This is the new gold rush for telecommunications companies: A furious, high-stakes race to own what is flowing over their valuable distribution networks - with an increasing eye towards wireless smart phones, with vast opportunities for exclusive mobile video and applications, or apps.
Rogers Communications Inc.'s discussions to buy the Maple Leafs Sports and Entertainment empire is not only part of this, it is part of a longer term strategy that has seen the Toronto-based cable, Internet and wireless giant recently snap up content rights for the Edmonton Oilers, the Calgary Flames and rename the home of the Vancouver Canucks to the Rogers Arena.
To the Blue Jays and the Rogers Centre in Toronto, Rogers would be able to add the Maple Leafs and the Raptors, original content factories that might allow Rogers to start spreading exclusive content across platforms that - so far, at least - fall beyond the heavy regulation of traditional distribution networks, like cable and satellite TV. Bell has already executed on this formula in Montreal with the extremely valuable Canadiens franchise, renaming the arena to the Bell Centre and leveraging their ownership against their Quebec telecom rival, Quebecor.
To some, this content-meets-distribution ownership convergence is a proven formula. Quebecor , in its French-language home market of Quebec, for instance, has begun lavishing its new wireless network's smart phones with endless hours of broadcasting from its own broadcaster, TVA Group. The Calgary-based cable company Shaw Communications has bought CanWest Global's TV assets. BCE Inc. just threw down $1.3-billion for CTV Inc.
But even if convergence 2.0 is rocking the industry with mergers and blockbuster deals, some remain unconvinced about the value proposition, including several prominent industry analysts. While broadcasting and distribution companies are heavily regulated, wireless remains a sort of wild west. Companies have promised not to hoard content and broadcasting on their own wireless devices, but in an era where everyone is walking around with a mini-TV in their phone, the lure may be irresistible. Already, Bell has struck an exclusive deal with the NFL for their smart phones, Telus has struck an exclusive arrangement for live mobile video with the CFL.
But will someone buy a Rogers iPhone - or for that matter, a Rogers plan for an iPad or the looming Research In Motion Playbook tablet - over a device from Telus or Bell, simply because Rogers is offering exclusive, live mobile video? Will Rogers benefit - in its bottom line - from denying Telus those games, or will it see more value in leveraging its ownership to enrich the content rights deals it strikes with its telecom competitors?
These questions will likely be addressed in a Rogers boardroom. But what all this convergence means for the industry will end up being discussed in May when the federal telecom and broadcast regulator holds a set of hearings in Gatineau, Que., to examine the vertical integration that has come to characterize the industry over the past few months.
A spokesperson for BCE, which one analyst said was the only other obvious bidder, said there was no immediate comment.Report Typo/Error
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