Bell makes final pitch to CRTC on why it should be allowed to buy Astral Media
BCE CEO George Cope, left, speaks with Astral Media president and CEO Ian Greenberg in Montreal on Monday, Sept. 10, 2012, on the opening day of the CRTC hearings into the proposed acquisition of Astral by Bell. (The Canadian Press/Graham Hughes)
Published Friday, September 14, 2012 4:06PM EDT
MONTREAL--Telecom giant Bell has made its final pitch to the CRTC on why it should be allowed to buy Astral Media, saying it must increase its size to compete against foreign competitors like Netflix.
If the $3.4-billion deal is shot down Astral will break up, guaranteeing the continued foreign dominance in all forms of online content delivery, CEO George Cope told a hearing Friday.
"Canada should not have to wait any longer to deploy a viable, national multi-platform solution, backed by a company with the resources to compete against well-funded global competitors," he said.
If the acquisition is approved, Bell will have even more content from Astral's pay TV services and radio stations to put on TVs, computers, smartphones and tablets.
Bell bought the rest of the CTV assets it didn't already own in 2010 to put more programming across the four screens.
Several competitors have made submissions to the CRTC opposing the deal, arguing Bell would have too much control over the TV viewing market.
Cope played down potential dominance of Bell would have.
"As we've made clear, Bell's share of English language TV viewing will be 33.5 per cent following the Astral-Bell transaction," Cope said.
That's under the 35 per cent threshold set by the CRTC.
Astral CEO Ian Greenberg says Canada needs its own online TV and movie service to compete with Netflix and the merger of the two companies would allow that.
Greenberg adds that competition won't disappear because of the transaction and independent players will continue to emerge.
Earlier Friday, several small TV, film and media companies spoke up in favour of Bell's takeover of Astral, saying bigger is better to compete with online entertainment companies like Netflix and to get Canadian content a bigger audience.
Bringing together Bell and Astral, which has specialty TV services and radio stations, will only strengthen the Canadian broadcast system on all platforms, said John Brunton, chief executive and chairman of Insight Production Company Ltd.
"Services like Netflix, Apple TV, YouTube, Google, Facebook--the list goes on--are just the tip of the iceberg of what we're going to face in the next few years," Brunton told a CRTC hearing reviewing the deal on Friday.
"I truly believe that our American counterparts will continue to find ways of dealing directly with Canadian consumers, which will eliminate Canadian companies in the process. The bigger and stronger our media companies are, the more likely our production community will thrive and prosper, in my opinion," Brunton said.
Insight Production Company produces "Canada's Got Talent," "Canadian Idol, "Big Brother Canada," "Canada Sings," "Intervention Canada" and "Top Chef Canada."
Brunton said he has produced 1,201 hours of programming with CTV and its associated specialty channels, which Bell owns.
"BCE promotes creative and innovation. That's been our experience."
The Canadian Association of Film Distributors and Exporters said it also supports the deal because it will provide new opportunities to promote Canadian films and reach larger audiences.
Association president Ted East said Bell's announcement of a new service to compete with online Netflix will provide a platform for Canadian movies.
"Having Bell Media as an enthusiastic supporter of Canadian feature films will be a critical component in their success in the decade ahead," East said.
Small independent broadcaster Blue Ant Media gave its conditional support to the acquisition by Bell.
Toronto-based Blue Ant said Canada's broadcasting system needs large, powerful media companies and also needs independent broadcasters "who feed the soil that allow the big players to grow."
"We are here today to voice our support for the acquisition being considered, and to remind you that this is only half of the equation," said Raja Khanna, head of Television and Digital at Blue Ant Media.
However, Blue Ant said the current code of conduct that industry players are supposed to follow is ineffective and doesn't stop Bell from abusing its market power as a dominant media company. Blue Ant said it wants the CRTC to redraft the code under broadcast distribution regulations to give it heft.
But a small association of cable TV distributors spoke against the deal.
The Canadian Cable Systems Alliance told the CRTC that Bell will have too much control over programming if it's allowed to buy Astral Media and suggested that consumers will pay the price if competition is reduced.
"This transaction would give Bell control over the marquee programming content, both English and French, that is available to Canadian consumers," said Alyson Townsend, president and CEO of the Canadian Cable Systems Alliance Inc.
An Ontario member of the cable alliance told the CRTC that it's required under a new Bell contract to distribute sports channel TSN--one of the specialty channels owned by Bell's affiliate CTV Inc.--in its basic cable package.
The contract pushes up the cable operator's wholesale costs and will force it to increase monthly fees for about half of its customers by about 10 per cent, said Glenn Baxter of Nor-Del Cablevision.
Baxter said Nor-Del Cablevision in Norwich, Ont., southeast of London, said he has 2,173 customers in five small, rural communities with many of his customers being seniors.
Townsend also said Bell does not need to own Astral to compete with online TV and movie distributor Netflix, which provides what the industry refers to an "over the top" service.
Townsend asked rhetorically what the Bell-Astral deal is really about and why is it happening now?
"The real answers to those questions have more to do with cutting Bell's own programming expenses and driving competitors out of the distribution business than standing up to foreign OTT (over the top) services," Townsend said, referring to Netflix, Apple TV and others.
There has been a long list of companies and groups that have come out against the proposed acquisition of Astral, a friendly deal valued at about $3.4 billion when it was announced March 16.
BCE Inc. owns Bell Canada, the CTV television network, the former CHUM radio stations and numerous specialty TV channels, as well as online sites for them all. Astral owns dozens of radio stations, specialty channels and an outdoor advertising business that includes billboards.
Bell has countered its critics by saying it needs to be large enough to compete with global companies, especially in newer digital forms of media that relay content to mobile phones, tablets and other devices.
It announced at the open of this week's hearings that Astral would enable it to create a competitor to the U.S.-based Netflix online video service, which delivers movies and television programs for a monthly subscription fee.
The Astral deal would continue a years-long trend of increasingly concentrated ownership of Canadian media companies.
Rogers (TSX:RCI.B), Quebecor (TSX:QBR.B) and Cogeco Inc. (TSX:GCO) have come out against the deal, while Calgary's Shaw Communications (TSX:SJR.B) supports it.