POLITICS

CRTC approves Bell's proposed $3.4-billion takeover of Astral Media

06/27/2013 10:18 EDT | Updated 08/27/2013 05:12 EDT
GATINEAU, Que. - Canada's communications regulator cleared the way for the country's newest telecom colossus Thursday, approving Bell's retooled $3.4-billion bid for Astral Media and its coveted TV specialty channels and radio stations.

Bell's original bid for Astral (TSX:ACM.A) was rejected by the Canadian Radio-television and Telecommunications Commission last fall on the grounds that it wasn't in the best interests of Canadians.

But the regulator said the revised bid, in which Bell (TSX:BCE) agreed to sell some of Astral's specialty TV channels and radio stations, satisfied its concerns that the company would be too dominant in the market.

"I would like to emphasize that the CRTC's approval of this transaction, with the measures we have imposed, is in the public interest," said CRTC chairman Jean-Pierre Blais.

"It serves the objectives set out by Parliament in the Broadcasting Act for the Canadian broadcasting system."

Bell had no immediate comment on the decision.

"We're assessing the details of the CRTC's decision, and will issue a detailed statement before markets open tomorrow," spokeswoman Jacqueline Michelis said in an email.

Bell's parent company, BCE Inc., has said it wants to buy Astral to put its content across traditional TV, computers, smartphones and tablets. Astral's English pay TV service, The Movie Network, and French-language pay TV service Super Ecran would be key providers of shows and movies.

Bell is trying to compete with the online streaming service Netflix — which has more than one million Canadian customers who pay for its offering of television shows and movies — and YouTube, which launched its pay channels last month.

However, Bell's competitors — notably Rogers Communications (TSX:RCI.B), Quebecor (TSX:QBR.B), Telus (TSX:T), Cogeco Cable (TSX:CCA) and Eastlink — voiced their concerns during CRTC hearings earlier this year about getting deals for content on digital platforms if the Bell-Astral deal went ahead.

Rogers also asked the CRTC to force Bell to sell The Movie Network as a condition of approving the revised deal, saying it would take a look at buying the pay TV service itself. But Bell threatened to drop its offer if forced to sell The Movie Network because that would cripple the strategy behind the bid.

"We thought that it would play out roughly the way it has. Not everybody gets everything they want," said Rogers executive Phil Lind.

"But the commission has decided, so we're going to play by the rules that have to be played by."

Cogeco issued a statement expressing disappointment with the decision.

"While disappointed, we accept and respect the decision," said Louis Audet, Cogeco's CEO.

The Public Interest Advocacy Centre, which acted as counsel for a number of consumer groups and opposed the bid, said it too was disappointed by the CRTC's decision.

"Canada will now have an unprecedented level of media concentration and vertical integration and a weaker diversity of voices with the loss of Astral, a strong independent broadcaster," Janet Lo, a lawyer for the advocacy group, said in a statement.

"Consumers should brace themselves for less competition for television services — and consumers will not only pay the price but they will face less choice and flexibility in the market."

As a condition of the CRTC's approval of the deal, Bell must sell a number of Astral's English and French specialty TV channels, including the Cartoon Network, Disney DX and Teletoon, along with some of its English-language radio stations.

Bell must also keep a number of English-language TV stations in operation for at least four more years.

When the deal is finalized, Bell's share of the English-language market will grow to 35.8 per cent, while its share of the French-language market will be 22.6 per cent.

Bell must adhere to the CRTC's code of conduct for commercial arrangements that limit anti-competitive behaviour and treat independent programmers and distributors fairly, the CRTC said.

Bell must also give its competitors "reasonable access" to advertising opportunities on its radio stations.

The CRTC is also requiring Bell to spend $246.9 million on "tangible benefits" over the next seven years — $72 million more than the company proposed.

Some of those tangible benefits include paying for initiatives in the radio and television sectors that are meant to create more Canadian programming, and spending on Canadian films and festivals to promote them.