POLITICS

Rogers shoots down Bell's Netflix idea, saying TV providers already competing

09/12/2012 04:00 EDT | Updated 11/11/2012 05:12 EST
MONTREAL - TV providers are already launching on-demand services to compete with Netflix, says Rogers Communications, which argued Wednesday against Bell's testimony that buying Astral Media will help provide a Canadian alternative to foreign online companies.

"This notion that Bell plus Astral is the scale that we need to defeat Netflix in Canada is one that we find absurd," Ken Engelhart, senior vice-president of regulatory at Rogers (TSX:RCI.B) told a CRTC hearing into Bell's $3.4-billion deal to buy Montreal-based Astral.

Bell told the CRTC earlier this week it will launch a "made-in-Canada'' competitor to Netflix and other big U.S. online TV and entertainment providers, as part of its pitch to buy Astral.

But Engelhart said cable companies in Canada and around North America are already buying rights to libraries of television shows and movies in order to compete with Netflix — making Bell's offer just one of many.

"So this is not a terribly startling development and it's not some secret formula or secret sauce that Bell has that no one else has," he added.

Engelhart said Netflix —which offers unlimited viewing of their library at a set monthly rate — took off because it provided content that no one else had, allowing viewers to "binge," or watch numerous episodes of shows they missed.

But he said Rogers Anyplace TV is a type of Netflix competitor already, adding that cable and broadcast companies in the United States are now outbidding Netflix for content.

Through Rogers on-demand service, customers can watch recent episodes of television shows for free, but pay to watch a movie.

U.S. cable company Comcast has launched Streampix to compete with Netflix, and Shaw Communications (TSX:SJR.B) has a launched an on-demand movie club to compete. Rogers said at least two other major Canadian TV providers are considering launching their own services, similar to Netflix.

"Bell will not be unique or exclusive in this marketplace," said David Purdy, senior vice-president of content at Rogers.

"They will be unique if they've used it for some justification for a transaction like this," Purdy said.

Bell's service would be available on demand on any device, and showcase Canadian and international movies from Astral's pay TV services, such as HBO Canada and The Movie Network, as well as news, sports and entertainment content from Bell Media.

The CRTC is in its third day of hearings into whether telecom giant Bell (TSX:BCE) should be allowed to forge the deal that would make it even larger.

Bell's parent BCE Inc. already owns the CTV television network and former Chum radio group as well as their extensive list of specialty television channels and Bell Canada, the country's largest telecom company.

Rogers also said it's opposed to the deal unless the CRTC forces Bell to get rid of Astral's English specialty channels, such as The Movie Network, HBO Canada, and Family Channel.

It may be interested in Astral's English-language TV channels, but "we would be perfectly fine with someone else buying those assets," Engelhart told reporters after his remarks.

Rogers told the CRTC that it has had problems getting access to Bell's TV content for its services, a "stark contract to our relationship with Astral over the last decade."

Cogeco, Canada's fourth-largest cable TV company, said the deal will make Bell too big with too much power, calling it a "mega transaction."

"Quebec and Canadian consumers are not fooled. They understand very well that there will actually be less competition if this mega transaction were to be approved and how much it will cost them down the line," said Louis Audet, chief executive of Cogeco Inc. (TSX:CCA).

One of Canada's largest media unions also sounded warnings about the deal, which would add to Bell's extensive radio and television business.

The Communications, Energy and Paperworkers Union of Canada told the federal regulator on Wednesday that media concentration in Canada has had troubling consequences.

"Apart from chilling diversity and neutering competition, concentrated media ownership has reduced employment opportunities in content creation," said union vice-president Peter Murdoch.

He added that if the Canadian Radio-television and Telecommunications Commission does approve the deal it should ensure that Bell strengthens original, local broadcast news with a $43.5 million investment.

The union also says that since 2008, CTV has cut its TV staff by 24 per cent, including 233 people since BCE acquired CTV in 2000. Astral has cut its radio news spending by eight per cent since 2008, Murdoch added.

A few years ago, Rogers was able to acquire several Citytv conventional television stations — including its flagship station in Toronto — that BCE had wanted when it bought Chum Ltd. several years ago. The CRTC ruled that BCE would have to divest the Citytv stations in order to get approval for the larger Chum deal.

Bell has said that with the acquisition of Astral, it will own 33.5 per cent of the English language TV viewing market and 24.4 per cent of the French-language market.

Meanwhile, the ACTRA union, which represents performers across Canada, supported the deal — with conditions.

Union president Ferne Downey said ACTRA is relying on the CRTC to make sure Bell doesn't own more than 35 per cent of the English market so that strong, competitive Canadian media companies can continue to emerge.

"If you do that, we are prepared to support this transaction," she said. "But not without hesitation."

Telus (TSX:T), which has already voiced opposition to the deal, is slated to testify Thursday morning.