CHPC Committee Report

Supplementary / Dissenting Report of the New Democratic Party:

Canadian Heritage Committee on Impact on Local News of Rogers Communications Inc.’s Takeover of Shaw Communications Study

The House of Commons Standing Committee on Canadian Heritage study of Rogers Communications Inc.’s takeover of Shaw Communications heard from ten witnesses who represented community-driven media and non-profit organizations over two meetings. The testimony was clear - the impact of Rogers Communications Inc.’s takeover of Shaw Communications would be extremely detrimental to local media and news outlets.

Not only did the witnesses spoke against the merger, the Competition Bureau has recently filed an application with the Competition Tribunal to seek a court order to block Roger’s proposed acquisition of Shaw Communications. The Bureau has also applied for a court injunction to stop the parties to close the deal until the matter can be heard by the Tribunal.[1]

Based on witnesses testimonies and the Competition Bureau’s recommendations, the New Democratic Party of Canada supports a clear recommendation to the government to reject the Rogers take-over proposal of Shaw Communications. But why is the CRTC still considering this merger? It is because the Competition Bureau lacks the tools necessary to stop this deal.

That’s exactly why the NDP believes there should be a further recommendation to urge “the government to undertake a comprehensive review and complete enhancement of the Competition Act. The Competition Bureau should be provided additional power to assess takeovers and be given additional tools to assess takeovers on the basis of the public good”.

We believe that it is imperative that the Government of Canada should be required to undertake a comprehensive review and complete enhancement of the Competition Act so that the Competition Bureau would be given additional tools to access the Rogers’ proposed take-over of Shaw Communications or any future major merger in Canada.

Competition Bureau’s verdict on Roger’s Take-over Shaw Communications

People are frustrated that they are paying more for their rent, groceries and gasoline, but their wages are not increasing as fast as the revenues of large corporations who are taking advantage of this to substantially increase their profits. The merger of Rogers and Shaw would only worsen the affordability crisis. Canadians would be even more frustrated because they are already paying some of the highest cell phone prices in the world. For generations, these telecom giants have had no competition. They have made huge profits under both Liberal and Conservative governments. That's why Canada's telecom giants put their profits ahead of providing the quality services people need in their daily lives.

As the Rogers-Shaw merger will further strengthen the power of the large telecommunication companies, the Commissioner of Competition has sounded the alarm by requesting an order from the Competition Tribunal to prevent it from going ahead. The Commissioner points out that in the wireless market, three large companies concentrate the economic power and serve 87% of the subscribers. Moreover, competition between Rogers and Shaw is already being weakened, to the detriment of consumers. The risk posed by this transaction is obvious as the competition bureau has shown that Shaw's investment in its network has diminished. Shaw was indeed planning to enter new wireless markets, launch its 5G network and expand its wireless service offering to businesses. In addition, Shaw's reduced marketing and promotional activities have reduced the level of competition in the market.

Meanwhile, liberals want to look like they care about high prices consumers are paying. In fact, For over 6 years the Liberals have been in power, they have protected the profits of the huge telecom companies by refusing to cap the exorbitant prices these companies charge people. Liberal government has given big telecom corporations hundreds of millions of dollars in subsidies and government contracts, while doing little to lower Canadians' cell and internet bills.

The NDP is fighting for people and we will pressure the government to stop this Merger that will hurt Canadians. Only the NDP really stand up to the huge telecom companies that are gouging Canadians, and make sure that everyone has affordable and reliable television, cell and internet access.

Mr. Matthew Hatfield, Campaigns Director, OpenMedia, testified during the committee meeting on Feburary 16, 2022 about the lack of competition in telecommunications in Canada:

“Rogers' plan to buy Shaw is a disaster for competition, diversity and innovation in our country. It will lead directly to increased consumer prices for telecom services, loss of jobs in news media and in telecom, and a consolidation of power over our media like we've never seen. It will put one man, Edward Rogers, in charge of the Internet and broadcast service of nearly half of English Canadian Internet users. It will further concentrate and reduce the diversity of perspectives in a media market already ranked the third-most concentrated among 28 countries in a recent study. As a point of comparison, while the top four media companies in the U.S. hold 29.8% of market share, in Canada the top four hold an astonishing 52.3%.”(p.5)

“That's hurting all news outlets, but it is devastating local news. From 2008 to 2021, over 450 media outlets closed the vast majority of them small community papers. Of course, open your phone and you're bombarded with more news than ever, but we increasingly lack crucial local news that connects us with our neighbours and holds local government and corporations to account. Approving the Rogers-Shaw deal means further slashing into local news.” (p.5)

“The combined Rogers-Shaw will be a company of unprecedented power in Canadian history. Canada already has an unusually serious problem with vertical integration, in which key telecom companies like Rogers and Bell sell both access to wireless networks and a great deal of the content Canadians consume on those networks. High levels of vertical integration create strong incentives for clearly anti-competitive behaviours that hurt smaller media and telecom competitors and also consumers.”[2]

While the NDP is encouraged that the rest of the many good recommendations were adopted at the committee, it is important to emphasize our position on this deal. The NDP strongly oppose the Rogers take-over proposal of Shaw Communications. As Mr. Thomas Saras, President and Chief Executive Officer, National Ethnic Press and Media Council of Canada, pointed out at our on Feb 16, 2022, meeting,

“on behalf of the National Ethnic Press and Media Council of Canada, I want to bring two things to the attention of the members. The first is clearly political. It is a message that reflects democracy and the kind of democracy we want to have in this country. The other one is economical. By concentrating all those corporations together, we're going to have a monopoly. A monopoly is really bad because the moment they achieve whatever they want, the prices move up. Speaking about Rogers, I have in front of me one of its invoices. …….

This is the reason that the National Ethnic Press is against this amalgamation. It is bad for the state. It is bad for the people. It is bad for our justice and our security. We have to stand up for the freedom of the press. Freedom of the press means diverse voices that this country has to show all over the world. My organization represents 1,200 media outlets all over Canada in 103 different languages. We try to inform our readers with our best ability and our ability to express and serve the Government of Canada and their people.” (p.4)[3]

Mr. Matthew Hatfield, Campaigns Director, OpenMedia, echoed Mr. Saras’ objection of this merger at our committee meeting on Feb 16, 2022,

“Canadians know that. We do not, as a group, want this deal. Public polling has consistently found that a majority oppose the deal, particularly in the west, where Shaw does business. Last year over 61,000 people signed petitions calling on the federal government to block the Rogers-Shaw deal. The Competition Bureau set new records for public engagement around it.” (p.5)[4]

Non-profit community television stations play an vital role in delivering local accurate news information. That is why the NDP supports the following two recommendations:

The Canadian Heritage Committee urges the government to approve the application by CACTUS and the Federation des televisions communautaires autonomes du Quebec for a

Community-Access Media Fund.”

The Canadian Heritage Committee urges the government to require as a condition of license that a percentage of “local expression” financing collected through Rogers and Shaw license areas should be directed to this new fund, to support not-for-profit community media organizations to fill the voids in local coverage created by Rogers’ and Shaw’s closures of their own community TV stations.

During the committee on February 16, 2022, Ms. Catherine Edwards, Executive Director, Canadian Association of Community Television Users and Stations, talked about the importance of funding non-profit community television stations:

“We all know that local news is in trouble, but we've been erroneously handing money to vertically and horizontally integrated giants to solve the problem. At each hearing, they promised that with deeper pockets they would be able to support local production, but they don't. The local journalism initiative by the Department of Canadian Heritage has finally recognized that if you want to ensure communities have local news, you resource not-for-profit community media that are located in and committed to serving communities over the long haul. CACTUS, the Fédération and the Community Radio Fund of Canada are generating news under LJI for a tenth of the cost of public and private sectors, hour for hour, so we do not support further consolidation. It's bad for information diversity and it's also bad because the bigger the companies get, the more they capture our regulator. The CRTC staff openly refer to them, not the Canadian public, as their clients. The rot has gone so far up that we're being told not only by the CRTC, but by Canadian Heritage staff working on Bill C-11, that they cannot recognize not-for-profit broadcasting in a new broadcasting act, because other big entities think it's a zero-sum game. If they recognize that we exist, there's less money for them. The legal structure of our country is caught in their net. We've elected you to defend the public interest when our bureaucrats and regulators are captured by industry. Should the merger go ahead, however, we urge you to support initiatives that ensure a diversity of information.” (p.2)

“—and service for smaller communities outside of the control of Rogers and other BDUs, including a local journalism initiative and the establishment of a community access media fund to support not-for-profit community media. We currently have a proposal for such a fund before the CRTC, which hasn't been gazetted. It would enable communities themselves, especially indigenous, rural and diverse—” (p.3)[5]

Last but certainly not the least, the NDP supports the following recommendation:

The Canadian Heritage Committee urges the government to prioritize in the Media Fund the funding of small-market and local independent media outlets.

Mr. Alex Freedman, Executive Director, Community Radio Fund of Canada, said during the committee meeting on February 16, 2022, that

“What I can tell you is that while journalism is a keystone for a functional society, it is not profitable….

Corporate concentration in the media hurts Canadians' access to local news and information. We have seen this play out with Bell recently closing entire newsrooms in Montreal and Toronto, firing hundreds of journalists as those funds are diverted to supporting streaming services. A few years earlier it was Citytv closing newsrooms and gutting Breakfast Television. According to the Local News Research Project, since 2008 a total of 451 news operations have closed in 324 communities across Canada. I won't be taking a position today on whether or not this merger should proceed. Rather, I'm here to say that if it does, the consequences will be damaging for local news and information, and this government has a responsibility to insist on remedies to ensure that Canadians get the news they need and deserve….

A review of the tangible benefits associated with this transaction meant to support Canadian voices shows $8.5 million will be in- vested in the ILNF once. After that, the fund is on its own, and a significant portion, as I mentioned, will be absorbed by Global. Of note, this fund was set up by funding that was originally intended for community television. The rest of the benefits will go to the Canada Media Fund and an assortment of important film festivals, but there's next to nothing to support local news. What does this committee do about it? I propose that it needs to ensure there are mechanisms to protect local news, not just corporate interests….

If this transaction is approved, the government must extend and expand the funding for the LJI (local journalism initiative) and it should be up to the corporations benefiting from the gutting of local news to pay for this.” (p.3)

“you ask a very good question, Mr. Julian. If you'll indulge me, right now, the government gives $1.4 billion to the CBC/Radio-Canada. For radio alone, it gives more than $450 million. We, through community radio, receive not one cent of operational dollar support for this incredible network of stations and for the work that we do. There are a number of mechanisms that I mentioned in my opening statement and I'm more than happy to go through a variety of other mechanisms. We need support. We need support to ensure that our stations can continue to operate, continue to do the incredible work they have been doing so far, and continue to expand their capacity to make sure there is more local news, more coverage, more talk radio and more connection with the community. That is something that all Canadian are desirous of.” (p.11)[6]

Conclusion:

The Competition Bureau and public opinion polling have shown a vast opposition of the Rogers take-over Shaw Communications. It was clearly stated by the Bureau that if the merger was to go ahead, it would have detrimental impact on local media news outlets as well as the pricing of telecommunications. It is definitely not in the public interest to allow the merger to happen. Rogers Communications will use their business case to argue that this deal makes sense in terms of profits to the business and economy. But the Liberal government must put people’s and the community interest first before profit. The NDP strongly opposes the merger and will continue to do so.