BCE Inc. is warning the federal government that the country's broadcasting and investment industries are threatened by an overzealous regulator that is changing rules on the fly, as the company tries to salvage its $3-billion takeover of Astral Media Inc.
The Canadian Radio-television and Telecommunications Commission rejected BCE's bid last week, saying it would not be in the public interest to allow its Bell Media division to bulk up with radio stations and specialty channels owned by Astral.
Bell launched its formal request Monday by sending letters to the Prime Minister's Office and the Privy Council. Both offices referred requests for comment to Heritage Minister James Moore's office, which said "cabinet has no legal ability to overturn this decision."
But Bell did not apply to cabinet; it asked the government to step in under a provision of the federal Broadcast Act that it interprets to mean that elected officials can force the CRTC to apply its own rules if they feel the rules were misinterpreted.
Bell argues that the regulator told the industry that its Diversity of Voices policy would be the rulebook for takeovers when it was introduced in 2008, and then decided to apply policies from 1978 when it wanted to reject the Bell deal.
The 2008 guidelines said a takeover could proceed, as long as the combined company did not control more than 35 per cent of either the English- or French-television market.
"We knew going into this that Diversity of Voices is what mattered in this country," said Mirko Bibic, chief regulatory officer at BCE.
"They didn't tell us they would use other policies. The commission said clearly 'We are giving you this policy because there is no other policy and the industry needs to know the rules.' "
In its letter to government officials, Bell said it met the only requirement that matters: Its market share would be below 35 per cent (if U.S. networks, being watched in Canada, were included in the tally).
Bell's letter said the CRTC named 18 other reasons for rejecting the deal that had nothing to do with current policies but instead draw on documents that are more than 30 years old. "Instead of relying on share of viewership, the CRTC relied on never-before-used criteria to deny the BCE-Astral transaction," Bell wrote in its letter.
Some of the reasons the CRTC listed were "the nature of the transaction," "presence of the acquirer in the most attractive genres" and "firm commitments regarding additional local and spoken-word radio programming or promotion and airplay of emerging Canadian artists."
While there appears to be little appetite for intervention on the government's part, Bell said an answer is essential for any company looking to invest in this country.
"A policy direction is required … to ensure that the CRTC does not ignore its own policy framework in the future and to avoid the tremendous negative impact that such conduct has on the economy, the broadcasting ecosystem, employees, consumers and the capital markets," Bell said in its letter.