In its revised application to the CRTC to request regulatory approval for the purchase of Astral Media, Bell parent BCE promised that its revised plan would handle the commission’s concerns about concentration of ownership. Bell would sell off some popular Astral specialty channels including Family, MusiquePlus, and Musimax, and offload its half of Teletoon, Historia and Séries+ to Corus. The result would put Bell at just above the 35 per cent mark where the CRTC, according to its own policy, would normally approve such an acquisition (though the commission said in rejecting the first deal that this was more of a guideline than a hard and fast rule).

But what about radio? On that front, Bell’s plans are identical, with the exception of its revised proposal for CKGM in Montreal (asking for an exemption to keep it instead of requesting it be converted from English to French). For the rest of the country, Bell would keep all the Astral radio stations, except in markets where they would put the combined company above the CRTC’s common ownership limits (two AM stations and two FM stations in any market with eight or more commercial stations).

That comes out to 10 stations, in Vancouver, Calgary, Winnipeg, Toronto and Ottawa (Bell has already agreed to sell the two Ottawa stations to Corus). Bell submitted a list of the 10 stations it planned to sell during the CRTC hearing on the first application last September. It included seven stations currently owned by Astral and three by Bell.

The CRTC, and Bell’s competitors, took issue with the choice of stations to be put up for sale. In the CRTC’s decision denying the overall purchase, it laid out fairly clearly what the problem was:

“The decision to include certain Bell Media radio stations in the divestiture plan can be viewed as an attempt by BCE to trade underperforming stations for successful ones, which would not provide a benefit to the Canadian broadcasting system or create the conditions for healthy competition,” the CRTC wrote in its decision. “Selling less profitable stations could reinforce BCE’s position in these markets, make the entrance of new competitors more difficult and reduce the total tangible benefits paid on Astral’s radio stations.”

In other words, the CRTC felt Bell might be keeping the best stations of the combined company and selling the worst, which would be great for Bell but not so great for competition in those markets.

Bell’s competitors, while they focused on the market share in television, also took great issue with radio market share, saying Bell would have a 45% listening share in large markets, and a 30% share of national commercial radio revenue, more than double its next-closest competitor (Rogers at 14%).

The CRTC didn’t tackle the share issue specifically (the policy is on radio stations per market, not on overall share of revenue or listening hours), but you have to think that it would be a consideration when deciding whether the purchase would result in too much market power.

But Bell seems to outright reject the CRTC’s thinking on this. In its revised submission, it says:

The proposed divestiture plan groups stations holding a variety of market positions together – it is not an attempt to trade underperforming stations for successful ones. Rather, the selection process proposed by Bell in determining which radio stations of the combined Bell-Astral family would be sold to comply with the Commission’s Common Ownership Policy was complex and rigorous. As the following evidence demonstrates, the mix of stations that Bell proposes to place into trust for divestiture embraces a diversity of formats, rankings in their respective markets, profitability and future potential. Their divestiture will not reinforce Bell’s position in those markets, nor will it make the entrance of new competitors more difficult. In fact, the stations to be sold will continue to offer diversity and competition in their respective local markets.

It says the stations were evaluated based on “format; brand and key contracts; assets, location, and rent versus own; financial performance; and frequency class and footprint,” and then on a secondary set of criteria: “customer base and potential for overlap; audience base and potential for overlap; audience P1 [first preference] strengths and brand health; key talent; asset lifespan replacement; transition complexity and cost; and CRTC benefits impact.”

I found all this odd, because a year ago when Bell announced it was buying Astral, I looked at the various markets and tried to guess which stations it would put up for sale based solely on ratings. The list I came up with was very similar, though not identical, to the one Bell presented to the CRTC seven months later.

I asked Mirko Bibic, Bell’s chief regulatory officer, about the (non)-revised radio plan. Like with the application from Bell, he took issue with the characterization that Bell would be selling less-popular stations and keeping the better ones. He said some of the stations they’re putting up for sale are more popular than the ones they’re keeping, and that the process for choosing which stations to sell was based on was complex. And like the application, he didn’t go into detail about those other criteria for determining what stations to sell.

I don’t have access to per-station financial data, so I can’t evaluate them based on profit or assets. And my access to ratings data is limited. But I do have access to overall ratings, format, on-air staff, frequency class, power and other information that I could use to evaluate these stations and take a guess as to why Bell is selling them. And in most cases, it looks like the stations Bell wants to keep are indeed of lesser value than the ones it plans to sell.

Let’s go market by market (like Bell, I used fall 2012 ratings data). I’ve uploaded the spreadsheet I used to compile the numbers here if you want to check my work (.ods).

Vancouver (AM)

Vancouver is the only market (besides Montreal) where Bell/Astral would be over the limit in terms of AM stations. This is mainly because of a unique situation where Bell’s The Team station there operates on two frequencies. There’s CKST 1040, the main channel, and CFTE 1410, a secondary channel. (This allows them to, for example, air Canucks and Whitecaps games at the same time on a Saturday night.) With the addition of Astral’s AM 650 oldies station, this puts Bell/Astral at three stations.

Here, Bell has proposed to sell the Astral oldies station, which is actually the higher-ranked of the three (2.1 share vs. 1.7 and 0.6). This would avoid having to break up the Team team.

Vancouver (FM)

Bell and Astral each have two FM stations in this market, so two will have to go after the merger. Bell has proposed divesting CKZZ-FM 95.3, the Virgin Radio station, and CHHR-FM 104.3, branded Shore. CHHR is by far the lowest-rated of the stations, and is in fact the lowest-rated English commercial station in the market with only a 1.7 share. CKZZ actually rates a share point higher (8.1 vs. 7.1) than one of the stations Bell is planning to keep, its own CFBT-FM The Beat 94.5. It’s also higher power, 71,300W vs. 46,500W. There doesn’t seem to be any obvious reason for keeping the lower-rated of the two.

Calgary

Bell only owns one station in this market, and because it’s both the lowest rated and the lowest power, it’ll be the one to go when the two Astral stations come into the family. Astral’s CIBK-FM (Virgin Radio 98.5) is No. 3 in the market, with a 7.5 share. Active rock station CJAY-FM 92.1 is sixth with a 5.6 share. Right behind it is the Bell station CKCE-FM (Kool 101.5). CKCE is licensed for 48,000W, the only commercial station in the market not at 100kW.

Winnipeg

My chart shows that Bell would sell both its highest-rated and lowest-rated station in this market. But three of the four stations have only a 0.2 difference in share between them, so the ratings difference is negligible. The fourth, Bell’s CHIQ-FM (Fab 94.3) is a full point behind, and for sale. The other station Bell would sell is Astral’s CFQX-FM (QX 104.1), a country music station. Nothing obviously indicates this station is better or worse than the other two.

Toronto

In Canada’s largest market, the choice is very clear: Bell is keeping the highest-rated and highest-power stations. CHUM-FM 104.5 (Bell) and CKFM-FM Virgin Radio 99.9 (Astral) are No. 2 and No. 3 in the market among commercial FM stations, behind Rogers’s CHFI-FM. Behind them is Astral’s CHBM-FM Boom 97.3 at No. 5, and well behind them is Bell’s CFXJ-FM Flow 93.5, which has only a 1.5 share and only 1,170W. I’m guessing this market didn’t take long to figure out.

Ottawa

We already know that Bell is selling two stations to Corus (Corus is already maxed out in the other markets). Both are on the low end of the ratings scale. In a reverse of Winnipeg, the three lowest-rated of the Bell/Astral stations have only a 0.3 share difference between them. The outlier is CJMJ-FM (Majic 100.3), with a 7.3 share and No. 2 in the market. Among the other three, Bell would keep its own station CKKL-FM (Bob 93.9) and sell the two Astral ones (CKQB-FM The Bear 106.9 and CJOT-FM Boom 99.7). The two for sale have lower power than the one being kept, though the difference isn’t so much to make it an obvious choice.

Conclusion

I don’t deny that Bell is using many criteria for evaluating radio stations for sale. And it’s true that ratings isn’t the only factor. But there’s a clear correlation showing that Bell is more likely to keep higher-rated stations and sell lower-rated ones. In no markets where a Bell/Astral station is a share point or more above the others is that station for sale. And in only one case (Vancouver’s CFTE AM station) is a station being kept that is a share point or more below the others.

The CRTC will look closely at this list, and the fact that Bell hasn’t changed it might easily lead the commission to conclude that once again, Bell is trying to trade up in each market by buying the best and selling the worst.

Possible buyers

Aside from Corus, Bell hasn’t revealed the names of other parties interested in buying its radio stations. But we know they exist. In its submission to the CRTC, Bell explained that there were six parties that wanted in on the purchase, blanking out their names:

We can infer that No. 4 was Corus. That leaves five other potential owners, three of whom would buy all of the other stations.

Here are some possibilities for potential new owners of these stations and their likelihood, based solely off of my conjecture:

1. Rogers: Aside from Vancouver’s AM market, Rogers is already maxed out everywhere, so the likelihood of a bid from them is just about zero.
2. Pattison: With two FM stations in Vancouver and a licence for a yet-to-launch FM in Calgary, this medium-sized radio player might be looking to expand. But I can’t see why it would bid on the Vancouver stations, so if it is among the above, it’s one of the two smaller bidders. Right now the group is limited to stations only in B.C. and Alberta. Buying the Calgary station would make sense (it just won a licence there), as would a further expansion into Winnipeg. (UPDATE: See below)
3. Newcap: Newcap has two stations in Calgary and two in Ottawa. And it recently announced it wanted to sell off its radio stations in western Canada (UPDATE: It has since cancelled that plan after getting no satisfactory bids). A bid on stations that includes the one in Calgary makes no sense in this context.
4. Evanov/Dufferin: This group is obviously looking to expand, having secured licences for two radio stations in the Montreal area set to launch this year. The company owns two FM stations in Winnipeg, three in the Toronto area and one in Ottawa. A bid would make sense, but only the Calgary station bid wouldn’t require them to sell stations off.
5. TTP Media: The Montreal-based trio of radio revolutionaries don’t have their first station on the air yet, but already tried to make bids in Toronto and Calgary when frequencies opened up there. I wouldn’t put it past them to try to put together a bid for everything on the table.
6. Cogeco: Cogeco said at the last Bell/Astral hearing it had no intention of bidding on Bell’s radio stations. But that doesn’t mean it won’t. Cogeco currently owns only one English-language radio station, CKBE-FM (92.5 The Beat), so it might not be eager to make the jump into a major English-language broadcaster. But as a major cable company, it definitely has the money if it wanted to.
7. Other multi-station small players: Companies like Durham Radio, McBride Communications, Golden West Broadcasting, Zoomer Radio, Vista Radio, RNC Media and others have stations mainly in smaller markets and might be willing to expand into the large ones. The big question is how many of them would have the kind of money necessary to put together a bid.
8. Quebecor: Quebecor doesn’t have any radio station assets, mainly because it already owns local TV stations and newspapers in large and mid-sized Quebec markets and probably wouldn’t be allowed to own radio on top of that. But it doesn’t own any local TV stations in English Canada, so an expansion there is at least theoretically possible. You could even make a case for a convergence play, between the Sun newspapers and the Sun News Network.
9. Telus: Haha, nice one. Won’t happen.
10. Someone else with a lot of money: Anything’s possible. We could see a new player here, and the three bids for all 10 stations suggests there might be someone starting from scratch or near-scratch. But your guess is as good as mine there.

UPDATE (May 16): Pattison has announced it’s come to a deal to buy the Calgary and Winnipeg stations.

The deadline for comments on the Bell/Astral application is Friday, April 5 at 8pm ET. To comment to the CRTC, click here, select Option 1 and select the first application (2013-0244-7). Keep in mind that all information submitted to the CRTC this way, including contact information, is on the public record. The hearing into this application begins May 6 in Montreal. Sales of radio stations (including the two to Corus) will likely be subject to a further hearing at a later date.