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Cable firms call on consumers to foil BCE bid

George Cope, BCE president and CEO, and Ian Greenberg, president and CEO of Astral Media Inc., announce the takeover of Astral by Bell in a deal worth about $3.38-billion Friday, March 16, 2012 in Montreal.


Three Canadian cable companies are enlisting the support of an unlikely ally in their battle to stop BCE Inc.'s $3.3-billion takeover of Astral Media Inc.: consumers.

Quebecor Inc., Cogeco Cable Inc. and Halifax-based Eastlink appealed in an open letter to Canadian viewers Tuesday to pressure federal regulators and politicians to reject the deal, portraying it as a merger that would result in a dominant, dangerous broadcast behemoth that would dictate what cable companies and advertisers pay and what viewers watch – ultimately driving up costs for consumers.

In full-page newspaper ads and on a dedicated website, they prompted viewers to write and tweet their concerns, arguing that Bell would have a greater share of the viewing audience than the largest broadcasters in most developed countries. "Ottawa must absolutely stop this deal," Cogeco president and chief executive officer Louis Audet said at a press conference in Ottawa. "This transaction is clearly anti-competitive and dramatically reduces the choices offered to Canadian consumers," Quebecor CEO Pierre-Karl Peladeau added.

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The call to arms – coming one month before Canadian Radio-television and Telecommunications Commission hearings into the deal in Montreal and as the Competition Bureau reviews the file – underscores the high stakes as BCE attempts to complete its transformation into a multifaceted telecommunications and media giant that sells consumers not only the "pipes" that bring content to their homes and mobile devices, but the content itself.

"Given this is the last major acquisition of an independent broadcasting entity and given the limits the commission has established in media consolidation, the stakes are high for all remaining players," said Peter Miller, a Toronto-based broadcasting lawyer and consultant. "It's not surprising this transaction is facing a lot of scrutiny and even opposition."

The Astral deal would give BCE ownership of 70 TV channels and 107 radio stations, making it the largest player in both businesses, and represent what is expected to be the last blockbuster deal following a decade of consolidation in the broadcasting industry. Meanwhile, it is pushing further into the territory of cable companies by rolling out its Internet-based TV service, Fibe, adding to its existing satellite TV offering.

The cable companies claimed Bell would have 38 per cent share of Canadian viewership after buying Astral, above the CRTC's threshold of 35 per cent, and argued it had already used heavy-handed tactics to drive up prices in recent negotiations to renew terms for providing its broadcasts to cable companies.

But BCE argued that it would only have a 24 per cent share of the Quebec francophone TV market, lagging Quebecor's TVA broadcast group, while its share in the English TV market would be 33.5 per cent, below the CRTC's threshold of 35 per cent. "We're actually levelling the playing field and giving TVA and Vidéotron [Quebecor's cable unit] a run for their money," said Bell's chief legal regulatory officer Mirko Bibic.

He further accused Quebecor of "resorting to these tactics" to counter the arrival of a new competitor, and the other two cable companies of sour grapes after the CRTC ruled against them last month in a dispute over the their latest contract with Bell to offer specialty TV stations.

Greg O'Brien, editor of online broadcasting trade journal, said the cable companies' appeal to Canadians is unlikely to stop the deal, but "this is maybe a test of how close you get to the point" where Bell's share of viewership triggers a federal response.

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He said the fracas is largely rooted in BCE's price increases for its content – a move he said still left it charging less than its counterparts in the U.S.

The cable companies, in turn "are trying to get a handle on their own costs and protect their [business]," Mr. O'Brien said. "But TV is a big money game."

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