BCE steps headlong into media arena with purchase of CTV

Bell Canada Enterprises announced an agreement Friday to acquire full ownership of CTV Inc., putting the telco in a better position to use media assets to compete against vertically integrated players Rogers Communications Inc., Shaw Communications Inc. and Quebecor Media. BCE president and CEO George Cope told news media Friday that the deal levels the playing field between itself and its big competitors. “Acquiring CTV’s range of premier video content enhances Bell’s execution of our strategic imperatives by leveraging our significant broadband network investments, accelerating Bell’s video growth across all three screens—mobile, online and TV—and achieving a competitive cost structure,” Cope said in a release. He added that 100 per cent ownership of CTV will enable Bell to “maximize strategic and operating synergies with CTV, including the efficiency of our content and advertising spend.” CTV owns a network of 27 television stations and 30 specialty channels, including TSN and RDS, as well as 34 radio stations on the CHUM Radio network. The company also operates digital media platforms like CTV.ca and TSN.ca. “In today’s digital age, it is extremely important to be part of a vertically integrated company that can take advantage of video delivered on multiple screens,” Ivan Fecan, CEO of CTV, said in a release. “CTV has emerged stronger than ever from the recession, and is now perfectly positioned to take advantage of an improving economy. This is the right deal at the right time.” Bell currently has a 15 per cent share in CTV, and will spend $1.3 billion to acquire the remaining 85 per cent equity in the company. The total transaction, including the acquisition of shares, debt, and BCE’s existing equity, is valued at $3.2 billion. The transaction is not expected to close until sometime next year and will be subject to regulatory approval from the CRTC and the Competition Bureau. Through the transaction, BCE will not purchase CTVGlobemedia’s national newspaper, The Globe and Mail. Canada’s Thomson family will acquire a direct 85 per cent ownership stake in the Globe through its investment vehicle the Woodbridge Company Ltd., which is also the controlling shareholder in Thomson Reuters. BCE will continue to own a 15 per cent stake the Globe. In an interview on BNN Friday, Cope suggested that BCE did not also buy the Globe and Mail because the Thomson family wanted to own a significant share in the newspaper. Maher Yaghi, an analyst with Desjardins Securities, told BNN Friday that content assets are becoming more important for communications companies. “Having content on your cellphone is becoming a key differentiating factor,” he said, noting that Quebecor intends to push its content on its new wireless network. “BCE is following suit with this acquisition. It’s very much in line with what we’ve seen in the last year,” Yaghi said. The BCE agreement to purchase CTV follows on Shaw’s $2-billion agreement to purchase the broadcasting assets of Canwest Global Communications. Shaw also plans to launch a wireless network next year. “This is not going to be a holding company operation. This is going to be a 100 per cent owned subsidiary that’s going to be another division of Bell to execute our strategies,” Cope told BNN. “We generate more revenue from TV today than we do from home phone.” Peter Murdoch, vice-president of media for the Communications, Energy and Paperworkers Union (CEP), representing CTV and Globe and Mail employees, said in a release Friday that the CRTC should ensure that Bell’s acquisition of CTV benefits all Canadians. "In the emerging days of online broadcasting, there was a certain inevitability that these two media giants would set up a media box store,” Murdoch said. “The CRTC must now ensure, on behalf of consumers, that such massive media power will be used to benefit all Canadians in their news and entertainment programming.” Following the Friday’s announcement, Ivan Fecan, president and CEO of CTVglobemedia, said he will retire from the position soon after the agreement receives regulatory approval. “After meeting with George Cope, I promised to stay through the regulatory process and work with him to execute a seamless transition, all of which should be completed by next summer,” Fecan said in a note to CTV employees, issued in a release. “So I will probably be here for another year.” Fecan had originally planned to retire as CEO in 2012. In 2000, Jean Monty, then the CEO of Bell, made a bid to acquire CTV for $2.3 billion, creating Bell Globemedia with a controlling stake of 70 per cent. Bell set the stage for splitting up in 2005 when CEO Michael Sabia announced plans to sell off control of CTV to Woodbridge, the Ontario Teachers' Pension Plan and Torstar Corp., renaming the company CTVglobemedia. news@thewirereport.ca

BCE steps headlong into media arena with purchase of CTV

Broadcast | September 10, 2010

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