Media @ McGill

Christmas gifts for private media north and south of the border

Submitted by claire on

canwestCRTCBy Gregory Taylor

There was no coal this Christmas for the media industry in Canada and United States. Two significant regulatory decisions ensured much good cheer for the private communication sector. In Canada, The Canadian Radio-Television and Telecommunications Commission (CRTC) approved the CanWest Global Communications Corp. purchase of Alliance Atlantis. And in the United States, the Federal Communications Commission (FCC) approved a controversial measure clearing the way for increased media consolidation in American local markets. These two key developments offer a window into the contemporary communication policy processes in the two countries.

The CanWest purchase of Alliance Atlantis for C$2.3 billion was announced early in 2007 and immediately caused concern regarding the level of financial assistance the Canadian media company received from US investors Goldman Sachs. That Goldman Sachs is footing nearly 85% of the bill seems a clear violation of section 3. (1)(a) of the 1991 Broadcasting Act, which declares that: “the Canadian broadcasting system shall be effectively owned and controlled by Canadians”.

The key word here is “effectively.” In the end, the CRTC was persuaded by Goldman Sachs’ representatives who argued that they had no desire to run a Canadian broadcaster. To establish the legal parameters of the word ‘control,’ the CRTC referred to a 1993 decision by the National transportation Agency (the NTA) regarding the ownership of Canadian Airlines in which ‘control’ was defined as “the ability to manage and run the day-to-day operations of an enterprise.” In response to CRTC concerns about the corporate governance structure of the company, CanWest agreed to ensure that CanWest nominees represent the majority of Board of Directors members necessary for a quorum. The CRTC also took exception to a planned Reporting Committee created “to gather information on CanWest’s management,” which some saw as a potential back door for Goldman Sachs to exert influence. As a condition of approval, CanWest agreed to ensure 80% of the Reporting Committee members are Canadians.

Despite the dominant role played by Goldman Sachs in financing this deal, on December 20th the CRTC Commissioners ruled that: “the Commission finds no merit in the argument that GSCP’s (Goldman Sachs) equity position will give them control in fact.” The path is now clear for CanWest to take over the assets of Alliance Atlantis, giving CanWest a much-needed foothold in the lucrative specialty channel market.

South of the Border : The week before Christmas was a busy time for the American communications sector as well. On December 18, the Federal Communications Commission (FCC) approved a measure to allow media consolidation in local markets. It was approved by a three-to-two vote, split along party lines: three Republican Commissioners supported the new measure, two Democrat Commissioners did not. (All FCC Commissioners are appointed by the President.) The new rule, pushed through by FCC Chairman Kevin Martin, lifts a 30-year old ban on companies owning both a newspaper and television or radio station in the same city. It should be noted such media consolidation is commonplace in Canada.

Democrat FCC Commissioner Michael Copps, incensed at the Commission’s decision, gave a dissident speech denouncing the rule change : “We pat ourselves on the back for holding six field hearings across the United States, yet today’s decision cites not a single word from the thousands of Americans who waited in long lines for an open mike to testify before us. We say we’re guided by public comment, yet the majority’s decision is overwhelmingly opposed by the public, as demonstrated in our record and in public opinion surveys. We claim the mantle of scientific research, even as the experts say we’ve asked the wrong questions, used the wrong data, and reached the wrong conclusions.

…We could have been—should have been—here today lauding the best efforts of government to reverse these trends and to promote a media environment that actually strengthens American democracy rather than weakens it. Instead, we are marking not just a lost opportunity but the allowance of new rules that head media democracy in exactly the wrong direction.”

In a country still reeling from the failure of the press to offer critical analysis in the build-up to the Iraq War, (in an unprecedented move, both the New York Times and Washington Post have since issued formal apologies) media ownership has become an increasingly hot political issue. In June, 2003, the FCC made a similar decision to relax ownership restrictions (also by a three-two vote), setting off a political firestorm in which the Republican-controlled congress voted to overturn some of the rule changes, until the federal court intervened in June 2004 and threw out the FCC decision altogether.

President Bush appears determined to get these changes through in his final term. Bush appointed the 41 year old Republican loyalist Kevin Martin to the FCC Chair in April of 2006. Martin was originally appointed to the Commission in 2001 after he had worked as deputy general counsel for the Bush-Cheney campaign in 2000. Before that, he worked for Kenneth Starr at the Office of Independent Counsel during the Monica Lewinsky scandal. Martin’s wife works on Bush’s communication staff.

Once again, the success of this FCC directive is by no means assured. Opposition to this change cuts across traditional party lines. Less than 24 hours after the FCC vote, Democratic Congressman Jay Inslee and Republican Congressman Dave Reichert introduced the Media Ownership Act of 2007, an Act which would overturn the new rules proposed by the FCC.

Between these regulatory decisions and the growing public involvement in digital copyright in Canada, 2008 promises to be an eventful year in communication policy.

For the CRTC, click here.

For the FCC news release, click here.

Gregory Taylor is a PhD candidate in Communication Studies at McGill University.