MONTREAL — Consumers are the winners in the federal broadcast regulator’s decision to nix BCE Inc.’s controversial $3.4-billion takeover of specialty TV provider Astral Media, analysts said Thursday.
The Canadian Radio-television and Telecommunications Commission turned down one of the biggest takeovers ever submitted, rejecting a deal that it said would not benefit Canadians and one analysts suspected would drive up cable bills.
“Simply put this was not a good deal for Canadians,” said chairman Jean-Pierre Blais, who took over the top role just four months ago.
“It would have placed significant market power in the hands of one of the country’s largest media companies.”
Consumers won’t face any increased prices that may have been associated with Bell buying Astral, said telecom analyst Troy Crandall.
“Market power was an issue,” said Crandall of MacDougall, MacDougall & MacTier in Montreal.
Crandall said if the deal had gone through, consumers could have faced higher monthly cable bills if Bell had pushed up the price of selling programs to other TV providers. That cost, in turn, likely would have been passed on by other providers to consumers, he said.
He noted that Bell (TSX:BCE) increased the price it charged to other cable providers to carry the TSN sports specialty channel once Bell bought the rest of the CTV assets it didn’t own in 2010.
Analyst Iain Grant said consumers should be “breathing a sight of relief.”
Bell’s plan was to use Astral’s content across TVs, computers, tablets and smartphones and sell it to its own customers and to its competitors. But Grant said Bell’s strategy to put as much content on the four screens shouldn’t be affected.
Bell and Astral had argued to the CRTC in September that Canada needs its own online TV and movie service to compete with Netflix and the merger of the two companies would allow that.
But the company can take the $3.4 billion it was going to spend on acquiring Astral to buy and create content, said Grant, managing director of the technology firm SeaBoard Group.
Grant also said Bell can still go ahead with a made-in-Canada Netflix-type offering to provide online programming to consumers, he added.
He said other companies such as Rogers (TSX:RCI.B), Eastlink and Shaw Communications (TSX:SJR.B) are doing just that.
“We don’t need Bell to be our national champion against poor Netflix.”
The rejection was welcome news to Bell’s competitors, with Rogers and Cogeco Cable Inc. (TSX:CGO) calling it a win for customers.
Stop the Takeover Coalition — the consumer advocacy group formed to oppose the deal — said it was “thrilled” that the CRTC listened to the concerns of Canadians in rejecting the deal.
It said that owning more content would have given Bell an incentive to maximize profits by pushing content it owns or restricting access to other content it can’t make a profit on.
Analyst Carmi Levy said consumers win because the CRTC prevented the concentration of ownership that so many feared if the deal had gone through.
“For consumers and consumer advocates who support choice, this is a victory for them,” said Levy, an independent technology analyst in London, Ont.
However, consumers in Quebec may the losers because Bell said it would have provided more French-language competition to dominant Quebecor Inc. (TSX:QBR.B) in that province.
“Unfortunately, for Quebec, their grand opportunity to have greater access to and competition in the French content market has now been taken away,” said Levy.
“There was an opportunity for improvement. That opportunity has been removed from the table.”
Crandall also said Bell’s proposed French all-news network may not go ahead.
Such a channel would compete with Radio-Canada’s all-news channel RDI and Quebecor’s (TSX:QRB.B) LCN all-news channel.
Astral (TSX:ACM.A) 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.