By Greg O’Brien
MONTREAL – One wants the Bell deal to purchase Astral stopped, the other doesn’t – but in the end, independent cable group CCSA and Independent Broadcaster Blue Ant both say Bell is big enough to need to be held back.
Up first on Friday morning, the Canadian Cable Systems Alliance demonstrated directly how, in its view, the existing market power of Bell Canada (without Astral) negatively impacts the price and availability of choice available to its member companies’ customers. The CCSA represents independent distributors who collectively serve about 750,000 Canadians and is worried the addition of Astral Media to Bell Media’s stable of assets will make a bad situation worse.
“Bell says that this transaction would ‘provide more and better viewing choices’ and that it would ‘keep prices in check’,” said CCSA president and CEO Alyson Townsend. “Our experience with Bell has been just the opposite. Consumers’ viewing choices have been restricted more than ever before and prices have increased dramatically.”
Townsend also noted that CCSA had earlier this year agreed in writing with Astral Media on terms for a new carriage agreement for the company’s pay and specialty channels but when the announcement came that Bell had purchased the company, the CCSA couldn’t get Astral to sign off on the deal. “Last month, CCSA was presented with new restrictive packaging terms reflecting the same restrictions required by Bell in their contracts,” she said.
The CCSA brought along two representatives from member companies as well, Glenn Baxter of Nor-Del Cablevision (Norwich, Ont,) and Stephane Arseneau of Co-Operative Cablodistribution de l’Arriere Pays (Charlesbourg, Que.) to give some examples how they dislike dealing with Bell.
Nor-Del serves just under 2,200 cable subscribers and used to distribute TSN in three digital theme packages, which meant TSN had just 53% penetration with its customer base. The new contract recently settled on via a contentious final offer arbitration proceeding with the CRTC doesn’t allow Nor-Del to package TSN in the same fashion. “Bell’s new contract prohibits distribution of TSN unless the package has very high set penetration levels. Nor-Del has no discretionary tiers that satisfy the new penetration requirement,” said Baxter.
“Because of that, the new contract forces us to distribute TSN to all of our subscribers, on the basic service, That means our customers who had not chosen one of our theme packs with TSN – that’s almost half of our customers – will now have to take TSN and will pay 10% more than they paid before just to cover the TSN wholesale rate.”
During questioning, Commissioner Peter Menzies summarized Baxter’s point by saying the customers who didn’t want TSN “now have to subsidize those who do want it,” to the nodding heads of the CCSA representatives. Menzies then noted that making people pay more for basic cable doesn’t really help those in the regulated system compete against OTT video providers – whereas Bell has said it must be bigger in order to compete with the growing list of over-the-top providers.
CCSA’s consultant Harris Boyd went a step further, noting that when Bell came to the market with its satellite TV product in the late 1990s, when it had no programming assets, their offer to customers was all about flexibility, complete with free equipment, an all-digital experience and various theme packs – things few cable companies then could match. “Now, they have just three packages; good, better and best,” said Boyd. “They are no longer interested in consumer choice… it looks like the old analog cable packaging.”
“As the new Bell Media contract takes effect with our members, rural Canadians will be seeing their cable bills go up and their content choices diminish,” added Townsend. “Approval of this acquisition will likely double that impact.”
THE CCSA SAYS THE CODE of conduct within the Vertical Integration policy created last year is not working. Blue Ant Media agrees, adding it sorely needs strengthening and as long as those rules are bulked, Bell need not be denied its purchase of Astral.
Blue Ant is the creation of former Alliance Atlantis CEO Michael MacMillan and owns a slate of specialty channels including Travel+Escape, Bite, Aux, and the former High Fidelity HDTV channels. It’s also agreed to buy Bold from CBC, pending approval.
“The Canadian broadcasting ecosystem needs a variety of organisms in order to sustain itself. It needs large, powerful media companies who engage in transactions like the one before you today and it needs vibrant independent broadcasters who feed the soil that allow the big players to grow,” said Blue Ant’s CEO of television and digital, Raja Khanna.
Despite its support of Bell-Astral, Blue Ant made clear its concerns over the Commission’s vertical integration policy and its need for stronger terms. “This hearing must be seized upon by the Commission as a vehicle to do three things,” said Blue Ant’s EVP business and legal affairs, Asha Daniere.
“1) ensure the code of conduct which emerged from the vertical integration hearing last year is structured so as to actually have some influence over negotiations between independents and vertically integrated BDUs; 2) issue a clear statement in its decision on this hearing that the growth of large, integrated undertakings must not come at the expense of independent broadcasters… and 3) determine that the license renewal process to be undertaken in the coming months will be done in the context of a policy review to ensure the continued vibrancy of the independent broadcast sector.”
Blue Ant executives noted there are substantial protections in place for independent BDUs and small wireless companies – and that independent broadcasters need more help than the voluntary code in the VI regulations (a code which the CCSA’s Boyd characterized as: “A voluntary code that people voluntarily don’t follow is not the strongest way to deal with this”).
“As well as approving this application, the Commission has the opportunity to consider the need for a competitive ecosystem where more than one species exists,” said MacMillan. “You have the opportunity to set the conditions for a continued healthy, innovative, truly competitive consumer-friendly marketplace.”
Bell Canada executives were back in front of the CRTC panel Friday afternoon to end the public hearing and our coverage of that somewhat contentious appearance will be posted soon.