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CRTC hearings begin on Rogers-Shaw deal that would make Big Three telcos even bigger –



The recent drama of the power play within the Rogers family may be winding down, but the theatrics of getting the family-run company’s massive takeover of Shaw over the finish line have only just begun.

When Rogers Communications Inc. announced last March it had struck a $26-billion deal to take over Calgary-based cable, internet and wireless provider Shaw Communications Inc., the move was instantly seen as transformative for Canada’s telecom industry.

It would take a sector that is already in the hands of a very small number of companies and make it even more top-heavy, affecting millions of Canadians who consume television and radio, or subscribe to high-speed internet or cellular telephone services.

Although the families that control the two companies both back the deal, it needs the OK of three different regulatory agencies to become official. And the first of those approval processes begins today in Gatineau, Que., as the Canadian Radio-television and Telecommunications Commission (CRTC) holds hearings on what the deal would entail.

Partha Mohanram, an accounting professor at the University of Toronto’s Rotman School of Management, is among those hoping the regulator takes a long, hard look at the deal because of what it would do to Canada’s already-concentrated telecom landscape.

“The regulator has to look at whether … the benefit to the shareholders outweighs the cost,” he said in an interview. “Because it becomes worse every time there is a merger.”

Focus on broadcast

Officials from Shaw and Rogers are slated to appear first before the committee on Monday, to lay out the case for why they should be allowed to sell themselves. For the three days after, they’ll be followed by those against the plan, including consumer rights groups, independent broadcasters — and most tellingly of all, Rogers’ main competitors, Bell and Telus.

Newly minted Rogers chair Edward Rogers reportedly set to attend. It would be the first time he has publicly appeared since the ugly fight for control of the company came to light last month.

While the merger involves a complex handover of broadcasting, cable, internet and wireless assets across the country, the only issues the CRTC will pay attention to are the impact on the broadcasting side, which mostly consist of 16 television channels across B.C., Alberta, Saskatchewan and Manitoba; all of Shaw’s cable, satellite and pay-per-view television services; and a 25 per cent ownership in CPAC, the public affairs channel.

The real thorny issues of what happens to Canada’s wireless landscape once Rogers swallows Shaw’s two million wireless subscribers will be largely ignored by these hearings.

The fact that Canada’s telecom regulator won’t really pay much attention to the most pressing telecom issues shows how bizarre the industry’s landscape is, says researcher Ben Klass, who studies telecom policy as a PhD candidate at Carleton University.

“We have this siloed system in Canada, with two ships passing in the night,” he said of the CRTC. “But they don’t intersect as far as the regulator is concerned.”

While the CRTC does have jurisdiction over the wireless market, tasked with ensuring there’s a healthy competition for consumers to choose from, they’re also in charge of broadcasters, too. And the regulator made it explicit in its notice for the hearings that the impact of the deal on Canada’s broadcast landscape would be its main focus, Klass said.

Instead, the regulator is leaving the review of the impact on the wireless market and related issues to other watchdogs — namely Canada’s Competition Bureau, and the federal department of Innovation, Science and Economic Development (ISED).

“They wanted to get out of the gate and say, ‘Don’t talk to us about this thing that’s probably pretty important to you and implicated in this merger … you can try somewhere else,'” said Klass. “I think it’s unfortunate.”

On the broadcast side alone, there are reasons for concern, said Klass.

“Independent broadcasters are very concerned that instead of being able to market their content to Rogers on one half the country and Shaw on the other — and generating some bargaining power in the process — they’re only going to have the one door to knock on,” he said.

“That’s what this is about for the CRTC, primarily,” he said. “Making sure that this merger doesn’t throw the [TV] industry too far out of whack.”

WATCH | Why this telecom critic says the deal is bad for Canadians:

Why regulators should block the Rogers Shaw deal

3 days ago

Ben Klass says cable, internet and wireless plans at Shaw are much different from those at Rogers, and he worries what will happen to them if the merger is approved. 0:48

Klass gives the CRTC credit for at least making its hearings public, unlike the other two regulators, who usually announce the start of a probe — and then announce the result.

“The Competition Bureau, to my knowledge, has never successfully opposed a merger outright,” Klass said.

A major driver for the deal from the perspective of Rogers and Shaw is that their businesses are so complementary.

Rogers is a force in the Ontario market, where it is next to impossible to not have to interact with at least one branch of the media conglomerate. But the company is nowhere near as dominant in Western Canada, where Shaw has more than five million cable and internet customers, and two million cellphone subscribers through its Freedom Mobile brand.

Rogers is seeking to add millions of Shaw cable, internet and wireless customers to its telecom empire, giving it more dominance in Western Canada. (Shamil Zhumatov/Reuters)

The appeal for Rogers is obvious, said Bloomberg Intelligence telecom analyst John Butler.

“Rogers can leverage Shaw’s … subscriptions to offer multi-service bundles and use its network as a foundation for 5G expansion in the region,” he said in a recent note to clients.

Impact of family drama

Butler said he thinks the deal will ultimately go ahead in one form or another, but the messy family battle for control of Rogers Communications likely didn’t do the company any favours.

“While we don’t believe the Shaw deal that’s under review is in imminent danger of being derailed, the spat could taint regulators’ opinion on Rogers’ ability to integrate Shaw,” he said.

Mohanram also doubts the regulator has the appetite to block the deal outright, but he’s among those who think the telecom industry in Canada is in desperate need of overhauling.

“You’ve got to ask yourself, ‘Where is that kind of competition going to come from?'” he said.

At a minimum, Rogers could be forced to sell off assets, like Freedom Mobile, to get Ottawa’s stamp of approval. But that, too, is not without its problems.

“The value that Rogers sees in the Shaw assets, if you start eating away at that number, eventually they’re going to walk away,” Mohanram said. “[Regulators] don’t need to scuttle the deal, but they’ve got to make the deal less attractive for Rogers.”

Any sort of rubber-stamping would be bad for Canada, but good for the telecom companies, he said. “They have this kind of comfortable, cozy oligopoly among themselves.”

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S&P/TSX composite falls to end a third-straight losing week on angst about Fed – CP24 Toronto's Breaking News



TORONTO – The rebound in Canada’s main stock index was short-lived as it pushed lower Friday to end a third-consecutive losing week amid concerns about impending action by the U.S. Federal Reserve.

The S&P/TSX composite index closed down 128.76 points to 20,633.27 despite hitting an intraday high of 20,825.21. The Toronto market had a strong morning start after posting its best performance in 10 months Thursday. It then lost ground throughout the session before recovering a bit approaching the close.

The TSX was down 2.3 per cent on the week but is up 18.4 per cent so far in 2021.

In New York, the Dow Jones industrial average was down 59.71 points at 34,580.08. The S&P 500 index was down 38.67 points at 4,538.43, while the Nasdaq composite was down 295.85 points or 1.9 per cent at 15,085.47.

Investors have been jittery this week in response to the more hawkish comments from the U.S. central bank around speeding up the tapering of bond purchases at the same time as a new COVID-19 variant has surfaces and economic activity is slowing, said Greg Taylor, chief investment officer of Purpose Investments.

“The risk this week is around the Fed making a policy error,” he said in an interview.

Taylor said investors have been nervous in the last few days about the Fed taking away stimulus while the economy in the rest of the world slows down a little bit.

Canadian markets have been somewhat insulated by strong bank earnings.

The heavyweight financials sector was slightly lower on the day, led by a 4.4 per cent drop by Canadian Western Bank. That was partially offset with BMO and CIBC rising 2.4 and 2.1 per cent, respectively, as the Canada’s big banks wrapped up strong quarterly reports that saw them each boost dividends.

Telecommunications was the only sector on the TSX to close higher on Friday.

The broad-based decrease on the TSX was led by health care and the technology sector, which sustained even stronger declines in the U.S.

Tech dropped 2.5 per cent as shares of Hut 8 Mining Ltd. fell 10.8 per cent while Lightspeed Commerce Inc. was down 7.7 per cent and Shopify Inc. was 2.4 per cent lower.

There was a disconnect in the sector’s movement because bond yields were weaker, which is typically a supportive move for these companies.

Big tech stocks have really come under pressure in the last few days as previous pandemic winners such as DocuSign Inc. suffered a 42 per cent decline, Taylor said. 42.2

After starting the day higher, energy lost 0.3 per cent as crude oil prices fell.

The January crude oil contract was down 24 cents at US$66.26 per barrel after climbing as high as US$69.22 in the morning. The January natural gas contract was up 7.6 cents at US$4.13 per mmBTU.

Suncor Energy Inc. and Cenovus Energy Inc. led the declines, losing 2.1 and 1.7 per cent, respectively.

The Canadian dollar traded for 78.05 cents US compared with 78.03 cents US on Thursday.

Materials also fell as copper prices softened while gold was stronger as shares of Lithium Americas Corp. lost 8.7 per cent.

The February gold contract was up US$21.20 at US$1,783.90 an ounce and the March copper contract was down 3.2 cents at nearly US$4.27 a pound.

Earlier, the United States and Canada posted November employment numbers. U.S. non-farm payrolls disappointed as they increased by 210,000 jobs, far below forecasts for about 550,000 jobs. However the unemployment rate fell to 4.2 per cent, the lowest since February 2020.

In Canada, the jobless rate fell to six per cent as 153,7000 jobs were added as the share of the core working population with a job climbed to an all-time high.

Taylor said markets were at risk coming into the week.

“We haven’t had a correction in a long time and were due for some volatility. The question will be when will buyers step back in.”

This report by The Canadian Press was first published Dec. 3, 2021.


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Google real estate executive says 5% more workers coming in to office each week



Alphabet Inc’s Google has seen an increasing number of employees coming in to its offices each week, particularly younger workers, the company’s real estate chief said during an interview at the Reuters Next conference on Friday.

On Thursday, Google indefinitely pushed back the mandated return date for employees due to concerns about the Omicron variant. The company had previously said its 150,000 global employees could be required to come in to the office as soon as Jan. 10.

Nevertheless, David Radcliffe, Google’s vice president for real estate and workplace services, said many Googlers are returning of their own volition. About 40% of its U.S. employees on average came in to the office daily in recent weeks, up from 20-25% three months ago, he said. Globally, 5% more employees are returning to offices week after week, he added.

“People are actually showing voluntarily that they want to be back in the office,” Radcliffe said. “We’re moving in the right direction.”

Younger employees and those who joined Google more recently have been coming in at higher rates, seeking opportunities to learn from colleagues, Radcliffe added.

Google expects workers in the office at least three days a week once it mandates a new return date.

Based on feedback from those already back, it is redesigning floor plans to increase private, quiet spaces for distraction-free individual work and adding conferencing and other collaboration areas in open spaces both indoors and outdoors.

Real estate and human resources experts have considered Google a trailblazer for the past 20 years in sustainable office design and variety of workplace perks, including free meals, massages and gyms.

To extend those sustainability and wellness benefits to remote work, Google has encouraged employees to buy carbon offsets and non-toxic furniture for their home offices. It also has provided free cooking classes and discounts to fitness studios near workers’ homes.

“It was amazing how many employees had really never cooked themselves,” Radcliffe said.


(Reporting by Paresh Dave in Oakland, Calif., and Julia Love in San Francisco; Editing by Sonya Hepinstall and Matthew Lewis)

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S&P/TSX composite down nearly 200 points, U.S. stock markets also lower – Business News –



Canada’s main stock index was down nearly 200 points in late-morning trading, led lower by losses in the technology, base metal and industrial sectors, while U.S. stock markets also fell.

The S&P/TSX composite index was down 176.86 points at 20,585.17.

In New York, the Dow Jones industrial average was down 160.83 points at 34,478.96. The S&P 500 index was down 48.14 points at 4,528.96, while the Nasdaq composite was down 341.27 points at 15,040.05.

The Canadian dollar traded for 78.05 cents US compared with 78.03 cents US on Thursday.

The January crude oil contract was up US$1.54 at US$68.04 per barrel and the January natural gas contract was up eight cents at US$4.14 per mmBTU.

The February gold contract was up US$14.90 at US$1,777.60 an ounce and the March copper contract was down two cents at US$4.28 a pound.

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