Who Owns the Telecom-Media-Internet in Canada, 1984-2010?

This post has been sitting in the wings for a while waiting for me to finish the mad scramble that is the beginning of the school term and to catch my breath after a whirlwind tour to New Zealand. Yes, I have violated the first cardinal rule of blogging — i.e. pick a frequency for your posts and stick to it no matter what — but I hope that you and the blog-Gods-that-be will forgive me.

I started this series of posts a month-and-a-half ago by outlining the growth of the network media economy in Canada and in a second post that examined concentration trends within the network media. Both covered the period from 1984 until 2010, and so too does this post by setting out the top 10 telecom-media-Internet (TMI) companies in Canada, their ownership, revenues, market capitalization, profits and debt over the past quarter-of-a-century.

Just to quickly recap, the first post argued that the network media economy grew immensely from $12.1 billion in revenues in 1984, to $23 billion in 2000, to $33.8 billion last year (in real dollars) (excluding wired and wireless telecoms services). The second that the network media industries became more concentrated during the same period, with the ten largest media companies’ share of entire network media economy rising from a little over 50% in 1984 to just over 70% in 2010. This third post extends the analysis by identifying the rise of media conglomerates in Canada since the mid-1990s and giving a snapshot profile of the “big ten” TMI companies as of 2010.

The Post-1995 Ascent and Triumph of the Media Conglomerate

The mid- to late-1990s marked a watershed in media history in Canada and many other countries around the world. It was the point in time in which media conglomerates – i.e. media companies with stakes in markets across many different kinds of media – went from being the exception to the norm.

If we look back to the late-1980s, we can see the difference. The media environment was much smaller and neither the growth of pay-television nor the Internet had taken-off. TV and the press were still the dominant core of the media, the CBC was the biggest single entity of them all, with about 14 percent of all media revenues, and most companies still focused on just one or two media sectors.

Media conglomerates had begun to emerge – Maclean-Hunter, Videotron, Rogers – but they cut a far less imposing figure. Their reach covered two or three media sectors and their combined share was only slightly greater than that of the CBC at the time, i.e. 14.4 percent versus 14 percent, respectively.

The ‘Big 10’ Media Companies in Canada, 1988 (millions$, real dollars) (excluding wired line and wireless telecoms)

	TV	Cable	Press/Mags	Radio	Total Rev (Mill$)	Mrkt Share
CBC	846			282	1128	13.9
Southam			789.9		789.9	9.7
Thomson			599.6		599.6	7.4
M-H	104.2	83.5	321.8		509.5	6.3
Videotron/TVA	97.8	245			342.8	4.2
Rogers	36.4	277.8			314.2	3.9
Torstar			286.7		286.7	3.5
Toronto Sun			248.6		248.6	3.1
Power Corp			169.70		169.7	2.1
Baton/CTV	144.6				144.6	1.8
Total $/Sector	2176.4	1242.9	3699.5	1005.6	8,124.4

Amalgamation amongst television ownership groups in the late-1980s and early-1990s produced the large national companies that came to single-handedly own the leading commercial television networks – e.g. CTV, Global, TVA, CHUM, TQS – by the late-1990s. While weighty in their own right, however, these amalgamations did not have a huge impact across the media as a whole.

That changed dramatically in the late-1990s as investment poured into a wave of mergers and acquisitions, yielding massive media conglomerates with unheard of capitalization levels and debts. A second wave of consolidation followed from 2003 until 2007, albeit not nearly on the same scale.

By 2000, the ‘big 10 media enterprises’ in Canada – the first five of which were massive media conglomerates towering over the industry as whole — included: Bell Globemedia, Canwest, Quebecor, Shaw, Rogers, CBC, Torstar, Cogeco, Hollinger, Power Corp/Gesca.

Consolidation sealed the media conglomerate as a defining feature of the TMI industries in Canada, while pushing concentration levels to new heights. Although still significant, the CBC was already occupying a much reduced place within the mediascape.

Since that time, some firms have crashed and burned (Canwest, Hollinger), others have slid off the ranks of the top ten (Power Corp) and yet other new entities have emerged (Post Media). After its failed Bell Globemedia venture (2000-2006), Bell renewed its gambit to make convergence work by buying-back CTV ($3.2 billion) in 2011.

Bell is now at the top of the heap, commanding a sprawling TMI empire that spans: wired and wireless telephone, satellite TV, Internet access, CTV and the A-channel network (now rebranded CTV2), 31 satellite and cable television channels, 28 local television stations and 33 radio stations.

Excluding its wired and wireless telecom revenues, Bell now single-handedly accounts for 16 percent of all revenues across the TMI industries – an extraordinarily high number only paralleled in the era before the mid-1980s when the CBC stood as a central institution peering out across the nation. Bell and the rest, too, are only to eager to assume the mantel, relentlessly and shamelessly wrapping themselves in the flag whenever it suits.

The main difference between now and ten years ago when Bell first trotted out its vertical integration, media convergence strategy is that it has scaled back its stake in the Globe & Mail (15 percent) and that in most developed capitalist economies media conglomerates have fallen from grace (albeit with the exception of the Comcast/NBC-Universal merger approved in the United States in 2011). Not so in Canada, however, where the novel role carved out by the emergence of the media conglomerate at the core of the network media ecology has been more deeply cemented into place with the passage of time, aided and abetted by permissive government policy and a complicit regulator, the CRTC.

Altogether, as of 2010, four massive media conglomerates and a half-dozen large but more specialized companies which are half their size constitute the ‘big 10’ media firms in Canada, as the following table shows.

The ‘Big 10’ Media Companies in Canada, 2010 (millions$) (excluding wired line and wireless telecoms)

Companies & Owners	Mrkt Cap (mills)	Total $	Cable & Sat Dist	ISP	Total TV	Radio	Press/ Mags	Mrkt Share – All Media (%)
Bell/CTVDiversified	6,910*	5175	1676	1408	1801	290		16
Shaw(Family)	9495	4957	2332	916	1469	240		15.2
Rogers(Family)	19785	3826	1830	842	802	213	139	11.7
QMI(Péladeau)	2,421	3028	982	644	345		1056	9.3
CBC	NA	1593			1235	358		4.9
Post Media (Godfrey,et. al.)	1,266	1350					1350	4.1
Cogeco(Audet – 60%; Rogers – 40%)	525	939	594.9	282	62			2.9
Astral (Greenberg)	2051	888			550	338		2.7
TelusDiversified	1,000*	679	60	619				2.1
Torstar (Atkinson, Thall Hindmarsh, Campbell, Honderich)	966	490					490	1.5
Big 10Total $		22926	7475	4712	6265	1430	3035
Total NMI $		32,360	8,100	6,800	6848	1,910	6,502	71

* estimate based on proportion of total revenue accounted for by segments other than BCE and Telus’ wired and wireless telecom services.

So, what stands out from the above table? First, that the “really big four” telecom-media-Internet conglomerates are in a league unto their own, with dominant stakes spanning the media versus the greater focus of second-tier players on just one or two media: CBC, Postmedia, Astral, Telus, Torstar (Cogeco is an exception, being a second-tier player but with the media conglomerate form). The revenues and capitalization levels of the ‘big four’ media conglomerates also dwarf those of the second-tier players, to say nothing of the multitude of other players that fill the nooks and crannies of the media system.

Second, the ‘big 10’ media firms’ share of all revenues (excluding telecoms services), as I noted in the second post in this series, rose to all-time highs in 2000 and have hovered rather steadily around 71-75% ever since — a substantial rise from 61% in 1996 and bigger yet from 56% in 1992. In other words, while the telecom-media-Internet ecology has grown far larger and more structurally differentiated over time, the ‘big 10’ players’ share of it has become bigger still.

Third, as the big ten, and in particular the four major media conglomerates, gained in scale, their capitalization levels soared. During the boom years of the late-1990s, the market capitalization of the largest eight publicly-traded companies tripled from $8.5 billion to $26.8 billion.

The collapse of the TMT bubble cut these figures down to size, but during the mini-boom of 2003 – 2007 capitalization levels rose steeply to reach an all time high of $55.4 billion. Things have fallen from those heights in the face of the global financial crisis but capitalization levels in the TMI industries are at a very high level even relative to the excesses associated with the dot.com bubble.

Figure Big 8 media companies’ market capitalization (millions$), 1990-2010

Fourth, the media business is still a highly profitable one. The eight largest publicly traded media companies for which data is available show that these firms profits stayed steady between 16-17% in the late-1990s, nearly double the rate of profit for all other industries in Canada as a whole.

Operating profits at Rogers, Shaw and Quebecor plunged at the end of the 1990s and during the crash of the dot.com bubble in 2000/1. Downward trends took hold across the media industries as a whole during this time as well, but more modestly so.

By 2002, however, pre-crash profit levels were regained and surpassed, with operating profits for every year except 2006 in the 18-22% range – although the fortunes of individual firms did vary. Last year, they were nearly 19%, or more than double the estimated profits for all industries in Canada. Indeed, since 2008, things have been better than ever for Bell, Shaw, Rogers, QMI and Astral, with operating profits in the 20-30% range – despite the global financial crisis (and versus an average of 9.2 percent in 2009, according to Statistics Canada, for all industries as a whole).

Figure: Big 8 media companies’ operating profits, 1995-2010

Fifth, the big ten media companies in Canada are bloated with debt.  During the rah-rah days of the TMT boom, debt levels across the big eight publicly traded media players soared nearly five-fold. In 1996, total debt for these companies was $8.8 billion; by 2001, and after the orgy of acquisitions described in the previous post, total debt was closing in on $43 billion. Things have turned around since, and in 2010 debt levels were just over a half of what they’d been a decade earlier – still high by historical standards, but a significant decrease nonetheless.

Figure: Big 8 media companies’ debt (millions$), 1990-2010

QMI, Rogers and Shaw continue to labour under high-levels of debt, while at the opposite end of the spectrum, those who have stuck to their knitting – i.e. Astral, Torstar, notably – have never carried the massive debt loads that their counterparts used to buy their way into the centre of the network media economy.

Thus, at a time when these players should have been plowing resources into coming to terms with pervasive digitization, the rise of the Internet, development of broadband networks, more quality content and good journalism, most dominant players in the media industry were mired in debt. Handsome profits and increased market capitalization served owners and investors well, while dealing with the mountain of debt has had devastating effects on media workers and journalists and likely in terms of under-development of the network infrastructure and media content with resources siphoned off into paying the cost of debt rather than innovation.

The sixth and final thing that I want to observe from the listing of the ‘big ten’ is the fact that, despite the sweeping changes that have occurred, a peculiar form of ownership has been left intact across much of the TMI industries in Canada. As I have indicated elsewhere, several scholars have pointed to how the hothouse of innovation required in the communication and media industries has led to the rise of firms that are not only more capital intensive, but share-holder owned and managerially controlled as well.

According to Noam (2009), owner-controlled media firms in the U.S. fell from 35 percent to just 20 percent between 1984 and 2005 (p. 6). Demers and Merskins (2000) also argue that the managerial revolution has signaled the demise of the media baron – a figure reviled and revered in equal measure. They argue that this is a good thing as well, because media managers do not have ideological axes to grind, but do have the deep pockets and expertise needed to support technological innovation and higher quality journalism than owner-controlled companies.

Yet, the situation in Canada clearly does not conform to such a portrait given the fact that all of the ‘big 10’ media firms, except Bell, Telus and the CBC, are owner-controlled. If observers of the “managerial revolution” are correct, then we are the sorrier for it. Essentially, in Canada the sharp and dramatic bout of consolidation that occurred in the last half of the 1990s and again in the mid-2000s simultaneously transformed the structure of media companies and led to a sharp rise in concentration but without altering the structure of media ownership.

In Canada, the media mogul lives. Given their standing in terms of wealth and, often times, political ambition, the structure of ownership alone smacks of oligarchy. The fact that the boards of the big 10 TMI companies are stacked with ex-government and political figures drawn from the Conservative and Liberal parties alike only compounds the image (see Crony Capitalism for details).

This peculiar form of ownership (outside Russia, Latin America and the Arab world) will also continue to make media moguls in Canada a magnet of attention by both those who wish to sing them paeans of praise and others who see the conjunction between personal ambitions, media control and political power as being supremely unhealthy in relation to the values of a network free press and democracy.