Hot government regulatory hearing action!

THE FUTURE IS BEING DECIDED THIS WEEK, PEOPLE!!! Ok, that’s a bit hyperbolic, as is my habit. But the CRTC hearings on the Bell purchase of Astral Media that are happening this week in Montreal are extremely important for the future of broadcasting in this country. And more importantly for me, they will undoubtedly have a massive impact on the internet for computers. Let’s break down the hearings with the handy FAQ format that all the kids love.

So what’s this all about?

This is a CRTC consultation hearing on CRTC application number 2012-0516-2. That’s all you need to know.

Stop with your flippancy and give me a fucking answer to my first question.

OK OK. Let’s go to CRTC Broadcasting Notice of Consultation 2012-370 for an answer:

Application by BCE Inc., (BCE) on behalf of Astral Media inc. (Astral) for authority to change the effective control of Astral, and its licensed broadcasting subsidiaries, so that it is exercised by BCE. The transaction will be carried out by the acquisition of all outstanding shares of Astral by BCE and BCE Subco, a wholly owned subsidiary to be incorporated.

Can you explain that in simple English?

No, but I’ll try anyway. Back in March of this year, Bell (or BCE, or Bell Media Inc., or… let’s face it Bell’s corporate structure is a nightmare to outline) agreed to purchase Astral Media Inc. for about $3.38 BILLION dollars. Don’t worry, I’m sure your Bell bills won’t go up or anything. The deal was already approved by Astral shareholders in May, as well as the Superior Court of Québec. BUT, because such a buyout would drastically alter the broadcasting landscape in Canada, the CRTC gets to stick its big fat finger into a private transaction to approve it or not.

That last part didn’t sound very lawyer-ly.

OK you got me. The CRTC must have these hearings based on section 53 of the CRTC Regulations, which state that the CRTC shall hold hearings when someone has made an application “for the approval of the transfer of ownership or the change in control of a broadcasting undertaking.” Astral Media falls into the “broadcasting undertaking” category as per the Broadcasting Act, so these hearings are mandatory subsequent to Bell’s request to buy Astral. As for the general power for the CRTC to approve such a takeover, well, that’s just all over the Broadcasting Act so it’s kinda complicated. Rest assured, however, they have the power to block it, or to change the conditions of the deal. As a side note, the deal also has to be approved by the Competition Bureau. Bureaucracy in action!

What would Bell get for its $3.38 billion?

Boardwalk Empire! Game of Thrones! Well, sort of. Astral’s main assets (the ones that Bell wants) are a bunch of  pay and specialty TV channels in English and French, including The Movie Network, HBO Canada, and MusiquePlus. They also have a bunch of Quebec radio stations (stuff you may have even listened to, like Virgin Radio), and a very profitable outdoor billboard division.

Boy this all sounds very exciting! Can I go to the hearings?

Yes you can! Barring exceptional circumstances, CRTC hearings are open to the public. These hearings are happening in Montreal this week every day through Friday, at the Palais de Congrès, Room 518 ABC. Here’s the full agenda for the week. Make sure to get there early, regulatory hearings are the hottest ticket in town.

You know I do have to work, and I live in Hamilton, so I can’t quite make it to the Palais.

No worries, you are covered! CPAC has an excellent high-quality live video feed of the hearings. There is also a CRTC Hearings Twitter feed to follow, but it’s mostly just boring links to statements and changes in the agenda. Fagstein is all over it. Check out the #bellastral hashtag for all your good updates, including from yours truly, who’s kind of addicted to watching regulatory hearings.

Have there been any surprises in the first days of hearings?

Yes, in fact there was a very big one. Bell (who got to speak first) came in on Monday and announced that if the deal goes through, they would start a service like Netflix.

WHOA. Hold the phone. That sounds like a big deal.

Yes it is! In fact, it is essential for the internet side of this story, so let’s look at it in detail. I’ve got the transcript of Bell’s statement, let’s see what they said exactly:

This is why, following the transaction, I am pleased to announce that we will launch a service offering to compete with foreign competitors like Netflix. A made-in-Canada service, available in French and English everywhere we have rights, to all Canadians through the cable, satellite or IPTV provider of their choice. Available on-demand and on any device, the service will showcase the very best in Canadian and international movies from Astral’s pay TV services, such as HBO Canada and The Movie Network, and great news, entertainment and sports content from Bell Media. Combining the unique pay TV strengths of Astral with Bell Media’s broad range of programming will create a Canadian service that truly stands apart from those of international providers.

You can see the way that it was phrased, especially that last part, is important. CANADA is important! The whole strategy of Bell is to show how this deal would be good for Canadians and the Canadian media landscape. That is essential for the CRTC to approve the deal. In addition to this nugget, Bell is also promising to spend money to improve services in the Great White North, also a priority for the CRTC, so that’s good sucking up on their part.

What other justifications is Bell peddling to the CRTC?

Bell is presenting this in a couple of ways. First, Bell says it will actually increase the competitive landscape when it comes to the French market in Quebec. Right now Québecor has all the power, so Bell’s acquisition of Astral’s French-language properties would increase competition or something. The other side of the coin, as seen in the Netflix-like product announcement, is delivery of programming across all devices. Bell writes in their application (which you can download as a Zip file if you’re insane or need a sleep aid):

Their combination with Bell’s existing holdings will enable cross-promotion and more flexible delivery of programming over multiple platforms as is increasingly demanded by Canadian consumers.

That actually sounds pretty good! Why should I not like this deal?

Well, if Bell owns all this content, it could theoretically abuse its market position and give priority to content it owns through its own delivery systems. The other side of that coin is it may mean that such content would be harder to get (or more expensive) on non-Bell delivery systems. That’s a standard problem when media companies own both the delivery mechanism and the content (so-called vertical integration), but it will be that much worse if Bell owns all of Astral’s properties. Here’s a Vancouver Sun editorial from yesterday that explains this problem nicely, though it’s written by a Telus VP, so I’m guessing there is some anti-Bell bias there. And OpenMedia has its own anti-takeover project going which is packed full of their usual rhetoric, though there is plenty of truth in there too.

Any other surprises at the hearings so far?

Yesterday some people thought it was a surprise when Shaw Communications, a Bell competitor, come to the hearings and supported the buyout, unlike every other media company who was against it. This is not a surprise. They obviously have their own plans to purchase something, and if the Bell deal goes through, precedent will have been set and approval would be a rubber stamp. We’ll have just two media companies in the country in no time!

Are the hearings about anything else?

Well, there is the related issue of Bell’s plans to switch TSN 690 from an English to a French language sports radio station, but since Montrealers aren’t really interested in sports I won’t even discuss it.

(I kid of course. Check out this excellent update and summary on that issue.)

Interestingly, the hearings were actually supposed to be about 19 different applications for various things, but no one cared about anything but the Bell-Astral deal and TSN 690 to submit any comments, so the other 17 applications won’t even be discussed.

What should be my final takeaway from all this?

Your bills will go up no matter what the outcome. They always do.

Ed.’s note – big thanks to the always awesome GoldenGirl11 for the excellent Basstral logo