The merging of CanWest Global and WIC Western International Communications could be a dream realized for Izzy Asper, but the morphing of the two Canadian broadcasters may mean the loss of one avenue of opportunity for producers to sell into, creating a less than dreamy situation for the independent production community.

A successful merger could be a double-edged sword, providing a third national window for Canadian content on one hand, but potentially closing doors to the independent sector, say industry executives.

CanWest came forward with its $636 million bid for the b.c.-based broadcasting corporation last week, surprising the entertainment and business community with its pitch for a company which is in legal wranglings over ownership.

Should the takeover offer, which has a deadline of Dec. 15, succeed, CanWest will take ownership of the eight television stations and 12 radio stations that make up the core of wic properties, plus pay-television services Superchannel, Home Theatre, MovieMax! and Family Channel, production arms Westcom Entertainment Group and Allarcom Creative Development, and its 53.7% interest in Canadian Satellite Communications (cancom), a one-third partner in direct-to-home satellite service ExpressVu.

Elizabeth MacDonald, president of the Canadian Film and Television Production Association, expressed concern that a deal would mean one fewer outlet for Canadian producers.

‘It takes a buyer out of the market, and clearly another national broadcaster could have a negative impact on ctv which buys from the production sector. If the merger happens, we’ll have to wait and see how many purchasing decisions would come out of Toronto and what the regional representation looks like. We would hope it would be a truly national service and offer producers opportunities from coast-to-coast,’ says MacDonald.

She adds that a national distribution for CanWest would mean a new sizable commitment to Cancon in its terms of licence for a national service.

Leonard Asper, director of corporate development for CanWest and point man on the wic bid, says the loss of wic as a buyer won’t cumulatively change the number of outlets available to producers. ‘The same number of outlets still exist and we already buy national rights and sell to wic’s stations in Alberta, so the supply lines wouldn’t change.’

But Sandra Kresch, president of New York-based Partners in Strategic Development, a consulting firm specializing in media with a client base of entertainment conglomerates including Viacom International, says a merger of this size could make it more difficult for independent producers to access a distribution base.

Although she isn’t familiar with the strategies of CanWest and wic, Kresch says the general rule in the States is that if two merging broadcasters serve distinctly different markets, there will continue to be a demand for a diversity of programming. ‘But if it’s a consolidation of companies doing more or less the same thing, there will be less opportunity for program sales.’

Of equal concern in the u.s. is that the new broadcast giants could demand increasingly less production from independent producers. It will be in the broadcasters’ best interest to maximize their own in-house production capabilities rather than going outside, says Kresch. With an increase in size of the in-house development and production departments, ‘it may become more and more difficult to pitch ideas when the competition is so strong internally.’

It’s a major concern for us, says MacDonald. ‘It’s clearly where the Canadian broadcasters want to go. But we’re more regulated here than in the States and the crtc and the Competition Bureau will look at this before anything closes.’

John Slan, chairman of Paragon Entertainment, says it’s too early to tell if a CanWest/wic media giant would narrow the scope of available markets or concentrate production in-house. He notes that the most active broadcaster producing to date is Baton, ‘and I don’t think they’ve cornered their market.’

He has noticed that dealing with the in-house companies in the States is becoming ‘problematic’ because ‘they force you into deals with their own production company and exact huge dividends.’

From a distributor’s standpoint, Paragon would prefer to sell to a national broadcaster, says Slan. ‘The economies of scale would make sense for them and they would be able to provide us with a licence fee more in line with our production budgets. Plus, there’s never a guarantee that because you sell to a regional broadcaster, you’re going to sell nationally, and this could make it easier to access bigger markets.’

According to Kresch, producers may well be concerned that broadcasters having an ownership stake in production may want a bigger share of programming rights.

‘If big distribution companies essentially own the programming, they’ll want a bigger piece of the off-air profit. The financial arrangement will change, meaning that over time it will be more difficult for independent producers to stay as independent as they have been in the past.’

Although it is premature to say how that idea could play out within the context of today’s happenings, Asper doesn’t deny that having equity in production is on the broadcaster’s agenda.

‘We’re responding defensively to what’s happening on the production side, with companies like Alliance that already have that position. In the u.s., there’s the Warner Bros. network, Disney has its channel and they’re going worldwide. We don’t want to lose the ability to get the supply. We haven’t bought into the programming content side, but it’s one way of defending ourselves against suppliers in the broadcast market and I think it’s fair under the circumstances.’

The driving force behind mergers of the CanWest/wic scale is twofold, says Kresch. First, the number of new broadcasting services in the market is yanking up programming costs, particularly for programs with a guaranteed audience like Seinfeld and Beverly Hills 90210 (two among many in the high-profile CanWest lineup).

Investing in increased distribution means there’s too much at stake to take risks on programming that isn’t a sure thing, so the competition and price will keep increasing for programs of this sort over the next couple of years.

The other factor hinges on the vertical integration of studios and distributors. Studios that have traditionally put programming into syndication are essentially holding back, saying why should we sell to a distributor when we may be able to launch our own cable channel and get the revenue, she concludes.

Although Slan says Global should be able to pay more for programming with a national licence, one broadcast executive says there’s no guarantee that another national broadcast entity will spark any more of a bidding war than already exists for hot u.s. programs.

‘Whoever is prepared to spend the most is going to get the shows, but there has to be a realistic business plan for the bid and I don’t see this merger giving CanWest a competitive advantage over any other national distributor.’

Slan adds that although bigger purchase prices increase the need to max promotion budgets and attract enough eyes to the screen to make the buy economical, it doesn’t mean there will be less in the pot for Canadian productions.

‘If CanWest buys national rights and has a full territory to distribute them, they could make national buys more efficient. In effect, that may up the available promotion funds for Canadian productions. If this deal is going to have any effect, it’s going to be positive.’

At press time, CanWest was preparing an official offer to be filed with wic shareholders by the end of the week. Asper says that despite investment analysts speculating the offer is too low, there are no plans to up the ante. ‘We’ve done our evaluation and come up with an offer at the high end of our range.’

If the deal is ratified and crtc approved, the likelihood is that CanWest will be forced to sell either its own or wic broadcast properties in Ontario and b.c., which overlap in both markets.

Asper says CanWest will make the decision which properties to cut loose when the time comes. ‘All I’ll say now is that we’re very happy with the properties we have.’

Potential buyers for bctv Vancouver, chek-tv Victoria and chch-tv Hamilton are thought to include CHUM Ltd., Baton Broadcasting Systems and Electrohome. A voting trust agreement with Electrohome signed in September has left Baton with three seats on the ctv board of directors, one away from control of the seven-member board.