Bell Shooting for the Stars: CRTC Holds Hearing on the Purchase of Astral Media

In a time where the price for cable TV and Internet subscriptions seem to be ever-increasing, a bid for Astral Media Inc. by Bell Canda Enterprises Inc. (BCE) in March, 2012 for $3.38 billion has roused the concerns of a number competing corporations and consumer groups.

Following the bid, campaigns such as Stop the Takeover and saynotobell.ca have been created with the purpose of informing the public about the potential consequences of such an acquisition and to persuade the government, the Canadian Radio-television Telecommunications Commission (CRTC), and the Competition Bureau that such a move by BCE should be blocked in order to protect consumers across the country. While there is some doubt as to whether steps being taken by BCE’s competitors are being done with consumer rights as the main motivator, important issues have been raised by both sides concerning the potential deal. From September 10th – 14th, 2012, the CRTC heard arguments from all parties involved at a regulatory hearing in Montreal, Quebec and will be presenting their decision in the near future; a decision that could have heavy implications on consumer access to media in Canada, regardless of what is chosen.

According to OpenMedia.ca – the group behind Stop the Takeover – Canada has one of the most concentrated communications industries, with Bell, Shaw, Rogers, and Quebecor contributing the overwhelming majority of cable/satellite transmissions as well as raking in the majority of revenues for wireless and internet services. The CRTC has placed limits on the English and French content any one company can control – 35% in the case of English content. With the acquisition of Astral, Bell states that it would own 33.5%, just under this threshold. However, rival Telus calculated it would control 49.5% and the Say No to Bell group calculated a figure of 37.6%. Much of the arguments presented at the hearing concerned these figures as well as the impact the Astral deal could have on the Canadian consumer.

During the CRTC hearing on the matter, George Cope – CEO of BCE – stated, “Canada should not have to wait any longer to deploy a viable, national multi-platform solution, backed by a company with the resources to compete against well-funded global competitors.” Without the content that Astral Media owns, Bell fears that it will not be able to stand up to the likes of Netflix and other companies that have been using updated business models (other than the expensive subscription fee that cable TV is well-known for) in order to attract new customers. However, executives at competing Canadian companies don’t believe this argument. Ken Engelhart, a Senior VP at Rogers (another company against the purchase) pointed out that a number of cable companies in Canada and the US have launched their own services to compete with Netflix and this makes Bell’s situation no different than that of any other.

One of the issues with the Astral bid that could affect consumers is the possibility that Bell could leverage its new-found position to unfairly overcharge other cable companies that want to broadcast Bell-owned programming. Such increases would then be passed off to consumers, resulting in higher prices and less options for Canadians – one of the issues with having content and distribution controlled by the same company. Telus and Rogers have both cited times where Bell has exhibited this type of behaviour, and there is potential for future dealings to follow a similar pattern if the Astral deal is allowed to go forward. In addition, unnecessary duplication of positions between the two companies will mean a number of job cuts within the sector.

The government of Canada and the Competition Bureau both have the ability to veto the purchase, whether or not the CRTC does so. However, some experts are unsure as to whether either of those bodies will step in. Making matters more uncertain is the recent appointment by the Harper government of Jean-Pierre Blais as the CRTC chair. While the CRTC has officially changed its focus in order to provide Canadian consumers with better accessibility to content and services (a change from the previous objectives under previous chair Konrad von Finckenstein), the decision on this case may probe deeper into the Commission’s motivations.

Adam Del Gobbo is a JD Candidate at Osgoode Hall Law School.

3 Comments
  1. The Competition Bureau’s commissioner, Melanie Aitken, actually recently commented that even if the CRTC gives the deal the green light, the Bureau may bring it to a halt. Subsequent to recent CRTC proceedings and testimony, the Bureau’s commissioner allegedly concluded that the prospective acquisition of Astral Media Inc. would likely not be in the best interest of Canadian consumers. This is very refreshing to hear, but also quite bold for the Bureau (who conducts all of their investigations in private) to announce its trepidations at this stage of review.

    The largest danger, quite palpably, is the fact that BCE currently manages BOTH content and means of transmission. This means that if (read: when) they increase the cost of services, consumers will either be forced to pay more for the content they have been accustomed to receiving for a lower rate, or get left out in the cold due to the absence of a viable alternative.

    I will definitely be following how the investigations/reviews play out; thank you for posting!

  2. “The government of Canada and the Competition Bureau both have the ability to veto the purchase, whether or not the CRTC does so.”

    This statement is NOT entirely true. Under section 28 of the Broadcasting Act, the approval of this transaction by the CRTC is not subject to petitions to the Governor in Council unless it results in changes to a broadcasting licence (i.e., to issue, amend or renew a broadcasting licence). The CRTC can indeed approve this without changing any of the underlying broadcasting licences.

  3. Thanks for the clarification Tijan and I apologize for the error.

    I for one am pleased by the CRTC’s recent decision to halt the deal. It seems they are taking their new direction to heart and are keeping consumer interests at the forefront. The question now is what will happen to Astral Media…

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