Quebecor calls Bell-Astral deal unfair

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

MONTREAL -- Quebecor's new president and CEO blasted the proposed Bell-Astral merger on Thursday, saying it would create a "monster" that would have an unfair competitive advantage.

The Canadian Radio-television and Telecommunications Commission initially killed the Bell-Astral merger last fall, arguing it wasn't in the best interests of Canadians.

That forced Bell (TSX:BCE) to come up with a new plan to acquire Astral (TSX:ACM.A).

The new proposal would, among other things, see Bell sell all of Astral's English language specialty services and one of its English pay TV services. However, it would keep eight of Astral's channels including the pay TV service, The Movie Network.

Bell also said it would sell 10 of Astral's 84 radio stations and acquire less than half of Astral's French language specialty services.

BCE chief executive George Cope told the CRTC this week the application to buy Astral is quite different from the last proposal. He said the revised deal would strengthen Bell's presence in Quebec and see Bell invest in creating more Canadian radio and television content.

But Quebecor CEO Robert Depatie told the CRTC on Thursday the new $3.4-billion offer is a smokescreen and that Bell is trying to "exaggerate the scope of its proposed concessions."

"A monster would be created," said Depatie, whose first day as company CEO was Wednesday following Pierre Karl Peladeau's recent decision to step down.

"A dominant machine would be created. A company with such control should not exist."

Depatie argued that Bell's "monopolistic mentality" would hurt consumers and not be in the interest of the public or the Canadian broadcasting industry.

CRTC chairman Jean-Pierre Blais was skeptical about Depatie's comments.

"You're still a company that has a certain presence," said Blais, referring to Quebecor's assets in communications, daily and weekly newspapers, magazines, TV, books and music.

"Are you trying to tell us that you're not able to use all these outlets, these platforms, to compete?"

His fellow commissioner, Suzanne Lamarre, also wondered about Depatie's remarks.

"Astral competes with you as it stands right now.... so what really changes?" Lamarre said. "BCE and Astral merged will arrive in the marketplace with services that are already there."

She also pointed out Quebecor has a 35 per cent share of the market in Quebec in terms of advertising revenue, compared with 19 per cent for Bell and Astral combined.

"You are currently in a dominant position," she said. "On the day after the deal, if it did go through, you would still be at 35 per cent -- or maybe a bit higher because your numbers are good -- and Astral would be at 19 per cent.

"So you're in a position of strength from Day 1. So why are you worried? Why should we be worried?"

Earlier this week, the head of Cogeco Cable called the proposed merger "very dangerous" and "particularly odious."

Cogeco CEO Louis Audet said it would make getting TV content on multiple platforms more difficult and expensive.

Cogeco Cable (TSX:CCA) is the country's fourth-largest cable provider and Cogeco Inc. (TSX:CGA) operates 13 radio stations in Quebec.

Audet said such a merger would enable Bell to charge unreasonable prices and also sell content rights on multiple platforms as a package.

Other cable and telecom companies such as Rogers (TSX:RCI.B) and Telus (TSX:T) have told the CRTC they fear negotiations for content, especially for tablets and smartphones, will be too difficult and too expensive with a merged Bell-Astral.

Bell has said it wants to buy Astral's specialty and pay TV channels to put content across traditional televisions, laptops, tablets and smartphones, and also to compete with online providers like Netflix.

Astral CEO Ian Greenberg told the commission this week he's concerned about the growth of services such as Netflix and added a combined Bell-Astral would be better able to deal with that kind of competition.

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