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November 26, 2024

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Quebecor (QBR.B) adds to its holdings, but media concentrations leave much to be desired

Videotron, a subsidiary of Quebecor (QBR.B), announced yesterday that it had reached an agreement to acquire Télédistribution Amos (Cable Amos) and its network.

Mergers like this have two-sides. One is the usual—growth, development and longevity—they’re good for the company and presumably good for the shareholders. The other side is that media companies have an often overlooked effect on information flow for the region, and therefore affect local democracy.

Both of our dominant political parties have either overtly or covertly given lip service to the neoliberal notion of free markets over the past twenty-five years, but we’ve never really had that. You can’t have a free market with closed borders. Instead, the closed market ecosystem creates artificial limits on how far the companies held within can grow, while keeping out other bigger fish that would otherwise threaten the smaller fish inside, forcing them to grow or die.

Hence, the Canadian media industry is governed instead by a combination of private and public enterprise. The core companies change every few years due to mergers and the normal flow of business in the turbulent pond that is the Canadian media landscape, but the mainstays are Bell, Corus (formerly Shaw), Rogers, the CBC, and Quebecor, with a handful of smaller companies trying picking up their scraps.

This merger is one of the bigger fish (Quebecor) noting a particularly juicy morsel swimming in one of the regions they’d prefer to control, and swimming down to eat it. Quebecor gets bigger and the people once served by this independent telecommunications company now get to join into Quebecor’s collective, and get the Peladeau perspective.

Vertical and horizontal integration

Occasionally, someone from one of the core companies will call me around dinnertime and inquire if I’d like to add television and a landline to my already existing package for somewhere around $45 for a locked-in two year deal. Inquiring further, we discover that after six months it’d get jacked to somewhere around $150 a month. Most places in Canada (including where I live) have three main options for media, and maybe two others of lesser quality, and they operate basically the same.

Amos Cable Television Inc. is a company offering internet and television services for 21 different regions in Quebec. Residents covered by Cable Amos’ wireline network will be able to experience Helix, Videotron’s new home entertainment and management platform.

“We are proud to pass the torch to Videotron. This was not a random choice. We are convinced that Videotron is the company best able to create healthy competition in the region. Customer needs are changing and only Videotron is in a position to respond to the new realities,” said Cable Amos management.

I bet they are, but I hope you’ll excuse me if I doubt Videotron’s commitment to creating healthy competition. The only reason companies like Peladeau’s Quebecor are as big as they are is because they have no real competition.

The point of media concentration is to build the biggest company with the widest reach that will bring in the most value for its shareholders, which acts in direct contradiction with a media outlet’s understated social purpose—to provide a multiplicity of voices each contributed to the free market of ideas, which leads to a health democracy.

But a healthy democracy is not necessarily one that’s good for business, because we might, I don’t know, democratically decide to throw open the borders to greater competition from larger firms in other countries.

The acquisition is set to close in the spring of 2020, and is subject to the usual spate of approvals from Innovation, Science and Economic Development Canada. It will probably continue its longstanding practice of looking at the proposed merger, shrugging their shoulders, and rubberstamping it without a second thought.

“We’re serious about establishing ourselves in Abitibi-Témiscamingue, as the transaction we are announcing today shows. As we have been saying, we are evaluating growth opportunities in the region and will seize those that are promising. We are excited about offering our services to local residents,” said Jean-François Pruneau, president and chief executive officer of Videotron.

Videotron’s teams will meet with Abitibi residents in the service area to offer Videotron’s products, and start taking installation appointments.

And just like that your choices start drying up.

—Joseph Morton

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