Ruling on Bell Globemedia’s proposed takeover bid of CHUM Ltd. will show just how much teeth the federal regulators have.

As the owner of leading network CTV, BGM would, if the CRTC and Competition Bureau approve the deal, pick up another major broadcaster – one that has perpetually hovered just outside of network status. The combination of CTV and CHUM properties would create an overlap of TV stations in markets including Vancouver/Victoria, Edmonton, Calgary, Winnipeg, Ottawa and Toronto/Barrie. BGM hopes its plan to divest itself of CHUM’s six A-Channels and Access Alberta would appease any misgivings the regulators might have about a media monopoly.

But selling off Access and the A-Channels – one in Victoria and five across Ontario – would strike only Ottawa off the list of markets in which BGM would own two stations. So, the question now is: will this concession be enough to allow BGM to seal the deal?

It shouldn’t be.

Back in 1999, the CRTC, after having called for a review of its policies relating to private TV, issued a report entitled Building on Success – A Policy Framework for Canadian Television, which stated that the commission would ‘continue its current policy which generally permits ownership of no more than one over-the-air television station in one language in a given market.’ It defended the policy, as it ‘ensures the diversity of voices in a given market, and helps to maintain competition in each market.’

But CHUM has been granted an exception before, as in 2001, when it acquired Vancouver’s CKVU-TV from CanWest Global, and BGM is counting on similar – though far more wide-ranging – exceptions to be made this time round. The potential plus for Canadian production here is that, in addition to the benefits package that the CRTC would impose on BGM as a condition of the deal, the commission likely would, as in the case of CKVU, impose minimum levels of local programming.

But despite these potential opportunities, the production community is apprehensive about this consolidation, even if some are putting a brave face on it. The CFTPA, responding to BGM’s purchase offer, expresses optimism about the potential advantages to Canadian producers. Guy Mayson, CFTPA president and CEO, says that his organization would like to see the transaction ‘encourage competition in the market place,’ although most critics expect the takeover will have exactly the opposite effect.

Producers looking to do business with private over-the-air English-Canadian broadcasters would be limited to Bell Globemedia and CanWest Global in the new configuration. Although CTV and the CITY-TV stations may very well continue operating quite independently and target different demographics, fewer players to deal with ultimately gives producers less leverage – a fear shared by the advertising community.

And this may only be the beginning. Coming just one day after news of the deal was rampant speculation about other broadcasters joining forces to form super-sized rival media monsters – will Astral buy Corus? Will CanWest Global buy Alliance Atlantis – or vice versa? This would mean fewer players in the specialty space as well.

In swallowing CHUM, some see BGM looking to gain more sway with the U.S. networks, which would obviously like to sell their top shows to their Canadian counterpart with the most promotional muscle. CTV has pulled far ahead of Global in the ratings race, and just as Global has shown some small signs of recovery, BGM, hell-bent on driving the competition into the ground – and that includes CBC, which CTV outbid for the Whistler Olympics and may also do for NHL rights – announces this deal. And it is unrealistic to think that CanWest can respond with a significant rival acquisition of its own, given its heavy debt load.

The deal would give BGM more windows for the American programming it purchases in excess – some of which is simply to keep these shows away from Global. Until now, CTV has shelved some U.S. acquisitions or sold them off to lesser players like Sun TV. If the takeover goes through, expect CITY-TV, known for its edgy homegrown product, to be loaded up with more U.S. fare.

And despite assurances from BGM CEO Ivan Fecan that CTV and CITY-TV would continue to operate independent newsrooms, that stance naturally erodes over time when concerns over efficiency prevail.

The timing of the deal is interesting given that it comes when the ruling federal party espouses deregulation and a more free-market philosophy, and is widely expected to call for a review of the CRTC’s mandate. If the commission were to be shifted off the task of reviewing media ownership, as a recent Senate report suggests, then there would be one less hurdle for deals such as these, leaving the decision-making up to the Competition Bureau alone.

All this comes as CRTC chair Charles Dalfen enters the home stretch in his five-year term, and the CRTC isn’t even expected to address the proposed takeover until next year. Dalfen’s departure could provide the feds with an occasion to overhaul the commission and reduce its powers.

This is a crucial moment for the regulators. In the interest of preserving a diversity of voices in Canadian media, and protecting a competitive environment for producers and advertisers alike, the Competition Bureau and the CRTC – if it is able – must, at the very least, make BGM give up far more than it is currently prepared to do so for this takeover, if not deny the bid altogether.

MARK DILLON, EDITOR