Astral Media CEO Ian Greenberg speaks at the company's AGM in Toronto, Dec. 13, 2011. Bell Media owner BCE Inc. is in the midst of a $3.4-billion takeover of Astal and one of the key questions is whether the combined company would control too big a stake of the market.Frank Gunn/The Canadian Press
The Canadian Broadcasting Corp. has unexpectedly stepped into the debate over BCE Inc.'s $3.4-billion acquisition of Astral Media at the last minute, insisting it be allowed to voice its objection to the company's plan to launch a French news network as part of the deal.
Bell Media announced plans to use $20-million of the deal's $241-million tangible benefit fund – money it is obligated pay as part of the deal to improve Canada's broadcasting system – to fund the $40-million creation of an all-news network.
It would position Bell Media as a rival to CBC's RDI service and Quebecor Inc.'s LCN, both of which offer 24/7 French news networks in Quebec. CBC argues that throwing another competitor into the mix – which Bell has already said will be a money loser – will distort the market and make it harder for established networks to thrive.
"BCE's proposal to use tangible benefits monies to subsidize the launch of a … news service is extraordinarily self-serving and unprecedented," the CBC wrote in a submission file to the Canadian Radio-television and Telecommunications Commission. "No party has ever before suggested that benefits monies should be used to subsidize the launch of a totally new broadcasting service."
The CRTC said it would consider CBC's request, but didn't say when.
The CBC's objection came as Bell Media executives appeared in the final stage of a week-long hearing into the deal before the Canadian Radio-television and Telecommunications Commission. The CRTC has final say over the deal, which would leave Bell Media with control of more than 100 radio stations and almost 90 television channels and put a cap on its content costs as it prepares to battle foreign players such as Netflix.
The CRTC could approve the deal outright, allow it to go through with modifications or kill it altogether – a decision is likely to come within 45 days. Canada's Competition Bureau could also squash the deal if it feels it would give the consolidated company too much clout in Canada's broadcasting industry.
The company's rivals – industry giants such as Quebecor Inc., Rogers Communications Inc., Cogeco Inc. and Telus Corp. – warned the deal would make it too easy for Bell to overcharge them for popular services (such as TSN) that their television services rely on.
And if Bell gouges them on pricing, they warned higher costs will ultimately be passed down to consumers. Regulations that already exist prevent Bell from withholding content or charging rivals uncompetitive rates, but they argued that enforcement is weak and there are no penalties should Bell break the rules.
Bell fired back against its critics, saying that it has always followed the rules and had no intention of changing that should the Astral deal be approved.
"The commitments we have outlined to you are firm and compelling," said BCE chief executive officer George Cope. "We expect Bell's significant investments in broadcasting will unleash a strong competitive response, as our rivals develop their own strategies to improve service and expand choice for consumers."
More to come