BCE Acquisition of Astral Media Round 2 Part 3 – Telus Strategy vs BCE Strategy

Blog, Disruption, Roland Renner

In the debate over whether or not BCE’s second proposed acquisition of Astral Media is a good thing or not, one of the interesting aspects is the difference in fundamental business strategy between Telus and BCE.  Both are telco incumbents in their ancestral home territories (For Telus, most of BC and Alberta; for BCE, most of Ontario and Quebec).  Both are competitors in the opposition’s old home territory.  Telus entered a new market of roughly 25 million people and BCE entered a new market of 8 million people.  Telus got the better deal on that in terms of growth potential.

The stock market loves both, Telus somewhat more so.  George Cope, who originally led new wireless entrant Clearnet to success and acquisition by Telus, has been president of both and currently heads BCE.  Bell and Telus also share infrastructure for their cell phone networks, which has led to speculation about an eventual merger.

On a side note, it was Clearnet that launched the brand image and advertising campaign using lizards and frogs and other small animals and lots of green.  Telus still uses it.  Another example of the creativity of new competitors.

BCE is now well into its second round of convergence, the merging of industries that had previously been made up of different entities.  Under Jean Monty, BCE bought CTV and other broadcasting properties.  Under Mario Sabia, they reversed course and moved back to their core business, selling CTV in the process.  Then they reversed course again and bought CTV a second time.  The acquisition of Astral Media is an extension of that strategy, potential putting them into the range of ownership concentration that raises the concerns regulators.

Telus, meanwhile, has not bought into broadcasting or production businesses.  It has gone no farther than launching Optik TV, a Broadcasting Distribution Undertaking (BDU) in regulatory terminology, to compete with the cable and Direct to Home satellite companies in video distribution.  Telus has repeatedly stated that it has no intention of buying up broadcasting and production properties.  That leaves it the only one of the majors (BCE, Telus, Rogers, Shaw, Quebecor) that has not gone in that direction.

Given BCE’s history in the content business, the Telus strategy has a lot going for it.