Cooler heads have prevailed at BCE Inc. One month ago the parent company of Bell reacted with petulance, arrogance and foolishness when the Canadian Radio-television and Telecommunications Commission turned down its takeover of Astral Media Inc. It called the decision "appalling," accused the regulator of being "tainted," "impetuous" and "unreliable" and appealed to the federal cabinet. With the firms resubmitting a new proposal to the regulator Monday, the telecom giant seems to have returned to its senses and learned three important lessons, which should help it to get the deal done this time around.
Lesson 1: Don't be evil. BCE was proposing to become the dominant media empire in Canada and dismissed legitimate public interest and regulatory concerns about the clout it would have, particularly in the English specialty TV market. In its first go-round it showed little flexibility and failed to propose alternative solutions that could have resulted in a more palatable outcome, such as selling off some assets. Now, BCE seems to understand that consumers come first. It is expected to divest enough of its combined assets to satisfy the regulator's concerns.
Lesson 2: Be nice to your regulator. BCE's reckless decision to try to discredit and humiliate its regulator for rejecting the deal failed spectacularly, when it became clear it had no public sympathy nor would the federal cabinet overturn the CRTC decision.. BCE not only accused the CRTC of colluding with BCE's rivals to thwart the takeover, it even dismissed the CRTC's calculation of BCE's post-deal share of viewership. It's the CRTC's number to determine, not BCE's; the company's rash accusation suggested BCE believed it was more credible and took the needs of Canadians more seriously than the CRTC. Such a hostile stance was no way to establish relations with newly appointed CRTC chairman Jean-Pierre Blais. (By contrast, Astral's reaction to the original decision was measured and neutral.) BCE now seems utterly humiliated by its initial reaction, as it should be: its release Monday morning strikes a more conciliatory tone, stating: "We heard Canadians and the CRTC loud and clear – they want assurance [that the deal] will directly benefit consumers and content creators." BCE CEO George Cope can only hope Mr. Blais is the forgiving sort.
Lesson 3: This is war – plan accordingly. BCE failed to anticipate, and was slow and ineffective in reacting to, a surprisingly effective public relations campaign by its rivals to kill the deal. The competition isn't going away, but this time, BCE seems to have a strategy to deal with them, namely keeping the details of its revised proposal out of the public domain for as long as possible. BCE and Astral haven't yet disclosed the new terms of their deal, and suggested they will only be revealed when the CRTC launches public consultations on the application. That will give Quebecor Inc. and its peers much less time to craft a coordinated PR assault that picks away at the specifics of the Bell-Astral tie-up. And no doubt, when they do, Bell will respond more effectively than it did the last time — as of this morning, it's already started its own PR full court press on its contributions to Canada.
Sean Silcoff