Bell-Astral2 – Part 2

Ah yes, my long-awaited post.  The clamouring can stop now.

I’m not going to go through the whole application (you know what you have to do if you want that service) but highlight some of the issues, with context.  I know that most of you won’t read the 63 pages of the Supplementary Brief or the appendices or the deficiency letters.   If you are only interested in English Television (as I tend to be), then the only Astral assets that Bell is acquiring are TMN and TMN Encore, 50.1% of Viewer’s Choice and local stations in Terrace and Dawson’s Creek, BC.

As you remember from Part 1, though the Competition Bureau has agreed that if Bell-Astral sells off certain television and radio services then it will not be overly competitive, the CRTC has its own review with its own issues.  They have been identified in the public notice as:

  • Concentration of Ownership and Vertical Integration (Television)
  • Common Ownership Policy (Radio)
  • Value of the transaction
  • Proposed Benefits Package
  • Other issues pertaining to radio

While a number of these issues were thoroughly discussed in Bell-Astral1 in September and Bell-Astral feels certain that this new structure addresses them, the issues will be discussed again in the Bell-Astral2 hearing.

Bell hopes that it has addressed concentration of ownership (or the “Diversity of Voices” policy) by agreeing to sell off those assets co-owned by Corus to Corus (Teletoon and more) and by selling the Family Channel services to unknown (at this time) bidders.  [Note that Bell expects to announce the new owners of Family Channel in April, after the submission deadline.  There will be other hearings for the Teletoon services and the Family Channel services]  The concentration is definitely much less than at the first hearing but the Commission will still want to review the facts and the thoughts of intervenors.

Vertical integration is the often messy question of whether Bell, as a vertically integrated company (BDU-broadcaster) can use its market power in an anti-competitive way to impose excessively high rates on smaller BDUs who want to carry Bell-owned services.  There may also be vertical integration issues with independent broadcasters who want to ensure that Bell is not favouring its services over the independent services.  At the last hearing there were many allegations of improper behaviour by Bell but at times it felt like a case of ‘he said – she said’ (though in this context ‘he said – he said’ is more accurate).   If there are real issues to be dealt with here, those intervenors are going to have to come to the table with specific evidence of anti-competitive behaviour that needs to be protected against.

As the big issues were so big last time, very little time was spent on valuation of the transaction.  Valuation has become increasingly complex and variable – and redacted due to claims of confidentiality – so intervenors have come to rely on Commission staff to ask the necessary questions during the deficiency process and at the hearing and adjust the valuation as necessary.  The impact of the valuation of the divested assets (ie those not yet purchased) will be dealt with by an adjustment so that if the buyer pays less than those assets were valued, Bell proposes that it will make up the difference in the calculation of benefits.

The independent television production community is most interested in benefits.  There are intangible benefits and tangible benefits.  Bell-Astral has spent a lot more time on describing the intangible benefits this time than last time as there really were no identifiable intangible benefit to the industry (i.e. other than to Bell and Astral’s shareholders).   While some of these intangible benefits will cost money, that cost will be outside the tangible benefits package.  They include:

  • Maintain Astral and Bell local stations open till the end of their licences in 2017 and 2016 respectively
  • Maintain French media headquarters in Montreal, English in Toronto and set up new regional development offices in Vancouver and Halifax
  • Two executives who will be “Canadian programming champions” in Montreal and Toronto (not clear where they sit in the org chart or if they are required to wear capes).
  • Adhering to CMPA and APFTQ terms of trade

The tangible television benefits are primarily French.  The English benefits (31% based on value of the assets) proposed are:

On Screen Benefits

  • $5 million to the Harold Greenberg Fund
  • $3.25 to Telefilm’s Private Donation Fund
  • $24.56 to ‘Other Programming of National Interest’

Social Benefits

  • $9.15 million to film festivals, a CAFDE Promotion Fund for distributors, Media training programs (Banff, NSI etc.), the Academy of Canadian Cinema & Television and Canadian Women in Communications
  • $5.23 to Consumer Education, the Canadian Broadcasting Participation Fund and the Canadian Broadcast Standards Council

Unlike the first hearing (and many other hearings recently), there was no attempt to increase the social benefits beyond the standard 15% or to direct the benefits to self-serving projects (such as the Northwestel project during Bell-Astral1).  A lot of the arguments made by the English independent production community have been addressed but that doesn’t mean there won’t be concerns.  One issue will be the timing of the on-screen benefits as Bell has proposed that they would be paid out over seven years but would not start till the existing pool of benefits (BCE-CTV and Shaw-Global) expire in 2017.  In the last hearing the independent production community generally opposed this schedule.

Finally, an editorial comment.  I like this Supplementary Brief much more than the first one.  It is easier to read, has much less hyperbole and sets out clearly the various aspects of the transaction.  Bell seems to have listened to the objections of the stakeholders and the CRTC and tried to address almost all of them in their application.  It remains to be seen whether it is enough and whether other issues get raised at the hearing.  My big hope is that we do not see another case of negotiation throughout the hearing, with stakeholders, Commission and applicant scrambling to deal with new, half-thought out, proposals in a comprehensive way.  That didn’t work for any of us.

Submission deadline is April 5 and the hearing will take place starting May 6 and probably last the week.

For some additional insight (including more on radio and French services) check out Fagstein and Carrt and coverage by the Globe and Mail‘s Steve Ladurantaye – these were my hearing buddies during Bell-Astral1 (and of course my wonks – not nerds – wonks).

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One thought on “Bell-Astral2 – Part 2

  1. Pingback: Bell/Astral Take 2: The Proposal – Fagstein

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