BUSINESS

Bell-Astral Merger: Telus Says BCE's $3.4B Deal To Purchase Astral Media Is Anti-Competitive

08/14/2012 12:04 EDT | Updated 10/14/2012 05:12 EDT
AP
MONTREAL - Bell would have too much control of English-language TV content and consumers would end up with higher prices if the telecom company is allowed to buy Astral Media, telecommunications competitor Telus (TSX:T) says.

Bell could have a 49.5 per cent share of the English-language television audience with its purchase of Montreal-based Astral, along with its ownership in the Maple Leaf Sports and Entertainment TV assets, and its stake in joint venture assets such as Teletoon, Telus said Tuesday.

"The bottom line is more concentration equals fewer choices and prices go up," said Joe Natale, Telus's chief commercial officer.

"So half of the content in English Canada on the dial would be controlled, managed and dictated by BCE," he said from Toronto.

However, Bell (TSX:BCE) said Telus has over-estimated the potential English language audience with the inclusion of the MLSE TV assets — including Leafs TV, NBA and soccer channels — and put it at 33.5 per cent instead of almost half.

How much consumers will be charged is dictated by the cable companies, said Mirko Bibic, chief legal and regulatory officer for Bell.

"The wholesale price we charge to cable, all of that is regulated by the CRTC," Bibic said from Ottawa. "It's the cable companies that dictate their pricing and how services are packaged."

But Telus's Natale used the example of BCE's acquisition of the rest of the CTV assets it didn't already own, saying the fees to distribute TSN have already gone up.

"When you've got that kind of concentrated power you can do things like withhold evolution to certain channels and signals as a result."

Telus is backing a coalition comprised of Quebecor (TSX:QBR.B), Cogeco (TSX:CGO) and Eastlink and has filed a submission against the acquisition by BCE Inc. to the CRTC. The CRTC will hold hearings on BCE's $3.4-billion purchase of Astral starting on Sept. 10.

Natale said if the Canadian Radio-television and Telecommunications Commission doesn't block the acquisition, safeguards need to be put into place to ensure consumers have access to the content on not only their televisions but their smartphones, computers and tablets.

The deal also needs approval from the Competition Bureau of Canada.

Bibic said Bell's acquisition of the Astral media assets will provide more competition in Quebec's French-language market which is dominated by Quebecor.

"On the French-languge side competition is great for consumers and they will have better French language content than ever before and a real choice," Bibic said. "And on the English language side, we are going to continue to make phenomenal investments in programming."

Astral (TSX:ACM.A) owns radio stations as well as specialty channels and pay-TV networks, including The Movie Network and HBO Canada.

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

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 raise 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.

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