Time to Let Foreigners Own Broadcasters?

In recent weeks, a political consensus has begun to emerge on the benefits of removing restrictions on foreign ownership in the telecommunications sector. Implementing such reforms faces at least one major political stumbling block that is only tangentially related -- the spillover effect onto the broadcasting sector.

As Canadian telecom operators, broadcasters and broadcast distributors become single entities -- Rogers combined with City-TV, Quebecor's ownership of Videotron, Sun Media and Groupe TVA, Shaw having purchased Canwest Global, as well as Bell in the process of merging with CTVglobemedia -- the biggest hurdle may well be fears about the cultural impact of opening up telecom companies to foreign buyers.

While the link between broadcasting and Canadian culture is obvious, the connection between Canadian broadcasting ownership and Canadian culture is tenuous at best.

Canadian law currently features both foreign ownership restrictions and content requirements. The foreign ownership rules generally limit licensees to 20 per cent foreign ownership (up to 33 per cent for a holding company). This covers all types of broadcasters including television, radio and broadcast distributors.

The Canadian content requirements apply to television, radio and specialty television stations. Television stations must carry a certain percentage of Canadian content, with additional requirements for "priority programming" that includes Canadian dramas, documentaries, music and variety shows. At least 35 per cent of music played on radio stations must be Canadian in order to meet Cancon requirements.

Many observers appear to assume that Canadian ownership and content requirements go hand-in-hand, fearing that a foreign-owned broadcaster would be less likely to comply with Canadian content requirements. Yet there is little reason to believe this to be so.

Not much enthusiasm for Canada

The Canadian Radio-television and Telecommunications Commission's active involvement in setting Canadian content requirements is a direct result of Canadian-owned broadcasters regularly seeking to limit the amount of Canadian content they are required to broadcast. Producing original Canadian content is simply more expensive than licensing foreign (largely U.S.) content. These fiscal realities -- and the regulations that have arisen as a response -- remain true regardless of the nationality of the broadcaster.

Foreign-owned businesses face Canadian-specific regulations all the time -- provincial regulations, tax laws, environmental rules or financial reporting -- and there is little evidence that Canadian businesses are more likely to comply with the law than foreign operators.

Cultural businesses may raise particular sensitivities, but broadcasters that are dependent upon licensing from a national regulator can ill-afford to put that license at risk by violating its terms or national law.

In fact, a review of other developed countries reveals that many have eliminated foreign ownership restrictions in their broadcasting sector but retain local content requirements. For example, Australia has no foreign ownership restrictions on broadcasters (Canwest was once the majority owner of one of its television networks), yet employs a wide range of local content requirements.

Find better ways to guard our culture

The same is true in many European countries -- Germany has eliminated foreign ownership restrictions but retains daily regional programming requirements, Ireland has no foreign ownership restrictions but establishes programming requirements for each broadcast licensee, and the Czech Republic has dropped its foreign ownership restrictions but relies on broadcasting licenses to mandate local programming.

In the absence of content requirements on private broadcasters, some countries rely more heavily on their public broadcasters to be a key source of domestic programming. For example, Norway does not have foreign ownership restrictions but has established regional programming requirements for its public broadcaster (in addition to local programming expectations in the licensing process).

Although few are calling for Canadian broadcasting to be opened to foreign ownership, the reality is that the cultural concerns associated with greater foreign ownership are vastly overblown. As a growing number of viewers venture outside the traditional broadcasting system for their news and entertainment, the cultural community must find better tools than foreign ownership restrictions to help support the creation and broadcast of Canadian content.