BCE/Thomson deal portends greater demand for new media companies

Analysts are guardedly applauding a deal between BCE Inc and Thomson Corp that sees the assets of Canada’s oldest national newspaper thrown into a multimedia pot with Sympatico.ca and CTV Inc. The move is the clearest signal yet that convergence is being taken seriously by previously conservative telcos, broadcasters and publishers. New media companies are expressing their glee at the turn of events, saying the demand for new content and integration services will now be higher than ever. BCE’s NewestNew Media CompanyValue: $4 billion Broadcast propertiesCTV, CTV Newsnet, Talk TV, The Comedy Network, TSN, RDS, Discovery Channel, CTV Pay-per-view Sports, Sportsnet, Outdoor Life Network, Canal Evasion, Viewer’s Choice Canada (minority interest) History Television (minority interest), Télé Des Arts (minority interest), ROBTv (50% interest) Internet PropertiesCTVNEWS.com Sympatico.ca, YellowPages.ca, Tripod.ca, network of city sites including Toronto.com, CalgaryPlus.ca, MontrealPlus.ca, QuebecPlus.ca and EdmontonPlus.ca and VancouverPlus.ca slated to be launched in OctoberGlobe and Mail.com, GlobeInvestor.com, GlobeFund.com, Workopolis.com, GlobeTechnology.com, ChaptersGlobe.com, ROBMagazine.com, ROBTV.com, GlobeMegaWheels.com PrintThe Globe and MailCanadian business vary in sophistication of Internet usage says CFIB e-business reportThough not everyone agrees with the premise, BCE president Jean Monty has been telling all within earshot that content, not access, will be key to Ma Bell’s fortunes going forward. Backing up his claims with action, on September 15 BCE created a new, as-yet-unnamed holding company to hold CTV and NetStar, its interest in Sympatico-Lycos which includes Sympatico.ca, and its 23 per cent interest in Extend Media. BCE will own 70.1 per cent of the new company. Thomson Corp will own 20 per cent and will contribute the Globe, nine growing Internet sites including globeandmail.com, globeinvestor.com, workopolis.com, and 50 per cent of ROBTv. The Woodbridge Company Ltd, Ken Thomson’s holding company, will own 9.9 per cent of the new company and will contribute $385 million. Company executives won’t name the new entity until the CRTC approves the BCE/CTV merger. CIBC World Markets analyst Dvai Ghose told Canadian NEW MEDIA he’s not as keen on the deal as several other fellow industry watchers. "I think that (Monty) is wrong when he says that power is shifting from access to content. I think what you’re seeing is that he’s not spending enough time on his own access. His concentration should be in access: wireless and Western Canada, DSL throughout Ontario and Quebec for SMEs, the fibre optic asset Intrigna in western Canada." Ghose also says that BCE is hedging its bets on content by reserving control of its Sympatico customers, and not putting Bell ExpressVu into the bundle. Though the company is putting a strong mix of companies into the new entity, Ghose says , as an access provider, BCE should be concentrating on more localized content to compete with better established "big content" players such as Yahoo! or CNN which already draw the majority of general interest viewers. He also minimizes the impact of this deal on consumers, saying that viewers don’t care where the content comes from. "I don’t think the consumer cares at all, which is why I think the ability to cross-market and gain synergy between all your various different assets is limited. In other words, if I want to read the Globe and Mail, does that mean I’m any more likely to switch to Bell Mobility? Not really." Bell needs variety of content Instead, access providers like Bell need to source content from as great a range of companies as possible. "BCE uses content from various different sources – or at least BCE should. ROB, Globe and Mail, CTV and every other content provider should distribute through as many access providers as possible. So, why should they be owned by the same people? Should you really own somebody that you buy from? Or, should you be owned by somebody you sell to?" he asks. An industry analyst with The Yankee Group in Canada, Mark Quigley, agrees that consumers are unlikely to see an immediate impact, but that the converging companies will ultimately draw more eyeballs. "Do I think it’s going to yield fruit going forward? Most definitely. I think that there are some real synergies that exist there, and I think that there is certainly the potential to really take this and transform both businesses. But, at the end of the day, all of this depends on old-fashioned things like successful execution of business plans and marketing plans and that sort of stuff. I certainly see that there’s great opportunity though." He says the Globe and Mail website is one area that will probably receive significant attention. "BCE has a great opportunity to leverage all kinds of buckets into one another in terms of taking CTV and all of a sudden that becomes a presence on the Globe and Mail’s website – as the Globe, I’m sure, will become a presence on the CTV website as well. I think we’re probably going to start looking at the Globe’s website expanding, I think fairly dramatically, in that it will become perhaps a much more fluid medium. It’ll start to see more timely articles, etc., appear." BCE is reportedly already at work building a new ecom strategy that would exploit the Yellowpages.ca site to build a new business-to-business online marketplace aimed at the small- and medium-sized enterprise market. Reports say the new site will allow users to interactively search any Canadian company doing business on the Internet. Content providers to benefit Quigley also says that managing the newly converged entities is good news for content providers and companies which manage the delivery of content over multiple platforms. Though the channels through which content is delivered seem to be narrowing into a handful of media conglomerates, he says the work of integrating their legacy content will be a difficult job. Further, those media moguls will have to find new ways of differentiating themselves from the competition. One CNM source said that though there are fewer, but larger, customers for their content management software, it won’t cut into revenues as the conglomerates are ready to spend more on cutting-edge technology. Convergence also helps smaller new media companies deal with entities such as the new BCE empire or CanWest/Hollinger because sales calls are with a single organization, not with several groups.

BCE/Thomson deal portends greater demand for new media companies

News | 09/20/2000 4:00 am EDT

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