Vancouver: In a significant shift in position, the minister of Canadian heritage has put the issue of foreign ownership of Canadian broadcasters up for debate – albeit with a strong warning.

Sheila Copps, testifying Nov. 8 in Ottawa as the first witness in the 18-month review of the Broadcasting Act by the Standing Committee on Canadian Heritage, said: ‘I think the intent of the foreign ownership requirements is to ensure that there is a diversity of voices. If there is another way of achieving those objectives, I don’t think we should preordain that review, but I think [the standing committee] should be reviewing that.’

To date, she has opposed any initiatives that relax foreign ownership restrictions.

‘One of the benefits of having a Canadian ownership system…has been to ensure that when decisions are made around broadcasting investment, whether they be Canadian content or industrial investment, those are decisions made in Canada by Canadians,’ added Copps during the question-and-answer period.

‘I think it’s important that we ensure that the stories that we tell continue to be told across all of our airwaves. Is it possible that there might be another way of ensuring that this happens for the next 25 years? Probably.

‘That’s something that I think [the standing committee is] going to have to take a long a hard look at. But…if you took the road of simply wiping out the regulatory framework that we’ve put in place in favor of a market-based system which some would argue, I guarantee you that within the next generation, not only will you not have your stories told, the very essence of who we are as a country would be put at risk.’

Copps’ comments, made at a time when she is rallying her leadership bid in the post-Jean Chretien era, have poured fuel on the simmering and thorny issue of foreign ownership that is complicated by world trade issues, cultural imperatives and the need for infrastructure investment in telecommunications.

‘Before she has taken a doctrinaire position that the foreign ownership issue should not be on the table,’ says Geoffrey Elliot, VP of corporate affairs at CanWest Global. ‘Now she’s saying she’s willing to be persuaded that Canadian content and diversity [imperatives] can be met in some other way. It’s just encouraging that the door is slightly ajar.’

CanWest is on record supporting a relaxation of the foreign ownership rules as long as changes are accompanied by international negotiations that open up Canadian investment in other broadcasting systems.

Right now, the Act says that broadcasters must be Canadian-owned and -controlled. The current Order in Council allows for the voting shares of an operating licence holder, say CTV, to be foreign-owned up to 20% and the voting shares of a holding company, say BCE, to be foreign-owned up to 33%.

Combine the direct and indirect thresholds and foreign interests can control almost 47% of a Canadian broadcaster.

Elliot maintains that Canada’s cultural policy can be maintained with a policy that allows up to 49% of direct foreign ownership. Therefore, he adds, Canada’s independent producers need not worry about an erosion of the protections that keep them employed.

Elizabeth McDonald, president and CEO of the CFTPA, is not convinced the Canadian broadcast system or the production industry spawned to support it can be protected with increased foreign ownership. The CFTPA says it is satisfied with the current legislation and that foreign ownership limitations must be maintained to protect Canadian content.

‘If it’s for infrastructure, fine,’ says McDonald, referring to the recommendations from Industry Canada’s recent National Broad Band Task Force that advocate increased foreign investment to expedite expansion initiatives. ‘But anything that can touch on content can disrupt the whole system. I’m not convinced any safeguard is good enough.’

The Friends of Canadian Broadcasting, meanwhile, will also defend the existing restrictions on ownership and effective control, says spokesperson Ian Morrison, who adds that Copps’ comments show the broadcasters lobbying for relaxed restrictions are succeeding.

‘Who would benefit if the rules were watered down?’ he asks. ‘The large, family-owned, publicly traded companies.’

The sale of voting shares, suggests Morrison, would create a demand that would spark increased share prices and net worth for the controlling families.

‘It’s not in the Canadian public’s interests,’ he says.

Nor does it seem to be an issue of consensus among broadcasters. While CanWest Global is supporting relaxed foreign investment restrictions, CHUM wants the status quo – polarization that will likely mean the CAB skips the issue of foreign ownership entirely in its Dec. 11 presentation to the standing committee.

‘Maintaining Canadian majority control is vital,’ says Peter Miller, VP of planning and regulatory affairs at CHUM, which does not benefit from the holding company business model that allows CanWest and BCE to court foreign ownership beyond 20%.

He points to the financial demands of the telephone and cable companies that have pushed up the foreign ownership thresholds that, through a domino effect, allow for the added foreign investment in Canadian broadcasting.

‘The bottom line is that whatever [the government does] for telecommunications and cable companies [regarding foreign ownership], programming services should not be changed,’ says Miller.

As for foreign demand, there is definitely foreign interest in strong Canadian media franchises ‘with good management and strong growth,’ says Stephanie Laroque, equities research analyst/communications and media, UBS Bunting Warburg. But how much softening foreign ownership restrictions would effect stock value would depend on the kind of policy change put in place.

-www.pch.gc.ca

-www.canwestglobal.com

-www.cftpa.ca

-www.chumlimited.com