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CanWest Metro Move Preserves Daily Dominance

Competition Bureau says move increases advertising competition — its only concern.

By Shannon Rupp, 16 Mar 2005, TheTyee.ca

CanWest Global’s revelation that it will own all or part of two of Vancouver’s three free daily transit tabloids may disappoint readers looking for a truly competitive alternative, but there’s no law against it.

Metro, which launched March 14, was promoted as a joint venture between Torstar (owner of the Toronto Star) and Metro International, a European company that, since 1995, has built a 45-paper empire by inventing the free commuter paper. But on launch day CanWest announced it has an equal one-third stake in the new paper, and in future Canadian Metro papers.

Dose, which launches April 4, is wholly owned by CanWest. The third paper entering the Vancouver market this spring is 24 Hours, a Quebecor venture that will draw on copy from the Sun Media chain of tabloids.

While many critics lament CanWest’s dominance of news and information in the Vancouver market, where its two transit will join the Vancouver Sun, the Province and the National Post in its stable of locally available dailies. Although CanWest also owns a dozen weeklies and the dominant TV station, Canada’s Competition Bureau doesn’t have any interest in its effect on editorial competition.

The bureau deals with exclusively the economic aspects of competition. The social issues raised by media concentration, such as a whether citizens have adequate access to the information necessary to function in a democracy, are outside the scope of the federal legislation that governs the bureau.

Ownership not a key issue

A representative of the Competition Bureau, the agency set up to enforce the Competition Act, says that even though CanWest owns all or part of the two new papers, they actually create more competition.

Robert Lancop, assistant deputy commissioner of competition, says that [that] the Competition Act, like anti-trust law in other jurisdictions, is an economic statute that is designed to preserve competition in economic terms. While this doesn’t provide much comfort for readers who want a diversity of news sources, Lancop emphasizes that the bureau can’t investigate anything that isn’t covered by the act.

“The legal test is: is there a substantial lessening of competition? [Vancouver Metro] is a joint venture by partners who aren’t present in the Vancouver market — Torstar and Metro — and that looks like more competition,” Lancop explains. Although Torstar is present in B.C. in the form of a roughly 19 per cent share of Black Press, which prints Metro and supplies some of its copy, Lancop says this is a “minority interest.” An owner must control at least 50 per cent of a venture to be considered the controlling interest.

As for CanWest’s one-third ownership of — Lancop says CanWest is simply extending its reach in the market — and there’s no law against that, either.

“If a party extends its market there’s nothing under the merger provisions [of the Competition Act] that would trigger an automatic review.”

'Predatory pricing' must be proven

What does trigger a bureau investigation is if someone complains that a company has run afoul of the act. For example, a company could abuse its dominant position by engaging in “predatory pricing” — selling its product at an unreasonably low price in order to put its competitor out of business.

But in the case of news media this would be difficult to prove. The transit tabs, for example, are automatically cheaper to produce because they recycle most their news content from wire services or other papers. Their ad space is bound to be less costly than that of newspapers that deliver [original] local news coverage.

However, in cities such as Chicago the arrival of daily giveaways with lower ad rates has had an impact on what locally produced independent papers can charge for their ads. That in turn has affected local news coverage as publishers cover their losses by cutting their editorial budgets.

Dan McLeod, owner of the 38-year-old Georgia Straight, is one local publisher likely to feel pressure from advertisers to lower his ad rates as these cheap papers hit the streets. He believes CanWest’s market domination does constitute unfair competition, but he says he won’t bother filing complaints with the bureau because he believes it’s a waste of time.

Chance of action ‘zilch’

“Would a fifth CanWest daily in Vancouver be deemed a case of CanWest OverDose by the Competition Bureau? Probably not, in my opinion,” McLeod said in an e-mail interview from Mexico. “The Toronto Star is a major long-term supporter of the federal Liberals, and the Aspers donated $100,000 to Paul Martin’s leadership campaign, so I think the chances of the feds cracking down on this new partnership are zilch.”

Lancop says he understands people’s frustration over [the] social impact of media concentration but points out that it’s a problem that is outside the bureau’s realm.

“If we’re talking about the number of [different media] voices, I know there’s been a lot of concern about that, but that’s difficult to deal with in law,” Lancop says. Before 1986 the statute included a provision for activities that were of “detriment to the public,” but Lancop said that the phrase was so vague as to be impossible to prove in court and was removed when the law was revised.

The bureau receives about 80,000 complaints a year, mostly from consumers, and Lancop says they welcome complaints. “Our investigations [are] complaint-driven, we usually hear about a situation either through complaints or through the media.”

Anyone can register a complaint — by phone, letter, or e-mail. The Competition Bureau web site outlines the legislation, and defines what constitutes anti-competitive behaviour.

But Lancop emphasizes that companies have to contravene the act in some way before the bureau can investigate — and merely owning most of the print media in town is not a crime.

CanWest refutes speculation

CanWest’s involvement in Metro has also sparked speculation that the company won’t launch Dose, the commuter paper aimed at under-34 readers, in Vancouver on April 4 as planned.

Michael Williams, president of CanWest MediaWorks Publications, says that’s not true, in an e-mailed response to The Tyee’s inquiries. “DOSE launches on April 4th in five cities across Canada at once. CanWest remains unwavering in its commitment to the success of Dose,” Williams stated. “We fundamentally believe that Dose is a substantially  different product than the Sun, the Province, and Metro. Targeted at saavy [sic] twentysomethings, and produced by the demo it serves.”

Local CanWest news staff were surprised by the Metro-CanWest’s partnership. As one wag put it: “We have met the enemy and he is us.” Another journalist complained that the editorial staff was left in the dark: “All that worry about Metro coming into the market and CanWest buys in for 33 per cent!?!”

Williams said negotiations with Metro and Torstar had been going on for about four months.

The other speculation within the media is that the Province and the Sun will merge. The rumour has circulated since the late 1950s when the Sun and the Province first became a couple by sharing their presses. In was raised again in 1980 when Southam, which owned the Province, bought the Sun. But to prevent the fast-growing Toronto Sun and its sister papers from invading Vancouver, Southam decided to remake the Province as a tabloid.

To some skeptics, the rumour now sounds plausible. In terms of style and audience, the free transit tabs offer something similar to the Province, making its circulation vulnerable. And about two months ago, Sun scribes were told that they could not write stories longer than 15 inches long (about 600 words) without permission, which is closer to standard tabloid form.

However, Williams insists the papers themselves will not merge.

“The Sun and the Province are already as merged as they ever will be. They share a common infrastructure and support mechanism and they share a common publisher. The editorial staffs and product decision making functions are today and will remain separate,” Williams wrote.

Of course, it’s probably fair to say that CanWest may have few more surprises planned.

CanWest chief executive Leonard Asper said in January that the company has been considering taking its newspaper operations public as an income trust to help reduce its $2.75 billion debt — most of which was incurred when CanWest bought chain of major daily newspapers from Hollinger in 2000.

“It’s one of the things that people are suggesting we do to further reduce our corporate debt and I haven’t rejected it…. It’s not a simple equation. It’s something that requires significant consideration before one does it,” Asper said.

Shannon Rupp is a frequent contributor to The Tyee.  [Tyee]

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