BCE to launch service to take on Netflix in English and French

BCE/Bell Canada CEO George Cope, left, speaks in Montreal with Astral Media Inc., President and CEO Ian Greenberg on the opening day of the CRTC hearings into the proposed acquisition of Astral by Bell, Monday, Sept. 10, 2012. (Graham Hughes / THE CANADIAN PRESS)

MONTREAL -- BCE will launch a "made-in-Canada" competitor to Netflix, available in English and French, CEO George Cope said Monday as part of his pitch to broadcast regulators considering the company's $3.4-billion takeover of Astral Media.

The service would be available on demand and on any device, and showcase Canadian and international movies from Astral's pay TV services, such as HBO Canada and The Movie Network, as well as news, sports and entertainment content from Bell Media.

"(It's) a made-in-Canada service -- available in English and French everywhere we have rights -- to all Canadians through the cable, satellite or IPTV provider of their choice," Cope told a hearing into Bell's acquisition of Astral Media.

"Combining the unique pay TV strengths of Astral with Bell Media's broad range of programming will create a Canadian service that truly stands apart from those of international providers."

Cope didn't say when the service will launch or provide more details on what consumers will get to watch.

He noted that more than 10 per cent of Canadians subscribe to Netflix, but the service doesn't pay taxes in Canada and doesn't contribute to Canadian content.

"The Canadian system needs companies with the scale to compete against foreign content companies like Netflix, Apple, Google and Amazon."

The Canadian Radio-television and Telecommunications Commission hearing, which got under way Monday, is focused on how much of the English-language TV market the telecom giant will corner if the Astral deal were to go through.

BCE's Canadians rivals, as well as a group of Canadians concerned about media concentration, have publicly voiced concern about the implications for the Canadian media landscape if the takeover were allowed.

The commission will examine the multibillion-dollar transaction and hear from multimedia, telecom and radio companies, and producers as well as film groups and consumer advocates -- many of them against the deal.

The fact that Cope chose the outset of the hearings to announce BCE was taking on Netflix raised the concern of at least one of the commissioners.

Tom Pentefountas asked Cope if he was "pulling rabbits" out of his hat with the announcement.

Cope said BCE hadn't intended to announce a product launch, but felt compelled to focus on the benefits of the Astral transaction due to the negative publicity campaign against it, and to let consumers know about the benefits of the deal.

Cope told the hearing that with the acquisition of Astral, Bell will own 33.5 per cent of the English language market -- that's under the 35 per cent threshold set by the CRTC for approval. BCE's competitors dispute that figure and say it is higher.

He said the deal will bolster its French language content in Quebec and will see an all new French language news service launched in Montreal.

Cope added BCE will boost its contribution to $241.3 million as part of a "tangible benefits" package as part of the deal.`

Competitors disagree with the way BCE (TSX:BCE) calculates market share and argue it would get too much clout.

The "Just Say No To Bell" campaign's website says if the deal is successful, Bell would control 37.6 per cent of TV viewing. It wants the federal government to stop the deal.

Telus Corp. (TSX:T), for one, argues Bell would have too much control of English-language TV content and leave consumers with fewer choices and higher cable bills.

Telus has argued that the purchase of Montreal-based Astral, along with Bell's part ownership in the Maple Leaf Sports and Entertainment TV assets, and its stake in joint venture assets, such as Teletoon, would give Bell 49.5 per cent share of the English-language television audience.

A coalition comprised of Quebecor (TSX:QBR.B), Cogeco (TSX:CGO) and Eastlink have also been fighting to stop the Astral takeover.

Under the deal, 10 radio stations in five markets will be divested, BCE said.

The markets are Vancouver, Calgary, Winnipeg, Toronto and Ottawa, BCE said in a list of stations tabled with the CRTC.

Seven of the stations are owned by Astral and three by Bell.

BCE announced the Astral deal last March aimed at creating a media powerhouse poised to take on rivals in providing digital content to consumers. At the time of the deal, Cope had said the deal gives Bell important new content for online services and mobile devices like smartphones and tablet computers.

Astral CEO Ian Greenberg told the hearing Monday that BCE was the only bidder that could meet its price and not carve up his company.

"Bell will not split up the French and English assets," said Greenberg.

"If we keep fragmenting the broadcasting system in Canada it will not be as strong as it could be.

"Bell was by far the only buyer that could meet all of the criteria we set out."

In 2010, BCE bought the rest of the CTV assets it didn't already own for $1.3 billion.

CTV operates more than 25 stations across the country, 30 specialty channels including sports networks TSN and RDS online video programming and properties such as CTV.ca, TSN.ca, RDS.ca, MuchMusic.com, MTV.ca and TheComedyNetwork.ca. It also owns CHUM Radio, which operates more than 30 radio stations throughout Canada.

Astral is Canada's largest pay and specialty TV broadcaster and owns 84 radio stations in 50 Canadian markets and 24 television services. It is also the third-largest outdoor advertising company.

If the deal goes ahead, Bell said it would control 24.4 per cent of the French-language market. Bell has said the acquisition of the Astral media assets will provide more competition in Quebec's French-language market which is dominated by Quebecor Inc. (TSX:QBR.B).