Bell says it needs to buy Astral to compete in digital world

Bell to acquire Quebec's leading media company Astral in $3.38 billion transaction.

MONTREAL -- Bell should be allowed buy specialty TV and radio station company Astral Media to get bigger to take on foreign online competitors like Netflix, BCE CEO George Cope said Friday as part of the telecom giant's final pitch to CRTC.

If the $3.4-billion deal is shot down, Astral's assets will ultimately be split up, guaranteeing the continued foreign dominance in every way that online content is delivered, Cope said.

Astral own 25 channels, including The Movie Network, HBO Canada and French -language Super Ecran, Family Channel and Disney Junior and more than 80 radio stations.

"Canada should not have to wait any longer to deploy a viable, national multi-platform solution, backed by a company with the resources to compete against well-funded global competitors," he said on the final day of the regulatory hearing.

If the acquisition is approved, Bell will have even more content from Astral to put on TVs, computers, smartphones and tablets of its own customers and to sell to its competitors. Bell bought the rest of the CTV assets it didn't already own in 2010 to put more programming across the four screens.

Meanwhile, the CBC objected in a last minute letter to the CRTC on Friday to Bell's plans to set up a new, national French-language all-news service.

CBC's French-language service has RDI, a 24-hour all-news service and Quebecor runs French all-news service LCN. Bell's proposed service would mean a third French-language all-news competitor based in Montreal.

The CBC has objected to Bell using $20 million to start the all-news service from the more than $240 million it will contribute to what's called a "tangible benefits" package -- an additional financial obligation -- if the deal is approved.

Bell said it's confident its French-language news service will go ahead.

"I think we'd be surprised to see CBC or SRC (Societe Radio Canada) come forward and say that another voice of news for the French community isn't a strong addition," Kevin Crull, president of Bell Media division, said after the hearing.

The use of the tangible benefits package by Bell to launch an all-news service raised some eyebrows, though.

The Alliance of Canadian Cinema, Television and Radio Artists told the CRTC that it would be "completely inappropriate" to use the money to fund the news service.

"There are a number of great proposals for social benefits submitted for BCE's consideration -- including from the Broadcast History Museum and the Actor's Fund of Canada," said ACTRA president Ferne Downey.

"These are worthy beneficiaries for whom even a little would mean a lot," Downey said.

During Bell's final pitch to the CRTC, Cope played down the potential dominance of Bell would have.

"As we've made clear, Bell's share of English language TV viewing will be 33.5 per cent following the Astral-Bell transaction," Cope said.

That's under the 35 per cent threshold set by the CRTC.

Cope also said Bell makes its TV content available to its competitors, denying accusations the company has been an unwilling or difficult negotiator and has pushed up prices.

Astral CEO Ian Greenberg says Canada needs its own online TV and movie service to compete with Netflix and the merger of the two companies would allow that.

If it's so easy to set up competitors to Netflix, why hasn't anyone else in Canada already done that, asked Greenberg.

"The answer is that it requires the scope only a transaction like this one brings," Greenberg told the Canadian Radio-television and Telecommunications Commission.

"Astral considered doing so, alone and in partnership, but we were unable to develop a viable business case," he said.

Greenberg added that competition won't disappear because of the transaction and independent players will continue to emerge, saying, "After all, that's how we got started."

Earlier Friday, several small TV, film and media companies spoke up in favour of Bell's takeover of Astral, saying bigger is better to compete with online entertainment companies like Netflix and to get Canadian content a bigger audience.

Bringing together Bell and Astral will only strengthen the Canadian broadcast system on all platforms, said John Brunton, chief executive and chairman of Insight Production Company Ltd.

"Services like Netflix, Apple TV, YouTube, Google, Facebook -- the list goes on -- are just the tip of the ice berg of what we're going to face in the next few years," Brunton said.

"I truly believe that our American counterparts will continue to find ways of dealing directly with Canadian consumers, which will eliminate Canadian companies in the process. The bigger and stronger our media companies are, the more likely our production community will thrive and prosper, in my opinion," he said.

Insight Production Company produces "Canada's Got Talent," "Canadian Idol, "Big Brother Canada," "Canada Sings," "Intervention Canada" and "Top Chef Canada."

Brunton said he has produced 1,201 hours of programming with CTV and its associated specialty channels, which Bell owns.

"BCE promotes creative and innovation. That's been our experience."

The Canadian Association of Film Distributors and Exporters said it also supports the deal because it will provide new opportunities to promote Canadian films and reach larger audiences.

Association president Ted East said Bell's announcement of a new service to compete with online Netflix will provide a platform for Canadian movies.

"Having Bell Media as an enthusiastic supporter of Canadian feature films will be a critical component in their success in the decade ahead," East said.

But a small association of cable TV distributors spoke against the deal.

The Canadian Cable Systems Alliance told the CRTC that Bell will have too much control over programming if it's allowed to buy Astral Media (TSX:ACM.A) and suggested that consumers will pay the price if competition is reduced.

"This transaction would give Bell control over the marquee programming content, both English and French, that is available to Canadian consumers," said Alyson Townsend, president and CEO of the Canadian Cable Systems Alliance Inc.

There has been a long list of companies and groups that have come out against the proposed acquisition of Astral (TSX:ACM.A), a friendly deal valued at about $3.4 billion when it was announced March 16.

BCE Inc. owns Bell Canada, the CTV television network, the former Chum radio stations and numerous specialty TV channels, as well as online sites for them all.

Rogers (TSX:RCI.B), Quebecor (TSX:QBR.B) and Cogeco Inc. (TSX:GCO) have come out against the deal, while Calgary's Shaw Communications (TSX:SJR.B) supports it.