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Globe Investor Bell Media moves to comply with conditions of Astral Media deal

BCE president George Cope, left, and Astral Media CEO Ian Greenberg announced the takeover of Astral by Bell in March.

PAUL CHIASSON/THE CANADIAN PRESS

Bell Media has made its first move as the soon-to-be owner of Astral Media - announcing plans to shutter a Montreal sports station that broadcasts in English and replace it with one that broadcasts sports in French.

It's the first step that Bell, owned by BCE Inc., will have to take to meet strict ownership requirements of the Canadian Radio-television and Telecommunications Commission, which dictate how many stations per market any one media company can own.

Bell said it would also have to sell 10 stations - nine FM and one AM in Toronto, Vancouver, Calgary, Ottawa and Winnipeg - to win approval from the regulator.

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"These are not market forces that make this happen," said Chris Gordon, the president of radio and local television for Bell Media. "But these are the rules now so it's not the time to worry about that. It's simply a case of having to do it."

The decision to close TSN Radio 990 and replace it with RDS Radio is an example of the challenges the company faces in securing approval of the deal that will sharply increase the ownership concentration in the Canadian broadcast industry.

The rules state a company can only own two FM and two AM stations in any language in any market. That means Bell has to either change the language of as many as 10 stations in large markets across the country, or sell them.

The takeover is before the CRTC, which will hold hearings in September to iron out details. The stations won't be formally put up for sale until the deal closes.

Peter Fleming, a radio industry consultant, said Bell is likely to "divest of the poorest of the stations with the poorest signals," such as Bell's Flow 93.5, a hip hop and R&B station in Toronto.

Still, there appears to be no shortage of potential bidders for the undisclosed stations BCE plans to divest in a sector that has held its own, with revenues of $1.6-billion last year and profits of $311-million, up from 2010. However, few of the larger second-tier radio groups would likely be able to bid for all 10 stations due to the CRTC ownership limits.

"We see it as a great opportunity, for sure," said David Murray, chief operating officer of Newfoundland Capital Corp., Canada's fifth-largest radio broadcaster, with 83 licences, including the maximum two FM stations in Ottawa. "[We're interested in] all the ones we can buy, at the right price."

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Jim Pattison, the billionaire entrepreneur who owns 29 FM stations in Western Canada, including the maximum two in Vancouver, said he will look at what's on offer. "It depends on the frequency and programming. We're certainly interested in some of them."

Cam Cowie, general manager of Harvard Broadcasting, which owns 11 stations in Western Canada, said his company would be interested in those stations in Western Canada. "Is there somebody that can take it all? I don't know. That's a pretty big chunk."

Mr. Fleming speculated that a consortium of buyers could step forward - or Bell could choose to sell to a new group with deep pockets, such as former Bay Street trader Mike Wekerle, who has been in the hunt for a licence in Toronto.

Meanwhile, BCE filed a complete breakdown of the Astral deal's intricacies Tuesday. Part of the package is a tangible benefits payment of $200-million, money that Bell must pay as part of the transfer process and which is supposed to help support the country's broadcast industry.

The package includes $96-million for the development and production of Canadian programming. There is another $61-million to "help support, promote and develop Canadian musical talent and to assist community radio and other initiatives" and $40-million to extend broadband service to the north.

The company's filings also show the deal valued Astral's 63 English-language stations at $724-million.

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