Canadian regulators are scrutinizing Shaw Communications' (NYSE: SJR) latest foray into TV as they review its $2 billion purchase of Canwest Global Communication Corp.' s (CDNX: CGS.V) television division. Executives with the Calgary-based cable giant--including CEO Jim Shaw--are speaking to the Canadian Radio-television and Telecommunications Commission (CRTC) over the next three days for hearings on the deal.
The Shaw executive team got a taste of what to expect this week when telecom operator Telus (Toronto: T.TO) appeared at a separate hearing into the renewal of the cable company's broadcasting distribution license. Telus argued that the license should only be renewed for another two years, instead of seven.
"Shaw's cable license renewals come at a time of an unprecedented shift in the landscape of the Canadian broadcasting system due to increased vertical integration that will leave the majority of once independent broadcast properties in the hands of Canada's four largest broadcast distributors," said Michael Hennessy, Telus' senior vice-president of regulatory and government affairs. "This clearly warrants a cautious approach by the commission."
Brad Shaw said a seven-year renewal is important because of the state of the industry. Not only is the company competing with operators like Telus, he said, "but the Googles and the Apples and everyone nipping at our heels. We need total attention on competition, ensuring that we compete from a Canadian point of view."
Telus is one of the few major telecoms in Canada that does not own companies that provide content. Shaw has purchased Global, while Bell Canada (NYSE: BCE) recently picked up the portion of CTV it didn't already own.
Acquiring Canwest's television assets are also important to Shaw's ability to compete, Shaw said. "Vertical integration is important, we see, to compete in the future and to make sure that Canadian companies can compete against these world players."
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