CRTC approves BCE-CTV transaction, imposes moratorium on exclusive content deals

The CRTC addressed concerns about potential anti-competitive behaviour for vertically integrated companies in a decision Monday, imposing a moratorium on exclusive content deals for vertically integrated carriers until the commission deals with the issue in a hearing this spring. In a decision that approved BCE Inc.’s acquisition of CTVGlobemedia Inc., the CRTC imposed a three-month moratorium on new exclusive content deals for vertically integrated players that own both broadcasting and broadcasting distribution assets. The CRTC held a public hearing on the BCE transaction in early February, where Telus Corp. and Cogeco Cable Inc. told the commission that it should implement safeguards on the transaction to protect from undue preference. The companies said they had suffered a competitive disadvantage in negotiations with Bell. BCE president and CEO George Cope also told the commission during the hearing that he could not guarantee the company would not use exclusive content after the acquisition closed. In its decision, the commission said it was not convinced additional safeguards are necessary before its upcoming hearing on vertical integration in June. “The Commission considers that the vertical integration proceeding will be the most appropriate and timely forum to consider expanding existing measures related to vertical integration,” the decision said. But the commission, noting that BCE's comments about exclusivity concerned competitors, imposed a three-month moratorium on new exclusive deals for content. The CRTC said BCE's public statements placed “emphasis on the provision of exclusive content to its subscribers and especially to its wireless subscribers” and reinforced competitors’ concerns. “Until the Commission implements its determinations in the vertical integration proceeding, BCE is prohibited from entering into new exclusive programming agreements that would prevent it from making available to its competitors, on commercial terms, mobile and broadband rights to television programming from its conventional and specialty services.” The commission added in its decision, which was released after markets closed Monday, that it expects other vertically integrated players, such as Shaw Communications Inc. and Quebecor Media Inc., to respect the moratorium. CRTC chair Konrad von Finckenstein said in a phone interview following the release of the decision that he hopes the measure will help address concerns advanced during the hearing. “For a large wireless carrier, we think it's necessary to be prudent,” he said. “We think it is a small price to pay.” Telus’ senior vice-president of regulatory and government affairs, Michael Hennessy, said by phone that the decision is positive for the company, consumers, as well as independent producers and broadcasters. “It's a big win for consumers because once again the commission has affirmed that they can have access to whatever content is available without being locked into the walled garden of any particular distributor,” he said. “It does show that the CRTC often continues to put the interest of consumers ... first and foremost.” Bell said in a release it welcomed the CRTC’s approval, saying the acquisition will level the competitive playing field in the Canadian broadcasting sector. "We look forward to welcoming the CTV team to Bell and to accelerating the delivery of the best digital content to Canadians on the screens of their choice through Bell's world-leading broadband fibre and mobile networks,” Cope said in a release. Bell also announced a new business division called Bell Media, which will include all CTV properties and the Sympatico.ca web portal. Open-Internet advocacy group OpenMedia.ca said in a release Monday that the acquisition will “lead to less real choice and diverse options for news and other content” and “create more incentive for Bell to discriminate against online content and services.” In its decision Monday, the CRTC also directed BCE to pay a $245 million benefits package as part of its acquisition of CTV, $8 million more than what the company had proposed But some competitors and cultural groups had described items in the approved benefits spending as “self-serving.” “We always hear that critique, that all the proposals are self-serving, but for us it's important to decide whether it represents a benefit for the Canadian broadcasting system,” von Finckenstein said. “With this investment, we're going to have all the local stations available on satellite. That's a goal that we had since the first day.” Following the hearing, BCE presented the final version of its offer for a $237-million benefits package attached to the transaction. Companies undertaking a television acquisition traditionally contribute 10 per cent of the value of the transaction in “tangible benefits” to support the Canadian broadcasting system. The commission estimated the value of the transaction at $2.68 billion, but Bell asked the commission to lower the value of the conventional broadcasting assets by five per cent, arguing that Shaw was afforded the same reduction when it acquired Canwest Global Communications Inc.'s broadcasting assets last year. In its decision Monday, the commission denied BCE's request and said the company would have to pay a benefits package of $245 million over seven years. Of the package, $60 million will go to allowing carriage of at least 43 additional television services, including local, regional and community stations. Quebecor, Cogeco and Shaw said during the hearing that Bell's proposal to carry the stations would give the company an advantage over other distributors. But von Finckenstein said the proposal will significantly help the broadcasting system, as satellite carriage will give some small stations the boost needed to survive. The commission also directed BCE to allocate $100 million of the benefits package to independently produced programs of national interest. Under BCE's proposal, up to 20 per cent of the production initiatives would have been directed toward online or multi-platform content. But the commission said no more than 10 per cent of the funds could be used for that purpose, arguing that a higher level could “subsidize the non-regulated sector at the expense of the regulated broadcasting system.” The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) said in a release Monday that it is disappointed that less than half of the total package will go towards onscreen programming. "The good news is Canadians will be getting an additional $140 million worth of new programming. The bad news is that the CRTC is letting BCE put too much of the 'public' benefits back into their own pockets to cover the costs of doing their business,” Stephen Waddell, ACTRA's national executive director, said in a statement. The commission also approved a BCE proposal to spend $28.8 million to enhance local news on its stations and $30 million to sustain the A-Channel stations for three years. In its decision, the commission said BCE could use the funds to keep the A-Channels going but could not spend it on upgrading master controls for the stations. Von Finckenstein added that local news is crucial for small communities and that Bell's proposal will benefit the broadcasting system given that companies are often reluctant to invest in local news. The commission also directed BCE to use $5.7 million to improve the accessibility of the broadcasting system through an independent fund, as requested by the Access 2020 Coalition. Three million dollars will be directed to the creation of an independent fund to help pay the costs of public interest groups that participate in the commission's broadcasting hearings. The proposal was put forward by consumer group the Public Interest Advocacy Centre. Another portion of the package, $17.5 million, will be directed to support the development of Canadian musical and spoken-word talent. kfournier@thewirereport.ca

CRTC approves BCE-CTV transaction, imposes moratorium on exclusive content deals

Broadcast | March 8, 2011

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