Earlier this week, BCE, the parent company of Bell Canada, agreed to an acquisition deal that would give it complete control of media company CTV Globemedia in a transaction worth approximately $1.3 billion. Standing in the way, however, could be a very contentious regulatory process, in which it will need to get approval from the CRTC and the Competition Bureau.
Under the terms of the deal announced Monday, BCE will increase its ownership of CTV from 15 percent to 100-percent, giving Bell the assets to enhance its TV, wireless and online services over the next few years. Serving a great deal of Canada’s specialty television stations and digital media, as well as conventional TV and radio broadcasting, CTV enables Bell to, in the words of Bell Canada and BCE chief George Cope, “maximize strategic and operating synergies” including streamlining its content and advertising budgets.
“Acquiring CTV’s range of premier video content enhances Bell’s execution of our strategic imperatives by leveraging our significant broadband network investments, accelerating Bell’s video growth across all three screens – mobile, online and TV – and achieving a competitive cost structure,” Cope said.
Indeed, as Canadians consume media on a broader array of devices including their Web browsers, smartphones, and mobile devices, there has been an increasing pressure to rethink the connection between programming, and Internet-enabled devices.
The acquisition deal has been met with a great deal of support from politicians and business partners, as well as various groups such as the Media Awareness Network (which, it must be noted has received significant funding from both Bell and CTV in the past). Many supporters cite the benefits of proposed measures that would have BCE contribute to the Canadian television ecosystem, for instance, with the funding of more original programming.
There are, of course, others, including rival companies Cogeco, Quebecor, and Telus, that have announced their opposition to the proposed acquisition given the potential impact that such ownership will have on the market. Further, others worry that convergence will have a negative effect on the media landscape of Canada, given the degree of control that a handful of major broadcasting companies, including Bell, Rogers, Quebecor. and Shaw, have over the market.
University of Toronto technology management and strategy professor Mihkel Tombak expressed his concerns about the dangers of vertical integration to the Toronto Star. “It could impact consumers in the sense that if they wanted to get CTV content over the Rogers network it might be more expensive,” he told the paper.
Since a vertically integrated media company such as Bell would have control over programming as well as the delivery of content to consumers, it could have the capacity to limit access to exclusive CTV shows and sporting events to those using a Bell Internet connection. The neutrality of such a network is not assured under this model.
Rival telecom Telus explains in a statement: “[S]uch exclusives reduce audience reach and the potential for monetization of the content in order to give itself a competitive advantage to leverage in the carriage or distribution markets. The cost of exclusives by vertically integrated broadcasting groups is not merely a cost to consumers, it is also a cost to the Canadian broadcasting system because the monetization of the content is forsaken in favor of a competitive advantage to leverage non-broadcasting revenues, i.e. wireless or other carrier revenues which do not contribute to cultural objectives.”
The flirtation between network providers and content providers has become a concern worldwide, especially with the interest raised surrounding the takeover of NBC Universal by network provider Comcast in the US.
Corporate concentration and vertical integration within the broadcasting industry, critics say, must be limited to preserve the citizens’ ability to access content on various networks and using various devices.
Nevertheless, Cope, who would likely be at the helm of the Bell/CTV hybrid, noted that the change in Canada’s communications landscape make the merging of content providers and network providers essential to his company’s success. “Our acquisition of CTV more than levels the playing field in our increasingly competitive industry,” he said. Not only does the greater vertical integration of the communications industries, as well as new technology and industry regulations present new opportunities for Bell, but it may be essential for the delivery of content given the new economics of communications in Canada.
The consolidation of Canada’s telecom industry has been an on-going process. For instance, between 1990 and 2005, Canadian media corporate mergers and takeovers contributed to the share of independently owned daily newspapers dropping from 17.3 percent to merely 1 percent in 2005. In particular, 2004 marked an important year in the consolidation of Canadian telecom market as several incumbent carriers acquired competitive providers. Such transactions included MTS’ acquisition of Allstream, Rogers Wireless of Microcell, and Bell Canada of the Canadian assets of 360networks, which all contributed to fundamental changes to the industry. More recently, Shaw Communications acquired the broadcast television assets of Canwest Global.
The shape of the Canadian media landscape is, indeed, changing, not only with the evolution of our methods of communicating and accessing information, but also with the industry’s gradual consolidation and vertical integration, of which the acquisition of CTV could be considered among the final steps.
Given the the realities of the communications industry, and the ideals of how media should be run in Canada, should this deal be approved?