Canada's BCE wins regulatory approval for C$3 billion Astral bid
OTTAWA/TORONTO (Reuters) - Canada's broadcast regulator on Thursday approved a C$3 billion ($2.86 billion) bid by BCE Inc (BCE.TO), the country's biggest telecoms company, to take over Astral Media Inc ACMa.TO, a deal that will give BCE more control over content it distributes to television, computer and mobile screens.
The deal, expected to help BCE better compete with rival Quebecor Inc (QBRb.TO) in their home province of Quebec, adds premium movie channels and French-language content to BCE's existing media assets.
The regulator, the Canadian Radio-television and Telecommunications Commission, had initially rejected the deal last year, saying it would make BCE far too dominant.
BCE and Astral subsequently revised their agreement and promised to divest 11 television channels and 10 radio stations.
Still, the CRTC said it had to put conditions even on the revised deal to uphold the public interest and protect rivals from anti-competitive behavior. It required no further asset sales, however.
The conditions mean that "Canadians will continue to have access to programming from a diversity of voices in the marketplace," Jean-Pierre Blais, chairman of the CRTC, said at the regulator's headquarters. "Let me be clear, without the measures we are imposing today the commission would not have approved Astral's application," he said.
Under the conditions, the regulator will more closely monitor BCE's behavior in the marketplace. BCE will have to adhere to a code of conduct on anti-competitive behavior or risk losing its broadcasting license. It must also file documents with the CRTC on deals to sell content to rivals.
BCE said it is assessing the CRTC ruling and would issue a statement before markets open on Friday.
CONSUMER GROUPS CRITICAL
Consumer groups, which have criticized the deal for further concentrating media ownership, said the approval would result in jobs losses and higher prices.
"This decision is bad news for Canada, because allowing yet more concentration in our media market will act as a dead weight on our economy," consumer advocacy group OpenMedia.ca said in statement.
Even after the sale of some channels, the CRTC said BCE's share of the English-language television market in Canada would be 35.8 percent, just above the regulator's comfort zone, while its share of the country's French-language market would be 22.6 percent.
"My main takeaways as a BCE shareholder are these - it is going to become accretive to earnings quickly and secondly it is going to decrease their wireless revenue exposure and that is timely given that money is coming out of Rogers and Telus," said Kash Pashootan, a portfolio manager with Raymond James in Ottawa.
Shares of BCE's biggest rivals, Rogers Communications Inc (RCIb.TO) and Telus Corp (T.TO), have sold off sharply over the last two days on news that U.S. telecom giant Verizon Communications (VZ.N) is set to enter the Canadian wireless market. Shares of BCE, which already had less exposure to wireless than Rogers or Telus, have so far taken less of a hit.
The Public Interest Advocacy Centre said the CRTC safeguards were less than ideal, because the regulator would have to monitor and enforce penalties for unfair practices.
BCE has extensive landline, Internet and wireless operations and owns the CTV television network, Canada's biggest private network, as well as specialty TV channels. Astral owns radio stations across the country, as well as specialty TV channels and an outdoor advertising business.
In addition to the conditions imposed, the CRTC said BCE must pay C$72 million more into a fund to support local programming than it had proposed, for a total of C$246.9 million.
It said BCE can operate four English-language radio stations in Montreal, but must maintain one as a sport-focused station for seven years.
BCE was keen to acquire Astral's French-language content to help it better compete with Montreal-based Quebecor, which owns specialty-TV channels and radio stations and produces programming as well as selling Internet, mobile phone and cable service.
Like their U.S. counterparts, Canadian telecom and cable companies have increasingly looked to buy the channels and other content they distribute. Earlier this year, U.S. cable provider Comcast Corp (CMCSA.O) bought out General Electric Co's (GE.N) 49 percent stake in NBC Universal.
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