Helping friends in need

Suddenly, Ottawa seems eager to restart an old battle

Helping friends in needIt’s a rather inauspicious date, but construction work on the Canadian Museum of Human Rights in Winnipeg is scheduled to begin April 1. There won’t be a lot of fanfare—an official groundbreaking ceremony was held just before Christmas. Heritage Minister James Moore made the trek to the frozen site at the forks of the Red and Assiniboine rivers. So did Prime Minister Stephen Harper, who paid tribute to the late Izzy Asper, the man whose audacious dream is about to become a reality. The $265-million project will be the “capstone” on the legacy of the founder of Canwest Global Communications, he said, while Gail, Asper’s daughter, proudly looked on. In creating the first national museum outside of Ottawa, the Conservative government has pledged $100 million toward construction costs, and a further $21.7 million a year in operating funds, in perpetuity. But when it comes to helping the Asper family secure its dreams, it appears the feds may still have more to give.

As Canwest, owner of 13 daily newspapers and two Canadian television networks, flirts with bankruptcy, approaching yet another make-or-break deadline with its creditors on April 7, Ottawa is readying a lifeline. Last week, Moore confirmed that the Harper government is looking at loosening broadcast regulations and changing tax rules to help give the company, and other struggling private broadcasters, some relief. And while the heritage minister was quick to add that no specific promises have been made, it’s clear what the networks have on their wish list—a reversal of CRTC policy that would see cable and satellite providers pay them “carriage fees” for the basic TV channels they now pass on for free. That arrangement would net the broadcasters an estimated $300 million a year, perhaps directly out of consumers’ pockets.

Canwest blanches at the idea of calling it a bailout, but the company welcomes suggestions that the Tories are now ready to listen to a complaint they’ve been making for more than three decades. “It’s a sign that the government is hearing the growing chorus of voices—consumer groups, organized labour, the opposition, special interest groups—who are all saying that the way consumer dollars are collected for viewing cable are not being adequately and fairly sent around to everybody,” says John Douglas, Canwest’s vice-president public affairs.

Canwest, along with CTV and Quebecor, owners of the French TVA network, have long been after the CRTC to treat their conventional channels more like specialty networks, which receive a share of cable and satellite subscribers’ monthly bills. But providers like Shaw Communications, and Rogers, which owns Maclean’s, are vehemently opposed to the idea, claiming they will be forced to pass on the costs to customers, inflating bills by as much as $10 a month, and throwing their own companies into crisis. “If this is imposed on us, it’s going to ruin the cable industry as well,” says Phil Lind, vice-chairman of Rogers Communications. “Five to 10 dollars a month on a basic cable bill will not wear well. We’ll have a massive reduction of customers and we’ll have to recalibrate the whole business.”

As recently as last fall, the CRTC rejected demands for such a fee, saying the networks failed to prove they really needed the higher revenues. But as the global economic meltdown has taken its toll on advertising, broadcasters are finding that Ottawa is a lot more receptive to being—rather than crying—poor. In a February speech, CRTC chairman Konrad von Finckenstein suggested Canada’s broadcast model was “broken,” Douglas points out. “And anything that would be contemplated by the federal government, I’m assuming, would be in recognition that the state of the industry is what we said it was two years ago.”

Since the fall, Canwest has laid off several hundred workers across its media holdings, cut morning and noon hour newscasts, and put its five E! branded channels on the block, suggesting it might simply walk away from them unless a buyer can be found. And the company is not alone. Late last year, CTV took a $1.7-billion writedown on the value of its conventional television assets, and is forecasting close to $100 million in losses for 2009. In a brief submitted to the CRTC in February as part of its renewed push for carriage fees, the company wrote that the “very survival of conventional television in English Canada is now being threatened.” It, too, has made deep cuts to local programming, laid off hundreds, and announced plans to walk away from three underperforming stations. “Right now, the privileges of owning a broadcast licence are outweighed by the obligations,” says Paul Sparkes, executive vice-president of CTVglobemedia. Although the network remains open to a government bailout—provided it helps all players equally—carriage fees are the simplest solution, he says, and they don’t necessarily have to be passed on to the consumer. “The cable companies have built their businesses off the backs of broadcasters,” says Sparkes. “Our position is that it’s time to give back.”

The threatened closures and cuts to programming have clearly captured Ottawa’s attention. Not least, suggest some observers, because they imperil the Tories’ favoured strategy of going “over the head” of the press gallery in Ottawa, and flogging their policies through interviews with local media. But a concerted lobbying effort by the private broadcasters also appears to be paying dividends. Both Canwest CEO Leonard Asper and Quebecor’s Pierre-Karl Peladeau have personally met with Harper in recent weeks. The federal lobbyist database also shows meetings with minister Moore, senior CRTC executives, and then-industry minister Jim Prentice.

The sudden government interest in helping private broadcasters—at a time when the Tories are resolutely refusing aid to the publicly owned CBC, which faces its own $100-million advertising shortfall—has piqued the interest of the opposition. The House of Commons standing committee on Canadian heritage is launching hearings into the television industry’s economic crisis, with special attention to the ties that bind. “We want to make sure that James Moore isn’t making a sweetheart deal with a bunch of lobbyists who are close to the Prime Minister,” says Charlie Angus, the NDP’s heritage critic. In recent years, the Aspers have made the transition from lifelong Grits—Izzy was a former leader of the Manitoba Liberal Party—to vociferous Tories. The media company’s newspapers endorsed Harper in the past two federal elections, and the family now gives generously to the party. (Especially since dithering by former Liberal finance minister Ralph Goodale on tax changes for income trusts shaved an estimated $150 million off of the value of a 2005 Canwest newspaper trust offering.) And the government has demonstrated that it shares many of the Aspers’ priorities. In addition to the human rights museum, Treasury Board Minister Vic Toews recently indicated that Ottawa is ready to give a further $15 million to another family obsession—a new stadium for the Winnipeg Blue Bombers. Under the proposed plan, the private sector will pony up $100 million of the $150-million estimated cost of the new 30,000-seat facility at the University of Manitoba. And David Asper, Canwest’s executive vice-president, will take control of the now civic-owned franchise.

The private broadcasters’ licences are up for renewal this spring, and the CRTC is expecting carriage fees to again be a top issue at the hearings. Recognizing the industry’s financial woes, the commission has quietly indicated its willingness to tweak Canadian content and local programming requirements. And although the CRTC isn’t categorically opposed to fee-for-carriage, it continues to be lukewarm on the idea. In his February speech to the Canadian Film and Television Production Association, von Finckenstein said conventional broadcasters have so far failed to explain to the commission “how the fee would further the objectives of the Broadcasting Act.” But even if the private networks get their wish, it’s not clear it will be enough to save Canwest. It would be months before the cash starts flowing—and perhaps too little, too late for a company struggling with close to $4 billion in debt and leery creditors.

Then there is the whole notion of precedent. The country’s largest media union, the Communications, Energy and Paperworkers Union of Canada, is warning Ottawa to be wary of bailing out the company from under the weight of its “bad business decisions.” After all, other sectors of the media—radio, newspapers, magazines—are also struggling in the current economic climate. And if the government’s aim in saving Canwest is to preserve local programming, easing content restrictions is a curious way to go about it, they argue. “Local programming is not the cause of Canwest’s debt problems, nor should it be made its victim,” says Peter Murdoch, the union’s vice-president.

Others are quick to point out that it’s not just shrinking revenues that have put the broadcasters in the hole. In 2008, the privates spent a record-setting $775 million on the rights to U.S. programming, part of a long-term trend that has seen such costs balloon seven to 10 per cent a year. “It’s just their conventional channels that are hurting,” says Rogers’ Lind, noting that specialty services and other parts of the industry remain profitable. “They’re just using the economy as an excuse to do what they’ve wanted to do for a long time.”

And as experiences south of the border are proving, public bailouts of private corporations are not always an easy sell. Perhaps that’s why viewers of Global television have recently been treated to ads, under the Canwest banner, that talk up the strengths and importance of Canada’s auto industry. The car companies, dealerships and workers need our help, say the spots. A public service with a not-so-hidden message.

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