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article imageCRTC rejects BCE $3.4 billion deal to take over Astral Media

By Ken Hanly     Oct 18, 2012 in Business
Ottawa - The Canadian Radio-television and Telecommunications Commission rejected the Bell $3.4 billion deal to buy Astral Media. The Canadian regulatory commission claims that the deal would give BCE too much market power and threaten competition in the media.
The CRTC rejected the proposed deal unconditionally. Many analysts thought that the deal would go through but with conditions attached.
Jean-Pierre Blais, chair of the CRTC said:"BCE failed to persuade us that the deal would benefit Canadians. It would have placed significant market power in the hands of one of the country’s largest media companies. We could not have ensured a robust Canadian broadcasting system without imposing extensive and intrusive safeguards, which would have been to the detriment of the entire industry."
The proposed deal was one of the largest takeovers ever sent to the CRTC. It was also the first major decision for newly installed commissioner Blais. If the deal had been approved, BCE would have owned 107 radio stations, two national television networks and 49 pay channels as well. Its share of the English TV sector would have been a whopping 42 percent. In the radio sector, BCE would have 25 per cent of revenues. It would be larger than the next two biggest competitors together.
Blais noted that BCE had not made any commitments to local programming or local artists, activities the CRTC would like to see promoted. In TV, BCE would have had about 45% of viewing share in English, and 35% in French.
The CRTC was concerned that BCE would have even more influence in negotiating its share of must-carry services with distributors. The CRTC also thought that BCE would increase its presence in premium content containing exclusive and/or live programs that would be unavailable elsewhere. The CRTC said that BCE did not show that it needed to be larger to compete with foreign services.
Competitor Rogers, which had opposed the deal, commended what it called the courageous decision of the CRTC. Gavin Graham of Graham Investment Strategies said:“I was very surprised. The expectation here was fairly widespread they would approve it with some restrictions.”
Although competitors Rogers, Telus, and Quebecor had all joined in opposing the deal, Calgary-based Shaw Cable was for it. Shaw president, Peter Bisonnette said the real threat in Canada is not large Canadian players such as BCE would be, but online services such as Netflix and Apple TV. He said:"We urge the commission to support our efforts to respond to the real competitive threat to the system — unregulated, foreign (over the top services) like Apple, Google, Amazon and Netflix."
BCE has 30 days to appeal the ruling to the Federal Court of Appeal. As an alternative, BCE could change the proposal and apply again for approval.
More about Crtc, BCE, Astral Media, Acquisition, Media
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