Rogers, Telus ask for ‘safeguards’ in Bell-Astral deal

The CRTC should require BCE Inc. to sell off the English-language pay and specialty channels it would receive through its proposed purchase of Astral Media Inc. in order for that deal to be approved, Rogers Communications Inc. said in regulatory documents filed with the commission Thursday. In July, the commission kicked off a consultation on the proposed $3.38 billion deal, which would see Canada’s largest vertically integrated broadcaster and broadcast distributor, Bell, acquire the country’s largest independent broadcaster, Astral. One of more than 800 individuals and organizations that filed an intervention on the issue prior to last Thursday’s deadline, Rogers said the proposed transaction raises “significant concerns” about Bell’s dominance in the English television market. “n order to protect diversity, competition and Canadian consumers, Rogers believes that the commission should deny BCE’s application to acquire Astral’s English-language pay and specialty services,” Ken Engelhart, Rogers’ senior vice-president of regulatory affairs, wrote in the company’s intervention. "BCE should be required, as a condition of approval, to divest of these television undertakings." As a part of the CRTC’s 2008 "diversity of voices" framework for approving transfers of broadcasting licences, the commission generally expedites approval of deals that do not result in any one person or company gaining more than 35 per cent of the “total television audience share” of the national English- or French-language television markets. Those rules say the commission will “carefully examine” any acquisition that results in a party acquiring between 35 and 45 per cent of the audience share, and generally will not approve a deal that results in a party acquiring a 45 per cent share, or higher, in French or English television. In its intervention, Rogers said Bell would control more than 41 per cent of the English-language television market’s total audience share if it is allowed to assume control of Astral’s English-language services. Those English-language services include specialty channel Disney XD and pay-TV channels Family, The Movie Network and Mpix, and would add to Bell’s current stable of 26 English-language specialty services and its CTV network. Rogers said this would give Bell a dominant position in the market that would “negatively impact” the diversity of programming available, causing material harm to the competitive market and to Canadian consumers. The company said the acquisition could also jeopardize it current carriage agreements with Astral. “It would also effectively prevent Rogers (and other ) from continuing to obtain access, on commercially reasonable terms, to a wealth of Astral content that has, to date, been a vital part in the roll-out of our new service offerings to Canadians,” Rogers said. Bell spokeswoman Jacqueline Michelis said in an emailed statement Monday that Bell would continue to make Astral’s English-language programming available to competing broadcast distributors, including Rogers, if the deal is approved. “Bell Media is in the business of providing content to cablecos like Rogers. Our business depends on it, consumers want it, so we work to make content as widely available as possible across multiple platforms,” Michelis wrote, adding that Rogers and Bell currently have agreements to carry each other’s content. “he CRTC has clear and extensive rules governing how Bell Media and other content providers sell our services, and how other distributors package them for consumers. We obviously respect these rules.” Michelis said that if Bell is allowed to acquire all of Astral’s broadcasting assets, Bell’s national viewership share would climb to 33.5 per cent for English-language television and 24 per cent in the French-language market. She said the deal would intensify competition “to the benefit of consumers and the overall media market,” and dismissed Rogers’ concerns as regulatory gaming. “It's not surprising to see one of our rivals trying to create roadblocks, particularly a cable company that's also seeing our new services like Fibe TV impact its very large TV distribution market share in Ontario,” she wrote. Bell announced in its second quarter results last Wednesday that it’s Fibe TV service added 38,477 net subscribers during the three-month period ending June 30. Rogers said it lost 20,000 cable television subscribers during the same three-month period. A trio of Bell’s competitors said at an Ottawa press conference last week that the Astral acquisition would give Bell ownership of 79 television channels, 107 radio stations, and more than 100 websites across the country. Those competitors—which include vertically integrated company Quebecor Media Inc., Cogeco Cable Inc., and Bragg Communications Inc. subsidiary Eastlink—have started an online campaign encouraging Canadians to oppose the deal, and each filed interventions objecting to the acquisition. In a separate intervention, Telus Corp. also said the commission should impose special conditions on Bell before approving the proposed deal. Telus, which was involved in a protracted carriage dispute with Bell Media as a member of the Canadian Independent Distributors Group (CIDG) earlier this year, said Bell has “already shown a propensity towards making anti-competitive use of its content properties, and that the deal would give Bell a “concentration of power over popular content.” Telus said the commission should only approve the deal if it also provides “additional safeguards” to ensure other broadcast distributors can still negotiate fair carriage of Bell’s channels. As an example, it said the commission could warn Bell that certain criteria would constitute “prima facie evidence of an undue preference” under the digital media exemption order “that would resolve in favour of the complainant in any dispute relating to access to content.” In its own intervention, Shaw Communications Inc., which owns Global Television, said it supported Bell’s proposed acquisition of Astral and called on the CRTC to “deny any requests for new industry-wide policies and regulations to respond to either horizontal consolidation or vertical integration.” It said new rules the commission imposed on vertically integrated companies last year were sufficient to protect consumers and competition. “Layering on new regulations will only give rise to an even more uncertain, asymmetrical and overly restrictive framework that will inevitably harm consumer choice, stifle innovation, chill investment and encourage regulatory gaming,” Shaw wrote. Several groups that represent on-screen talent and content producers also filed interventions with the commission. Several of those groups objected to Bell’s proposal to use $40 million of the $200 million in “tangible benefits” related to the sale to support wireless infrastructure in Northern Canada. The CRTC requires companies purchasing broadcast assets to spend about 10 per cent of the value of the transaction on projects and programming that benefit the Canadian broadcasting system. In documents filed with the commission in June, Bell said the proposed northern wireless infrastructure would benefit the broadcasting system by improving Northerners’ access to broadcast material over the Internet. The Canadian Media Production Association (CMPA) said in its intervention that it would support Bell’s Astral acquisition if more of the tangible benefits money was devoted to causes “that will serve to enhance support for Canadian programming in a meaningful and appropriate way.” The CMPA said the total TV benefits package resulting from the transaction should amount to a minimum of $180.5 million, with at least $153.4 million being allocated to “on-screen” benefits. news@thewirereport.ca

Rogers, Telus ask for ‘safeguards’ in Bell-Astral deal

Broadcast | August 13, 2012

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us