Canuck media ownership rules may be relaxed

Government could ease or scrap foreign ownership limits

TORONTO -- Canada's TV regulator and the federal government are on a collision course over foreign control of domestic media assets.

A simmering battle between the Canadian Radio-television and Telecommunications Commission (CRTC) and Ottawa is threatening to boil over after federal industry minister Tony Clement said his government could ease or scrap foreign ownership limits on local phone companies, while retaining them for culturally sensitive broadcasters.

"I'm not saying it's easy, but it certainly isn't impossible," he told the standing committee on industry, science and technology on Parliament Hill as it probes the country's foreign ownership rules.

Clement's plan appears to back reorganizing the Canadian communications sector by separating cable, Internet and mobile phone "pipes" from content.

Forcing local carriers to spin off content assets to secure foreign growth capital would disturb an increasingly complex interplay between cable giants buying up TV content to drive their VOD and wireless phone offerings and broadcasters increasingly owning cable channels and digital assets to retain competitiveness.

Rogers Communications, Canada's large mobile phone and cable operator, already owns a stable of over-the-air and cable TV channels and radio stations, while rival cabler Shaw Communications last month acquired broadcaster Canwest Global Communications Corp. for $2 billion as it continues to run pay TV and niche channel operator Corus Entertainment.

Elsewhere, Quebec cable giant Quebecor Media owns and operates the French-language TV network TVA.

This industry trend pits Clement's emerging stance on foreign ownership rules against CRTC chairman Konrad von Finckenstein, who argues Canadian content distribution and broadcasting is converging and Canada cannot allow foreign control of telecoms without offering equal treatment to broadcasters.

"Given its importance, control of the communications sector should stay in Canadian hands," von Finckenstein told the same all-party committee last month.

The CRTC chief argues enabling foreign control of the telecom sector will have a domino effect on the broadcast sector, and ultimately undermine the creation of culturally sensitive Canadian media content.

But Clement told the parliamentary committee that the federal cabinet, and not the CRTC, will decide the destiny of Canada's mobile phone sector, which Ottawa wants to see opened up to increased competition and foreign growth capital.

The all-party committee on industry, science and technology started reviewing Canada's foreign ownership laws after Ottawa recently overruled the CRTC and okayed the entry of upstart Globalive Communications into Canada's mobile phone market, despite being mostly backed by an Egyptian company.

The federal government in recent months has signaled a phased liberalization of foreign ownership rules for domestic telecom and satellite companies, a move likely to have a knock-on impact on Canadian cable and broadcast players (HR, March 4).
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