OTTAWA, July 14 (Reuters) - Canadian regulators' reviews of a proposed mega-merger in broadcasting will focus on how it affects advertising markets and whether the new company will reflect a diversity of news and opinion, officials said on Friday.
Bell Globemedia Inc. agreed on Wednesday to a friendly C$1.7 billion ($1.5 billion) takeover of radio and television group CHUM Ltd. (CHM.TO: Quote, Profile, Research)(CHMb.TO: Quote, Profile, Research).
But the deal has raised concerns of media concentration that many fear will fall on deaf ears under a new Conservative government that fiercely defends free-market principles.
Regulators will likely take until the end of this year to either approve or challenge the transaction.
The government's Competition Bureau has not yet received an application from Bell Globemedia -- majority-owned by BCE Inc. (BCE.TO: Quote, Profile, Research) -- but when it does it will scrutinize the proposed new company's advertising market share, prices, quality and service and will consult with suppliers and rivals.
"This one is certainly going to be subject to review. With media mergers, typically we talk in terms of advertising markets," Robert Lancop, assistant deputy commissioner of the mergers branch at the Competition Bureau, told Reuters.
"Obviously market share and concentration are important but you always have to be mindful of what markets you're talking about," he said.
The bureau's focus on advertising markets was called "short-sighted to the extreme" by a Senate committee on transport and communications last month in a report.
The anti-trust watchdog can take anywhere from 10 weeks to five months to decide whether the merged firm constitutes a monopoly.
The Canadian Radio-television and Telecommunications Commission also has to approve a new license for broadcasters after any assets change hands. But first it must ensure that the operator upholds a broadly-defined set of qualities.
"They have to prove that it's in the public interest. (That means) diversity of news voices, Canadian content, that sort of thing," CRTC spokesman Denis Carmel said.
CRTC typically takes between six and nine months to conclude its review, which includes a 60-day period for public consultation followed by a public hearing.
Globemedia announced plans to sell some of CHUM's television stations, possibly to appease regulators.
CRTC, for example, frowns on a single operator running two television stations in a single market. However, "nothing is written in stone," said Carmel, and exceptions to that rule have been made in the past if the company can show the two stations have distinct programming and audiences.
Geographical and product markets are hard to define and apparent competition issues often turn out to be harmless in the course of an investigation, Lancop said.
The complexity of the regulatory decision is also shaped by how the public reacts.
"Very often the public interest is determined by intervention we get. If everyone is in agreement with a transaction, it's not the same as when a lot of people are opposed to it," said Carmel.
