Canada: CRTC Approves Bell-Astral Merger And Catches A Glimpse Of The Future Of Consolidation And Concentration

Last Updated: July 2 2013
Article by Stephen Selznick, Christopher Hersh and Imran Ahmad

Sometimes you have to stand on the shoulders of giants to see over the horizon. The Canadian Radio-television and Telecommunications Commission ("CRTC") did just that yesterday when it released its long awaited decision approving the application by Astral Media Inc. to sell its pay and specialty television channels, conventional television stations, and radio stations to BCE Inc.

At a purchase price of $3.4 billion (the CRTC valued the deal at approximately $4.1 billion when net debt and leases assumed are factored in), this is a precedent setting transaction in the Canadian media sector. This concentration of television and radio assets will see the merged and reorganized entity become one of the largest cross-platformed Canadian broadcasters in terms of audience share in both English and French-language markets.

The CRTC is the federal gate keeper responsible for ensuring that mergers in the broadcasting sector accord with the objectives of the Broadcasting Act (Canada). This is a challenging mantle to wear in an industry marked by rapid technological innovation in content delivery methodologies, high infrastructure costs that create barriers to market entry, and a borderless Internet/social media environment that makes domestic enforcement difficult. In addition, the CRTC recognizes, and BCE and Astral make the case, given the reality of current market conditions, that consolidation and getting "big is better", to ensure a Canadian competitive presence in an increasingly borderless broadcasting industry.

Effectively the CRTC seems to be taking the view that, allowing a degree of consolidation in the industry is required to ensure that Canadian broadcasters are able to compete with new distribution technologies and over-the-top foreign broadcasters. This may ensure that a healthy Canadian presence is maintained and that a diversity of voices in content and program delivery offerings remain available to all Canadians.

At the same time, the CRTC recognizes that allowing too much concentration in an industry characterized by high barriers to entry, is a recipe for static and uncompetitive market for Canadian consumers. Accordingly, the CRTC's mandate includes ensuring that Canadians are afforded a wide range of programming that reflects Canadian views, attitudes, opinions, ideas, values and artistic creativity, as well as programming that provides an outlet for Canadian talent. In its role as a consumer advocate, the CRTC must balance the benefits and opportunities of consolidation with the reality that some assurances are required from the merging licensees that appropriate steps will be taken to ensure that the marketplace remains dynamic and that Canadian audiences also benefit from the objectives of the proposed consolidation.

Astral and BCE were unsuccessful in their first attempt to obtain CRTC approval of their proposed transaction (in October 2012, the CRTC turned down the proposed merger following a vigorous public intervention and hearing process stating that BCE failed to discharge its burden to demonstrate that, on balance, the transaction was in the public interest). At that juncture the CRTC felt that the "tangible public benefits" proposed by BCE would primarily benefit BCE and its services. The CRTC was not persuaded that the transaction provided significant and unequivocal benefits to the Canadian broadcasting system and to Canadians that outweighed the CRTC's concerns about the merged entity's effect on the marketplace. In the first hearing process, the CRTC made it clear that it was prepared to break new ground and place additional or different regulatory behavioral conditions/restrictions upon entities it perceived as dominant market players, that were not applicable to smaller competitors.

To their credit, Astral and BCE went back to the drawing board and returned to the CRTC in 2013 with a slightly smaller transaction. Taking the words of the CRTC to heart, a more expansive tangible benefits package was offered in addition to proposed divestitures and behavioral undertakings, to ensure that the marketplace would remain dynamic and that Canadian consumers will reap the benefits of the opportunities claimed by the merging parties. These remedies were offered despite the possibility BCE might find itself at a competitive disadvantage relative to other industry players because it has to play by a slightly different set of rules.

Notwithstanding a similarly involved public intervention and public hearing process, Astral and BCE were able to allay the CRTC's fears in the course of their second application hearing with the result that the CRTC approved the transaction, and accepted most of the proposed divestitures and behavioral remedies offered by BCE, while modifying and adding others. The CRTC's decisions (Broadcasting Decisions CRTC 2013-208, 209 and 310) are extensive and copies can be found here.

Of immediate significance, the CRTC has mandated the following in order to maintain a dynamic Canadian broadcasting system that affords Canadians the best opportunity to reap the benefits of scale that the merger proposes:

1. Divestitures.  BCE must divest 12 English and French-language specialty television channels (including Disney HD, Teletoon and The Family Channel, but may retain the highly valued The Movie Network) and 10 English-language radio stations.  This essentially replicates the divestitures already agreed to by BCE to secure the approval from the Competition Bureau under the Canadian Competition Act. Upon completion of the divestitures, it is anticipated that BCE will possess 22.6% of the French-language television market and 35.8% of the English-language television market, thus placing it below the threshold for examination so far as French-language television is concerned and within the range of careful examination so far as English-language television is concerned, under the CRTC's Diversity of Voices regulatory policy (Public Broadcasting Notice CRTC 2008-4).

2. Mandatory Retentions to Ensure Access to Local Programming.  Apart from specific divestitures, BCE must continue operations for a stated list of 30 English-language conventional local market television stations, and maintain current levels of local programming on those stations, until at least 2017.

3. Tangible Benefits.  While not tinkering significantly with the general formulae applied by the CRTC to determine tangible financial benefits, this decision is notable in that:

(a) The CRTC increased the value of the transaction from the $3.4 billion commercial purchase price quoted by Astral and BCE to $4.1 billion by factoring in the value of net debt and leases assumed as part of the transaction.  Since the tangible benefit formulae for both television and radio is a percentage calculation based upon the transaction value, this increases the anticipated tangible benefits by some $72 million dollars;

(b) While confirming that it is not the CRTC's practice to exact tangible benefits on assets to be divested, in this case the CRTC is directing that BCE pay tangible benefits on any shortfall arising on the divestiture of those assets; and

(c)  Given the sheer size of the transaction, the tangible benefits package is in the neighbourhood of $246.9 million over the next seven years. Of this sum approximately $175.4 million (i.e., 10% of the value of the Astral television services) is to be earmarked for initiatives related to the television sector, and $71.5 million (i.e., 7% of the value of the Astral radio services) is to be allocated to the radio sector. These funds should offer a boost to the creation of original Canadian dramas, comedies, documentaries and award shows as well as youth programs and Canadian programming content intended for multiple platforms.  In the music sector these allocated funds are intended to assist in the development of the Canadian music industry, to propel the careers of emerging artists and to provide assistance to campus and community radio.

4. CRTC Abuse of Dominance Provisions.  While traditionally the domain of competition law regulators, the CRTC has mandated a number of behavioural conditions of license to guard against anti-competitive conduct in consequence of the concentration of market power in the merged BCE entity:

(a) BCE, as a condition of license, must comply with the CRTC's Code of Conduct for Commercial Arrangements and Interactions (Appendix 1 to Broadcast Regulatory Policy CRTC 2011-601 Regulatory Framework Relating to Vertical Integration).  While this is only a voluntary Code that may be followed (or not) by other industry players, it is now mandatory that BCE adhere to its provisions, including those that prohibit BCE from charging an unreasonable rate for content (i.e., a rate not based upon fair market value), or from exacting commercially unreasonable terms, or from engaging in tied selling (i.e., demanding that a distributor purchase from BCE one service in order to purchase another service);

(b) BCE many not unduly withhold non-linear rights (for example, video-on demand) from competing distributors, even if BCE may not be exploiting those rights itself;

(c)  BCE must provide reasonable access to advertising opportunities on its radio stations to all competitors;

(d) BCE must file with the CRTC copies of the affiliation agreements it enters into with programming services and television distributors.  Query, what level of contract monitoring and review will the CRTC independently initiate; and

(e) BCE must enter into a CRTC-supervised dispute resolution process if a new affiliation agreement is not reached within 120 days before the expiration of the then existing affiliation agreement.

As reported in the press today, BCE and Astral intend to close the transaction on July 5, 2013, now that CRTC approval is in hand. However, a number of the conditions of license imposed by the CRTC require a response and action plan from BCE for CRTC approval by specific deadlines (i.e., July 29, 2013, in most cases). Look for our further reports on significant developments with this transaction and license implementation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions