Antitrust Law Daily Wrap Up, ANTITRUST NEWS: BCE Agrees with Canadian Competition Bureau to Divest Television Assets, Permitting Acquisition of Astral Media to Proceed, (Mar 5, 2013)

By Tobias J. Gillett, J.D., LLM.

The Canadian Competition Bureau has cleared Canadian communications company BCE Inc.’s proposed acquisition of television company Astral Media Inc. in an agreement under which BCE must divest itself of a number of pay and specialty television channels, the Competition Bureau has announced.

BCE Inc. (Bell) is Canada’s largest communications company, operating 28 conventional TV stations, 30 specialty channels and 33 radio stations. On March 16, 2012, Bell and Astral Media—operator of 25 television services, 84 radio stations, more than 100 websites and digital media properties, and 9,500out-of-home advertising signage locations—announced a deal under which Bell would acquire all of the issued and outstanding shares of Astral Media for approximately $3.38 billion.

The Competition Bureau’s review focused on the impact the combination of the companies would have on the market for pay and specialty television channels, and whether the transaction between Bell and Astral Media would give Bell enhanced power when negotiating the terms of its agreements with distributors. The Competition Bureau had concluded that the acquisition “would have led to increased prices and reduced choice and innovation in the television distribution industry.”

In the Consent Agreement reached between Bell and the Competition Bureau and filed with the Competition Tribunal, Bell will divest itself of interests in a variety of pay and specialty television channels currently owned by Astral Media, including The Family Channel, Teletoon, Teletoon Retro, Disney XD, the Cartoon Network, Disney Jr. (English and French), Historia, Séries+, Télétoon, TélétoonRétro, MusiquePlus, and Musimax. In addition, Bell agreed to refrain from imposing restrictive bundling requirements on any provider seeking to carry The Movie Network or Super Écran. To comply with the Canadian Radio-television Telecommunications Commission’s Common Ownership Policy, Bell will also divest itself of some radio stations, a move the Competition Bureau believes will be sufficient to prevent the transaction from diminishing competition in any radio market.

“Consumers who pay for television programming are looking for greater choice, more innovative product offerings, and reasonable prices,” said John Pecman, Interim Commissioner of the Competition Bureau. “Today's agreement is essential to preserving choice for consumers and ensuring continued and effective competition in this area.”

The transaction must still obtain approval from the CRTC.

BCE response. In a press release, Bell expressed its enthusiasm for the Competition Bureau’s decision to permit the transaction to proceed.

“This positive news from the Competition Bureau is a major step forward in uniting Astral and Bell Media and delivering on our promise to grow investment and competition in Canadian broadcasting,” said George Cope, President and CEO of BCE Inc. and Bell Canada. “This decision preserves the tremendous value the transaction represents to consumers, the Canadian media community, and Astral and Bell shareholders.”

“The commitment to broadcasting investment and innovation by Astral and Bell Media, and Corus's further expansion into the Québec marketplace, underscores the growing competitiveness in the Canadian broadcasting industry,” added Kevin Crull, President of Bell Media. “We now look forward to demonstrating the many benefits of the transaction to the CRTC and all Canadians.”

Astral Media response. Astral Media also released a statement echoing Bell’s sentiments regarding the Bureau’s decision.

“Competition Bureau clearance is a key milestone in the progress of our transaction and reflects Astral and Bell's commitment to making sure that the consumer always comes first,” said Ian Greenberg, President and CEO of Astral. “Together, Astral and Bell Media will have the scale to invest, compete and deliver on the opportunities ahead for all Canadians in this rapidly changing media landscape and I look forward to continuing to work in close collaboration with Bell's team towards securing CRTC approval for the transaction.”

News: Antitrust