By Sue Tolusso
OTTAWA-GATINEAU - In a surprise move that aims to preserve competition in Canada’s Internet, broadcast and telecom markets, the CRTC said Thursday it is denying Bell Canada’s request to buy Astral Media for a proposed purchase price of $3.38 billion. The decision, which the Commission says is in the best interests of the Canadian public, comes a little over a month after the five-day Montreal hearing, which concluded in mid-September.
The Commission is also denying the application from Bell’s parent company, BCE, to convert CKGM Montreal from an English to a French-language station. BCE had only wanted to convert the station if its application to buy Astral Media was approved.
Bell had sought control of Astral’s 84 radio stations and 20 pay and specialty channels, which serve both French and English audiences. Astral also operates two conventional English-language TV stations, both of which are CBC affiliates. Bell is currently the largest Internet provider in Canada, the second-largest wireless service provider and the third-largest TV distributor. It operates the CTV and CTV Two conventional television networks, owns 29 discretionary TV services and 33 radio stations across Canada. The Commission believes Bell is big enough.
CRTC Chairman Jean-Pierre Blais, who has only been leading the regulator since June 18, 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 statement from the chairman reflects a theme he revisited many times during the hearing, where he asked every presenter why the proposed deal would benefit or harm Canadians.
Bell’s proposed package of benefits would have totalled $241.3 million, including $180.5 million in television benefits with special focus on independent production of French-language content.
According to figures provided by the CRTC, Bell currently has a 33.7% share of the English-language TV market. If Bell and Astral had been combined, and if the regulator included Astral’s joint ventures, that share would have risen to almost 43%. If Astral’s joint ventures are included, the takeover would have given Bell a 33.1% share of the French-language TV market.
CRTC figures indicate Shaw controls almost 22% of the English-language market, with Corus Entertainment controlling 10.4%, CBC/SRC at 9.4% and Rogers at 8.7% In the French-language market, Quebecor currently has a 30.5% share, with CBC/SRC at 18.3%, other groups at 16.4% and Remstar at 7.7%.
The decision indicates that BCE’s English-language market share would be too high, providing “an unprecedented amount of total revenues and viewing” and an increasing BCE’s “already significant share of Category A discretionary services...and considerable negotiating power with other distributors.” This has been a sore point with content providers for some time, as obvious at the September hearing.
Fifteen years have passed since the CRTC has outright denied a proposed takeover, according to CRTC staff. In 1997, the CRTC denied Videotron’s application to acquire both Montreal-based services CFCF and TQS.
This decision flies in the face of an approval of the takeover from the Quebec Superior Court as of last May 25. It also means the Competition Bureau, which has not yet ruled on the proposed acquisition, may not have to proceed to a decision.
In short, said Blais during a short press conference after te decision's release, "This was not a good deal for Canadians."
BCE has 30 days to appeal to the Federal Court of Canada.