BCE Inc. began its defence Monday of a proposed $3.4-billion takeover of Astral Media Inc. – and immediately faced the pointed scrutiny of the avowedly populist new CRTC boss.
"I would remind everyone that it is the responsibility of a seller or their representative to prove that a transaction is in the public interest," Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission, warned in his opening statement. "That means the burden of proof rests squarely with Astral and BCE. We will not hesitate to challenge their representatives."
When Mr. Blais took up the post in June, he promised to shift the agency's focus back to consumers amid criticism that the commission too often coddled the country's largest broadcasters.
In an unprecedented move, he broke from tradition almost immediately on Monday as he read letters from average Canadians expressing frustration with the company's customer service.
Bell Media president Kevin Crull defended the firm, stating many of the consumer complaints were from people who didn't understand the deal thanks to an advertising campaign funded by BCE's competitors.
An irritated Mr. Blais quickly cut in. "You seem to be suggesting there has been a campaign of misinformation and there may well have been," he said. "But we don't apply a test to consumers, who would come to a hearing, to see if they are knowledgeable about the broadcast system. They are welcome here."
The CRTC – which can approve, amend or kill the deal outright – has always solicited comments from the public but it's unprecedented for a commissioner to put those comments directly to the executives being questioned.
The deal has been controversial because some feel it would put too much power in the hands of Bell Media, which could then use that power to extract higher prices for its programming and put pressure on its competitors.
Those rivals will have a chance to weigh in Tuesday, starting with Quebecor Inc. chief executive Pierre Karl Peladeau.
The deal is a high profile test of the commission's willingness to take on the country's largest broadcasters and service providers as they seek to grow larger. While the fate of the deal is at stake, so is the reputation of a broadcast regulator that has increasingly found its relevancy in question as Canadians turn away from conventional television and turn to unregulated services such as Netflix for their viewing needs.
"The CRTC has become a bit of a whipping post for many people who felt it was just coddling the incumbents and not looking out for consumer interests," said Dwayne Winseck, a professor at Carleton University who studies media consolidation and regulation. "But I think people are pleasantly surprised that it seems to be changing."
Mr. Blais has made it clear the commission would dedicate as much effort to making sure consumers are well served as it spends developing the regulations that govern the industry. He appointed a chief consumer officer late last month, and last week issued a three-year plan that further underscored his intentions.
Bell Media came to Montreal bearing gifts in its bid to win regulatory for its takeover – a Canadian-based service to take on Netflix, a French-language news channel and more money for French programming. It previously announced a plan to form a production company with Quebec-based Cirque du Soleil which is also dependent on the Astral deal closing.
The Netflix-like offering would be available to all of the country's cable and satellite companies to offer to their customers, Bell said, and would be built around content inherited in the Astral deal from specialty channels such as HBO and The Movie Network.
"[It is] a made-in-Canada service, available in French and English everywhere we have rights to all Canadians through the cable, satellite or IPTV provider of their choice," BCE Inc. chief executive officer George Cope said.
Ian Greenberg, who founded Astral and said he put it up for sale on the advice of his family, said the company is "at a crossroads" as services such as Netflix take market share. The U.S. subscription-based service is used by about 10 per cent of Canadians. In contrast, Astral's specialty channels aren't yet available on many mobile devices.
The hearing continues Tuesday and goes until Friday.
The CRTC could allow the deal to proceed, insist on some changes being made as a condition of approval or reject the deal outright. The deal must also be approved by the Competition Bureau.