04/08/2013 10:48 EDT | Updated 06/08/2013 05:12 EDT

Cogeco opposes revised Bell-Astral deal, saying it's not good for consumers

MONTREAL - Cogeco Cable Inc. is still opposed to BCE Inc. buying specialty broadcaster Astral Media despite changes to the deal, arguing that consumers will have higher costs and less choice.

Cogeco (TSX: CCA) said Monday that its reasons for being against the $3.38-billion deal haven't changed.

"Canadian consumers of television entertainment can only expect rising costs for their viewing options on fixed and mobile platforms, more forced packaging of BCE services and less choice in the selection of services they actually wish to use," the company said in a news release.

The CRTC will hold hearings in May to consider Bell's revised application after Montreal-based Astral agreed to sell some of its television assets to make the deal more acceptable.

The Canadian Radio-television and Telecommunications Commission killed the deal last fall, saying it wasn't in the best interests of Canadians.

Cogeco said if the deal is approved, it would still give an already dominant BCE (TSX:BCE) too large a share of the broadcasting market.

"It would be excessively complex, burdensome, costly and ineffective in the end to try to discipline Bell's overwhelming market power through regulatory measures whether from the Competition Bureau or from the CRTC," Cogeco said in a news release.

Last year, Cogeco formed a coalition with Quebecor Inc. (TSX:QBR.B) and cable company Eastlink to block the deal.

However, the Competition Bureau has given its OK for Corus Entertainment Inc. (TSX:CJR.B) to buy the remaining half of Teletoon and other specialty TV interests from Astral (TSX:ACM.A).

The sale of those assets was a condition of the Competition Bureau's approval of Astral's takeover by BCE Inc.

BCE has said it wants to buy Astral, which owns specialty channels including the Movie Network, to use its content on traditional TV sets and on smartphones, tablets and personal computers and to help it compete against online service Netflix.

The Public Interest Advocacy Centre said it also remains against the revised Bell-Astral deal.

Bell would have enough content to sell to make its competitors' cable packages larger and more similar, said John Lawford, executive director and general counsel of the consumer advocacy group.

As a result, there would be no pressure for prices to come down, Lawford said from Ottawa.

"Price is related to choice," he said.

Ryerson University's Suanne Kelman said Cogeco is portraying itself as the underdog.

"The real underdog here is the consumer," said Kelman, associate chair at Ryerson's School of Journalism in Toronto.

She said she shares some of Cogeco's objections to the deal, but noted there aren't many buyers in Canada.

"Would it make things better if Cogeco or Quebecor bought some of these assets? We restrict foreign ownership and we just don't have enough players," Kelman said.

"If this stuff were redistributed and they all shared it equally, would it make any difference to us as consumers? No, it would not."

BCE said it was looking forward to the CRTC hearings to show how Bell and Astral will provide more choice, competition and more new Canadian content.

"Astral and Bell Media are talking about how much new investment and innovation we plan for Canadian broadcasting." said Bell Media spokesman Jason Laszlo.

"Meanwhile cablecos like Cogeco are basically demanding the regulator protect their profit margins — which at about 50 per cent are actually already the highest in the North American cable industry," he said in an email.

Cogeco also noted the Canadian broadcasting market is highly concentrated among four players, BCE, Shaw (TSX:SJR.B), Rogers Communications (TSX:RCI.B) and Quebecor.

The proposed sale of some of Astral's assets wouldn't decrease the level of concentration in the Canadian market and would further increase the market dominance of BCE and Shaw, which owns Corus, Cogeco said.