George Cope's phone rang at 3:55 p.m. Thursday.
It was CRTC commissioner Jean-Pierre Blais calling to give the chief executive officer of BCE Inc. a cordial heads up. The $3-billion deal for Astral Media Inc. was dead.
"It was probably not one of my most joyous conversations," Mr. Cope said Friday. "He told us the transaction wasn't going forward. It was very brief. I told him the rules have changed, clearly, because we met all the rules."
A few minutes later, reporters camped out at the regulator's Gatineau, Que., headquarters were rapidly spreading the unexpected news, sending shockwaves through the media and telecommunications industry.
Many, including Mr. Cope, thought approval was all but guaranteed – although most expected a few minor changes. Bell had argued that it needed to bulk up to better serve its customers and compete with foreign rivals such as Netflix, while Astral needed a deep-pocketed investor to help roll out new products and ensure its specialty channels continued to prosper in a world increasingly focused on online delivery.
Mr. Cope maintains there was nothing he could have done differently to win approval, arguing the CRTC didn't follow its own rules. But the company clearly misread how the regulator would view the deal, and underestimated the effect of an intense advertising campaign financed by several of BCE's fiercest competitors.
"We've been asking what we could have done," Mr. Cope said. "But the reality is we needed to write and ask them to confirm their rules. We shouldn't have assumed the rules were the rules, because they were changed and torqued."
Amid the regulator's scrutiny of the Astral deal, the burden of proof was on Bell to show it would benefit Canadian consumers.
But BCE seemed to misread some of the key points that would influence the CRTC's thinking. The company didn't offer a list of Astral assets it would consider divesting to address any concerns about concentration. And when the CRTC didn't press it about its own market share numbers, Bell figured that meant they were within the safety zone.
Astral founder and chief executive officer Ian Greenberg had set the deal in motion by calling Bell executives to see if they wanted to buy the Montreal-based television company and fold it into the Bell family.
Mr. Greenberg never really wanted to sell Astral Media, which he founded with his brothers in 1960 and transformed into one of the country's biggest media companies. But last year he took a look around and came to a startling realization – the family run business would soon be without a family member willing to run the business.
"A decision to sell is obviously very complex and in some cases emotional," he said last month. "But at the end of days, you well know this company was started by four brothers – two have deceased, so we are dealing with two families … they decided it was time to sell and came to see me and talk about the possibility."
Buying Astral isn't a straightforward process – the Greenberg family owns a special class of share that gives them final say on any proposed deal. But in Bell, both Montreal-based companies felt they had a perfect fit that went well beyond geography.
The Bell Media division wanted to acquire more content, something Astral had in spades with specialty channels such as HBO Canada and the Movie Network. And Mr. Greenberg wanted to ensure his company stayed in Montreal and its employees would be protected, something he believed would only be possible if he dealt with Bell.
"I could see the winds against an independent company like Astral not being able to compete with global players any more," Mr. Greenberg said. "We have to face realities and it was clear in my mind that a combination of Bell and Astral would accomplish that goal."
Opposition to the deal was muted when it was announced last spring, but the case against it was slowly being built. The CRTC immediately seconded about a dozen specialists from various offices to study the deal's ramifications – lawyers, financial experts and broadcast analysts among them who produced thousands of pages for commissioners to review prior to a week-long hearing.
During the hearing, Mr. Blais was quick to show the hostility around the deal. "Do you know what I did during my summer holidays?" Mr. Blais asked Bell executives as he held up a thick binder of material. "I didn't have any holidays – I read interventions. There are nine volumes like this."
The contents of those binders – much of the final decision was based on market share calculations – would be central to the CRTC's case against the deal. But Mr. Cope believes the CRTC was equally swayed by a massive Say No To Bell campaign financed by competitors such as Quebecor Inc. and Cogeco Inc.
The campaign was launched in August. The ads suggested Bell would abuse its market power and keep popular services away from its rivals. One ad suggested that families would no longer be able to watch movies together if the deal closed because Bell wouldn't make movie networks available to its rivals.
Although the comment period was officially closed when the ads launched, more than 70,000 people signed the organization's online petition. Bell Media's Mr. Crull said in August that the ads would have no effect on the outcome. On Thursday night, Bell said the campaign was one of the main reasons the deal was rejected.
"It's not our style," Mr. Crull said when asked why Bell wasn't fighting back against the ads. "We put out facts that correct the public discourse. I don't think they've won over public opinion whatsoever."
Bell's adversaries were visible in their aligned opposition. Shortly after the hearings ended, Pierre Karl Péladeau from Quebecor, Louis Audet from Cogeco and Lee Bragg from Eastlink invited federal ministers and their aides, MPs and senators for cocktails at the Château Laurier on Wednesday, Sept. 19, the week after the CRTC held its public hearings in Montreal. It was their only registered lobbying activity.
Bell and Astral, on the other hand, chose not to lobby the government during the CRTC's deliberations.
Now BCE is asking the federal government to force the CRTC to revisit its decision so it can refile its takeover papers, and suggesting its rivals exerted undue influence on the commission by meeting with its members prior to the decision.
"We are doing everything we can with Astral to get this deal put back," Mr. Cope said. "If cabinet sees it our way we'll get it back for shareholders."