BCE would take unfair share of national advertising, content rights deals: Quebecor

BCE Inc., if its deal for Astral Media Inc. goes through, would take an unfair share of national English- and French-language television rights agreements and pan-Canadian advertising deals, Quebecor Media Inc. executives told a panel of CRTC commissioners. Robert Dépatie, Quebecor’s new chief executive, appeared with company executives at a CRTC hearing Thursday after officially taking the title of CEO from Pierre Karl Péladeau a day earlier. The Quebecor executives said BCE would have too much power to leverage negotiations for content rights and advertising deals. Through the acquisition, BCE would add premium film and television channels TMN, TMN Encore and HBO Canada to its existing stable of Bell Media channels, which include popular sports services TSN and RDS. Pierre Dion, president and CEO of Quebecor broadcasting subsidiary TVA Group Inc., said national advertising deals are now made in Toronto for the French and English markets, which is a disadvantage to Quebecor, a broadcaster and cable company operating only in Quebec. “Pan-Canadian advertising deals are made in Toronto. If I am the VP of marketing of a packaging company in Toronto, and I have Bell-Astral in front of me proposing the ideal, pan-Canadian deal that I’ve always dreamed of, and you’ve got Quebecor on the other side, a player in a declining market … you can guess the conclusion,” Dion said. “This is what is going to happen.” Dion said some advertising deals are made outside of Canada by consulting agencies in Europe, which arrange national agreements also covering Quebec. Companies and interveners are appearing before the CRTC commissioners this week to discuss BCE’s reworked application to acquire Astral for $3.38 billion. The commission rejected an initial application last fall, saying it was not in the public interest. BCE executives told the CRTC Monday that the company addressed the regulator’s concerns about market power, referring to an agreement announced in March with the Competition Bureau, under which Bell will sell off 11 specialty channels to Corus Entertainment Inc. “Bell’s revised proposal is nothing less than a sham intended to confound the commission. Bell’s proposed solutions do not change the fundamental nature of the transaction,” Dépatie said, and urged commissioners to again deny the application outright. “It’s well known that films and sports are the most attractive products. They are the must haves, the core business,” Dépatie said, adding that BCE can leverage those products on its television, online, and mobile platforms. Dion said the transaction would also give BCE more leverage to negotiate content rights licensing agreements. “It will put them in a position to go to the creators, studios, and content producers and say, ‘We’ve got all the platforms, general services, specialty services, channels, across Canada.’ They’ll have a one-stop deal,” Dion said. “They’ll have power we’ll be incapable of competing with.” Dion said BCE would negotiate packages of content rights and he would expect the company shelve, or not use, some exclusive programs it negotiated in national, “one-package deals.” In its filing with the CRTC for the consultation on the proposed deal, Quebecor requested that, if the deal is approved, the regulator impose a condition of licence on Bell that prohibits it from acquiring a French-language television network in the future, namely Remstar Corp.'s V. The company also said the CRTC should deregulate specialty channels by eliminating genre protection, opening up more competition. BCE executives told commissioners Monday that Bell’s acquisition of additional French-language content from Astral would increase competition in Quebec and lower prices for consumers. CRTC Chair Jean-Pierre Blais asked the Quebecor executives, as he has asked other companies this week, about the possibility of imposing further “structural changes” on the deal, such as forcing BCE to divest TMN, TMN Encore, and Super Ecran, or possibly a sports channel. Dépatie responded that the commission should deny the transaction entirely. The Canadian Cable Systems Alliance (CCSA) also appeared Thursday, representing 115 small and independent broadcast distributors and more than 1,000 cable systems, and said BCE's Bell Media division is asking for carriage and licensing fees that are too high, a common complaint from competitors during the hearings. “Bell’s pricing effectively forecloses our customers from access to Bell’s services on their computers, tablets and phones,” said Jim Deane, chair of the CCSA, according to his speaking notes. “We have no power to negotiate more reasonable rates and terms for such rights. If we do not agree to Bell’s rates and terms, our only alternative is to engage in costly, time-consuming mediation that holds our customers hostage,” he said. The CCSA said the transaction should be denied, though it added that if approved, additional safeguards are necessary. It said BCE should be required to offer transparent and “commercially reasonable” rates to distributors for its channels and multiplaform rights; more flexible packaging terms for channel carriage; and be prohibited from asking for minimum penetration rates. “There is no justification for volume-based rates that require smaller BDUs and their customers to pay more for services simply because they are small. We purchase the same products as the big guys for the same uses,” Deane said. At the hearing Monday, BCE chief executive George Cope rejected competitors’ complaints about high distribution fees, and said the company’s model is to license its content to as many distributors as possible. Bell spokeswoman Jacqueline Michelis told The Wire Report in a statement this week that its competitors “would rather have regulatory intervention supersede market negotiation” and that the company has offered some competitors “extremely reasonable” rates for on-demand rights to Bell Media's 29 specialty channels. BCE appears at the hearing Friday to reply to the interveners. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and copy editing by Nicholas Kyonka at nkyonka@thewirereport.ca

BCE would take unfair share of national advertising, content rights deals: Quebecor

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BCE would take unfair share of national advertising, content rights deals: Quebecor

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