BCE’s tangible benefits proposal prompts sea of interventions

BCE Inc.’s public benefits proposal as part of its acquisition of CTVglobemedia Inc. is “self-serving” and doesn’t benefit Canadian broadcasters, industry players and advocacy groups say. “Our concern is that quite a bit of the benefits policy is doing things that are self-serving, that are in ’s business interests to do anyway. The intention of the public benefits policy is to do something for the audio-visual system that creates new benefits,” Ian Morrison, spokesman for watchdog group the Friends of Canadian Broadcasting, said in an interview. “It’s all about technological advancements that they would or should be making anyway.” Tuesday marked the deadline for interventions on BCE’s application to acquire control of CTV for $3.2 billion. The CRTC received 547 interventions representing both sides of the debate. The commission generally requires that 10 per cent of broadcasting transactions be paid out as “tangible benefits” to support the Canadian broadcast industry. BCE’s first tangible benefits application did not offer to pay any new tangible benefits into the broadcasting system. But BCE submitted a second proposal on Dec. 3 outlining a benefits program totaling $220.8-million over seven years. BCE's proposed package includes expanding its satellite carriage of local stations in non-mandatory markets, supporting its local television stations through satellite carriage, enhancing its local news production in high-definition and sustaining local programming in CTVglobemedia's A Channel markets. “BCE supports the concept of a reduction/elimination of tangible benefits with respect to conventional television assets,” BCE said in an Oct. 25 letter to the commission. But Quebecor Media Inc. (QMI) wrote in its submission to the hearing that Bell’s benefits package is “almost insulting.” “The proposed tangible benefits consist of disguised attempts to finance BCE’s expenses and are part of its current responsibilities,” QMI wrote. The Communications, Energy and Paperworks Union of Canada (CEP) said in its submission to the CRTC that BCE's proposal deviates from the intended purpose of a tangible benefits package. “The Commission’s public benefits policy is intended to create benefits for the viewing and listening public, not to subsidize normal course of business investments that all broadcasting entities must undertake in order to advance their interests,” the CEP wrote. The CEP also said it is concerned about the lack of detail included in BCE’s proposal, stating in their submission that the nature and impact of BCE’s expenditures, exhibition and employment for their local programming contribution is very uncertain.“If we don’t have details about what BCE is thinking of doing with the money it has set out, it will be difficult for the commission to understand in three or four years if the benefits have been met,” Monica Auer, the CEP's legal counsel, said in an interview. “The CEP welcomes the stability that BCE can bring to CTV. We just need to know what it plans to do.” Morrison said BCE's proposal to increase programming for the A Channels also goes against the CRTC's intended policy. “Bell would be spending the public benefits money on something that would make the A Channels worth more money if they were to dispose of them,” he said. “Eleven years ago when BCE last took over CTV, they put forward a benefits policy that included offering additional spending on local programming and assisting in training programs at The Banff Centre. There were a range of things that were actually improving the system. This time it was all stuff that they would or should otherwise already be doing.” Friends proposed that BCE revise the contents of their public benefits proposal and invest instead in the production of high-value Canadian programming. But Bell Canada spokeswoman Jacqueline Michelis pointed out by email that many of the submissions received by the commission support BCE’s proposed package. “We have received many hundreds of supporting letters including in support of many of our specific public benefits proposals in the event benefits are imposed by the CRTC, despite our strong arguments to the contrary,” Michelis wrote. “The wide array of support we received shows that the broader Canadian broadcasting community feels strongly that this is a very positive transaction for the broadcasting system.” The Writers Guild of Canada (WGC) submitted an intervention stating their conditional support for the acquisition, contingent on BCE investing 85 to 90 per cent of the benefit monies into Canadian programming. “BCE’s tepid proposal misses the mark. The allocation to onscreen programming, the centerpiece of the benefits policy, is woefully inadequate. Most of what BCE is proposing as benefits are really benefits for BCE – to cover infrastructure costs such as conversion of facilities to HD production—and that’s not what the CRTC policy is about,” the WGC wrote. The WGC’s intervention also questions BCE’s valuation of the deal, stating that the $3.2-billion price tag is actually hundred of millions of dollars lower than it should be. “CTV is a healthy and promising group of businesses which BCE is acquiring for clear shareholder benefit. The WGC sees no reason why BCE should not be held to the full requirements of the CRTC benefits policy and present a package worth 10% of the true value of the deal,” the WGC wrote. The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) also questioned the value of the transaction in its submission. “BCE's valuation of the transaction does not take into account the value to BCE of its acquisition of CTVgm, or the quite likely synergies and benefits to be enjoyed by CTVgm's broadcasting assets when they are combined with BCE's substantial distribution, telephony and wireless assets,” ACTRA wrote. Joanne Deer, director of public policy and communications for ACTRA, said in an interview that “BCE is proposing that should be $220.8-million. To us this is still woefully inadequate. We maintain that the benefits package should be payable on the full transaction, which in our mind is at least $3-billion. They have tried to deduct a number of things that we don’t think there is any basis to exclude.” Deer said that the regular pattern applied to benefits packages is to have 85 per cent of the monies contributed to onscreen programming and within that to have 75 per cent directed to drama or programs of national interest. Catherine Edwards, spokeswoman for the Canadian Association of Community Television Users and Stations (CACTUS), echoed ACTRA's position. “It’s much more normal for 75-80 per cent be for onscreen programming. Most of the so-called public benefits benefit Bell directly, very little of it is for onscreen,” she said in an interview. The public hearing on the BCE transaction is scheduled to begin on Feb. 1. asmith@thewirereport.ca

BCE’s tangible benefits proposal prompts sea of interventions

Broadcast | January 14, 2011

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