FCC decision a roadblock

WINNIPEG — CanWest Global’s ambitious plans to expand into the United States have hit a stumbling block as a result of the Federal Communication Commission’s decision this month to allow domestic broadcasters to own two stations in major urban markets.

CanWest Global’s TV network is Canada’s third largest and most profitable, with eight stations in seven provinces. It is controlled by Izzy Asper, 67, a tax lawyer who has parlayed it from one station into a media empire with TV and radio assets in Australia, New Zealand and Ireland.

Asper’s agents have lobbied hard in Washington and Ottawa to relax foreign ownership rules, which remain at 20% in both countries.

“CanWest Global must acquire U.S. broadcasting properties or it will be overwhelmed by four or five media giants,” said Leonard Asper, 35, Izzy’s son and chosen successor. “We’re either going to be gone, or we’re going to be one of them.”

But the FCC’s landmark decision deregulating restrictions on domestic ownership of stations probably has pushed the cost of acquiring U.S. stations beyond CanWest Global’s reach, as U.S. independents are fought over by major players, and smaller broadcasting groups are frantic to expand.

Analysts here believe there will be slim pickings left for CanWest Global as the U.S. networks begin consolidating.

“We are continuing to look at ways to invest in the industry,” Harry Ethans, CanWest senior VP, told Daily Variety.

CanWest Global may try to obtain a minority stake in U.S. stations, which would provide a continental outlet for its Canadian-made programs. Izzy Asper owns Fireworks Entertainment, a Canadian company, and has just bought a 20% share of Alliance Atlantis, which creates and distributes filmed entertainment and which itself has investments in six Canadian cable networks.

CanWest Global is already implementing other strategies in the United States. Last week the company made its first investment in online media, paying $14.5 million for a 20% stake in two U.S. Internet companies, Internet Broadcasting Systems of Minneapolis and LifeServ Corp. of Chicago.

“The Canadian industry is already consolidated into two players, the CBC and CTV,” Mathew Fraser, a communications professor at Ryerson Polytechnic U in Toronto, told Daily Variety. “There’s nothing left in Canada for Izzy Asper — that’s why he has to go south.”

Canada’s highly protected TV broadcasters, including CanWest Global, will meet later this month to discuss the industry’s collective strategy toward trade initiatives. They are fearful of challenges from the U.S. TV industry that might result in the removal of current protectionist subsidies, and may join Asper in seeking to sacrifice Canada’s foreign ownership limits in order to save them.

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