Canada's broadcast regulator has given its blessing to a $1.3-billion agreement by BCE Inc. and Rogers Communications Inc. to purchase a majority stake in Maple Leaf Sports and Entertainment Ltd.
While that paves the way for the two rivals to take control of the iconic sports company, the real test of consumer safeguards will come next month, when the Canadian Radio-television and Telecommunications Commission scrutinizes BCE's $3.38-billion proposed takeover of Astral Media Inc.
The CRTC is imposing some conditions on the MLSE deal, but stressed Thursday that sufficient safeguards are in place to protect consumers and prevent anti-competitive behaviour.
"When deciding whether or not to approve a proposed ownership transaction, the commission must be persuaded, in light of the application and the public record, that an approval is in the public interest," said CRTC chairman Jean-Pierre Blais. "In this case, we have been convinced that the transaction benefits Canadians as it will lead to the creation of new home-grown sports programming."
Even so, industry tensions continue to rise over BCE's growing media dominance.
Competitors Telus Corp., Quebecor Inc., Cogeco Cable Inc. and Eastlink warned Thursday they are preparing to wage an even bigger battle over the blockbuster Astral deal.
BCE and Rogers struck a deal in December to acquire a 75 per cent stake in MLSE, which owns prized sports assets including the Toronto Maple Leafs and Toronto Raptors, with an eye to locking up the accompanying television broadcast rights. Both companies said they look forward to the deal closing in short order, although no firm date has been set.
CRTC approval was required because the transaction includes three specialty channels: Leafs TV, Raptors NBA TV and Gol TV, and two yet-to-be launched services.
But in applying conditions to the MLSE acquisition, the regulator also signalled it has no intention of simply rubber-stamping such deals, a move that could shed some light on how it plans to scrutinize the Astral transaction. Specifically, it is requiring BCE and Rogers to roughly double the amount of money they must spend to support the Canadian broadcast system through the deal. BCE and Rogers will have to spend $7.5-million over the next seven years on the creation of new sports-themed programming by Canadian independent producers – a pot of money known as "tangible benefits." BCE and Rogers had originally proposed a tangible-benefits package worth $3.8-million.
In the case of Astral, Bell is proposing $200-million in tangible benefits to be spent over 10 years, including $40-million to improve telecom services across the north.
Ann Mainville-Neeson, director of broadcast policy at Telus, said the MLSE deal, while smaller than the Astral acquisition, adds significant market power to Bell in the key area of sports programming.
"As we move forward to the Astral transaction, [the CRTC] will certainly have to give considerable thought to the sheer size that Bell will have … Sometimes it just gets too big and the safeguards become meaningless," she said.
Separately, the chief executives of Quebecor, Cogeco and Eastlink wrote a letter to Heritage Minister James Moore on Thursday, saying the Astral deal threatens to put consumer interests at risk.
The CRTC, meanwhile, also noted that it has already taken steps to ensure viewers will have access to a wide array of programming on their screen of choice: "In 2011, the CRTC prohibited companies from offering television programs on an exclusive basis to their mobile or Internet subscribers. Any program broadcast on television must be made available to competitors under fair and commercially reasonable terms."