BCE Buys Astral Media Round Two

Blog, Disruption, Roland Renner

As expected, BCE has filed its second application to the CRTC to take over Astral Media, one of Canada’s largest owners of radio and television stations, pay TV and specialty channels.  BCE already owns a great deal of content through Bell Media.  This was the biggest concern over the first version of the proposed acquisition that was denied by the Commission after a major hearing last year.    There are established rules about concentration of ownership in the media and the Commission’s opinion was that the first Bell deal would have exceeded the thresholds.

There was a difference of opinion, Bell claiming that the original application was within the stated thresholds but, to make a long story short, no one else agreed that the Bell way of calculating the numbers was the right way.  Both competitors and the production sector lined up to complain that the deal would reduce diversity in the sector.  By “closing another door”, a term used repeatedly by opponents of the deal, there would be one less buyer for the production sector.  In this case the “door” belongs to Astral Media, a company with a long reputation of being good at content.  BCE has been in and out of the content business a couple of times now swinging from an acquisition strategy to participate in convergence of content and distribution sectors, and then selling the acquisitions again to look after their core business.  The production sector fears a corporate culture clash with Bell and a buyer that is so big it does not have to negotiate.

The second deal involves selling some tv and radio stations and specialty channels in both English and French markets.  This reduces the degree of market concentration below threshold targets set out in existing policies.  The second thing they dropped was giving $40 to Northwestel (which Bell owns) as part of the tangible benefits Bell is required to deliver to the system as part of an acquisition.  The new tangible benefits package now falls within the rules.  You are not supposed to give the money to yourself, to pick just one problem with the original benefits package.  Based on these changes and other smaller ones, I think it will be difficult for the Commission to come up with anything but an approval.

One interesting aspect of the BCE content acquisition strategy is that it is completely different from the Telus strategy.  Telus has not participated in buying up pieces of the content sector.  I will explore this difference in the next blog.

N.B.  The author represented Ice Wireless, a competitor of Northwestel in the first BCE Astral acquisition proceeding.