I was going to wait until the CRTC Public Notice was released later this week before I posted, but thought some of you might be wondering about how the Competition Bureau decision fits into this transaction in the meantime.
Separate and apart from the CRTC review of the Bell acquisition of Astral’s assets, the Competition Bureau also had to review the transaction. It is required to review all mergers or acquisitions when the value of the assets being acquired are more than $50 million. As you will recall Astral is somewhat over that threshold at $3.38 billion. The purpose of the review is to ensure that the transaction is not anti-competitive. This is similar to the CRTC’s review but not as complex, as consolidation is only one of the issues that the CRTC looks at when reviewing an acquisition (e.g. valuation, ‘twin sticks’, benefits policy among others). The Competition Bureau also looks at the transaction from a commercial perspective: would the transaction provide Bell with enhanced market power in negotiating terms for its broadcast services with other distributors. The CRTC reviews that issue but as well looks at the impact on the consumer should a broadcaster dominate viewing share. The Competition Bureau review is also different from the CRTC’s in that it is a private investigation and not a public hearing.
We do not know anything about the discussions between the Competition Bureau and Bell but we know the end result so we can guess. Bell had talked to the CRTC last fall to find out what it would take to get the transaction approved and it looks like the Competition Bureau had similar concerns. An acquisition of all of Astral’s assets would put too many television and radio services in one company’s hands. Bell would dominate the market. Despite Bell’s very public disagreement with that assessment after the initial decision to reject Bell-Astral1, Bell management have agreed with the Competition Bureau to sell off certain Astral assets in order to maintain a reasonable and not dominating share of the viewing audience.
In the Consent Agreement Bell agreed to divest itself of 6 English specialty television services and 7 French. On the English side Bell is getting rid of Astral’s kids services (I’m only going to say this here – called it!) and hanging on to TMN. As you may recall from Bell-Astral1 the largest part of the transaction was for French television services and radio, so Bell will still be acquiring a substantial chunk of Astral. We will not know the exact valuations of what is being kept and what is being sold until we see the detailed material that will be part of the CRTC Public Notice.
Corus has agreed to buy Astral’s share in Teletoon and Cartoon Network and become the sole shareholder in those services (along with French specialty services and two radio stations). They would have had a fight at the CRTC if they had picked up Family/Disney XD/Disney Jr. because then they would have monopolized private broadcasting for children. Those services are being put out for bids. There has been much speculation as to who might be interested in those services as there is no natural home for them. It will be very interesting to see who ends up buying them and moving into the kids space.
So when we see the CRTC Public Notice (please not when I’m on the train to Prime Time) we will get more information on the Bell-Astral2 transaction, might also see an application for approval of Corus-Astral and will see benefits package proposals for one or both. I am assuming that we will have to wait to see the Public Notice on the acquisition of the Family Channel services but that could have been happening behind closed doors all along.