BCE Inc. won’t sell any more television or radio stations to secure its $3-billion takeover of Astral Media Inc., the company told Canada’s broadcast regulator on the final day of a week-long hearing into the deal’s future.
“We tried to reach above the bar on divestitures so everyone could be comfortable,” BCE chief executive officer George Cope told the Canadian Radio-television and Telecommunication Commission Friday. “If we are asked to do more, we would not move forward with the transaction. We are absolutely at the cusp of where we knew this strategy would work.”
The companies are in front of regulators for the second time in a year trying to secure approval of the deal, which would see the two companies merge their radio and television properties.
The current deal has already won approval from the Competition Bureau, but needs to be cleared by the CRTC as well.
In an effort to win its support, the companies amended the deal to appease concerns about the company’s size, agreeing to divest television channels such as Teletoon and Disney XD and 10 radio stations.
But BCE’s rivals demanded it go further when they made presentations to the CRTC this week, something Mr. Cope dismissed as complaints prompted by fear of competition.
“Those who would seek even more divestitures or an outright denial of Astral’s application are pursuing their own commercial agendas,” Mr. Cope said on the last day of the week-long hearing.
“But collectively, we and Astral have already put our best foot forward. Our strategy involves investment in and promotion of content, increasing competition in Quebec and acquiring the scale to address head-on the new borderless, multiplatform world. Further divestitures will eliminate any strategic rationale for what is already a scaled-down transaction.”
Rogers Communications Inc. was particularly concerned about the Movie Network, a speciality channel that would boost Bell Media’s presence in the movie television space. It said if the deal were to be approved, the companies should be forced to unload the channel (and suggested it would be interested in buying it).
On the first day of the hearing, CRTC chairman Jean-Pierre Blais told the company that it would need to prove that the deal was in the best interest of Canada’s broadcast system as well as Canadian consumers, something Mr. Cope said the company has accomplished.
“We understand that we have the burden to show this transaction is in the public interest,” he said. “We have presented a dramatically revised and enhanced application to do just that.”
The revised application also promises to keep head offices in Montreal, and proposes a $174-million tangible benefits package that would help independent content producers fund their projects.
Astral Media CEO Ian Greenberg, whose family owns a controlling stake of the company, said if the deal is refused it would throw his company into at least a year-long period of uncertainty as it tries to figure out how to proceed without BCE.
He said that the deal is needed because rising costs make it increasingly difficult for Astral to secure the content needed for its speciality channels and compete against services such as Netflix, and any rejection would cast its future in doubt.
“The consequence of a second denial would be severe,” he said. “That would be in retention of employees, signing new content agreements with suppliers and relationships with [television providers] across the country … there are four families involved, and with me as the youngest you can imagine they are getting on in age. They are equal partners and have a say, and of course we have a board. This would extend the uncertainty for at least another year.”
Another theme that emerged through the week was the concern that a larger BCE would use its Bell Media division to bully smaller television providers to pay more for its speciality channels, such as TSN.
As a vertically integrated company, BCE owns both content and the networks to deliver the content. That has led some to fear that Bell would jack up prices when selling channels to its competitors, and if they didn’t want to pay the higher prices consumers would be driven toward Bell’s television packages instead.
The commission suggested that each deal Bell reached with other cable companies could be brought to the CRTC for approval prior to becoming official, something Bell outright rejected.
It did propose a compromise, however, suggesting that it would be comfortable with arbitration if a deal only has 60 days left before expiry and neither side can agree on a price.
The hearing concluded Friday, and the commission will make a decision in the next few months.
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