Methodenstreit: A Reply to a Question from Greg O’Brien @ Cartt.ca about Media Concentration Research Methods

I have changed this post since putting it up on Wednesday. I have not done so substantively. Indeed, I have left all the data and main claims as they were.

What I have done, however, is remove some of the snark at the top and the bottom that I directed at Greg O’Brien at the outset. It’s unnecessary, and as a few colleagues, friends and others with my interests close to heart have kindly suggested, we need more civility in the internets, not less (see Blayne Haggard’s thoughts here).

Btw, the picture in Blayne’s post of a guy pounding away at a keyboard struck a chord; Kristina, my wife, will nod disapprovingly for sure; and its effect would be even greater still if you put five more words at the end of the word bubble: “about telecom, media, internet concentration”. I’ll think about that.

The revised version follows. A link to the original is here.

Last Friday afternoon, just as I was settling in for the first long holiday weekend, Greg O’Brien, sent me an email asking about media concentration research methods. Greg is the founding publisher and lead writer over at Cartt.ca — an industry trade paper that serves the telecom, media and internet industries here in Canada. The question is an important one and so I began to sketch out a reply.

I was advised, however, that it would be best to wait. The final replies to the Bell Astral hearings had yet to be submitted and, thus, addressing questions of methodology directly bearing on the hearings in public was out of bounds until the proceedings closed. No need to tip your hat to others about what you’re thinking. It was another in a long string of moments when my ‘academic’ persona tugged hard to break free of the short leash imposed on experts appearing before the CRTC.

The advice I got was superb. My advisors were dead right and I was wrong. While my inclination is always to just reply immediately and as fulsomely as I can, that is not always the smartest thing to do. Ask any journalists who knows me, or anybody for that matter, and they will tell you that I always freely share my ideas and don’t play coy.[1]

The advice I received was right. Bell was poking around in the same spot that O’Brien was and raised the same question that O’Brien does about the HHI thresholds used by “consumer groups” (they don’t refer to me or the consumer groups by name, nor do they speak of public interest groups) (See Bell Final Reply, page 2).

The core of his original email is below. My reply follows.

Date:       Fri, 17 May 2013 12:11:23 -0400

From:    ”Greg O’Brien” <greg.obrien@cartt.ca>   Block Address

To:          “Dwayne Winseck’” <dwayne_winseck@carleton.ca>

Subject:   Research question

Hi Dwayne,

I just wanted to point out an issue I came across about the research on media concentration that is part of PIAC’s presentation to the Commission on Bell/Astral and a big part of the CMCRP, too. I did a little digging into Herfindahl-Hirschman Index (HHI), to figure out what it was and came across some info below that it looks like, from the links, the HHI index itself was changed or updated back in 2010 by the Federal Trade Commission and US Department of Justice.

Your research paper says the HHI and the thresholds of media concentration fall into three levels:

HHI < 1000 = Un-concentrated

HHI > 1000 but < 1,800 = Moderately Concentrated

HHI > 1,800 = Highly Concentrated

However, these links here, here and here seem to show that back in 2010, those HHI thresholds were altered so that:

HHI < 1500 = Unconcentrated

HHI > 1500 but < 2,500 = Moderately Concentrated

HHI > 2,500 = Highly Concentrated

That puts the HHI scores for many of the media mentioned in your report in the moderate or low range, I think.

To be honest with you, this is a bit too deep in the regulatory research weeds for a story in Cartt.ca. But I was wondering if you could explain the difference to me? Am I missing something? If not, does the research need to be altered/updated? Please let me know if I am wrong, or if we use different numbers for Canada.

Thanks,

Greg

My Response

Hi Greg,

Thanks for your inquiry.

Before I begin, please let me ask you to address specific questions about methodology or data to me since it was me that was hired to prepare evidence and write a brief in support of the public interest and consumer advocacy groups’ intervention opposing Bell’s revised bid to take-over Astral. My response is done solely in my capacity as a scholar and director of the Canadian Media Concentration Research (CMCR) project.

I wanted to send you my response earlier but was advised that it best to wait until the Bell Astral proceedings closed. Turns out, Bell was poking around in the same spot you were (see Bell Final Reply, page 2).

Let me also say, though, too, I was a bit hesitant about replying to you on account of the fact that the only other time you’ve spoken about my data, method or research at all was when you tweeted one of Bell’s allegations about my CBC revenue data at the very end of the reply phase for Bell Astral 1.0. That you tweeted about it then without asking me first about my views, and that your question now falls again at the very end of the reply phase, feels funny to me and I don’t quite like it. 

However, let me put that aside and try to answer your question because it is a good question.

I am aware of the new U.S. Department of Justice and Federal Trade Commission’s guidelines. David Ellis, who you also know, sent them to me earlier in the year. Please ask him about that.

Guidelines do change from time to time. While the U.S. replaced the revised 1997 version guidelines in 2010, there are a couple of reasons why they have not seeped into the scholarly literature and my research methodology specifically.

For one, when guidelines change academics will always take time to decide if the changes adopted are suitable to the field we’ve been working in. There has been a long-standing argument amongst scholars that the DOJ’s existing guidelines were already inappropriate for communication and that a ‘weightier’ test was required because of the freight communications media carry with respect to free speech, the free press, privacy, democracy, their role as public spaces vital to citizenship, many non-market attributes and other such concerns. I share such concerns (also see Eli Noam and C. Edwin Baker on this point; or Compaine and Goldstein for opposing points of view).

Second, the International Media Concentration Research (IMCR), of which I am a part, and which is, as you know, led by one of the world’s foremost experts in this area, Professor of Finance and Economics, Eli Noam at Columbia University (New York), set sail in 2008. Changing course midstream and with the larger debates just referred to still hanging in the air would have been unwise. The fact that the project has forty or so scholars studying long-term media concentration trends in as many countries around the world also suggests that you don’t change things just because things in the U.S. change. 

Of course, we must take heed of what the U.S. does, but it does not determine things everywhere else. Historical and international comparative references, amongst other things, are crucial too. You might also ask Professor Noam as well why the project stuck with the existing standards rather than change to the new ones midstream?

In short, one doesn’t jump from a set of standards over which there is already a lot of debate to looser ones without a great deal of thought. That said, one should not cling to outmoded ways of thinking either, and so I have been looking carefully at the new guidelines with an open mind.

Indeed, I brought the new DOJ/FTC guidelines with me to Montreal two weeks ago and was reading them in the run-up to and during Bell Astral 2.0.  As you will see on page 19, the guidelines not only set the thresholds at the higher levels you recite, but tell us what constitutes significant consolidation by pointing to the degree of change, i.e. transactions that move the dial 100 or more points in markets that are already modestly to highly concentrated.

Here’s what the new guidelines say with respect to transactions in:

Moderately Concentrated Markets: Mergers resulting in moderately concentrated markets that involve an increase in the HHI of more than 100 points potentially raise significant competitive concerns and often warrant scrutiny.

Highly Concentrated Markets: Mergers resulting in highly concentrated markets that involve an increase in the HHI of between 100 points and 200 points potentially raise significant competitive concerns and often warrant scrutiny. Mergers resulting in highly concentrated markets that involve an increase in the HHI of more than 200 points will be presumed to be likely to enhance market power (emphasis added, p. 19).

The chart below created on the basis of 2012 revenue data shows that, contrary to what you say in your email, none of the sectors implicated by the Bell Astral deal are at the low end of the new guidelines, except radio – as I never fail to mention.

More importantly, the Bell Astral transaction will move several sectors from moderately to highly concentrated status even by the looser standards of the new guidelines, i.e. an HHI score above 2,500, as the chart below illustrates. These sectors are:

• English-language Specialty and Pay TV (2525.2);
• French-language Specialty and Pay TV (4085.1);
• total Specialty and Pay TV (2512);
• the total French TV sector is already above 2,500 but would be pushed further to 2801.7.

It is also important to point out that the Competition Bureau in Canada does not use the HHI to set fixed benchmarks but rather to help it “to observe the relative change in concentration before and after a merger” (emphasis added, p. 19, fn 31). The Bureau does, however, state that when the four-firm concentration ratio (CR4) passes 65% it may step in to examine whether a merger “would likely . . . enhance market power, and thereby . . . lessen competition substantially” (p. 19, fn 31). You can look at the data in the chart below and reach your own conclusions on this point.

In addition, in terms of relative change, as the DOJ guidelines quoted above state, a transaction that moves the dial in moderately or highly concentrated markets by more than 100 – 200 points will “potentially raise significant competitive concerns and . . . be presumed to be likely to enhance market power” (emphasis added, p. 19). Based on the 2012 data shown in the chart that follows immediately below, here is a list of sectors implicated by Bell’s proposed take-over of Astral that would move the dial between 200 and 1200 points (change in HHI noted in parentheses):

• English-language Specialty and Pay TV (+416 points);
• French-language Specialty and Pay TV (+1215.1 points);
• total Specialty and Pay TV (+608.5 points);
• English-language Total TV (+236 points);
• French-language TV (+207.5 points);
• Total TV (+298 points);
• French language vertical integration between BDUs and broadcasters (+361 points).

Changes in Concentration Levels: Before and After Bell Astral, 2012 Revenues 

2012 Revenues	Bell Mrkt Share Before	After	CR4 Before	CR4 After	HHI Before	HHI After	CR4 2008	HHI 2008
Conv TV
ENG	30.7	30.9	90.7	90.9	2337.2	2347.2	96.1	2724.9
FR	0	0	95.1	95.1	4403.4	4403.4	94.5	4005.7
ENG + FR	22.6	22.8	82.9	83	2287.9	2293.5	86	2367.4
Spec & Pay TV
ENG	28	33.8	83.1	84.5	2109.2	2525.2	73.2	1543
FR	27.1	59.2	97.9	97.7	2870	4085.1	87	2755.1
ENG + FR	27.9	38	81.5	83.8	1925.7	2534.2	71.9	1451.7
Total TV
ENG	29.2	32.5	81.9	86.2	1891.2	2127.2	77	1762.2
FR	11.1	24.4	91.7	92.9	2594.2	2801.7	85.2	2389
ENG + FR	25.4	30.8	76.8	83.3	1691.5	1989.5	70.9	1486.7
Radio
ENG	9.8	21.9	51.6	59.6	822.6	1014.4	56.5	970.8
FR	0	27	84.1	84.1	2406.6	2406.6	90.1	2704.9
ENG + FR	7.9	23.2	53.4	62	825.3	1127.3	60	1047.2
VI & Network Media (2011)
ENG	31.3	31.8	83.2	84.2	1984.4	2014.9	N/A	N/A
FR	35.2	40.1	71.8	76.7	1872.1	2233.1	N/A	N/A

Also take note of the big changes not just by the standards of regulatory authorities but those of the recent historical past as well, i.e. since 2008, and notably for pay and specialty tv, total tv and radio.

As you can see, Greg, if this was purely an issue of methods and numbers, the CRTC should be very busy. And it is. This is why the Bell Astral 2.0 deal has received the critical attention it deserves, by the Commission and by people such as myself.

Finally, as I am sure you will have noted, I have updated and made the CMCR’s analysis of the 2012 data available on our website. I have the French- and English-language market 2012 data that corresponds to each of the sectors that we released the other day (radio, broadcast TV, specialty and pay TV, total TV), and for vertical integration between BDUs and broadcasting in both English- and French-language markets as well as for Canada

I really would be delighted to share all of our data sets with you under appropriate circumstances once the CRTC completes its deliberations on the current transaction. Doing this kind of research is not easy. There is much judgment involved and reams of data to be managed. I would like to trust that your question comes from a good place but I’m also acutely sensitive to the fact that there are many who toss barbs at researchers and, especially, critical ones, all the time. It really needs to stop, and if a full prof with tenure and a good salary can’t stand up to such attacks, who will? 

Ultimately, I always aim to improve my work and what I put out under the auspices of the CMCR. If you ever see anything in need of improvement, correction, qualification, etc., please let me know and I will, as is our standard practice, fix things while publicly acknowledging any errors we have made and your role in setting things aright.

Best wishes,

Dwayne

[1] To put a more scholarly spin on it, questions about research methods are difficult and often boring, but they can be really helpful when they clarify how we know what we know. They tend to be open ended (and wordy, too) which leads in many unforseen directions. German philosophers originally called such activities “methodenstreit”, or “methods dispute”, hence the title to this post. The notion of methods disputes is now common across philosophy and the social sciences and yes, that includes economics (see here and here).

CMCR Project 2012 Data Release: Concentration Trends in the Telecom-Media-Internet Industries in Canada, Part 1

Highlights (original posted to Canadian Media Concentration Research Project website)

The CMCR analyzed the financial results for Canada’s biggest TV providers, radio broadcasters, specialty, pay and video-on-demand services as well as cable, satellite TV and IPTV providers released by the CRTC in early April. Our analysis shows that concentration levels in 2012 remained high in all areas, except radio.

Using two standard research tools to assess media concentration – concentration ratios and the Herfindahl-Hirschman Index (HHI) — our analysis shows that:

1. Concentration levels for all of the industry segments for which the CRTC released data, except radio, remained high in 2012;
2. However, such levels eased slightly in all segments addressed relative to 2011, except for specialty and pay TV services.

You can access all of our raw data not just for 2012, but from 1984 onwards here.

Discussion

Coupled with the annual reports of publicly-traded companies, the CRTC’s 2012 data allows us to construct a fairly comprehensive portrait of the current state of telecom, media and internet concentration in Canada.[1]

While concentration levels remain at the high end of the spectrum according to both the CR and HHI measures, and by international standards, there was a slight uptick in competition in four out of the five areas covered by the CRTC’s data for 2012:

• In the $3.5 billion conventional TV sector, the CR4 declined from 87% to 83%, while the HHI score dipped slightly from 1966 to 1943. The decline is likely due to the fact that Bell and Shaw saw small declines in their revenues and market share, while two mid-size TV stations that were formerly a part of Canwest have continued to carve out a spot for themselves: the employee-owned CHEK TV in Victoria and Channel Zero’s CHCH in Hamilton.
• A small dip could also be seen in the $7.5 billion total TV segment (an amalgam of conventional TV with specialty and pay TV), where the market share held by the big four — Bell, Shaw (Corus), Rogers and Quebecor — declined from 79% to 77%, with a corresponding decline in the HHI score as well.
• Trends for the $8.7 billion cable, DTH and IPTV pointed in a similar direction, with the big four’s share declining modestly from 83 percent to 81 percent, largely due to the growth of Telus, MTS and Sasktel’s IPTV services in western Canada and Bell’s IPTV offering in Ontario and Atlantic provinces.
• Finally, the $2 billion radio industry continued its long-term downward drift, with the CR4 sliding from 55.5% to 53.4%.

Concentration levels in the $4 billion Pay and Specialty TV services – the fastest growing and most lucrative segment of the TV industry – stayed steady at the high end of the CR4 (81.6%) and HHI (1905) scales. This is likely due to the fact that the growth of newcomers such as Blue Ant and Channel Zero was offset by a rise in Bell’s share of pay and specialty TV services, largely because of the substantial increase in revenue at its English and French-language sports channels, TSN and RDS, respectively.

The preliminary analysis offered thus far is important because the CRTC released the 2012 data in early April, just days after its deadline for submissions regarding BCE’s renewed bid to acquire Astral Media. As a result, none of the interveners was able to include it in their formal, written submissions to the public hearings that took place last week, except for Bell.

Bell filed an updated analysis based on the 2012 data with the CRTC in its Reply to interveners on April 16. In doing so, it used the new data to repeat and buttress its rejection of critics’ claims that the deal gives Bell too much market power:

. . . close review and analysis of the post-divestiture Bell-Astral in each of the English and French television markets – regardless of the metric employed – proves otherwise (Bell Reply, para 46).

Consequently, Bell asserted, there are no barriers from the standpoint of media concentration that should stand in the way of the CRTC approving the deal (Bell Reply, 2013, pp. 4, 11 – 20; also see the report Bell submitted from its consultant, CMI here, Appendix 3, or here). With today’s release of the CMCR data, readers can examine the evidence for themselves and draw their own conclusions.

Regardless of whether you agree with Bell’s view of the world or not, the fact that Bell and nobody else could update the public record for the Bell-Astral hearings using 2012 evidence is deeply troubling. I will have more to say about these issues in a series of upcoming posts. However, as the Commission settles in to make its decision on the Bell-Astral transaction, the public should have as much access as possible to the evidence upon which key elements of the decision will turn.

The CMCR project does not just present the relevant data company by company, or on the basis of ‘before’ and ‘after’ snapshots to gauge, for instance, the one-off impact of the Bell-Astral transaction on Bell’s stand-alone share of the TV market. Instead, our analysis of the 2012 data relies on two fundamental tenets of good scholarship on media concentration:

(1)  a long-term focus on concentration trends over a 28-year span from 1984 to 2012;

(2)  using two standard research tools to examine the structure of media markets rather than changes in the stand-alone market shares of individual media firms: Concentration Ratios and the Herfindahl-Hirschman Index (HHI).

These research methods are essential because snapshots of just one or two media sectors or firms are often selectively used to make unwarranted generalizations about the larger media ecology. Moreover, ‘before’ and ‘after’ snapshots fail to capture dynamic trends over time. These are precisely the kinds of commonly used techniques that serve to muddy the waters, and that sound methodology in media concentration research is explicitly designed to counteract (Noam, 2009, chs. 1-3; IMCR, nd; CMCR, 2012).

Analysis of the 2012 data also reconfirms the existence of a fundamental problem in the CRTC’s data for pay and specialty TV: key aspects of it cannot be reconciled with the results found in the audited annual reports of several companies covered by the Commission’s data sets. Tallying up the CRTC’s data for Astral, for example, yields a figure of $540.9 million, while the company’s Annual Information Form indicates a figure of $562 million, after the revenues from its two conventional TV stations, in-house advertising and online segments are excluded (see p. 8 and PWC, 2012, pp. 45, 52 and PWC, 2013, p. 60).

Nor is the Astral example an anomaly, as I will show in a subsequent post. This is not a view that we reached lightly but only after lengthy discussions with a Commission analyst well acquainted with the Individual Pay, Pay-per view, Video-on-Demand and Specialty Services Financial Summaries being referred to.

We hope readers will find our analysis of the 2012 data helpful in relation to other matters, as well. In the next week we will also release our analysis of the 2012 data for vertical integration between cable, satellite and IPTV distributors (BDUs) and TV and radio broadcasters in English- and French-language markets, and for Canada as a whole.

Our analysis will also be updated as new data becomes available for the remaining telecom, media and internet industries covered by the CMCR project: wireless and wired telecoms, Internet access, search engines, music, newspapers and magazines.

---

[1] The CRTC released total revenue figures for pay and specialty TV and broadcast distribution services; it did not do so for conventional TV or radio. To estimate revenues for these two sectors, we used last year’s cumulative annual growth rates cited in the Communications Monitoring Report, while checking that figure against other quality sources such as PriceWaterhouseCoopers’ (2012) Global Entertainment and Media Outlook, 2012 – 2016 to help ensure the reliability of our estimate.

Netflix and Canadian TV: Menace or Messiah?

We hear a lot about Netflix, and we hear it often, by both those who love and loathe it. It has become a fixture on the Canadian media scene in a very short time.

Indeed, there has been much gnashing of teeth since Netflix’s inception in this country in 2010, including the tightening up of bandwidth caps, inquiries by the CRTC, as well as the constant invocation of the streaming video on demand service (SVOD) in regulatory proceedings, from the CRTC’s 91h hearings just last week and no doubt in the one that it is set to start next week for Bell and Astral’s proposed amalgamation.

With roughly 1.6 million subscribers at the end of last year (HIS Screen Digest), it’s revenues can be estimated to have been about $134.3 million in 2012. This is a sizeable amount for sure, but where does it fit within the existing $7.5 billion industry (not counting the carriage and distribution side of the biz)?

So, the question for our post today: Netflix, menace or Messiah?

Netflix’s estimated 1.6 million subcribers, no doubt lean toward the latter view, even if they have to endure deliberately downgraded quality (i.e. no HD) to ensure they don’t blow their monthly bandwith caps and a slimmer catalogue to choose from. Even those in the TV biz regularly tell investors that they don’t expect any short- to mid-term harm, while the long-run is still anybody’s guess. 

However, look further and read the pages of leading newspapers in this country (take this piece by Andrew Coyne from the National Post just two days ago for starters), and Netflix is often cast as ushering in the death of “old TV” and as the spearhead of a much bigger ‘video revolution’ that is poised to bring Canada’s big four vertically integrated media goliaths to their knees: Quebecor, Rogers, Bell and Shaw.

The long list of new content acquisition deals, and charts showing internet traffic attributable to Netflix going through the roof (here and here), all seem to have a point, and who knows, maybe all of the kerfuffle is on the mark. I don’t want to offer anything definitive on the point other than to say that, me, I’m skeptical.

However, what I do want to know is something a bit more systematic about where things stand. And so as I’m won’t to do, I’ve encouraged my students to have a look at things and recently, one of them, Patrick Foley, did a real bang up job putting together the following chart showing Netflix’s content acquisition and development.

I’ve added to the table here and there and then developed some commentary of my own afterwards, but I think it’s good to, first, take a deep breadth and take stock of what kinds of content deals that Netflix has and hasn’t done. Otherwise, I’m afraid that a compendium of disparate press releases will add up to the impression that there are barbarians at the gate and unless we do something fast, they’re gonna tear the place apart – that “place” being the “Canadian television system” as we know it.

So here we go, a selection of Netflix’s content acquisition and development deals over the past few years.

Netflix’s Content Acquisition and Development Deals

	Year		Library Content
Starz	2008	2008  5 yr. deal. $30 million per year.	Access to 2,500 titles, including “classic films” such as “Scarface” and “Beetlejuice”
NBC Universal	2010	Renewed contract for 5 additional years, worth $1 billion.	Rights to titles from Paramount, MGM, and Lionsgate studios. Also acquires rights to old and new episodes of ”SNL,” “30 Rock”, “The Office,” and other popular shows. Can offer SVOD (streaming video on demand) 90 days after airing on Pay TV.
CBS Corp.	2011	4 yr. “Pay- as-you-go” deal with The CW Network (jointly owned by CBS and Time Warner)	700 hours of old CW programming and rights to new episodes. Older shows like “Cheers” can now be streamed. So too for newer ones, e.g. “Gossip Girl” and “Vampire Diaries”
Time Warner	2013	“Pay-as-you-go” deal between Netflix Turner Broadcasting & Warner Bros (TW subsidiaries) ($100s millions).	New and old Warner Bros content produced for TV (i.e. shows already aired on ABC, NBC, FOX, HBO, Cartoon Network, TNT, etc.), including “666 Park Avenue” “Revolution”
Disney	2012	$200-$300 Annually	Classic Disney titles and access to newly released Disney movies for 3 years (7 months after theatre release). Latter came its way after Disney’s contract with Starz ended. Classics like ”Pocahontas”, ”Alice in Wonderland” and LucasFilms productions available for internet streaming.Beginning in 2016 Netflix can exclusively stream films from Pixar, Marvel, DisneyNature, and Disney Animation Studios.
Starz	2013	Netflix did not renew contract	Netflix loses rights to 2,500 “classic films” such as “Scarface” and “Beetlejuice”
	2012	Arrested Development	Former Fox TV series revived. May be prequel to movie.
Media Rights Capital	2011/12 – 2013	House of Cards	Adaptation of previous BBC miniseries of same name. First TV series to premier on Netflix, beginning Feb. 1, 2013.
Viacom / Dreamworks	2013	Turbo F.A.S.T. (Kids animation series)	Original animated series based on forthcoming Dreamworks’ movie, Turbo.

Sources: Edwards (2012). Bloomberg; PR Newswire 2012; Kang (201). Washington Post. Villarrea. (2013). LATimes. Gruenwedel (2013). Home Media Magazine.

There’s much to be said about the above list of activities. Instead of writing another of my trademark long, long posts, however, let me distill a few points that I think are the most important.

Characteristics of Netflix deals:

1. Acquire old, classic, established libraries of content.
2. Acquire rights to air new episodes from ongoing TV series, and newly produced movies, after time delay.
3. Youth/kid/teen oriented content is really important.
4. ‘Old TV’ is the main ingredient of ‘new TV’, with established TV series revived and remade into new ones (Arrested Development; House of Cards) and forthcoming movies become TV series before they even hit the box office (Turbo F.A.S.T).  In other words, original content is derivative of existing content.

Make Peace Not War: or how the Traditional US (but not Canadian) TV and Film companies learned to live with Netflix

1. Netflix breathes new life into classic/old content.
2. It opens a new distribution window: ‘streaming video on demand’: SVOD, slotted into the pre-existing, window-based Hollywood model that staggers the release of movies between regions and across time.  Hollywood always learns to, at least eventually, embrace these new windows, even if late in the game, as my professor Janet Wasko taught us many years ago. Why? Because they are new markets, sources of revenue, that’s why (see here for latest evidence of growth of new windows relative to box office.).
3. Netflix is complementary because Netflix subscribers tend to watch more TV rather than less, as the MediaTechnologyMonitor studies have repeatedly shown. As the most recent MTM study says, for instance, “Netflix customers are not so-called cord cutters. . . . In fact, Netflix users were found to be more likely than other consumers to shell out for a premium TV package, even while paying $8 a month for the streaming service”. UK communication and media regulator, Ofcom (see p. 3), has come to similar conclusions (also see here with respect to UK).
4. Netflix may increase “packaged-media sales” (DVDs, DVD box sets, etc.) and cable VOD by sizeable amounts (15-30%), some Time Warner execs have claimed, although some of the scholarly literature I have read seems less convinced.
5. Adds foreign films that lack North American theatrical release (thanks Patrick).
6. Enables time-shifting and space-shifting via Microsoft’s Xbox 360, the Nintendo Wii, Sony’s PS3, Blu-ray disc players, and internet-based video players like Apple devices (again, thanks Patrick).
7. And some stalwarts of the ‘traditional mediacos’ have a position on Netflix’s Board of Directors alongside internet and tech companies and that affords them at least a small lever of influence and control: e.g. Ann Mather (Walt Disney, Pixar, Google, MGM, Village Roadshow Pictures), Leslie Kilgore (Amazon, LinkedIn), Jay Hoak (Technology Crossover Ventures) A. G. Battle (Ask Jeeves, Expedia), Reed Hastings (Netflix, Facebook, Microsoft) (Netflix, 2012).

Why Canada’s Vertically-Integrated Players Continue to Hate Netflix:

1. Must compete with Netflix over rights to new distribution window vs. treating them as an inexpensive bolt on to the existing suite of rights they acquire.
2. They don’t have much original content of their own so must compete even more with Netflix.
3. Netflix seems to give media workers more creative autonomy in their work and a bigger slice of the pie and more say afterwards.
4. The creation of a new window – SVOD – increases pressure to compress ‘old windows’, especially VOD – a lucrative cash cow for existing BDUs’ specialty and pay TV services that continue to rake in operating profits in the mid- to high-20% range (see p. 1).
5. Netflix enables time-shifting and space-shifting on other company’s devices –  Microsoft’s Xbox 360, the Nintendo Wii, Sony’s PS3, Blu-ray disc players, Apple, etc. – rather than their own.
6. Finally, Canadian media execs seem to loathe Netflix because they have no position of influence or control at Netflix, or anything like it.

Does this mean that nothing’s changing? Absolutely not! Television and how it is made, circulated, controlled and consumed is changing dramatically.

Fast disappearing is the old scheduled model of tv programming punched out by vertically-integrated tv cos modelled on the Fordist approach to car production (ownership of everything from inputs to manufacturing and dealerships), with highly unionized workforces and subsidized consumption brought to you courtesy of advertisers and government funding.

And what’s coming online? Hold your breath, folks, but it just may be the the centuries’ old  ’publishing model’. In this model, TV execs function as commissioning editors signing contracts and royalty cheques with creative talent. Most media work becomes more and more precarious, less unionized and less well paid. Disappearing are the ”old days” when union bosses negotiated long-term contracts for media workers with durable media jobs and clear roles and back are the really old old days when everybody had to fend for themselves.

In addition, in the publishing model, as with books, people pay for what they get while the ratio of advertising and government subsidies to public service media steadily declines. Audiences’ preferences become more closely aligned with what they pay for as a result, but the gap between the media rich and media poor expands.

Think catalogues of movie and TV program titles, not a linear scheduled flow of appointment viewing. Long live TV, while everything changes.

So, Netflix, Menace or Messiah? You be the judge.

Competition Bureau Blesses Bell – Shaw Take-Over of Astral Media

Bell Astral Round 2 officially got under way today with an announcement by the Competition Bureau that it will conditionally approve the deal. In the Competition Bureau’s words, ”Today’s agreement is essential to preserving choice for consumers and ensuring continued and effective competition in this area.”

The Competition Bureau and Bell place a great deal of emphasis on the pay and specialty tv channels and radio stations the latter agreed to sell off to get approval for the deal, as well as the modest restrictions that the Bureau imposed to prevent Bell from blocking rivals’ access to two marquee channels in the Astral line-up: The Movie Network and Super Écran.

The bottom line, however, is that no amount of divestitures can obscure the fact that already extremely high levels of media, telecom and internet concentration in Canada — by historical, international and anti-trust standards — will become a lot higher yet (see here). At least that will be the case, if the CRTC does not steel its spine for a second time to take a much more expansive view of the issues than the Competition Bureau’s myopic views of the deal’s impact on economic efficiency and “relevant advertising markets”. 

More important than the conditions placed on the deal is what Bell did get. Bell already owns thirty pay and specialty tv channels (e.g. CTV News, ESPN, Comedy Network, TSN, Réseau des Sports, Discovery Channel, etc.) and it will add eight more if its deal with the Competition Bureau sticks: the French-language SuperÉcran, CinéPop, Canal Vie, Canal D, VRAK TV, and Z Télé, and English-language services The Movie Network, HBO Canada, and TMN Encore. This, too, must be seen on top of the 28 conventional tv stations that Bell owns that make up its CTV1 and CTV2 networks across Canada.

Thus, even after the divestitures required, Bell will still hold 66 tv channels and its share of the pay and specialty tv market will rise sharply from 27.4% to 38.7%. But as I’ve always said, media and internet concentration is not about the market share of a single player but the structure of the relevant sectors and the telecom, media and internet (TMI) industries as a whole.

Thus, more important than just Bell’s dominant market share is that in the pay and specialty segment of the tv industry, the big 4 companies’ — Bell, Shaw, Rogers and the CBC, in that order if the deal succeeds — share of revenues will rise from 87.6% to 90.5%. This is far in excess of the CR4′s typical threshold for establishing a prima facie case of concentration of 50% and well above the Competition Bureau’s own standards set for banking (para 47). 

An already sky-high Herfindahl – Hirschman Index (HHI) score of 2270 will move into uncharted territory at over 3000 (recall, that the U.S. Department of Justice typically uses an HHI of 1800 as a threshold for defining high levels of concentration) (on questions of the CR and HHI methodology, see here). Table 1, below, shows the results. 

Pay and Specialty Television Ownership Groups, Revenue, Market Shares and Concentration Levels, 1984-2011 (1)
	2004	2006	2008	2010	2011	Post Comp Bureau Divestitures
Shaw/Corus (4)	18.7	15	17.5	31.7	33.1	35.1
Canwest	2.1	1.9	16.1	Shaw
Bell					27.4	38.7
CTV Globemedia			28.4	26.3
Rogers	15.8	15	10.9	11.5	12.3	12.3
Astral	5.9	13.2	17	15.9	15.6	Bell – Shaw
CBC/Radio Canada	6.4	6.3	5.1	4.3	4.4	4.4
Quebecor (5)	1.6	1.9	2.5	3.5	3.9	3.9
Pelmorex	1.9	1.9	1.7	1.4	1.3	1.3
Fairchild (Chinavision)	1.2	1.2	1	0.8	0.8	0.8
MusicPlus/MusiqueMax (7)	0.6	0.6	0.5	0.6	0.4	0.4
Cogeco (as TQS from 2001-08)		0.1	0.1 (Remstar)
Spec and Pay TV $ (14)	2050	2428	2929.9	3459.4	3732.1	3732.1
Conventional TV $	3159.9	3175.9	3381.4	3405.6	3491.9	3491.9
Total TV $	5209.9	5603.9	6311.3	6865	7224	7224
C4	61.9	57.1	72.9	85.4	87.6	90.5
HHI	1181.27	1205.71	1816.24	2069.58	2269.24	3084.6

Sources: CRTC’s Communication Monitoring Report and its Pay and Specialty Statistical and Financial Summaries; Corporate Annual Reports.

While Bell’s take over of Astral will have minimal effect on conventional over-the-air television, its impact on the total tv market, an amalgamation that adds conventional tv stations to the pay and specialty tv segment, will be significant. Bell’s share of total tv revenues will rise from just under 26% to just under 32%. Sure, these figures fall beneath the CRTC’s threshold of 35% set out in the Diversity of Voices ruling in 2008, but that is more a measure of the weakness of the rules rather than a satisfactory state of affairs. The CR4 for the total tv market will rise sharply from 81% to just under 90%; the HHI will similarly shoot upwards from its current excessive level of roughly 1900 to 2284, as the following table shows.

Total Television Market
	2004	2006	2008(2)	2010	2011	Post Comp Bureau Divestitures
Bell					25.7	31.6
Shaw/Corus (7)	7.4	6.5	7.1	21.4	24.4	25.4
CBC/Radio Canada (4)	22.8	21.2	22.1	20.5	20.8	20.8
Rogers[vi]	3.8	7	9.7	11.6	10.5	10.5
Astral	6.2	6.5	7.2	8.1	8.1	Bell – Shaw
Quebecor (8)	5.9	6.1	5.8	5.5	5.6	5.6
Remstar				0.9	0.9	0.9
Total TV $	5209.9	5603.9	6311.3	6865	7224	7224
C4	63.6	61.9	75.7	79.7	81.4	88.3
HHI	1310.6	1290.09	1750.26	1796.93	1897.01	2284.4

One of the more perverse outcomes of the state-of-affairs overseen by the Competition Bureau is how it plays to one of Canada’s other major TMI conglomerates: Shaw. Indeed, while there is much talk of divestiture, the arrangements brokered by the Competition Bureau effectively dismantles Astral Media — the ninth largest media company and most significant non vertically-integrated media enterprise in the country — in a way that allows Bell to keep the company’s crown jewels while handing over much of everything else to Shaw.

Indeed, Shaw is a major beneficiary of this transaction, moreso than citizens, consumers and the public will ever be. This is because Corus, which it controls through common ownership by the Shaw family, will pick up the two English-language radio stations as well as the half-a-dozen pay and specialty channels that Bell must sell: the bilingual Teletoon/Télétoon service, English-language Teletoon Retro and Cartoon Network (Canada), and French-language Télétoon Rétro, Historia and Séries+. Bell will also sell off ten other radio stations and another half-dozen specialty and pay channels: The Family Channel, Disney XD,Disney Jr. (English and French), MusiquePlus and Musimax.

This horse-trading amongst dominant players in the industry overseen and blessed by the Competition Bureau smacks of the worst in Canadian regulatory traditions, i.e. the state giving its seal of approval to incumbent interests in already concentrated markets. The matter is made all the more unsavoury by the fact that Shaw was Bell’s only industry ally in Round One of the Bell-Astral deal, supporting Bell’s application to the CRTC and largely sitting silent on the sidelines. The rest of the industry and many others — Quebecor, Cogeco, Telus, MTS, Sasktel, Eastlink, the Independent Broadcasters Association, public interest and consumer groups, etc — fought strategically and on principled grounds against the original deal. The upshot of these arrangements is the creation of two roughly equal behemoths, Bell and Shaw, with each accounting roughly for 38.7% and 35.1% of revenues in the pay and specialty tv sector, respectively, and about 31.6% and 25.4%, respectively, of revenues in the total television market.

Call it a duopoly, but it certainly is not competition in any normal sense of the term. On what should be the more exacting terms of creating the most diverse media possible in line with the ideals of the free press and democracy, such arrangements are a travesty.

Indeed, it is exactly this kind of insider coopetition that has defined Canada’s TMI industries for too long and which the original CRTC decision looked like it might undo. The Competition Bureau’s Consent Agreement certainly blunts that hope, if not kills it outright.

To be sure, this transaction has always been animated by the idea that Bell’s acquisition of Astral might just put it in a better position to undo Quebecor’s dominance of French-language media markets. Is we keep our eyes focused only on the ‘clash of titans’ scenario in which the end game is to pit an even bigger Bell against Quebecor, there is some truth to this, but focusing on only one or two players is not the proper way to assess the structure of any market, let alone media markets.

Looking at Table 3 below, we can see that on the basis of revenues, the CBC is currently the largest player in French language television markets, followed by Quebecor with roughly 24 percent market share and Astral with just over 17%. Bell, V Interactions and Shaw/Corus trail far behind with 8.2, 4.4 and 2.2 percent market share, respectively.

Table 3: French Language Total Television Revenues (Millions), 2007 – 2011

	2007	2009	2010	2011	PCBD*	2011 Market Share	PCBD Mrkt Share)
BCE	7.2	8.2	113.5	123.5	327.5	8.2	21.6
Quebecor	278.2	335.9	337.1	364.3	364.3	24.1	24.1
Astral	223.2	235.2	238.3	260.2	22.8	17.2	1.5
CBC(3)	489.7	532.9	606.7	629.5	629.5	41.6	41.6
V Interactions		64.4	61.9	66.5	66.5	4.4	4.4
Cogeco	107.0
Shaw	6.1	5.7	30	33.2	66.5	2.2	4.4
Canwest	18.5	22.3	Shaw
Others	137.6	123.4	46.5	35.6		36	2.4
Total French-language Conventional TV	817.5	826.0	892.0	925.8	925.8	925.8	925.8
French pay and specialty TV	450.0	502.0	542.0	587.0	587.0	587.0	587.0
Total French-language TV	1267.5	1328.0	1434.0	1512.8	1512.8	1512.8	1512.8
CR4						91.0	91.7
HHI						2699	2818.9

Sources: CRTC (2012). Communications Monitoring Report and Aggregate Annual Returns and company Annual Reports.

If the scenario contemplated by the Competition Bureau’s Consent Agreement goes ahead, Bell will replace Astral as Quebecor’s biggest commercial rival.  Shaw/Corus’ place in the French-language market will also be strengthened on account of the increased share in French-language TV services that it will have. While such a scenario might put two of Canada’s largest TMI conglomerates on a more equal footing in Quebec, the elimination of Astral will reduce the number of independent media groups and further drive up already extremely high levels of concentration within Quebec and across the Canada as a whole.

That concentration is already extremely high in Canada there can be no doubt, with the big four firms (CBC, Quebecor, Astral and Bell), as Table 3 above shows, controlling 91% of all revenues. The CR4 will rise if Bell acquires Astral to just under 92%, while the already sky-high HHI will rise from an exceptional 2699 to 2818.  To be sure, these increases might appear modest, but it cannot be emphasized enough that this is only because concentration levels are already off-the-charts by any reasonable measure.

The claims that a bulked up Bell will make for a more formidable competitor to Quebecor is even less convincing when we look beyond the domain of television. In radio for example, while Bell will bulk up on French-language radio stations to complement its English-language stations, Quebecor isn’t involved in radio at all. Net outcome? More concentration in radio, but zero benefit in terms of competition and diversity.

The table below shows the results with respect to French-language radio.

French-language Radio Revenues
	2007	2008	2009	2010	2011	Post CompBur Divestitures $ Mills)
CBC	155.5(4)	161.9	166.2 (4)	145.1	140.3	140.3
Astral	108.8	109.5	108.4	107.9	108.7	Bell – Shaw
Cogeco	30.3	33.2	36.3	41.8	84.1 (1)	84.1
Corus	48.1	49.3	50.4	55.5
BCE						108.7
Total Fench Private Radio Rev	224.9	230.9	238.4 (2)	251.1	258.4 (3)	273.2 (5)
Total Fench Radio Rev	380.4	392.8	404.6	396.2	398.7	407.7

Sources and Notes:  CRTC (2012). Communications Monitoring Report and Aggregate Annual Returns and company Annual Reports; CBC figure for 2007 is based on estimate of 41% of CBC radio revenues allocated to French language services, as per 2008. For 2009, the Aggregate Annual Returns identifies French radio rev for CBC as 170.5, however it is 166.2 in the Canadian Media Monitoring Report; Cogeco data for 2011 from Annual Report differs (p. 29) from CRTC figure of $113.6 (Aggregate Annual Return).

Moreover, while Bell will divest ten English-language radio stations as part of its agreement with the Competition Bureau, more importantly it will retain 77 out of Astral’s 84 radio stations. Add that to the 30 that Bell will retain in its existing stable and it will have 107 radio stations across the country — a development that will, as I stated last year when this transaction was first announced, see Bell “catapult from being the fifth ranked player in radio to top dog”. It’s exact share of revenues can’t be precisely counted, but would be about 26% before the divestitures and likely somewhere around 21-23% afterwards by my estimation.

This is not terribly high, but it does reverse the trend of declining concentration in radio, which is pause enough for concern. Indeed, the best the Competition Bureau can muster in this regard is that it “is satisfied that the proposed divestitures are sufficient to ensure the transaction will not result in a substantial lessening or prevention of competition in any radio market.” That’s a far cry from saying that it will contribute anything positive. 

Finally, Quebecor’s dominance of French-language newspapers and magazines will remain completely unscathed by Bell’s acquisition of Astral, since neither of them is involved in either of these areas, except for Bell’s minority stake in the Globe and Mail. Given the protracted strife and lock-outs at Quebecor’s Journal de Quebec and later the Journal de Montreal in recent years, and Pierre Karl Péladeau’s commitment to using his media outlets to push a clear political and ideological agenda, there is no doubt a great deal of antipathy toward Quebecor in Quebec, across the country and amongst journalists in particular.

This has no doubt fomented a desire to undercut Quebecor’s ability to seemingly lord over the French press with impunity. While that no doubt plays well into Bell’s claims about increasing competition with its erstwhile rival, the fact that it has no stake in the French press further weakens its claim.

Ultimately, the CRTC might yet turn back Bell’s bid to take-over and carve up Astral Media by taking a more expansive view of these matters under the Broadcasting Act and, more importantly, from within the traditions of a free press and democracy. At the same time, however, the fact that the Competition Bureau moved on its own today does not bode well.

Two years ago in the United States, by contrast, the Department of Justice and FCC worked hand-in-glove in relation to the closest parallel to the Bell-Astral agreement: Comcast’s acquisition of NBC – Universal in 2011. To be sure, both regulators gave the green light in that instance, but the terms were a far cry from the weak measures that appear to have been adopted by the Competition Bureau on its own.

We still await details of the Competition Bureau’s Consent Agreement, but so far, its actions seem woefully myopic and unhinged from even its own standards of assessing market concentration. This, however, is probably the price we play when fundamental matters of communication and democracy are left to those who see the world only through a constrained economic lens.

The net outcome of this transaction will be demonstrably higher levels of concentration in both French and national pay and specialty tv markets as well as the total tv market overall. The same will be true with respect to radio.

It will also further the extremely high levels of vertical integration across the entire sweep of the TMI industries. That, in turn, will, at the very least, solidify our dubious honour of having the second highest levels of cross media ownership concentration among the 14 comparable countries surveyed by the International Media Concentration Research Project. In fact, it will likely make us Number 1 on this measure.

At the same time, the idea of carving up the market between Bell and Shaw smacks of too much that is unsavoury of how media policy in this country has worked for far far too long. This has to change. There was hope that such change might be in the air last year when CRTC spiked the first incarnation of the Bell Astral deal.  That hope just got dimmer.

 

Women, Power and the Media: Women (not) on the Board of Directors and in Executive Management at the Big 10 Canadian Media Companies, 2012

Two weeks ago I had the pleasure of presenting my research on telecom, media and internet concentration to several women from Canadian Women in Communication, an organization that strives to “raise the profile” and honour the achievements of women in the telecom, media and technology industries in Canada.

The organization does so through professional development and mentoring programs as well as by creating partnerships with industry, government and other organizations. It also does so, as its website indicates, through “high profile initiatives like Women on Boards”.

These initiatives, and the “Women on Boards” one in particular, hint at what a lot of women who work in these areas already know, as I have learned over the years from casual conversations: the telecom, media and internet industries are notoriously tough ones for women to succeed in, and rise through the ranks to upper-level positions of decision-making authority on Boards of Directors or Executive Management teams. In order to take this beyond casual observations, however, I decided to examine the issue in more detail in preparation for my talk.

With the help of one of my star research assistants on the Canadian Media Concentration Research Project, Lianrui Jia, we examined the number of women in Board of Director and Executive Management positions at the “big 10 media companies” in Canada: Bell, Shaw, Rogers, Quebecor, CBC, Postmedia, Cogeco, Telus, Astral and Torstar. What did we find?

In a nutshell, we found that the raison d’etre for CWC is well-founded. Of the 286 Board of Director and Executive Management positions at the big 10 media companies, just less than a quarter (22%) are filled by women. From first to worst, the results are summarized in Table 1, below.

	# of Women on Board of Directors (Total # of Directors)	Number of Women on Executive Team	Total # of Women on BoD & Exec Team (%)
CBC	3 (11)	4 (8)	7 / 19 (37%)
Torstar	4 (13)	4 (11)	8 / 24  (33%)
QMI	3 (8)	4 (14)	7 / 22 (32%)
Rogers	4 (18)	3 (12)	7 / 30  (23%)
BCE Grand Total*	7 (38)	9 (36)	16 / 74  (21.6%)
BCE	2 (14)	2 (12)	4 / 26   (15%)
Bell Aliant	3 (10)	2 (7)	5 / 17  (29%)
Bell Media	2 (14)	5 (17)	7 / 31  (23%)
Cogeco	2 (8)	1 (9)	3 / 17 (18%)
Astral	3 (15)	1 (14)	4 / 29  (14%)
PostMedia	1 (9)	1 (7)	2 / 16  (13%)
Shaw	2 (16)	2 (18)	4 / 34  (12%)
Telus	1 (13)	1 (8)	2 / 21  (11%)
Total	30 (149) (20%)	32 (137) (23%)	62 / 286 (22%)
* Note: Total only includes figures from each of BCE’s subsidiaries, not “grand total” for BCE.
Sources: see below.

A fuller table with a finer breakdown by company and the names of women in Board of Director and Executive Management positions at the big 10 media companies can be found here.

Glass Half-Full or Half Empty?

A panglossian view of the evidence might suggest that things are, if not good, better than the rest of the state of Canadian industries as a whole and slowly improving over time.

Thus, according to research by the women in business advocacy group, Catalyst, the average number of women on Board of Directors at Canadian companies in general is 14.5%. By that measure, things look pretty good at the big 10 telecom, media and internet companies. These entities look good as well relative to the 41% of companies listed on the S&P/TSX that have no women directors at all.

Finally, there are three entities on the list of media enterprises above that stand out as doing quite well, by both Canadian and, as we shall see shortly, global standards: CBC (37% of Directors and Executive Management team are women), Torstar (33%) and Quebecor (32%).

Yet, to continue with such a rose-tinted view would vastly under-state the significance of the problem at hand. For one, the rate of increase of women in director and executive positions, as Catalyst and others show, has been painfully slow.

Second, the number of women in positions of decision-making power and authority pales in comparison to the number of women graduating from universities in Canada, and from journalism and communication programs in particular. For instance, at Carleton University, where I teach, 58% of all currently enrolled undergraduate students are women; 68% of those enrolled in the journalism program are women (see here). In short, the number of high-level opportunities available is far less than the number of educated and skilled women who desire them.

More importantly, conditions within the upper-ranks of the Canadian media stack up poorly globally. As a recent study by the International Women’s Media Foundation (2011), Global Report on the Status of Women in the News Media found, there is no shortage of women in the media industries in Canada; just at the top and in key positions where their decisions could determine policies, the allocation of resources, strategy and so forth.

As the Global Report on the Status of Women in the News Media observes, women are well represented at “important administrative level of executive editors, bureau chiefs and news directors”, accounting for about 55.1% of such positions. They also make up about half of mid-management level positions, 54% of producers, directors and writers are women, and occupy roughly six-out-of-ten sales, finance and administration positions (pp. 159-160). When it comes to production and design (e.g. photographers, scene designers) and studio production (e.g., sound and lighting), however, women account for only 23.6% and 13.1% of positions, respectively.

Pointedly, however, the Global Report on the Status of Women in the News Media states: ”Glass ceilings were especially noticeable in Canada, Dominican Republic, Jamaica, Puerto Rico and the United States.” (emphasis mine, p. 11). In short, it is not that women are frozen out of the media industries in Canada, just vastly under-represented in positions of real power and authority.

Comparatively speaking, the fact that women in Canada make up just 20% and 23% of Board of Director and Executive Management positions, respectively, fares well with a global average that is dragged down greatly by conditions in Asia and Africa. Compared to the United States, however, the situation in Canada is slightly less well-off. Roughly the same number of women are in upper-level management positions in both countries (23%). However, there is a significant difference when it comes to women in the boardroom, with roughly a third of directors at US media companies being women, while in Canada the number is 20%.

The situation is worse when we compare the status of women in Canadian media to their counterparts in northern Europe, where women occupy 36% and 37%, respectively, of Director and Executive Management positions. In Eastern Europe, women account for an even higher 33% and 43% of governance and top management positions, respectively (IWMF, 2011, p. 9).

Who Cares? 

There is a ton of reasons why we should care about this state of affairs. For one, there’s the principled question of fairness.

Second, there’s a huge gap in income even for those women who do make it to the top compared to men (IWMF, 2011, p. 161).

Third, there’s a substantial body of literature that suggests that companies with greater representation of women on their board generally do better (see here and here).

Fourth, and from a more specifically political economy of media perspective, while there is a great deal of focus in the literature on questions of representation in media texts, there is very little research on who is and is not making decisions that structure media companies, markets, work and texts to begin with. This is a huge oversight and needs to be filled.

Looking at the media, it is not just the day-to-day operations of media enterprises and the content they produce (operational control), but rather who allocates resources, makes decisions and sets corporate policies that frame everything else to begin with. The latter is known as allocational control and it is a form of structural power.

As this small exercise prompted by my talk with the Canadian Women in Communication two weeks ago suggests, when it comes to this latter kind of power, Canadian women in communication have a long way to go.

Sources: 

International Women’s Media Foundation (2011) Global Report on the Status of Women in News Media. http://iwmf.org/pdfs/IWMF-Global-Report.pdf

Corporate Annual Reports

BCE: http://bce.ca/assets/Uploads/Documents/archivesAnnualReport/BCE/2011/BCEAR2011EN.pdf

Quebecor: http://www.myvirtualpaper.com/doc/Edition-sur-mesure/annualreporten2011/2012051001/#55

Rogers: http://www.rogers.com/web/Rogers.portal?_nfpb=true&_windowLabel=investor_1_1&investor_1_1_actionOverride=%2Fportlets%2Fconsumer%2Finvestor%2FshowGenericFlexibleZoneAction&investor_1_1subAction=showRciSeniorLeadershipAction&_pageLabel=IR_LANDING

Shaw: http://www.shaw.ca/corporate/investors/corporate-governance/

Cogeco: http://www.cogeco.ca/cable/corporate/cgo/governance/comity.html

Postmedia: http://www.postmedia.com/company/governance/

Telus: http://about.telus.com/community/english/investor_relations/corporate_team/executive_team

Astral: http://www.astral.com/assets/094b7718a2994611a5667677b91f3321_AIF-YE-2012—2012-11-29—FINAL.pdf

Torstar: http://www.torstar.com/html/our-company/Officers_and_Senior_Executives/index.cfm

CBC: http://www.appointments.gc.ca/prflOrg.asp?OrgID=CBC&lang=eng

Press Pause: Why the CRTC Should Delay the Bell-Astral Round 2 Hearings

My column for the Globe and Mail today argues that the CRTC should take it’s time before putting the 2nd set of hearings into Bell’s proposed acquisition of Astral Media in motion.

The column was prompted by comments made a few weeks back, when BCE indicated that it had hope the Canadian Radio-television and Telecommunications Commission might give special fast-track treatment to its bid for Astral Media now that we’re going over things for the second time, “abbreviated hearings” it called them.

The CRTC should do nothing of the sort and, in fact, hold off for a while before doing anything at all, because the tools the regulator will rely on to assess the transaction are not up to the task.

This second-kick-at-the-can strategy that BCE wheeled out after the CRTC first rejected the deal last October (see here , here and here), is highly unusual. To the best of my knowledge, nothing like this has ever been done before. There is nothing routine about this transaction and, thus, it is hardly worthy of being fast-tracked.

Not least because the thresholds set in the CRTC’s 2008 Diversity of Voices decision (see para 87) are fundamentally flawed, and should be scrapped and new ones put into place before any review of media ownership transactions on the scale of the Bell-Astral deal gets out of the gates.

The oft-repeated idea that any merger or acquisition should automatically be approved if it results in the combined entity having under 35 per cent of the total TV market creates more problems than it solves (see here, here and here).

The 35 per cent guideline was imported from the standards set by the Competition Bureau in 2003 for reviewing mergers and acquisitions in banking, and form a weak standard when it comes to media diversity. Rules for banks balance competition with the stability of the national economy. Media concentration rules are about fostering the maximum amount of diversity feasible and a free press fit for democracy.

Even worse, adopting the ill-fitting 35 per cent guide, the CRTC cherry-picked the weakest half of the Competition Bureau’s two-part rule for assessing bank mergers.

The second part of the Competition Bureau’s guidelines suggests that there is a problem of market power when any merger or acquisition results in the top four firms controlling more than 65 per cent of the market. The share of the big four – Bell, Shaw, CBC, Rogers – today is already roughly 81 per cent for the total TV programming market – well-over the Competition Bureau’s standards. If Bell does get the green light to acquire Astral Media, it would rise to just under 90 per cent. This reason alone is enough to pause and reflect.

As the Competition Bureau clearly stated:

“If the sum of the merging firms’ pre-merger market shares is below 35 per cent, there are likely to be sufficient products and suppliers to which consumers can turn in response to any attempt by the merged entity to exercise market power. If the four-firm concentration level is below 65 per cent, then co-ordination among firms in the market is likely to be too difficult to raise competition concerns (para 47).”

Conversely, when a single firm’s combined market share tops 35 per cent its ability to exercise dominant market power is just too great, while when the top four control more than 65 per cent of the market, the potential for them too collude rather than compete vigorously in the marketplace becomes unacceptably high as well.

Also, the guidelines set out in the Diversity of Voices ruling did not anticipate the extent to which vertical integration would come to reign supreme across the entire sweep of the telecoms, media and internet in just a few years. When the new rules were created in 2008, Bell had sold down its controlling stake in CTV and was pretty much out of the TV programming business. The three vertically integrated conglomerates – Shaw, Rogers and Quebecor – at the time accounted for just 43 per cent of the total TV business (delivery and programming combined).

By 2011, Bell had returned to the fold by re-buying CTV; Shaw had bulked up by taking over Global from the bankrupt Canwest. Four vertically integrated telecom, media and internet giants now accounted for more than three quarters of the TV market: Shaw, Bell, Rogers and QMI, in that order. Toss Astral Media into the mix – the ninth largest media firm in the country – and the number rises closer to 80 per cent.

I am quite sure that former CRTC head Konrad von Finckenstein, never anticipated these conditions. A five-year-old 35 per cent threshold is no longer some kind of magic number upon which the Bell-Astral deal should turn come decision time.

We should also remember that not just the CRTC, but Canadians in general did not like the original Bell-Astral deal. In fact, 60 per cent opposed the deal.

Some may brush that aside as anti-capitalist populism, but the fact is, such a stance is the norm and when you probe the data further in such surveys, we find that the more educated the respondent is, the more likely they are to spurn any deal that appreciably changes the scales in favour of fewer choices and more concentration.

This is the impulse of a democratic culture. It should not be treated lightly, or dismissed with scorn.

It seems to me to be only prudent that the CRTC takes whatever time it needs to ensure that the tools it will use in Bell-Astral Round Two are up to the task. Until they are, Bell and Astral should step back and get in line rather than raising the possibility of fast-tracking this thing.

This isn’t just about Bell Astral; it’s about the rules of the road and ensuring that the media ecology in this country comes as close to embodying democratic ideals as is humanly and politically possible.

Voltage’s Shakedown of TekSavvy, Part III: the Fight for a Competitive and Democratic Internet

Over the past few weeks debate has roiled over Voltage’s mass copyright litigation scheme directed at TekSavvy users. This has many wondering whether the indy ISP has done enough to thwart the disclosure of subscriber identification linked to about two thousand IP addresses that Voltage alleges have been used to illegally share films and tv programs the company owns the rights for.

Here I want to add a few more thoughts to my previous posts on the topic (see here and here). The main aim is to provide a crisp distillation of the ultimate issues at stake, the benefits of TekSavvy’s approach so far and why I still believe that TekSavvy ought to directly oppose Voltage’s motion.

First, it is unequivocal that relative to what other ISPs in Canada have done, TekSavvy is in a league of its own. Other than Telus and Shaw in the precedent setting BMG case of 2004, only TekSavvy has raised as many hurdles to companies such as Voltage who seek to have ISPs turn over subscribers’ identification linked to IP addresses that are accused of being used for illegal file sharing purposes (see Howard Knopf’s posts on this point here and here).

In BMG, only Shaw and Telus led the charge against using ISPs as a means of getting to subscribers behind the IP addresses being sought. Videotron actively sided with the recorded music industry, while Bell and Rogers waffled. Fast forward to 2011, when Voltage launched a similar case (The Hurt Locker case), only to face zero opposition from the three incumbent ISPs targeted for the 29 IP addresses being sought: Bell, Cogeco and Videotron. Indeed, the three ISPs agreed to not show up in court at all.

Last year, Canadian film and tv producer and distributer NGN productions targeted four smaller ISPs, with much the same results: Distributel, Access Cooperative, ACN and 3 Web. All caved, and we hardly heard a peep about these events. Thus, compared to its counterparts, TekSavvy shines.

TekSavvy’s stance also lines-up well with international best practices and obligations of ISPs and digital intermediaries when it comes to protecting subscribers’ speech and privacy rights, as can be seen when we look at the Report of the Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression prepared for the United Nations Human Rights Council by Frank La Rue in 2011. As LaRue’s Report states,

To avoid infringing the right to freedom of expression and the right to privacy of Internet users, the Special Rapporteur recommends intermediaries to: only implement restrictions to these rights after judicial intervention; be transparent to the user involved about measures taken, and where applicable to the wider public; provide, if possible, forewarning to users before the implementation of restrictive measures; and minimize the impact of restrictions strictly to the content involved. Finally, there must be effective remedies for affected users, including the possibility of appeal through the procedures provided by the intermediary and by a competent judicial authority (para 76, page 20).

In short, TekSavvy’s actions not only shine relative to most of its Canadian counterparts, they appear to be in line with international norms regarding speech and privacy rights. Still, however, there are three points upon which we can still reasonably ask for more.

First, the LaRue report puts a lot of weight on proper legal proceedings taking place before any limits to speech and privacy are implemented. While TekSavvy has done much to make sure that such proceedings take place with a great deal of fanfare and plenty of time for the thousands of Jane and John Does implicated to be notified — all in line with what UN report has to say – we must ask whether or not the legal process that LaRue refers to would be better served if TekSavvy directly opposed Voltage’s motion?

That is what Telus and Shaw did when opposing the motion for disclosure in the BMG case and it is, as I’ve argued, what TekSavvy should do in the present case. Indeed, Judge Mandamin, who is overseeing last week’s proceeding in the Voltage motion, seemed to have exactly this in mind when he noted that hearing a motion from only one side is risky, and that complex technical issues required those with the best knowledge of such matters, i.e. TekSavvy, to step forward.

Second, we can look to elsewhere for cases where ISPs have actively opposed attempts to enroll them into the machinery of copyright enforcement.  Two of the largest ISPs in the UK, BT and TalkTalk fought tooth-and-nail, for example, against sections of the 2010 Digital Economy Act that did just this. While they lost, BT and Talk Talk’s opposition was part and parcel of a wave of opposition, including the influential Hargreave Report, that sent key planks of the Digital Economy Act back to the drawing board.

Another UK case – ACS Law – MediaCat (and here) – showed how important opposing copyright claimants’ bids to pursue mass litigation campaigns against alleged illegal file-sharers is to revealing the shoddy quality of the evidence that often stands behind such claims. Lastly, the Australian ISP, iiNet successfully fought back a push by a group of 34 movie studios, the Australian Federation Against Copyright Theft (AFACT), to have the ISP play an active role in enforcing their copyright interests. iiNet won the initial trial case in 2010, on appeal to the Federal Court in 2011 and again in the High Court last year. In short, ISPs actively and directly opposing motions by a variety of copyright claimants has beaten back the tide on many occasions (thanks to Australian lawyer, Leanne O’Donnell, for the tips regarding these cases).

Third, the standard for disclosing subscribers’ information set in the BMG case is weak. Indeed, the idea that the claims being made are done in good faith falls far short of the stronger standards associated with the requirement that those pushing such a motion make a compelling case that they have a good chance of winning in court.

If speech becomes one of the pivots upon which such things will turn, then the standard will become higher yet. CIPPIC plans to push these points if it gains intervener status, but I can see no reason why having both it and TekSavvy pushing at the oars in unison won’t strengthen the case for moving the weak standards of disclosure that have been in place since BMG, and arguably behind why many ISPs since then have simply folded in the face of motions for disclosure, to much higher standards, and especially standards that put speech rights in the front window.

Ultimately, it needs to be established once and for all that ISPs can’t be turned into agents on behalf of copyright claimants such as Voltage. This is essential given that the ink on the new Copyright Modernization Act is not even dry yet, leaving it ripe for interpretation, as Judge Mandamin noted.

TekSavvy now stands in the best position to do this having been forced into playing that role to oppose the enormous burden that this places on ISPs. TekSavvy has a chance to stick up for important values with respect to its subscribers’ anonymous speech and privacy rights, and it should. Sure, CIPPIC could do this, but CIPPIC’s interests, as I noted in my last post, are distinct both from TekSavvy and its subscribers.

Until the likes of Voltage are successfully challenged, these pillars — speech and privacy rights — of a democratic communication space, which the Internet certainly is a crucial part of, will lay fallow, resting more on the rhetoric of internet freedom rather than a sturdy legal foundation, or economic one, for that matter, if even good (in the normative sense) ISPs like TekSavvy keep taking a financial beating. In short, I hope that the occasion can serve to effect an interpretation of the law that (a) minimizes to the absolute least amount possible the role that ISPs (and other digital intermediaries) are forced to play as agents in the copyright enforcement machinery and (B) maximizes internet users’ speech and privacy rights.

The fact that TekSavvy has broken ranks with past practices by incumbent ISPs and others, who have rolled over and disclosed subscriber info in pretty much every case after BMG (except Telus and Shaw, in that case), it would appear, also demonstrates the importance of having as much diversity and competition in internet access as possible. A more competitive and diverse supply of internet access means that subscribers will be less vulnerable to a handful of players being shaken down by copyright claimants for their personal information.