BCE chief executive George Cope said Friday the deal gives Bell important new content for online services and mobile devices like smartphones and tablet computers.
"It fits perfectly with what we are trying to do," Cope told a news conference in Montreal. "We believe TV everywhere is absolutely where the market is going."
Cope said Bell has 200,000 to 300,000 customers now watching its mobile TV services and wants to increase the numbers, as well as sell to its competitors.
The deal includes Astral's (TSX:ACM.A) radio and television stations across the country, but Cope stressed it's particularly important to make his company a media leader in Quebec where it competes with Quebecor (TSX:QBR.B) and the Canadian Broadcasting Corp.
"The coming together of Bell and Astral puts us now head-to-head with our competitors in the marketplace, be it Quebecor's Videotron and CBC," Cope said in a conference call with analysts to explain the deal.
Astral chief executive Ian Greenberg also said Bell will benefit from his company's Quebec assets, which include radio stations such as classic rock station CHOM FM in Montreal and in Saguenay and Quebec City, among others in the province.
"The reason why this acquisition made a lot of sense for Bell is to give them a large competitive position in Quebec," Greenberg told the news conference.
Astral-owned pay television channels include The Movie Network, which carries HBO and Showtime series, and Family Channel, which will allow Bell push that content across multiple devices to attract more customers and advertisers.
The deal follows a move by Bell in 2010 to buy the rest of the CTV assets it didn't already own in a bid to broadcast the network's programs not only on television but also on computers, tablets and smartphones, a strategy its competitors Rogers (TSX:RCI.B) and Quebecor Inc. are also pursuing.
Greenberg said consumers watching a program on The Movie Network or HBO Canada this fall will be able to view it on their TV set and also have the ability to switch it over to their computer, tablet or smartphone without missing any of the show.
"You've got to give consumers a way that they want to see their programming and on any platform that they want to see it," he said.
BCE also teamed up last year with Rogers on a $1.07-billion deal for Maple Leaf Sports & Entertainment, the company that owns the NHL's Maple Leafs, the NBA's Raptors and the Toronto FC soccer club.
Queen's University business professor Ken Wong said Bell realizes that consumers don't want to just buy a smartphone.
"What they really want is the content delivered on that device," Wong said.
"The more of that you control, the more attractive your device and service becomes to the consumer. There's more content and a greater ability to integrate it across platforms."
Wong said the deal isn't unlike the concentration of newspaper ownership.
"Certainly any time you get that kind of concentration, you have to worry about whether there will be anti-competitive aspects," Wong said.
Dwayne Winseck, a professor in Carleton University's School of Journalism and Communications, said the deal gives BCE more television content to push demand for bandwidth consumption on its networks.
"To be plowing all sorts of television content through cellphones and Internet connections, it's going to bring them a whole lot more revenue through the use of bandwidths," Winseck said.
The deal will require approval from the Canadian Radio-television and Telecommunications Commission and a face a review by the Competition Bureau.
Cope said he believed the deal would be viewed positively by the regulators.
"There will be some markets that have some CRTC regulations around how many radio stations you can own in market and we will look at those and co-operate fully with the CRTC if there are any issues to be dealt with," he said.
The federal Competition Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition.
"I can confirm that the bureau will be reviewing the proposed merger," spokesman Greg Scott said Friday.
"The goal of a merger review is to obtain the necessary evidence for careful analysis and consideration before making a conclusion as to whether a proposed merger is likely to result in a substantial prevention or lessening of competition in any relevant market."
Under the deal, Astral's class A non-voting shareholders will receive $50 per share, while the class B subordinate voting shareholders will receive $54.83 per share.
Shareholders will receive 75 per cent in cash and 25 per cent in stock.
Bell has agreed to pay Astral $150 million if the transaction does not close for regulatory reasons.
Astral's class A shares closed up 33.93 per cent or $12.30 at $48.55 Friday on the Toronto Stock Exchange in heavy volume of almost six million shares, while BCE stock closed down 42 cents, of 1.05 per cent, at $39.64 on volume of almost 6.7 million shares.
Astral is Canada's largest pay and specialty TV broadcaster and owns 84 radio stations in 50 Canadian markets and 24 television services. It is also the third-largest outdoor advertising company and has a stake in the country's only subscription radio service, XM-Sirius Canada.
"After 15 years as commercial partners, we know each other well and share many important values," Greenberg said. "The fit between our two companies is a natural and I look forward to seeing our brands become even stronger as part of the Bell family."
In terms of jobs, Cope said there would be some duplication, but was not specific about possible cuts.