible impact of the proposed transaction on the funding of locally reflective news and on the delivery of such programming to Canadians. This will enable the Commission to better understand the impact on the diversity of voices, including regional voices, reflected in the Canadian broadcasting system.

Further, the Commission indicated that BDUs that offer a community channel contribute to the plurality of editorial voices in local markets. Licensed BDUs that distribute a linear community channel must ensure that they are doing so in accordance with the applicable sections of the Broadcasting Distribution Regulations relating to this type of programming and to contributions to local expression, Canadian programming and community television.

In its application, Rogers, on behalf of Shaw, stated that Rogers’s prospective stewardship of Shaw’s community channels, which serve various communities throughout Western Canada, constitutes an important intangible benefit of the transaction. Rogers indicated that it intends to adopt the same model for community programming in communities outside of the metropolitan markets that it currently serves and committed to supporting and strengthening the role of community television within the broadcasting system.

Therefore, the Commission may wish to consider Rogers’s community programming strategy and the impacts of its application to Shaw’s community channels.

In light of the above, the Commission approves, in part, CMAC’s request for additional information regarding locally reflective news and community programming.

In the Commission 21 October 2021 Request for Information Letter, the Commission asked that Rogers place its Cable/IPTV and Shaw’s Cable/IPTV and DTH BDU aggregate returns filed with the Commission for broadcast years 2018-2019, 2019-2020 and 2020-2021 on the public record of this proceeding.

It also asked that Rogers provide the total amount of the local expression contribution that is devoted each year to the production of local news on local television stations, as set out in Broadcasting Regulatory Policy CRTC 2016-224, sorted by Rogers’ licensed terrestrial BDUs and Shaw’s licensed terrestrial and direct-to-home (DTH) BDUs.

Employment data

In accordance with section 3(1)(d)(iii) of the Broadcasting Act, the Canadian broadcasting system should, through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society.

In the Commission 21 October 2021 Request for Information Letter, the Commission asked Rogers to provide employment data related to the operations of Shaw and Rogers community channels as relates to licensed BDUs , as well as Shaw’s licensed DTH pay-per-view services. In particular, data related to positions that are key to the operation of both linear and video-on demand programming, including local and access programming, and any other related functions.

The Commission asked that the numbers be broken down according to the following groups and should cover the entirety of the programming broadcast in the 2019-2020 broadcast year. For each of the following groups, Rogers was asked to indicate the number of men, women and other (please note that one individual can be counted more than once according to the equity-seeking groups to which they identify):

Further, the Commission asked that Rogers place on the public record of this proceeding the Rogers Media Inc. 2019 Diversity Report filed with the Commission for 2019-2021 and dated 31 January 2020.

The Commission considers the filing of this information to be responsive to CMAC’s request for additional information regarding employment data.

Procedural request #3

CMAC stated that it has been unable to find any document on the record of this proceeding that could help the public understand how much of the total cost of sale is for each component of Shaw purchased by Rogers. Consequently, CMAC stated that the public is unable to correctly calculate the minimum tangible benefits that Rogers would have to pay.

CMAC therefore requested that the Commission order Rogers to deposit on the record of this proceeding a complete list of each business unit that it is purchasing from Shaw, the purchase price, and indicating the main business of that unit (Satellite, Cable, Internet, TV, Cell etc.).

The Commission notes that the information related to the proposed calculation of the value of the transaction and the tangible benefits has been provided by Rogers.

At paragraph 54 of Broadcasting Regulatory Policy CRTC 2014-459, the Commission determined that it would require tangible benefits for ownership transactions involving all broadcasting undertakings except for BDUs.

Further, the policy sets out that when determining the value of the transaction, the Commission includes the working capital transferred at closing, the value of assumed real property leases (over five years), and the value of ancillary agreements. The policy further states that when a transaction involves a mix of assets, the Commission can adopt a simplified method of calculation based on the revenues to allocate the value between assets. In its application, Rogers specifically asked that the Commission calculate the value of the transaction by using the simplified method based on revenues.

As the application involves a transfer of ownership related to the acquisition of all issued and outstanding shares of Shaw, which consists of a mix of assets, the Commission can adopt a simplified method of calculation based on the revenues to allocate the value between assets as established in the policy.

The Commission notes that Rogers has already provided the data regarding its proposed value of the transaction based on the revenue method of calculation as well as the leases to be assumed at closing by Rogers. While the latter has been submitted as confidential, aggregate amounts were provided and disclosed by Rogers.

In light of the above, the Commission denies CMAC’s procedural request asking that the Commission order Rogers to publish a complete breakdown of Shaw’s assets purchased by Rogers, indicating the kind of service and individual cost of purchase.

Procedural request #4

CMAC stated that as a not-for-profit company with mandatory carriage on the basic service, the Cable Public Affairs Channel Inc.’s (CPAC) financial records are available to the public through multiple avenues including the Commission. CMAC therefore argued that no business secrets would be breached by publishing the latest financial statements of the station on the record of this proceeding.

The Commission notes that the requested data for the period 2016 – 2020 is publicly available on the Federal Government website as part of the Open Government initiative. It also notes that Rogers requested confidentiality for the information as it does not have the legal authority to represent CPAC nor to publicly disclose the statement of revenue and operating expenses of a third party.

In light of the above, the Commission denies CMAC’s procedural request asking that the Commission order Rogers to Publish CPAC’s annual statement of revenue and operating expenses. 

Further, the Commission notes that following the Commission decision regarding CPAC’s procedural request, issued on 8 October 2021, CPAC provided the unabridged information as part of its reply to this proceeding.

Yours sincerely,

Claude Doucet
Secretary General

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