Canada's Shaw Seeks To Merge Cable, Sat Units

Canada's broadcast watchdog has been asked to consider allowing Shaw Communications Inc. to remove firewall protections between its cable and satellite businesses to bolster its competitiveness.

The Canadian Radio-television and Telecommunications Commission said that Calgary-based Shaw had applied to combine its cable division, serving around 2.3 million customers nationwide, with its direct-broadcast satellite businesses — Star Choice Television Network Inc., serving around 600,000 DBS subscribers, and Canadian Satellite Communications Inc.

That bid comes despite earlier CRTC rulings that imposed structural separation between Shaw's cable and satellite businesses to ensure competition and consumer choice and prevent self-dealing.

In 1997, the CRTC approved the merger of Star Choice and Shaw subsidiary Homestar Services Inc., both of which had been authorized to offer direct-broadcast satellite services to Canadians.

But, while giving Shaw effective control of Star Choice, the CRTC ordered that Shaw's cable unit and Star Choice maintain separate corporate facilities and customer bases "to ensure that no undue preference or advantage passed between Star Choice and Shaw, or any of Shaw's affiliates."

The CRTC imposed similar safeguards in 1999 when it approved the merger of Star Choice and Canadian Satellite Communications, which provides TV signals via satellite to rural cablecasters across Canada.

Shaw is now applying to merge the human resources, legal, administrative, investor relations, accounting and technical operations at its cable unit and Star Choice to face down competition from Bell ExpressVu LLP, Canada's second DBS service, owned and operated by phone giant BCE Inc.

Shaw said it would maintain separate sales and marketing divisions for the cable and satellite businesses to ensure customer confidentiality.

The CRTC said Friday interested parties have until Sept. 17 to submit written interventions on Shaw's application to merge its businesses.