Cable firm trio blasts BCE’s bid for Astral

A trio of eastern Canadian cable companies has come out swinging against BCE Inc.’s (BCE-T) $3-billion purchase of media company Astral Media Inc., saying it will give the telecommunications giant too much control over what Canadians watch on television and what they pay for it.

In an open-letter to Canadian television viewers appearing as a full-page advertisement today in Canadian newspapers including The Globe and Mail, the CEOs of Quebecor Inc. (QBR.B-T), Cogeco Cable Inc. (CCA-T) and Eastlink -- Pierre Karl Péladeau, Louis Audet and Lee Bragg, respectively -- write: “We are speaking out against this deal because we believe it would be harmful to Canadian broadcasting and communications -- to our companies, to our employees, to our investors. But it is your voices that matter most, not ours.”

The three cable companies -- which unlike their peers Rogers Communications and Shaw Communications don’t own specialty or pay TV-stations -- appeal to Canadians to pressure the Canadian government to stop the deal, arguing that BCE’s main subsidiary Bell will have a far greater share of the audience than the largest broadcasters in other developed countries, would have the freedom to “charge you whatever they want to watch it” and would increase advertising rates, which would be passed on to consumers.

The cable companies also allege the deal will result in consumers being pressured into buying Bell’s wireless, phone, Internet and TV services and will result in a decline in original Canadian programs “and therefore fewer jobs in Canadian TV production.”

The deal, unveiled in March, will give BCE ownership of 79 TV channels and 107 radio stations, making it the largest player in both private TV and radio broadcasting in Canada. The deal will be the subject of hearings in front of the Canadian Radio-television and Telecommunications Commission in a few weeks.

Canada’s Competition Bureau also says it’s “actively reviewing” a spate of concerns about the deal. Commissioner Melanie Aitken said the bureau is aware of concerns being raised by the cable companies.

BCE responded to the criticism from the cable companies by saying its takeover of Astral Media is merely a competitive threat to Quebecor’s dominance in Quebec and accusations that it would restrict content are “silly.”

“The media landscape is changing in Québec, and that means new competition and consumer choice – but it also threatens our competitor’s market dominance,” Bell said in a statement released on Tuesday. “Not only is Bell ramping up competition and investment in media, but new services like Fibe TV are impacting cable’s TV service dominance (note that Québecor presently has 85 percent of the TV market in Québec with its Vidéotron cable business).”

BCE maintains that its takeover meets the CRTC’s rules regarding media ownership, as the company’s national share of viewers in English and French would be 33.5 percent and 24 percent, respectively – below the 35 percent level set by the CRTC where takeovers can occur without concern.

“It’s important to note that even after the Bell-Astral transaction, our largest competitor in Québec, Québecor, retains a significantly larger French-language viewership -- 30 percent,” Bell said. “They’ll still be largest in the market, versus Bell-Astral’s 24 percent, but with a less overwhelmingly dominant position.”

For Quebecor’s Péladeau, this is the latest in a series of long-running spats between his company and BCE, dating to his company’s purchase of cable provider Groupe Vidéotron in 2000. Astral shareholders approved the deal in May but successfully opposed a plan to give Astral CEO Ian Greenberg a $25-million sendoff payment. Bell has since announced its plans to spend $200 million on development, Canadian programming and other initiatives to satisfy regulators, as well as plans to divest radio stations in some markets where the combined company will own more than the allowed two stations per AM or FM band.

The three cable CEOs are holding a press conference in Ottawa this morning to expand on their views.

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With files from BNN.ca staff