Competitors weigh in on Bell's bid for Astral

A CRTC logo is shown in Montreal on September 10, 2012. (Graham Hughes / THE CANADIAN PRESS)

MONTREAL -- Bell should be forced to sell Astral's Movie Network pay TV service if the CRTC is going to allow the $3.4-billion revised merger of the two companies to go ahead, Rogers Communications Inc. said Tuesday.

And, the cable, wireless and Internet giant told the CRTC hearing reviewing the deal, if it were for sale Rogers would consider buying Astral's Movie Network for itself to add it to its own services.

Rogers said it expects Bell will impose financial terms to make it more difficult to get the English-language pay TV service's movies and programs and ultimately make it more expensive for consumers.

"These are premium services that hold the multi platform rights to 'must have' feature films and HBO series," said Ken Engelhart, vice-president of regulatory at Rogers (TSX:RCI.B).

"They are the jewels in the Astral crown. We think it would be unwise to allow these services to be acquired by Bell Media."

The CRTC turned down Bell's purchase of Astral Media last fall, saying it wasn't in the best interests of Canadians and would have made Bell too powerful, especially in the TV market.

Rogers had asked the CRTC to make Bell sell off the English pay TV assets during the last round of hearings too, but wouldn't say at that time if it definitely wanted to purchase them.

At the hearing Tuesday, Rogers told the CRTC it was an interested buyer.

"We would at least take a look at TMN," Engelhart said of Astral's Movie Network.

When asked by the CRTC who else could buy the English pay TV services other than Rogers, Engelhart replied: "I think with the amount of money that thing generates there will be a buyer."

Rogers said the Movie Network's films and series have been the "cornerstone" of its new services, Rogers on Demand and Rogers Anyplace TV and worries that Bell will make purchasing this content more expensive and difficult.

Bell (TSX: BCE) said it looks like Rogers wants Astral's Movie Network for itself.

"Rogers claims that forcing us to sell TMN would somehow solve their problem of getting access to that content," said Mirko Bibic, chief legal and regulatory officer at Bell.

"Yet they already have access to TMN content through a long-term agreement with Astral. They're demanding that the regulator ensure their access to something they already have. It's a very curious argument, and we can only assume they simply want TMN for themselves," Bibic said in an email.

Bell and Astral (TSX:ACM.A) also have said combining the two companies will better allow them to compete with companies like Netflix.

Rogers replied that most major Canadian TV providers will roll out some kind of competitor to online TV and movie provider Netflix.

"I don't think you need to approve the transaction in its current form in order to have that kind of competition in the marketplace," said Dave Purdy, Rogers vice-president of digital television products.

"We certainly plan on rolling out our own subscription products that will compete with Netflix," Purdy told the Canadian Radio-television and Telecommunications Commission.

Telus Corp. (TSX:T), which doesn't own any TV or radio stations, said Tuesday it's still opposed to the deal.

Telus said if Rogers were able to buy the Movie Network, it still wouldn't have the same heft as Bell owning the Movie Network and other Astral assets.

"They could buy three TMNs and still not be in the same ball park as Bell Media," David Fuller, Telus's chief marketing officer, said after his company's presentation.

But Telus said if the deal goes ahead it would like the code of conduct the industry uses, for such things as access to content and commercial negotiations, strengthened.

The telecommunications company also said Bell's proposal to sell off some of Astral's TV channels and radio stations doesn't change how this merger will affect the communications industry.

"If this transaction is approved, Bell will still become the largest television content aggregator, the largest radio operator and one of the most significant advertising suppliers, over and above being Canada's largest telecommunications provider," said Ted Woodhead, senior vice-president of federal government and regulatory affairs at Telus.

Telus also expressed Rogers' concerns that Bell would use its significant power over content and advertising to raise prices its competitors.

Bell and Astral are seeking approval of a revised deal that among other things would see Bell sell all of Astral's English language specialty services and one of its English pay TV services. However, it would keep eight specialty and pay of Astral's channels including the Movie Network.

A consumer advocacy group also asked the CRTC to turn down the revised deal for a second time, saying a bigger Bell won't be better for competition or choice.

The Public Interest Advocacy Centre said there would be more Bell content and services available to consumers, but at Bell's price and on Bell's terms.

"Bell's version of the public interest envisions a bigger Bell that provides more Bell services and content to consumers on Bell platforms -- or on a competitor's platform, but at Bell's price and on Bell's terms," said Janet Lo, legal council for the Ottawa-based group.

Singer Suzie McNeil told the CRTC she's in favour of the deal because both Bell and Astral support Canadian artists.

McNeil said Bell has helped support her career. Her song, "Believe" became Bell's fundraising song for its "Own the Podium" campaign and she was selected to sing at the Vancouver Winter Olympics closing ceremonies.

"Significant benefit dollars that will result from this transaction will enable more artists like me," she said.

Bell has said it will also sell 10 of 84 radio stations owned by Astral (TSX:ACM.A) and will acquire less than half of Astral's French language specialty services.

CTV is a division of Bell Media, which is owned by BCE Inc. (TSX, NYSE: BCE)