Bell to divest 12 Astral channels under Competition Bureau deal

BCE Inc.’s agreement with the Competition Bureau to sell off 12 pay and specialty channels as part of its proposed $3.38-billion acquisition of Astral Media Inc. is a “big step forward” for the deal, Mirko Bibic, Bell’s chief legal and regulatory officer, said in a television interview. In a release after markets closed Monday, the Competition Bureau said Bell agreed to sell off some of Astral’s French- and English-language television channels to gain the bureau’s approval of its bid to buy Astral. Those 12 channels, the bureau said, include The Family Channel, Teletoon, Teletoon Retro, Disney XD, the Cartoon Network, Disney Jr. (in both English and French), Historia, Séries+, Télétoon Rétro, Musique Plus and Musimax. Corus Entertainment Inc. and Bell said releases Monday that Corus plans to acquire Astral's share in six TV channels it jointly owns with Astral. Those are the French and English-language versions of Teletoon, as well as Teletoon Retro, Cartoon Network, Télétoon Rétro, Historia and Séries+. Corus, which is owned by the same family that owns Shaw Communications Inc., said it will also acquire radio stations CKQB-FM and CJOT-FM. Bell said in its release that the divestitures mean the company, after acquiring Astral, will have a French-language viewing share of 23 per cent, "below competitor Québecor 30.5% share," and that in the English-language market, Bell will have a 35.7 per cent TV viewership share, growing the company's current share by 2 per cent. “Today’s announcement clears the Competition Bureau approval, so that’s a positive step forward,” Bibic said in an interview with BNN following the announcement Monday. “We look now forward to the next big step, which is to show Canadians and the CRTC the significant value we’re going to bring to viewers and radio listeners across the country with this transaction.” Last fall, the CRTC denied Bell’s initial proposal to purchase Astral due to concerns about market power and competition. Bell since filed a reworked application with the commission. The agreement with the Competition Bureau contains “behavioural restrictions” on Bell, including a “prohibition on imposing restrictive bundling requirements” on competing broadcast distributors that want to carry Astral’s The Movie Network and Super Écran channels, the bureau said in a “fact sheet” posted on its website. “The Bureau’s review focused on whether the proposed transaction would provide Bell with enhanced market power in negotiating the terms of its programming services with distributors,” the Competition Bureau said. “The Bureau determined that Bell’s acquisition of Astral’s pay and specialty television channels would have led to increased prices and reduced choice and innovation in the television distribution industry.” Bell first announced its intention to acquire Astral on March 16, 2012. The CRTC blocked that proposal last October, saying Bell failed to demonstrate how the deal would be in the public interest. Bell filed a reworked application in November, and the CRTC said in a notice Friday that it plans to release Bell’s new application this week with details about a public hearing to examine the purchase. In its decision to block the deal last fall, the CRTC said the transaction “would not only remove the last major independent, non-integrated broadcaster from the system, but transfer its undertakings to the largest vertically integrated broadcaster and telecommunications service provider in Canada.” The bureau said in its release that, without the agreement, Bell’s acquisition of Astral’s pay and specialty television channels “would likely have led to increased prices, less innovation and reduced choice for television programming.” Bibic said the agreement with the bureau helps appease the CRTC’s concerns that a combined Bell-Astral would control a dominant share of English-language TV viewership. He said it allows Bell to retain assets that account for 77 per cent of Astral’s earnings before interest, taxes, depreciation and amortization (EBIDTA), and “many popular brands” including The Movie Network, HBO Canada, and Super Écran. Bell’s new application to acquire Astral, when released by the CRTC, will show the company’s plan to “take Canadian broadcasting to the next level,” Bibic said. “ how we will use Canadian content as a competitive, strategic advantage for the benefit of the viewer and the listener of course, independent producers; how we’re going to showcase Canadian talent, whether its dramatic talent or musical artistic talent; what we will do to take local radio to the next level; how we plan to operate our local television stations to further augment those and make those stronger,” he said. “These are the kinds of things that will be addressed in our CRTC filing that people will see later this week.” The Competition Bureau’s said Bell will also divest radio stations to comply with the commission’s radio ownership policy, which restricts broadcasters from owning 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 no more than three same-language, same-band stations. “The Bureau is satisfied that these proposed divestitures are sufficient to ensure the transaction will not result in a substantial lessening or prevention of competition in any radio market,” the bureau said in the release. Maher Yaghi, a telecom and media analyst with Desjardins Securities in Montreal, told BNN in an interview Monday that the agreement is “definitely a positive for the transaction to continue to go ahead,” though he said CRTC approval is not guaranteed. “I believe the decision today and how the transaction is being presented and how many TV stations are being sold, it does add some probability to a positive outcome at the CRTC level,” he said. “Nothing is for sure until it’s done.” Astral said in a release Monday that the Competition Bureau’s “no action” decision represented a “key milestone” for seeking final approval of the deal. "Together, Astral and Bell Media will have the scale to invest, compete and deliver on the opportunities ahead for all Canadians in this rapidly changing media landscape and I look forward to continuing to work in close collaboration with Bell's team towards securing CRTC approval for the transaction,” Ian Greenberg, president and CEO of Astral, said in a statement. John Cassaday, president and CEO of Corus, said in a release that his company's deal to acquire some of Astral's specialty channels represented a "transformative opportunity" for the company. “The consolidation of TELETOON and the addition of the popular services Historia and Séries+ give Corus the scale to expand into the growing French-language specialty television market," Cassaday said. "As a well-capitalized company, Corus can contribute to the growth of this market and provide new opportunities for the production community, while adding greater diversity to the system and more choice to French-speaking audiences.” —With reporting by Danika Grenier at dgreneier@thewirereport.ca, Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Simon Doyle at sdoyle@thewirereport.ca

Bell to divest 12 Astral channels under Competition Bureau deal

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Bell to divest 12 Astral channels under Competition Bureau deal

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