GATINEAU – The CRTC today approved the $3.2 billion purchase of Astral Media by BCE Inc., but Bell’s regulatory people have MUCH paperwork to file before July 29th in order to satisfy the various conditions of the approval. That said, there doesn’t appear to be anything surprising in the decision which could scuttle the transaction.
As most are well aware, this is the second time Bell attempted to purchase Astral, as the Commission said no to the original 2012 deal last October.
Bell executives pronounced themselves pleased Friday morning, and so they are obviously okay with all the conditions, all of which were discussed and debated during the public hearing in May. "Together, Astral and Bell Media will deliver more for Canadians, investing in great new programming and innovative new ways to access it, and ramping up competition in the Canadian broadcasting sector. It all means unprecedented new choice for Canadian viewers and listeners," said George Cope, president and CEO of Bell and BCE, in a release. "As two long-established Montréal companies, Astral and Bell especially look forward to taking competition and choice in Québec media to a whole new level."
The combined company will be led by a team of Astral and Bell Media executives, and Montréal remains the centre for French-language programming, as was promised all along. Bell will also open new regional development offices in Halifax, Winnipeg and Vancouver and when the transaction closes, Astral president and CEO Ian Greenberg will join the BCE board. The companies plan to close the deal by July 5th.
"The Astral team has built a uniquely successful Canadian media business in the last 50 years, and all of us are excited by the new possibilities ahead as we join with Bell Media," said Greenberg in the same release. "With our combined resources, we look forward to bringing truly great new French and English language programming and viewing options to consumers across the country."
Reaction has come in swiftly from those opposed, and it’s been somewhat muted. “We’re disappointed, but not surprised,” said Harris Boyd of the Canadian Cable Systems Alliance.
“We are pleased with the CRTC’s decision to support a diverse, healthy, competitive Canadian media market,” said ACTRA executive director Stephen Waddell. “While we remain concerned about the general concentration and vertical integration granted to BCE, we had argued that if this merger were to be approved conditions must be attached, and the commission has done that.”
The Public Interest Advocacy Centre was not on the ACTRA side of the fence on this one. “Canada will now have an unprecedented level of media concentration and vertical integration and a weaker diversity of voices with the loss of Astral,” said Janet Lo, legal counsel for PIAC. “Consumers should brace themselves for less competition for television services – and consumers will not only pay the price but they will face less choice and flexibility in the market.”
Other intervening companies were more sanguine than when they appeared at the hearing seven weeks ago. "While disappointed, we accept and respect the decision," said Louis Audet, president & CEO of Cogeco Cable, in a press release. "We view positively that a number of new safeguards have been introduced along with this decision. We are confident that if all the safeguards are actively implemented and strictly enforced in a timely manner and with tight supervision, the interests of Canadian consumers could be effectively protected and the Canadian broadcasting market could remain workably competitive.”
Added Rogers Communications EVP Phil Lind: “The conditions are strong and that’s a good thing. Whether they are adequate or not, we’ll see,” he told Cartt.ca in an interview. “We’ll take what they’ve given us and see if it works… The Commission has certainly indicated that scale can lead to abuses and they’ve predicated a lot of their new safeguards on that premise… And we’re hoping that their safeguards work.”
Those conditions and safeguards include:
* Bell will face a new benefits package of $246.9 million, which is $72 million more than originally proposed, based on a re-evaluation of Astral’s assets by the CRTC. $174.5 million has to be spent on TV and $71.5 million on radio. A small additional sum, given the size of the deal and the size of Bell Media. 100% of the spend on programs of national interest must be spent with independent producers.
* Bell can keep Montreal radio station CKGM (TSN Radio) as long as it commits to keeping the station a sports focused one for at least seven years, and make sure the other three English language stations it will own maintain distinct formats.
* The combined company must adhere, by condition of license, to certain sections of the CRTC’s Vertical Integration policy Code of Conduct for commercial arrangements that limit potential anti-competitive behaviour and ensure fair treatment for all. This is something Bell agreed to during the hearing. While Bell Media wanted those new conditions of license to apply only to its dealings with BDUs with 500,000 subs or less, the CRTC said in the decision it will apply to all. “The Commission also considers that it would be inappropriate to limit the applicability of the VI code of conduct conditions of licence to BCE’s commercial interactions with licensed or exempt BDUs having fewer than 500,000 total subscribers, as proposed by BCE.”
Plus, those new VI Code CoLs will also apply to Bell’s TV division and its dealings with other broadcasters.
* It must not unduly withhold non-linear rights from competing distributors, even if Bell is not currently exploiting those rights itself. Another key to that is paragraph 76 of the decision where the Commission says Bell can not impede others from obtaining such rights, even from competing distributors.
* It must file with the CRTC affiliation agreements signed with all programming services and television distributors, by Bell Media on the programming side and by Bell TV on the distribution side, including its own intra-corporate deals. CRTC staff told us in the lockup that the Commission has not yet determined whether or not it will make these agreements public or hold them in confidence.
* If a new affiliation agreement is not reached within 120 days of the old one expiring, both Bell and the company it can’t come to an agreement with must enter CRTC-supervised dispute resolution (but not necessarily final offer arbitration). The Commission will decide how that goes on a case-by-case basis, reads the decision.
* Bell must commit to provide reasonable access to ad opportunities to its various competitors on all radio stations. This is something Bell committed to during the hearing.
* The other conditions, such as the divestiture of the other assets proposed in the deal and okayed by the Competition Bureau (Teletoon/Télétoon, Family Channel, Teletoon Retro, Disney XD, Disney Junior, Cartoon Network, Historia, Series+, MusiMax and MusiquePlus) are approved and must be transferred to a trustee to run for now.
* The 10 radio stations it has committed to sell must also be transferred to a trustee to run.
In the end, Bell Media will own an enormous number of Canadian media outlets and brands.
The entire Appendix of conditions can be found below.
“Astral’s application put forward a different approach and responded to many of our concerns,” said Jean-Pierre Blais, chairman of the CRTC, in a statement (officially, the application was made by Astral Media). “Yet there remained significant risk that BCE could exert its market power to limit choice and competition. To ensure the public interest is served, we are requiring BCE to invest in new Canadian programming and sell more than a dozen services and we are putting in place a number of competitive safeguards. This will maintain a healthy and competitive broadcasting system that offers more programming choices to Canadian consumers and citizens and more opportunities for Canadian creators.”
Appendix 1 to Broadcasting Decision CRTC 2013-310
Conditions of approval relating to the change in the effective control of Astral Media Inc.’s broadcasting undertakings to BCE Inc. approved in Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013
1. The Commission directs BCE Inc. to transfer the interim management and control of the television programming undertakings The Family Channel, TELETOON Retro, TÉLÉTOON Rétro, TELETOON /TÉLÉTOON, Disney XD, Disney Junior, Cartoon Network, Historia, Séries+, MusiquePlus and MusiMax to a trustee pursuant to the terms of the voting trust agreement addressed in a letter of approval issued 27 June 2013, by no later than 29 July 2013.
2. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings and broadcasting distribution undertakings, as applicable, that will be operated by a BCE-related entity following the close of the transaction in order to add conditions of licence 1, 2, 5, 6, 7, 15 and 16 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
3. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add conditions of licence 8 and 9 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
4. The Commission directs BCE Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all radio programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 17 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013 310, 27 June 2013.
5. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings and broadcasting distribution undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 3 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
6. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings and broadcasting distribution undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 4 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
7. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for those Astral television programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add conditions of licence 11, 12 and 13 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
8. The Commission directs BCE Inc. to transfer the interim management and control of the radio programming undertakings CHHR-FM Vancouver, CKZZ FM Vancouver, CISL Vancouver, CFQX-FM Selkirk, CHBM-FM Toronto, CKQB FM Ottawa-Gatineau, CJOT-FM Ottawa-Gatineau, CKCE-FM Calgary, CHIQ-FM Winnipeg, and CFJX-FM Toronto to a trustee pursuant to the terms of the voting trust agreement addressed in a letter of approval issued 27 June 2013, by no later than 29 July 2013.
9. The Commission directs BCE Inc. to apply by no later than 29 July 2013 to amend the broadcasting licence for CKGM Montréal in order to add conditions of licence 19, 20, 21 and 22 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013 310, 27 June 2013.
10. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 10 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
11. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all radio programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 18 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
12. The Commission directs BCE Inc. and Astral Media Inc. to apply by no later than 29 July 2013 to amend the broadcasting licences for all television programming undertakings that will be operated by a BCE-related entity following the close of the transaction in order to add condition of licence 14 set out in Appendix 2 to Astral broadcasting undertakings – Change of effective control, Broadcasting Decision CRTC 2013-310, 27 June 2013.
13. The Commission directs BCE Inc. and Astral Media Inc. to file by no later than 29 July 2013 an application to revise the Astral group’s Canadian Programming Expenditures of Programs of National Interest percentages based on the remaining services within the Astral group and using the same methodology utilized to determine its current requirements.
