With Astral, Bell to auction off 10 radio stations by Sept. 10 hearing

As part of BCE Inc.’s acquisition of Astral Media Inc., the company plans to auction off 10 radio stations as early as this month to satisfy the CRTC’s radio ownership rules, Bell said in documents filed with the commission. Bell, which currently owns 33 English-language radio stations across the country, said in March it had reached a deal to purchase Astral for $3.38 billion. Astral owns 84 stations. Under the CRTC’s common ownership policy, broadcasters are limited to owning no more than two same-language, same-band stations in large markets with eight or more total stations. In smaller markets with less than eight stations, companies are limited to owning no more than three same-language, same-band stations. The Wire Report reported in March that the acquisition would cause Bell to go beyond these limits in major Canadian markets, including Vancouver, B.C., Calgary, Alta., Winnipeg, Man., Ottawa, Ont. and Toronto, Ont. In an application and accompanying brief filed with the commission May 1 and published on the CRTC’s website Tuesday, Bell said the policy will force the company to sell two FM stations each in Toronto, Vancouver, Ottawa and Winnipeg, as well as a single FM station in Calgary and an AM station in Vancouver. The company said it would begin a “sales process” for the stations “in the coming weeks.” Bell also applied to convert an English-language AM station in Montreal, TSN Radio 990, to French, to satisfy the CRTC’s rules. In a follow-up letter dated June 19, Kevin Goldstein, Bell’s vice-president of regulatory affairs, said the company would make efforts to sell all of its excess stations over the next two months. “BCE has developed a plan with the objective of completing the bid process by the expected Hearing date (early-to-mid September),” Goldstein wrote. “As initial steps, we have identified on a preliminary basis the stations that we would divest and we are in the preparation phase to launch an auction in July.” On Tuesday, the commission said it will consider Bell’s purchase of Astral at a broadcasting hearing scheduled to start Sept. 10 in Montreal. At that hearing, the CRTC said, commissioners will look at Bell’s proposal to convert its TSN Radio 990 station in Montreal to a French-language sports station called RDS Radio 990, the commission said. In another letter to the commission dated May 15, Goldstein said Bell will hold off on naming which stations it will sell in each market until closer to the auction date. He said identifying the stations could result in “the departure of key staff,” a loss of motivation in a station’s sales department, reduced advertising revenues, or intensified and targeted competition by competing stations. “Any combination of the above-noted events will likely result in deteriorating station level performance, which could result in prospective purchasers reducing their financial offers for the stations,” Goldstein said. Goldstein said in the June 19 letter that, although Bell has identified which stations it will seek to sell, “t is possible that the identified stations to be divested change between now and the beginning of the auction.” He said the company has fielded questions about the available stations from “many interested parties” but the company will only “officially contact potential purchasers at the beginning of the auction.” Bell’s acquisition of Astral has raised concerns from critics who say the deal will consolidate too many radio and television services under the company's control. In addition to its large stable of radio stations, Astral also owns 22 pay and specialty television services that Bell will add to its group of 30 channels, if the deal is approved as the company proposes. 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 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 May 1 letter, Bell urged the commission to include non-Canadian channels distributed in Canada for its calculation of audience share. Inclusion of the non-Canadian channels would increase the national pool of TV programming from which Bell and Astral’s audience share would be calculated as a percentage. If those non-Canadian channels are included, Bell said, its acquisition of Astral would give the company a 33.5 per cent viewing share of the national English-language television market and a 24.4 per cent share of the French market. If the foreign services are not included, Bell said, the levels rise to 38.7 per cent in the English market and 24.8 per cent in the French market. “The 38.7% level would put the transaction far below the 45% threshold which would cause the Commission generally not to approve a transaction and very close to the 35% threshold whereby transactions are expeditiously approved,” the company wrote. Under the CRTC's diversity of voices policy, the commission will “carefully examine” broadcasting transactions that lead to one person or company controlling between 35 per cent and 45 per cent of the national television audience share. Bell said its purchase of Astral could benefit the CRTC’s diversity of voices objectives, arguing that the deal would empower Astral’s broadcast holdings to better compete in the French-language market against rival Quebecor Media Inc. “Adding Astral’s French-language programming assets to Bell’s holdings will ensure robust homegrown competition in all areas of the French-language media sector,” the company said. “The transaction will ensure a strong private-sector counterweight to Quebecor’s strength going forward.” Bell proposed to provide the Canadian broadcasting system with $200 million in tangible benefits as a result of the deal, including $61 million in radio benefits and $139 in television benefits, the company said. A Bell release Tuesday said the company has also proposed $40 million to make Canadian programming “more widely available in Canada's North through the extension of next-generation broadband wireline and wireless service to all communities served by Bell subsidiary Northwestel in the Yukon, the Northwest Territories, Nunavut and northern British Columbia.” The company also told the commission the deal would offer “the intangible benefits of strengthening the Canadian broadcasting system.” The CRTC requires companies making a broadcasting purchase to pay “tangible benefits” to support the Canadian broadcasting system, which traditionally amount to about 10 per cent of the value of the deal. Last year, for the CRTC's approval of Bell's $3.2 billion acquisition of CTV, the company agreed to pay $245 million over seven years in tangible benefits. news@thewirereport.ca

With Astral, Bell to auction off 10 radio stations by Sept. 10 hearing

Broadcast | July 11, 2012

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With Astral, Bell to auction off 10 radio stations by Sept. 10 hearing

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