The federal broadcast regulator moved to block telecommunications companies from locking up their video content for their own wireless subscribers as part of its approval of BCE Inc.’s $1.3-billion acquisition of CTVglobemedia.
The decision by the Canadian Radio-television and Telecommunications Commission on Monday removes the final barrier to the BCE-CTV deal, expected to close in April, and means all of the country’s conventional broadcasters will be backed by providers of TV and Internet services. Cable and telecom company Rogers Communications Inc. already owned the CITY-TV network, and French broadcaster TVA is part of Quebecor Media Inc., whose parent company Quebecor Inc. also owns cable and Internet provider Vidéotron. The industry shift began in earnest last summer, when Shaw Communications Inc. bought the CanWest TV assets. BCE quickly followed suit with its own bid for broadcast content.
The industry’s vertical integration has prompted the CRTC to hold a set of hearings in June to ask for input on how the changes will affect the industry and how to deal with ownership concerns, such as content exclusivity on wireless devices. Exclusive deals for TV content on mobile phones are now on hold until after those hearings.
BCE has some mobile-only content deals apart from its CTV content – for example, it bought exclusive mobile rights to NFL games, which it owns not because of the CTV acquisition but because of a deal done directly with the league. Current arrangements such as that still stand.
With video content becoming more important on mobile phones, competitors have expressed concerns that BCE could, for example, restrict access to the programs it owns to make its own wireless services more competitive.
“This issue was signalled to us by many people as being very problematic,” CRTC chairman Konrad von Finckenstein said in an interview on Monday. “Bell is one of the largest wireless companies in the country; it also now is the owner of some of the best, richest Canadian content we have.”
When the deal closes, the broadcast assets will become a wholly-owned division of BCE called Bell Media. That will include the CTV network, its specialty stations such as TSN and The Comedy Network, the CTV radio properties and also the Sympatico.ca Internet portal.
“We look forward to welcoming the CTV team to Bell and to accelerating the delivery of the best digital content to Canadians on the screens of their choice through Bell’s world-leading broadband fibre and mobile networks,” George Cope, BCE president and chief executive officer, said in a statement.
Since the announcement of the deal, BCE has said it will use the content it now owns to expand its video offerings on its Internet and mobile phone services. The company has also said it will allow its competitors to do the same, provided they are prepared to pay for that content. In an interview with The Globe and Mail last month, Mr. Cope suggested mobile video could be negotiated in the same way broadcasters currently negotiate per-subscriber fees that cable and satellite companies pay to carry specialty TV stations.
“A market’s going to start to develop for mobile programming, and we’ll be making programming available and proposing commercial terms, and those who are interested will enter into discussions, as CTV always has, with distributors,” said Mirko Bibic, Bell’s senior vice-president for regulatory affairs, in an interview Monday. “I see it as business as usual.”
The question now will be whether access to video content on mobile and other on-demand platforms will become more heavily regulated, especially when the CRTC has shown little appetite for enforcing more regulations on the industry.
However, while fights over exclusivity may be a problem at first, the industry is likely to find a way to negotiate, said Iain Grant, managing director with the Seaboard Group telecommunications consultancy in Montreal. And that has as much to do with market forces as with the regulator’s attempts to restrict exclusivity.
“The underlying business of the broadcast model is larger than the marginal benefit the TV-access portion has to the mobile business model,” Mr. Grant said. “The broadcast model is best served by the largest possible audience, and is not served by audience partitioning.”
When a Canadian broadcast licence changes hands, the buyer must set aside funds (usually 10 per cent of the deal’s value) for broadcast-system improvements. The CRTC ruled BCE must pay for $245-million of such “tangible benefits” as part of its CTVglobemedia acquisition.
Here’s how the spending breaks down:
$30-million -- Support for local programming on its A Channel stations, which CTV said are in danger of closing and will now be kept open for at least three years.
$60-million -- Guaranteed carriage on Bell satellites for every over-the-air TV station in Canada that broadcasts a minimum amount of local programming
$100-million -- Production of Canadian content, including drama and comedy series and documentaries
$28.8-million -- New newscasts produced in Winnipeg, Regina, Saskatoon, Edmonton, Calgary and Vancouver
$17.5-million -- Support for Canadian musical and spoken-word talent
$3-million -- Funding to help public-interest groups participate in CRTC hearings
Nearly $6-million -- Fund for accessibility in broadcasting for hearing-impaired and visually impaired Canadians
TOTAL PAYMENTS: $245-million