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Mythbusting Bell’s propaganda concerning its acquisition of Astral Media


Last November, Bell announced that it had submitted a revised plan to the CRTC to once again attempt to acquire Astral Media after the CRTC denied the first transaction earlier in October.  With its announcement of the revised transaction, Bell launched a new website (CanadiansDeserveMore.ca) to lobby for approval.  At the time, Bell refused to make details of the revised transaction known, hiding the facts behind a misleading statement that the CRTC’s process is confidential.  In truth, nothing prevented Bell from making the details of the transaction known at the time of filing and when it started its propaganda in favour of the deal.   The confidentiality maintained by the CRTC was at Bell’s prerogative and could have been waived by Bell, which it should have done rather than attempt to use the time between November 2012 and March 2013 to lobby for the deal while inhibiting any interested party from being able delve into the details of what was being proposed.

When the CRTC finally issued the public notice on March 6th, which provided the full details of Bell’s application, Bell took out two-page advertising spreads in all the major Canadian newspapers to further lobby in favour of the deal.  In those advertisements, Bell asked and responded to six questions.  We disagree with their answers and the point-by-point dissection of their answers below explains why.

Bell Asks:   Why is Astral joining with Bell Media good for Canadians?

Bell says “More competition is good for everyone, especially in Quebec”.  That’s an interesting statement but some might say it is evasive. The statement leads you to believe that Bell is saying that this transaction will actually bring more competition to Quebec when clearly that is not the case.  How can Bell’s acquisition of one of the last strong independent competitors in the market bring more competition?   Losing a strong player in the market means less competition.  In the Quebec market in particular, losing Astral means that the Quebec market will essentially be served by two large vertically integrated communications and media conglomerates.

Bell further says that by joining forces with Astral it will be able to provide “more innovation, more choice and better value to consumers.”   However, I recall that just last year, Bell was attempting to force TELUS to change its consumer-friendly packaging (discussed in my inaugural blog here) by insisting on a “minimum penetration requirement” for its premium sports services TSN and TSN2 which would have forced TELUS to move TSN (and likely TSN2 as well) from their current packaging in a sports theme pack to the basic package, forcing all its Optik TV subscribers to receive and pay for these sports services.  Some have argued that this is akin to a “sports tax”.  In the end, the CRTC sided with TELUS in arbitration which means that TELUS has been able to maintain its sports theme pack as an optional discretionary package for its subscribers who are interested in sports.   Another aspect of this same dispute related to innovation by TELUS on its TV platform to deliver “customized viewing experiences” (think consumer-enabled multi-tasking on the same screen).  Bell objected (apparently it’s a problem for viewers to watch TSN and the competing Sportsnet service at the same time…) and so this issue also had to be dealt with in arbitration and again the CRTC sided with TELUS noting that “in regard to Bell Media’s final offer, the Commission was concerned that certain provisions of the offer would reduce some of the innovative elements in TELUS’ service offering that are currently available to TELUS subscribers.”  But despite these very clear facts, somehow Bell wants you to believe that if it is allowed to acquire Astral Media, and thereby increase its market power, then it will cease its abusive practices against competitors which have sought to reduce innovation and consumer choice in the market place over the past few years.

In that same response, Bell also touts that its acquisition of Astral will provide “increased investment in the overall broadcasting industry” and be a “big plus for our culture”.  However, there is clear evidence to the contrary. Bell Media (and its predecessor CTVglobemedia) have a history of “nickel and diming” on their regulatory obligations (those were the words used by the CRTC Chairman during  CTV’s last licence renewal, see the transcript of the Group-based licence renewals for English-language television at paragraph 181.)  More recently, in Bell’s first attempt to acquire Astral, Bell outrageously sought to short-change the cultural sector by seeking to divert $40 million of the tangible benefits of the transaction to upgrading its own telecommunications network in the North, an obligation that it has as an incumbent telecommunications provider in the area which it had woefully neglected.  To be clear, any acquirer of Astral Media would have to pay tangible benefits in accordance with the CRTC’s policy. Bell, now proposes to make those payments as required but there is no “increased investment” – Bell has not proposed to pay any more in tangible benefits than what it is required to pay pursuant to the value of the transaction.

Finally, Bell says that if it is allowed to acquire Astral, consumers “will be able to enjoy the very best French and English content from any device or TV provider of your choice.”    This will undoubtedly be a major point of contention at the upcoming hearing.  Let’s recall that at the last hearing relating to Bell’s failed attempt to acquire Astral, competing distributors made the point that Bell was denying access to its content, either by being a laggard in making rights available on other platforms or by making unreasonable offers to competitors for access to the content.  Rogers Cable made this point quite emphatically in its oral presentation when it provided a chart depicting the availability of On Demand Programing from Pay & Specialty Channels on Rogers’ Platforms.  I’ve taken the liberty of including the chart below.

On Demand Programming

Bell asks: How does Astral-Bell Media support Canadian content creation and our culture?

Bell says that “Together, we’ll be greater than the sum of our parts.  Our combined resources will enable us to showcase the best content and talent in a way we’ve never been able to before.”  What does this statement even mean?  Presumably we’ll have to wait and see if Bell pulls some more “rabbits out of hats” at the upcoming hearing, something they were accused of doing in the last Round by an exasperated CRTC Chairman.

Bell says that its acquisition of Astral will create “more balanced competition”.  This statement is incredulous when one considers the behemoth that is Bell.  We’ve made the point in our submissions in Round 1 of the Bell/Astral process but here is another good visual representation to make the point again.  This is what Bell’s unparalleled scope would look like if all its operations were in the United States (this mirrors a depiction which Bell itself created in 2002 for American investors).

Bell
 

 

 

 

 

 

 

 

 

Bell Asks: How does Astral-Bell Media benefit smaller markets and support local television?

Bell says that “by combining our resources, we can keep TV stations open.” This sounds very promising but the fine print in their application indicates that they are unwilling to commit to keeping any local TV stations open for more than the few years left in the current licences.  So as early as 2016, Bell could start shutting down TV stations which it considers unprofitable.   Let’s recall that Bell has been threatening to close unprofitable local stations for years now, in its comments at the last licence renewal, in relation to the need for a “value for signal” regime (which the Supreme Court of Canada has ruled is not within the CRTC’s power to implement) and in relation to the last review of the Local Programming Improvement Fund which Bell has significantly benefitted from.   So, at best, Bell’s propaganda regarding any benefits to local TV is for a limited time only.

Bell Asks:  What has changed since Bell Media’s first proposal to join Astral?

Bell responds to its question by saying that “this new proposal is more beneficial to Canadians than ever before” and this is undoubtedly true, but mostly because its first attempt to acquire Astral was so woefully deficient in the public interest department (which explains the denial by the CRTC).

But just because the new revised application doesn’t contain the arrogant proposals and spurious arguments which so distracted everyone in Round 1 doesn’t mean that the new application is in the public interest.  We certainly do not believe that Bell’s acquisition of Astral Media is in the public interest.  I’ll expand on this in Friday’s blog after we have filed our submission with the CRTC.

Bell Asks: Will my TV bill go up if Astral joins with Bell Media?

Bell says “in fact, we’ll be to able provide even greater packaging flexibility to your TV provider, which we expect them to pass on to you.”  Please refer to my comments above relating to Bell’s insistence on minimum penetration requirements for some of its services, especially its premium sports services.  So to be clear, before Bell sought to acquire Astral, it was seeking to restrict choice in packaging of its programming services by all competitors.  But now somehow we are to believe that this proposed acquisition of Astral Media would make them “able” to provide even greater packaging flexibility?  I find this statement incredulous.  It’s not their ability I doubt though, it’s their willingness.

Finally, Bell asks:  Won’t Astral and Bell Media be too big and dominant if they join together?

Clearly the answer to this question has to be yes, they will be too big and dominant if Bell is allowed to acquire Astral because Bell itself is already too big and dominant.  As we have argued in Round 1 of this same acquisition, Bell is already capable of acting on incentives for anti-competitive behaviour.  It’s already too big and acquiring Astral will only make things worse for competition and ultimately consumers.