Shaw benefits package for Canwest Global deal

6:58 AM PST 07/23/2010 by Etan Vlessing, AP

Proposes putting $203 mil into industry to secure approval

TORONTO -- As if on-going government subsidies weren't enough to spur Canadian TV production, local indie producers are enjoying huge spin-off dollars as broadcasters swallow one another.

Cable giant Shaw Communications Inc. has proposed putting $203 million into the local industry to secure regulatory approval for a $2 billion deal for the TV assets of Canwest Global Communications Corp. as it completes a financial restructuring.

"The additional new benefits proposed... will not only strengthen Canwest as it emerges from creditor protection, it will also substantially strengthen the broadcasting system and provide Canadians with valuable new Canadian content," Shaw told the CRTC in a July 12 letter.

The CRTC, Canada's TV watchdog, typically demands a purchaser to set aside 10% of a deal's value for local TV producers to offset the impact of industry consolidation.

But however lucrative the so-called "tangible benefits packages" can be for indie producers, much depends on the CRTC's math.

Shaw is looking to include $23 million to convert TV transmitters from analog to digital and $95.6 million in tangible benefits remaining from the 2007 purchase of then Alliance Atlantis Communications by Canwest Global for $1.4 billion.

That acquisition, and others by Canwest Global in better times, contributed to the Canadian broadcaster late last year tipping itself into voluntary creditor protection to deal with a crippling $4 billion debt load.

Shaw is looking to take Canwest Global's TV assets out of creditor protection, and will make the case during a planned Sept. 20 CRTC hearing in Ottawa.

In on-going bargaining before that regulatory hearing, Shaw has argued that its proposed purchase of Goldman Sachs' interests in Canwest Global's cable channels for $506 million should not be part of a tangible benefits package.

That could mean as little as $23 million of Shaw's proposed social benefits package will end up on the TV screen, as the cabler proposes $4 million for developing new Canadian dramas, another $18 million to produce and $2 million to promote scripted series.

In all, Shaw told the CRTC it intends to fund five 13-episode series that also receive generous backing from the Canada Media Fund, the main source of industry and public subsidies for indie producers.

That gives a window on the Canadian TV production model, where public subsidies, federal and provincial tax credits and spin-off dollars from industry consolidation means broadcasters contribute as little as 15% to 20% of a homegrown drama's production costs, before airing the series.

The Shaw benefits package proposes another $18 million for local new media production, and $43 million to launch new morning show newscasts in Canwest markets in Toronto, Regina, Saskatoon and Winnipeg.

As Canwest Global TV stations faced hardship during the recent economic downturn and ad slump, the CRTC reduced local programming obligations for loss-making local TV stations.
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