If anyone wondered whether the CRTC had a spine, they no longer need to. The federal telecom regulator's decision yesterday to kill BCE's $3.4 billion proposed buyout of Astral Media ranks as one of the most stunning moves in the industry in recent memory.
In its ruling, the CRTC said the deal was nixed because it would have left too much industry control in one company's hands.
"BCE did not demonstrate that it needs to be bigger to compete with foreign services," the ruling said. "The commission does not consider that there is compelling evidence on the record to demonstrate that foreign, unlicensed competitors are having a significant impact on negotiations for program rights by Canadian broadcasters'
George Cope, BCE and Bell Canada President and CEO, called on the federal government to reverse the decision.
"This is a decision that should not stand. Canadian consumers were told today by the CRTC that they don't deserve more - more choice, more competition, more Canadian content funding - all of which Bell and Astral committed to with this transaction," said Cope in a statement.
"We met all the CRTC's rules, indeed our acquisition of Astral was based directly on the CRTC's currently in-place Diversity of Voices policy. The wide-ranging benefits to Canadians of the transaction are clear, but the CRTC has told consumers that they and the rules in place just don't matter."
Bell Media President Kevin Crull was even more incensed, and accused the CRTC of ignoring due process.
"That the CRTC was not guided by its own rules is a grave concern," Crull wrote in the statement. "In fact, this is just the latest in a series of decisions where the commission held hearings, established rules … and then inexplicably ignored them when Bell moved forward with a strategic investment. This sends a strong message that Canadian broadcasting regulation is impetuous and unreliable."
While Bell prepares for its next battle, the list of winners continues to grow:
While the torpedoed acquisition means the family of founder Ian Greenbers doesn't get to cash in $50 million in special-class shares, the company will be receiving a $150 million breakup fee.
Fears of major job cuts — often necessary to cost-justify huge acquisition costs as the newly enlarged organization pursues economies of scale — no longer loom over Astral staff at its Montreal head office and media properties across the country.
The Quebec-based media conglomerate fought the proposed deal with a high-profile national campaign. A combined Bell/Astral would have invested heavily in French language content — a boon for consumers there who currently face limited choice. The CRTC decision leaves Quebecor as the leading source of French content.
Anglophone Montreal radio listeners
The CRTC denied BCE's request to flip its TSN Radio station from English to French.
The CRTC decision doubtless pleases Canadians who feared approval would lead to even more concentration of ownership — and less competition. It's a different story in Quebec, where a BCE victory would have led to expanded French-language content options for most of the province. It also tosses cold water on the Canadian market's global reputation, with foreign investors potentially shying away from future deals for fear of running into similar regulatory roadblocks.
The prevailing sentiment leading up to the announcement was that the deal would be approved, but with conditions attached. The outright door-slam puts the CRTC in the unfamiliar position of giant-killer. BCE isn't about to fold up its tents and go home. But its acquisition-based growth prospects have been cut down to size, courtesy of a regulatory agency some once likened to a rubber stamp. After this week, expect those accusations to fall silent for a while.
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. email@example.com