It's time for Round Two.
Less than a year after the Canadian Radio-television and Telecommunications Commission rejected BCE Inc.'s $3-billion for Astral Media Inc., both companies' executives will find themselves once again sitting across from the CRTC chairman arguing the deal is in the best interests of not only the companies but also Canadian consumers.
The deal has been modified this time around – the companies have already struck deals to sell off some of their English-language television channels, such as Teletoon and Disney XD, to reduce their combined market share; BCE will sell 10 radio stations; and the company made a promise about keeping its head office in Montreal – but the arguments will be largely the same on both sides.
Bell Media, BCE's media division, plans to argue that it needs to bulk up with Astral's radio and television channels if it is going to have any hope of competing with emerging services such as Netflix in the future. Those services are only a small part of the market now, but Bell Media argues that by controlling more content it will be able to create its own competing services and ensure the money spent by Canadians stays in Canada.
The commission is concerned about the size of the country's vertically integrated media companies, which own both the pipes that bring television into homes as well as the content that those pipes deliver. It will be up to Bell Media to explain why bigger is better (BCE also owns a 15-per-cent stake in The Globe and Mail).
"The onus is on the applicant to demonstrate that approval of the proposed transaction is in the public interest, that the benefits of the transaction are commensurate with the size and nature of the transaction, and that the application represents the best possible proposal in the circumstances," the CRTC wrote ahead of the week-long hearing, which begins Monday.
To make its case, Bell Media will focus on its plan to use its clout to promote Canadian productions. It will also focus on the almost $200-million it will spend as part of the deal's tangible benefits package – a fee the CRTC imposes on any broadcaster that takes over another. It plans to spend 85 per cent of the money on "on-screen initiatives," which is good news for independent producers who rely on the funding to get their projects off the ground.
It also promises to keep money-losing news stations open until at least 2016, and support emerging Canadian artists by dedicating more airtime on local radio stations to their music. These initiatives replace other benefits it proposed last time around, including a controversial plan to use $40-million to expand the northern broadband network of a BCE subsidiary and $3.5-million to fund Bell's mental health initiatives.
When the deal went in front of the commission the first time in September, Bell Media's opponents were fired up and ready to do battle. Quebecor Inc. and Cogeco Inc. ran a big ad campaign to sway public opinion, and camera crews followed their executives into the high-profile hearings.
Opposition has been muted this time – the opponents said another ad campaign would have been ineffective so soon after the last. But they will still appear before the CRTC to make their case – that a larger Bell would be bad for Canadians, because Bell can't be trusted to deal fairly with its competitors when it owns both highly coveted content and its own broadcast network, which includes TSN.
Bell dismisses the criticisms as the overhyped concerns of competitors, and insists the deal will lead to a more competitive market, particularly in Quebecor-dominated Quebec. Now it has to try to convince regulators of that.