BCE says it understands CRTC’s concerns about Astral deal

BCE Inc. understands the CRTC's concerns about the company’s $3.38 billion deal to acquire Astral Media Inc., Siim Vanaselja, executive vice-president and chief financial officer at BCE, said Tuesday. “As much as we were disappointed with the CRTC's decision, we do understand now the concerns that were expressed by the CRTC and we appreciate there's a process for addressing those concerns we're in the midst of pursuing at this moment,” Vanaselja said at the Scotiabank Telecom & Cable 2013 Conference in Toronto, webcast live. “We'll have to see how it plays out.” The CRTC blocked Bell's proposed deal in a decision Oct. 18, citing concerns about competition, Bell’s market power, and the public interest. The decision said that after acquiring Astral, Bell would have a 42.7 per cent viewing share of the Canadian English-language television market when including television services jointly owned with other companies. “If they submit a application and do their homework, they have a chance of getting it,” Richard Paradis, president of media and consulting firm Groupe CIC in Montreal, said in a phone interview. He said Bell could propose divesting some parts of the business to address the CRTC’s concerns. BCE took a harder stance on the decision following its release, with CEO George Cope saying the company “met all the CRTC's rules” and that the “wide-ranging benefits to Canadians of the transaction are clear, but the CRTC has told consumers that they and the rules in place just don't matter.” The company said Oct. 22 that it filed a request with the federal cabinet, asking the government to direct the CRTC to abide by its 2008 diversity of voices policy guidelines, which outline acceptable television viewership levels concentrated under one owner. Industry Minister Christian Paradis subsequently said cabinet would not intervene. Vanaselja noted Bell has extended the transaction's closing date to mid-December, and that, if necessary, it may be extended again until Jan. 15, 2013. One of BCE's mistakes during the CRTC proceeding was proposing new broadcasting services during the public hearing phase, including an online, over-the-top service and a new French-language news service, Richard Paradis said. CRTC Chair Jean-Pierre Blais said at that time Bell's proposed new services were akin to "pulling rabbits out of a hat." At a news conference the day the decision was released, Blais acknowledged that BCE could re-apply with a modified application. “I recommend, however, that before anybody brings a new application to us, that they carefully read the decision we issued,” he said. Blais said that to approve the application as Bell had proposed, the CRTC would have had to impose an extensive, unprecedented, and intrusive level of safeguards. “This transaction would have resulted in an unprecedented level of consolidation in the Canadian marketplace, and we had grave concerns that BCE would be able to use its market power in an unfair manner and to engage in anti-competitive behaviour,” Blais said. Bell did not demonstrate that the transaction was in the public interest, Blais said. “BCE demonstrated clearly that the proposed transaction was good for BCE,” he said. Vanaselja said BCE expects five per cent dividend growth into 2013 and 2014 with or without Astral. “With or without Astral, we can continue to do that,” he said. “We would much prefer to do it with Astral as a part of our family because we can bring a lot of value to those assets and leverage that programming across all of our multiple screens.” Vanaselja said Astral is a “terrific” transaction for Bell and a “great complement” to its media business. If Bell does not acquire Astral, Vanaselja said, “we at the current time are comfortable with the balance sheet and we wouldn’t look to use that excess cash towards further debt reduction.” Astral said at the end of October that it remains committed to the deal. Bell must pay Astral a $150-million break fee if it does not go through for regulatory reasons, and Astral would be required to pay Bell $100 million if the deal is rejected under “certain circumstances,” an Astral financial statement said. BCE's media division reported earnings before interest, taxes and amortization of $156 million in the third quarter of 2012, up from $81 million the same period a year earlier. dgrenier@thewirereport.ca

BCE says it understands CRTC’s concerns about Astral deal

News | 11/13/2012 9:15 pm EST

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