BUSINESS

Cogeco, Eastlink and Quebecor urge Canadians to oppose BCE-Astral deal

08/07/2012 11:01 EDT | Updated 10/07/2012 05:12 EDT
OTTAWA - Three major Canadian media companies have launched a campaign to oppose BCE Inc.'s (TSX:BCE) planned purchase of Astral Media Inc. (TSX:ACM.A), saying the deal would give Bell too much control over the country's broadcasting landscape.

The heads of Cogeco Cable Inc. (TSX:CCA), Eastlink and Quebecor Inc. (TSX:QBR.A) unveiled Tuesday a new online petition against the proposed deal.

They raised the spectre of Bell forcing consumers to pay more money for popular television channels, or packaging those channels with less-popular ones, or other services, if the Astral deal goes ahead.

The deal still needs approval by the Canadian Radio-television and Telecommunications Commission and the Competition Bureau.

"Ottawa must absolutely stop this deal," said Louis Audet of Cogeco Cable. "If this transaction is approved, Bell Canada will pose a very serious threat to the Canadian broadcasting industry.

"Competition will be severely reduced, and the broadcasting market as we know it today will essentially be handcuffed. And the power will shift out of the hands of consumers, and into the hands of the Bell conglomerate."

"Bell Canada would become so dominant that no other company could compete with it to buy popular movies, TV series and sports," added Eastlink's Lee Bragg. "They would use their financial muscle to own all the best content, which would ultimately make it more expensive for consumers."

Astral owns radio stations as well as specialty channels and pay-TV networks, including The Movie Network and HBO Canada.

"When you put all this together, especially also on the advertising market, you're really facing an elephant," said Pierre Karl Peladeau of Quebecor Inc. (TSX:QBR.A).

Bell says that's not the case.

"What we're seeing is a troika of dominant cable TV providers in their respective territories who will go to any lengths to preserve their dominance," said Mirko Bibic, the company's chief legal and regulatory officer.

He also singled out Quebecor, accusing the company of wanting to pick and choose its competition.

"I found it rather ironic that the dominant player in Quebec media is complaining about this when, even after the transaction, they'll have a larger share," Bibic said.

Astral Media shareholders voted in May to approve the $3.4-billion acquisition of the TV, radio and billboard company by BCE, but they did not endorse a special $25-million payment to company founder Ian Greenberg.

BCE has said it expects the deal will be completed in the second half of the year.

Competition Commissioner Melanie Aitken said her office is now conducting its review of the deal, and she is aware of the concerns that have been raised.

"The (Competition) Bureau is aware that a number of serious concerns have been expressed by market participants related to the effect that increased concentration and vertical integration in the broadcasting industry are said to be having on consumers and other television programming providers," she said in a statement.

"While the bureau is required by law to conduct its work confidentially, I can confirm that we are actively reviewing these concerns. Should the bureau determine that the proposed transaction is likely to substantially lessen or prevent competition, we would not hesitate to take appropriate action."

Bell has proposed tangible benefits valued at $200 million to help support the country's broadcasting industry in its effort to obtain the federal broadcast regulator's approval for the Astral deal. The payment of tangible benefits is a condition of CRTC approval.

The company has also said it will need to sell 10 radio stations in five markets — Toronto, Vancouver, Calgary, Ottawa-Gatineau and Winnipeg — to get the green light from the CRTC.

The proposed benefits package includes $96 million for the development and production of Canadian programming and $61 million to help support, promote and develop Canadian musical talent and to assist community radio and other initiatives.

The deal also includes $40 million to help make Canadian programming more widely available in the North through the extension of new broadband services, and $3.5 million to help raises money and awareness to help combat mental health issues.

Bell had to make a similar offer when it bought CTVglobemedia in 2011. Part of that deal included $5.7 million for an independent Broadcasting Accessibility Fund.

On Tuesday, the CRTC announced it had approved Bell's proposal for the accessibility fund, which will start accepting applications in December for initiatives to improve access for people with disabilities.

Audet, Bragg and Peladeau wouldn't speculate on whether they would ask Prime Minister Stephen Harper's cabinet to overrule the CRTC if the broadcast regulator were to approve the deal, as it did three years ago when it allowed Wind Mobile to launch a national cellular telephone service.

The regulator had ruled the company was not Canadian-controlled because an Egyptian company held the vast majority of its debt.