Bell Canada Enterprises (BCE) president and chief executive officer George Cope (L) and Ian Greenberg (R), president and chief executive officer of Astral Media Inc., speak at a news conference in Montreal in this March 16, 2012 file photo. (Christinne Muschi/Reuters)

Bell moves closer to Astral with sale of TV assets

The Globe and Mail

Bell Media has agreed to sell some of Canada’s most popular specialty TV networks to smooth the way for a $3-billion acquisition of Astral Media Inc., including its share in six channels that Corus Entertainment Inc. will buy to solidify its position as the dominant provider of children’s TV.

The media division of BCE Inc. plans to sell off Astral’s stake in 12 specialty channels and 10 English-language radio stations to ease regulators’ concerns about the potential for the abuse of market power. The move ensures the Astral deal will get the blessing of the federal Competition Bureau, though it must still be approved by the federal broadcast regulator.

The first of those divestitures has already been negotiated. Corus will pay $400.6-million for two radio stations and Astral’s stake in a number of TV joint ventures, including the bilingual Teletoon/Télétoon service, Cartoon Network (Canada), and three French-language stations. Bell has also agreed to sell a number of other big Astral TV brands, including The Family Channel, Disney Junior, Disney XD, Musimax, and Musiqueplus, in what it describes as “an auction process … now under way.”

The announcements underscore the lengths Bell Media will go to, to save the Astral deal, which was announced nearly a year ago but rejected by the Canadian Radio-Television and Telecommunications Commission over concerns that it would make Bell too dominant in Canadian broadcasting.

Bell executives want to acquire Montreal-based Astral to shore up their broadcasting strategy in Quebec, where the company lags well behind Quebecor Inc. in the fight for viewers and listeners.

Under the restructured deal, Bell Media would retain The Movie Network, which includes HBO Canada and TMN Encore, as well as the French-language services SuperÉcran, CinéPop, Canal Vie, Canal D, VRAK TV, and Z Télé. The CRTC is expected to convene hearings in the spring into whether allowing Bell to bulk up would present enough benefit to the Canadian broadcasting system.

“Clearly, a big step forward taken today, and we’re looking forward to the next big step that we have to take, which is to demonstrate to the CRTC and to all Canadians, our viewers and our listeners, that we plan to deliver a significant amount of value and programming benefit to them when this transaction closes – subject of course to the CRTC’s approval,” said Mirko Bibic, BCE’s chief legal and regulatory officer.

The company said the reformulated acquisition would give it 23 per cent of the Quebec market and 35.7 per cent of the country’s English-language market. The CRTC rejected the original deal after concluding it would give Bell as much as 42 per cent of the English-language TV audience, triggering concerns under the CRTC’s Diversity of Voices policy.

But the new deal makes Bell a serious player for the first time in Quebec, where it currently has only about 8 per cent of the French-language market. “Now, Quebecor and TVA will find themselves competing with a Bell Media that has a significant French-language presence; Corus, a great innovative broadcaster that’s now going to have a French-language presence; Radio-Canada; and a whole number of small broadcasters,” Mr. Bibic said.

Analysts said the deal might still need tweaking to satisfy the CRTC, despite getting approval from the competition watchdog.

“The two processes are not aligned directly,” said Maher Yaghi, a telecom and media analyst with Desjardins Securities. “So, it doesn’t mean this is going to lead to a positive CRTC decision, but the fact that BCE is showing real effort here to remedy the situation by selling significant portions of TV assets bought from Astral presents a better case for the CRTC to look at.”

The sheer magnitude of the divestitures, he added, signifies that Bell is prepared to use “concrete action” to close this deal.

“A lot of the work has been done already, so I think when the hearing is going to start with the CRTC, BCE is probably going to be in a position where they’ll identify the actual buyers and not just theoretically talk about ‘We want to divest of this and this and this.’ I think it is going to present a much [more] complete case, but nothing is done until it is done.”

As for other buyers, Cogeco or other private interests are probably best-positioned to pick up some of the remaining TV assets.

“The problem for Quebecor is that they … have a high percentage of viewership in Quebec already in the French-language market. So they could have some issues in buying these assets,” he added.

 

Companies & investments Mentioned In This Article (2)

Company Price Change Volume
BCE Inc.
BCE-T
48.96 0.472 % 604,829
Corus Entertainment
CJR.B-T
24.31 -0.328 % 138,943