BCE Inc. and Astral Media Inc. have reached an agreement on the key terms of a revised takeover deal that could be announced as early as Monday.
People familiar with the negotiations said late Sunday that BCE’s new offer will be close in value to the original $3-billion proposal that the two companies signed in March and the federal broadcast regulator rejected in October.
The Canadian Radio-television and Telecommunications Commission opposed the marriage of the two communications giants because of concerns that too much power would be concentrated in the hands of BCE, one of the country’s largest providers of Internet, cellular, telephone and television services in Canada.
Under terms of the new deal, sources said, BCE is seeking to win the CRTC’s support by promising to reduce its market clout through the sale of a number of television, radio and other media assets. These sources said BCE has had preliminary discussions with a number of potential buyers in the communications and entertainment sectors.
It is understood that BCE is contemplating selling most of Astral’s English-language television properties and a number of other unidentified media assets.
BCE will not likely provide many details about the potential asset sales until it makes a formal regulatory application to the CRTC for approval at some point during the next few weeks. It could be weeks after that before the regulator publicly releases the application and details of the potential asset sale.
Even with a bid that reflects more modest ambitions, BCE faces an uphill battle winning the CRTC’s support for the ambitious takeover because of its market dominance in Canadian broadcasting. Sources said a regulatory review could continue through to next spring because of the significant public policy issues at stake.
The planned deal also requires the approval of the Competition Bureau.
BCE’s plan to put media assets on the auction block will likely attract a great deal of interest from a number of industry leaders including Rogers Communications Inc. and Corus Entertainment Inc. And other bidders may come to the table as well. Cogeco Inc. – already a dominant radio player in Quebec – was interested in buying Astral before it inked the deal with BCE.
Any deal would likely include the sale of some Quebec radio and television properties, and because Cogeco isn’t a large player in broadcasting – its core business is cable and Internet service – it wouldn’t have much to worry about triggering major regulatory concerns about market concentration.
Cogeco was not the only company interested in Astral. Corus also expressed interest in the company prior to BCE’s deal. Corus and Astral co-own the rights to HBO Canada and both have a sizable stable of programming targeted to children. Astral’s stable of specialty cable channels includes Teletoon, Family and Disney XD.
Rogers Communications, meanwhile, has previously said it would be interested in several of Astral’s English specialty channels if they were to become available.
The original takeover bid offered $50 per share to Astral’s class A shareholders. The shares closed at $44.40 on Friday.