The Zerb: Just say no to this monstrous media deal
From Tuesday's
Star...
Just say no to this monstrous media deal
Aug. 8, 2006. 08:57 PM
ANTONIA ZERBISIAS
Seems that the only people hoping to consummate the $1.4 billion marriage between CHUM Ltd. and CTV parent Bell Globemedia are those who stand to make a bundle off it.
And, as the controversy over the $5.25 per share premium BGM is paying for the voting shares reveals, some bundles will be bigger than others.
But this column is for us poor shlubs who have no CHUM stock. For us, the sale, announced July 12, is one bad deal.
It will not only create a media behemoth that could include as many as 33 TV stations, 38 specialty channels, 33 radio stations, the Globe and Mail, an interest in Maple Leaf Sports and Entertainment, which owns the Toronto Maple Leafs, Toronto Raptors and more, it will dominate the advertising, cultural, music and sports landscapes as well as the news agenda.
Consider advertising. With one fewer competitor, media costs will rise and will undoubtedly be passed on to consumers.
With music, the merger combines CHUM's MuchMusic brands with CTV's MTV licences. And, although the latter are no longer music video channels, they still have awesome clout.
The converged company will have enormous buying power, and it won't hesitate to use it to get access to the hottest Hollywood or HBO hits.
As for journalism, well, CTV is already the top-rated news source in Canada. Add the CHUM operations into the mix, and BGM will have a powerful influence on public discourse.
The combo also means that producers have one fewer customer for their dramas and documentaries, which means lower licence fees and nowhere to go if a deal gets derailed.
That's too much power in too few hands in too small a country.
Of course, one of the two regulatory bodies to decide on that, the Canadian Radio-television and Communications Commission (CRTC) — the other being the Competition Bureau — will likely rubber stamp it.
Sure, that green light could be subject to a sell-off of some stations to third parties such as Quebecor's TVA group, which owns Sun TV in Toronto, or the Montreal-based Astral Media, or the Shaw family's Corus Entertainment. Even CanWest Global could expand by shopping the forced sale of assets — although, given its financial condition, it's hardly in a position to add to its debt.
As for Torstar, which owns the Star, it would be tricky for it to pick up specific assets since, two weeks ago, the Rubber Stamp okayed (with one dissenting opinion) a reorganization of BGM that gives Torstar 20 per cent for a $283 million investment. Now Torstar is kicking in another $100 million for the acquisition of CHUM.
So much for Torstar scoring, say, Toronto's Citytv, which would be a natural fit, from both the local news and ad angles.
In fact, you can bet that BGM will fight to hang on to Citytv and, by extension, its cable news channel CP24. The two are inextricably linked, in terms of content and personnel.
BGM will argue that it should keep Citytv because there are precedents for media corporations owning more than one TV station in a single market. Rogers Media for example owns Omni 1 and 2 in Toronto. CanWest has Global in Toronto and CH Hamilton while CHUM has Citytv and A-Channel in Barrie.
Those twinned operations allow the companies to beef up their Hollywood buying power because they're acquiring programming for double the outlets, while giving them the flexibility to shuffle programs around between stations.
Right now CTV has to "park'' many purchases, although they're performing well in the U.S., because it has no room on its schedule. And so, it misses out on lucrative simulcasts and the spill-over from the Hollywood hype machine.
For these reasons and more, the CRTC will likely dictate sale of CHUM's A-Channel station in Barrie and allow CTV to get control of Citytv/CP24.
Which leads us to Toronto.
As former Citytv political correspondent Adam Vaughan, now running for city council, put it recently, "It is also likely that as part of the approval process, shows will be transferred out of Toronto to appease local politicians in places like Lethbridge, Ottawa and Vancouver.
``In the past, productions have been relocated just to gain approval from federal regulators. It will happen again and Toronto jobs will be lost."
Inevitably, real estate holdings will be consolidated — and that could include the historic CHUM/City complex that anchors Queen Street West, the Masonic Temple at Yonge St. and Davenport Rd. and the iconic CHUM Radio building just north of it. Entire neighbourhoods might be changed.
Bottom line? Not very good.
In fact, there are only two positive aspects to this merger.
The first is that it would trigger "benefits," a minimum 10 per cent of the deal, or $140 million, for programming and related philanthropic endeavours, such as journalism scholarships.
The second is that the combined company would be so big that it could withstand attacks from foreign invaders, should a Conservative government lower Canadian ownership minimums on media companies, a change for which CanWest Global has long been lobbying.
Perhaps these two positives outweigh all the negatives.
Perhaps not.
But one thing all Canadians should be saying here, to both the CRTC and the Competition Bureau, is, "Not so fast, CHUM."
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