By Louise Egan and Alastair Sharp
OTTAWA/TORONTO, June 27 Canada's broadcast
regulator on Thursday approved a C$3 billion ($2.86 billion) bid
by BCE Inc, the country's biggest telecoms company, to
take over Astral Media Inc, 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 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
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
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
"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
Shares of BCE's biggest rivals, Rogers Communications Inc
and Telus Corp, have sold off sharply over the
last two days on news that U.S. telecom giant Verizon
Communications 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
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
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 bought out General Electric Co's
49 percent stake in NBC Universal.