Quebecor convergence plan trumps Bell’s, analyst says

Following Videotron Ltd.’s wireless launch and BCE Inc.’s plans to acquire CTV Inc., industry observers say it’s clear convergence is back in vogue—but Bell’s version of convergence may be “a poor facsimile” of Videotron’s, Iain Grant, a communications industry analyst with the SeaBoard Group, told The Wire Report. On Sept. 9, Videotron launched its mobile wireless network, the fourth leg of its quadruple-play strategy, which includes television, home phone, Internet and wireless service. Via television network TVA, Videotron’s sister company under parent Quebecor Media Inc., the new wireless service will also offer access to 1,000 hours of free video content, including 2,000 TV programs, 28 channels (10 of which are live) and 45 music channels. Then, on Sept. 10, BCE announced an agreement to acquire its remaining equity in national TV and radio broadcaster CTV for $1.3 billion, bringing Bell into the ranks of converged, vertically integrated content distributors like Rogers Communications Inc., Shaw Communications Inc., and Quebecor. Quebecor and Bell’s strategies, along with Shaw’s acquisition of Canwest Global Communications Corp.’s broadcasting assets this year, suggest the Canadian communications industry sees convergence as the trend going forward. But not all convergence plans are created equal. Grant said CTV doesn’t give Bell nearly as much clout as TVA gives Videotron. Grant said that while CTV largely features American programs available on other networks and Internet portals, TVA’s content is targeted. “They have a poor facsimile of what TVA has,” he said of Bell. “TVA tends to make most of its own programming. It’s about Quebec. It’s written about Quebecers. It stars Quebecers ... and it’s in French ... This is all about what content really is.” In a conference call with financial analysts, BCE president and CEO George Cope said revenues from mobile content are expected to increase substantially. The CTV acquisition puts Bell on an even playing field with competitors like Rogers, Shaw and Quebecor, he said. “Video ... is going to be an integral part of Bell’s product offering,” Cope said. Cope said CTV will give Bell access to unique content across all of its network services, including TV, Internet and mobile, through its numerous specialty channels, including sports networks TSN and RDS, the Discovery Channel, and BNN. Today it’s a different world for communications companies, Cope said. These days, competitors are scooping up content providers, making it all the more difficult for BCE to acquire content for its network services. The company is fed up with having to pay its competitors for access to TV programs, he said. “The industry is finally ready to deliver on what has up until now been largely an empty promise,” Carmi Levy, an independent technology analyst, said in an interview. BCE has already lived out its own convergence failure. In 2000, the company acquired CTV, combining it with The Globe and Mail national newspaper to create Bell Globemedia Inc. But Bell struggled to attain the higher profits it expected from the combination of its various divisions, and in 2005, the company sold most of its stake in Bell Globemedia. But the outcome may be different this time around. “Broadband adoption is significantly more widespread now than it was during the industry’s first attempt to drive convergence in the 1990s,” Levy said. “Similarly, the wireless market has exploded thanks to the availability of evermore capable smart phones and wireless networks that support them. True convergence, defined as seamless availability of content across multiple platforms and devices, is only now starting to come into its own thanks to near-universal availability of advanced devices and wireline and wireless networks.” In a research note published Monday, Desjardins Securities analyst Maher Yaghi said BCE is paying a fair price for CTV, and that the deal “ensures BCE will not be left behind as content and distribution continue to converge.” Yaghi said rival communications service provider Telus Corp., which hasn’t announced a major content-provider acquisition, “may face a strategic disadvantage in the long term.” (Other analysts have said Telus should not focus on acquiring content). But both Bell and Telus might have a leg up on Videotron in one respect: Bell and Telus offer Apple Inc.’s popular iPhone; Videotron doesn’t. Reports indicate that Apple has not yet developed a version that will work on Videotron’s AWS networks, although one may be in the works. Videotron spokeswoman Elodie Girardin-Lajoie told The Wire Report that due to competitive reasons and confidentiality agreements the company cannot say when it will offer the device. But offering the device might not be all that important, Levy said. “A carrier with a ... strong focus on delivering mobile services and rate plans stands a better chance of winning and keeping customers than an iPhone or Torch-carrying vendor that falls flat on the service and rate-plan front.” news@thewirereport.ca

Quebecor convergence plan trumps Bell’s, analyst says

Broadcast | September 16, 2010

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