Financial Post: Bell’s vertical integration hearings begin

CRTC hearings began this morning on Bell's proposed $3.4-billion takeover of Astral Media. If the deal is approved, it would greatly increase Bell's media ownership across Canada's broadcast spectrum – all at the expense of restricting fair market choice and competition for Canadians. The time to unite and speak out against Bell's maneuvering is now. Let the CRTC hear our disapproval by adding your voice to our ongoing campaign at StopTheTakeover.ca. Article by Jamie Sturgeon for Financial Post Odds are near certain you’ve never heard of ViaNetTV, a tiny Toronto-based television startup. And if BCE Inc. gets its way you never will, according to its founder, Alexei Tchernobrivets. For more than a year, ViaNetTV has attempted to negotiate with Bell Media, the sprawling telecom and media conglomerate’s entertainment unit, for the right to carry Bell-owned television channels like Discovery and MuchMusic through its new TV service.

Similar deals have been struck with other programming owners, like Shaw Communications Inc. as well as Astral Media Inc. Talks with Rogers Communications Inc., another integrated giant, are proceeding amicably.

But Bell hasn’t budged, refusing to show Mr. Tchernobrivets even a rate card for channels while demanding ViaNetTV signs strict non-disclosure agreements and hand over its business plans. Without cable mainstays like Bell’s news and information channel, CP24, ViaNetTV loses critical appeal for potential subscribers, the young executive says.

“This is literally holding our business hostage right now. And every day we’re losing money.”

ViaNetTV, a fledgling firm looking to crack the traditional — and still very profitable — TV market with its innovative hybrid product that blends TV with the Web, isn’t alone in its frustrations. The company’s experience is a microcosmic proxy for the tense dynamic developing now between Bell and players big and small across Canada’s $16.6-billion television distribution market.

As Bell moves closer to consolidating an unparalleled amount of TV assets under its wings with its acquisition of Astral, fears have risen that Bell’s newfound scale (called “gargantuan” by a top media executive at a rival last week) will grind or simply sweep many competitors into their graves. Smaller channel owners, the ones who require distribution on Bell’s network, share concerns about being further marginalized in the TV universe.

Through hearings in Montreal starting Monday morning into the $3.38-billion deal, industry stakeholders across the sector will implore regulators at the Canadian Radio-television and Telecommunications Commission to give teeth to a “vertical integration” code; a framework erected last year to prevent Bell, whose history includes decades of monopoly power in the telephone business, from becoming too powerful in the TV market.

“The code is hugely important to guarantee good behaviour,” says Jay Switzer, chairman of Hollywood Suite, which operates four movie channels, and a veteran media executive.

“We think that having creative and great product will drive our business, but that doesn’t mean that effective regulation in the background isn’t a good thing.”

The code, which critics deride as a loosely adhered to guideline rather than statutory framework, has worked to minimal effect so far.

Louis Audet, chief executive of Cogeco Cable Inc., the country’s fourth-largest cable provider, and others point to their own 18-month long struggle to renew carriage contracts with Bell, concluded in July through last-ditch arbitration. Like tiny VMedia’s founder, Mr. Audet portrays Bell as strong-arming his company into agreement.

“You have an uncooperative, not-forthcoming party that already owns too much, already bullied smaller players into accepting deals that are unacceptable trying to exact unreasonable rents and it wants to own more,” says Mr. Audet, who will be appearing before the CRTC this week.

If the Astral deal is approved, Bell will own more than 53 specialty services, two conventional TV networks and more than 100 radio stations (and a sizable outdoor billboard business to boot). Its closest competitor, Shaw Media, owns 18 specialty channels and one network, Global. Read more »

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