Broadcast assets give big telcomms an edge

CALGARY, AB, Oct. 18, 2010/ Troy Media/ – The question of whether Shaw Cable is running a risk by buying the broadcast properties of the bankrupt CanWest Global becomes even more poignant in view of its competitors’ response to Shaw’s move.

There’s an even bigger question – whether such acquisitions are even intended to increase profits.

CanWest Global was forced into bankruptcy this year after the Asper family ran out of cash. The Aspers had expanded its broadcast holdings – principally the Global Television Network – to include daily and weekly newspapers and some Internet holdings.

CanWest Global’s newspaper holdings were purchased intact by a group of investment companies while Shaw Cable won the bidding game to buy CanWest Global’s broadcasting arm. (CanWest spent its last few solvent months demanding that cable companies, like Shaw, pay more for use of Global’s programs. Canadian regulators were expected to rule this month on Shaw’s proposed purchase of CanWest Global’s broadcast assets).

No licence to print money

If CanWest Global had trouble making money off its programming, then it stands to reason that Shaw could ultimately face the same challenge. Unless, of course, Shaw’s purchase is not exclusively about profits, but more about market positioning and leverage.

As I reported in September, Shaw is not alone in its move to acquire broadcasting companies. Telecommunications giant Bell Canada Enterprises (BCE) is in the process of buying the CTV broadcast network, while Rogers Cable owns a number of digital television channels. BCE previously owned a large piece of CTV, but sold it off when it didn’t seem to fit BCE’s core business, which is providing phone, Internet and satellite services. Now, once again, it is acquiring control of CTV.

The only large communications company in Canada that is not in the content acquisition market is Telus Corp. It says it has no interest in getting into that game, though it is concerned, as the country’s broadcast regulators are, that the other big-comms will use their new content-generating properties to benefit their own customers and restrict access to content for its competitors.

Will Shaw make Global TV programming available to its customers only?  Or will the mainstream broadcast outlets be available to everyone, as they are now?

Limiting audiences

Those questions were described as the “elephant in the room” when Shaw was before Canada’s broadcast regulator, the Canadian Radio-television Telecommunications Commission, in September. A more fitting clicha might have been “tempest in a tea cup,” because there would be no advantage to Shaw or BCE, respectively, to restrict access to Global or CTV programs.

All that would do is restrict the size of the potential audience for those programs, thereby reducing their profit potential.

Even so, ownership of broadcast facilities could give Shaw and BCE an edge over Telus in offering their phone and cable TV customers a value-added service that Telus might not be able to match. Whether Shaw or someone else owns Global TV, such core programs as the U.S. drama House and the evening news will continue to be available to all; what Shaw does with its studio space and resources outside of its daily program schedule, however, will be its own business.

Shaw, and BCE using CTV facilities, could create other content resulting in new digital programming, and/or cell phone applications that they could then offer exclusively to their customers. Shaw could continue to provide wide-ranging and widely available cable TV services, while also expanding its offerings to phone users. BCE could do the same for its phone users. If one company has better content or phone apps than another, it could be reason enough for customers to switch.

It appears Shaw and BCE’s takeover of traditional broadcast properties is not to make a lot of money through those channels. Instead, it is a way to position themselves in a rapidly changing communications market.

Note to Telus and Postmedia (new owner of 11 major Canadian daily newspapers): Perhaps you two should start exploring ways to create and share content. Controlling sources of fresh, updated and interesting content is going to be at the centre of the action.

Terry Field is an associate professor and journalism program chair in the Bachelor of Communication at Mount Royal University, Calgary, Alberta, Canada.

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