CANADA

Dishing it out

WARREN CARAGATA May 8 1995
CANADA

Dishing it out

WARREN CARAGATA May 8 1995

Dishing it out

If the point was more competition in the television business and more choice for television consumers, it did not always look like that in Ottawa last week. Rather, the debate about direct-to-home (DTH) satellite television service had all the hallmarks of a U.S. television talk show, with a changing cast of heroes and villains and noisy allegations of wrongdoing. The debate arose after the federal Liberal government took advantage of a law never before used and ordered the Canadian Radio-television and Telecommunications Commission (CRTC) to rewrite its rules for direct-to-home service. That unprecedented step highlighted growing differences between the government and the regulatory agency. The order, the government said, would level the playing field between the two competitors, Power DirecTV and Expressvu. Both firms are creations of some of the country’s most powerful corporate interests. But it was the long-standing connections between Power Corp. and the Liberals, and especially its family ties to Prime Minister Jean Chrétien, that raised eyebrows. “They’re on the take,” Reform MP Deborah Grey taunted the Liberals.

Bloc Québécois and Reform MPs pointed

to Power DirecTV as the culprit that was refusing to play fair. The company is controlled by Power Corp. of Montreal, a vast enterprise with ties to both the Liberals and the former Conservative government. Its president is André Desmarais, who married France Chrétien, the Prime Minister’s daughter, in 1981. And the chairman of Power DirecTV is Joel Bell, who held numerous government posts under previous Liberal governments, including economic adviser in the Prime Minister’s Office and vice-president of Petro-Canada. But Chrétien vigorously denied any favoritism, saying that he absented himself from cabinet when it ordered the CRTC to undo the decision it had made last August—a decision that the government said essentially gave Expressvu a monopoly. “I have absolutely no conflict of interest,” he told the Commons. And he refused to apologize for his daughter’s choice of husband: “The Prime Minister of Canada has the right to have his daughter well married.”

The government’s reversal of the CRTC rul-

ing means that both companies will now have to apply for broadcasting licences. According to Bloc leader Lucien Bouchard, it was a move “tailor-made to meet the needs

of Power Direct.” Reform leader Preston Manning went further, saying the Liberals were guilty of favoring a “family compact” of companies allied with them. That so-called compact he said, included Bronfman family interests who— in an unrelated business deal—recently took over MCA, the large American entertainment company. Heritage Minister Michel Dupuy was in Los Angeles meeting MCA officials on the day the takeover was announced.

Manning said Dupuy’s presence there gave the appearance of government favoritism to Seagram, which will need government approval to complete the takeover. But late last week Dupuy said he only learned of the takeover after he arrived in California and decided to go ahead with the meeting g because there were representatives from other studios, besides MCA, present. The only connection between the television issue and Seagram is provided by Robert Rabinovitch, an executive with Bronfman-owned Claridge Inc. Rabinovitch was a member of the three-member panel appointed by the government last fall to review the DTH satellite issue. Industry Minister John Manley has acknowledged that Ottawa based its order to

the CRTC on the panel’s recommendation.

The controversy has its roots in a decision made by the broadcast regulator on Aug. 30. The CRTC decided then to exempt DTH satellite services meeting certain conditions from the requirement to apply for a licence. The key requirement, and the heart of the dispute, was a demand that the entire service be broadcast to the 60-cm dishes from Canadian satellites. Expressvu, owned by a consortium of Canadian telecommunications companies that includes BCE Inc. and CAN-

Conflict-of-interest charges over satellite TV dog the Prime Minister

COM (Canadian Satellite Communications), met the conditions and announced plans late last year to go on the air on Sept. 1. It promised consumers a host of TV choices— up to 100 channels of standard cable fare and additional pay-per-view movies and specials. Power DirecTV offered a similar service, but the CRTC conditions posed a big problem: the company planned to use American satellites in association with its minority U.S. partner, Los Angeles-based DirecTV. That meant that the only potential competitor to

Expressvu could not meet the CRTC’s rules. Said Manley: “The effect was a monopoly.” Power DirecTV made its objections to the decision loud and clear. And Bell told Maclean’s that company president Desmarais never lobbied the government on behalf of Power Direct and never talked to his fatherin-law about the issue. “Life is too short for this Prime Minister to jeopardize his political reputation and career,” said Bell. “If you think that we have been accorded some favors, I would ask you look at the evidence. Why have we been held up for over a year?” Expressvu, itself well connected to decision-makers through its corporate links, says it favors competition. But it now worries that the government order—which can be modified over the next 40 days of parliamentary sittings—may force it to abandon its program launch set for Sept. 1. “It’s kind of like changing the rules in the middle of the game,” company vice-president Chris Frank told Maclean’s. If the government does not budge from its position that Expressvu will first need to apply for a licence, along with Power Direct, Frank said a legal challenge could not be ruled out. The company, he said, has invested $200 million so far in the project. Meanwhile, viewers—the consumers of the endlessly touted expanding universe of TV fare—will likely have to stay tuned for a little longer.

WARREN CARAGATA in Ottawa