Tag Archives: Bell Media

Posted in TV

Bell Media shuts down CTV transmitter in Wiarton, Ont., after spat with neighbour over trees

There’s no longer a CTV television transmitter in Wiarton, Ont. And all because of a dispute with a neighbour that started with an apparent misunderstanding over the cutting of trees.

The story is contained in an application owner Bell Media filed with the CRTC on July 10 to revoke the broadcasting licence of CKCO-TV-2, a 100kW transmitter in Wiarton, which is on the Bruce Peninsula separating Lake Huron and Georgian Bay. It’s one of two retransmitters of CKCO-DT in Kitchener. The other is in Oil Springs, Ont., covering Sarnia.

As Bell tells it, it has had trouble accessing the transmission tower, even though it owns the land the tower sits on, because the access road to it is on property owned by a neighbour. For years, there was a verbal agreement with that property owner to access the site using his road (which leads to a street officially called Tower Road). But three years ago, the property was sold. The new owner had a falling out with Bell after “Bell Media rightfully prevented the new owner from cutting trees located on our property.” In January 2014, the new owner demanded Bell pay $1,000 a month to use his road, plus $34,000 in back pay going back to when he originally purchased the land.

Naturally, Bell thought this was a ridiculous sum and offered to pay $5,000 a year, with no back pay. The owner refused, and so Bell could no longer get a vehicle to its tower.

The next month, the power went out at the tower. Bell discovered a serious fault in the electrical system which required a series of repairs, but again the owner of the road denied access. Bell’s only access to the tower was through a tiny strip of land connecting its land to the road. Which meant travelling on foot. And since this was February in rural Ontario, this meant going by snowshoe.

Without the ability to fix the electricity, the diesel backup generator stopped working and CKCO-TV-2 went off the air.

Other than the TV transmitter, there’s only one other tenant, Spectrum Communications, a company that provides two-way radios and other specialized communications for businesses and institutions. It pays $14,000 a year until its lease expires in August 2015, which isn’t enough to justify the $91,000 a year it costs to run the tower and its transmitters.

So Bell has decided to give up on the 230-metre-high tower and hand back the licence for CKCO-TV-2. It’s unclear if they plan to sell the tower, dismantle it or do something else.

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Posted in TV

Bell Media to lay off dozens at Much, MTV

Despite its very profitable operation overall, Bell Media is making deep cuts to Toronto-based television production and cutting up to 120 jobs. On Wednesday, we learned that dozens of those jobs will come from Much, MTV Canada and related channels, and will have a big impact on in-house productions. We already know that indie music show The Wedge is being cancelled, as is Video On Trial and Today’s Top 10s. On MTV, we’re losing 1 Girl 5 Gays, After Degrassi, Losing It and MTV News, according to reports.

The notice of layoff, posted on the Unifor local’s website, list the 72 positions being made redundant. We (and they) won’t know exactly who’s being cut until the process is completed, including bumping of people with less seniority in other classifications.

Much aka MuchMusic, the biggest of the specialty channels in the group, had a decent profit margin, but from 2011 to 2013 experienced an $8 million drop in annual advertising revenue and a $7 million increase in programming expenses, conspiring to push the channel in the red, according to CRTC figures. This despite a significant increase in the number of subscribers. It reported an average staff count of 75, though Unifor’s seniority list has 100 full-time and eight part-time people at the Much production unit.

And in a bit of irony, one of Much’s iconic shows, Degrassi (formerly Degrassi: The Next Generation) was just nominated for an Emmy for outstanding children’s program. It’s the show’s third nomination in four years.

Posted in TV

Viewers Choice pay-per-view shutdown will force cable companies to scramble

Viewers ChoiceThere’s been no press release, and I haven’t gotten the company to confirm it, but Bell Media has been advising cable companies that Viewers Choice Canada pay-per-view is shutting down on Sept. 30. (UPDATE July 16: Bell finally confirmed it in an email to Canadian Press. It says there will be a single layoff, and it will work with other providers to find an alternative PPV service.)

As I explain in this story for Cartt.ca (subscription required), Bell became the majority owner of Viewers Choice when it acquired Astral Media last year. But Bell doesn’t use Viewers Choice for its own TV subscribers, instead preferring its own in-house service Vu! There has been speculation that something would happen to Viewers Choice, and those seemed partially confirmed in February when it turned in its now unused satellite distribution licence.

Dating back to 1991, Viewers Choice was once the exclusive PPV provider for eastern Canada. It’s no longer exclusive nor regional, but its history means it’s still the PPV service carried on many systems in eastern Canada, including the big ones — Videotron, Cogeco, Rogers, Eastlink and Bell Aliant.

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Posted in TV

V to buy MusiquePlus and MusiMax, the last of the Bell-Astral castoffs

The announcement Tuesday from both Bell Media and V that the latter has won the bidding to purchase music specialty channels MusiquePlus and MusiMax means that all of the assets that the CRTC forced Bell to get rid of as a condition of the Astral acquisition now have prospective new owners.

Neither company revealed the amount of the sale, but we’ll know it when the matter comes before the CRTC. La Presse reports it’s $15 million total, which is low for a well-known specialty channel (much less two), and well below the price it was evaluated at when Astral acquired CHUM’s 50% share of the channel for $34 million in 2007.

To recap, here’s what is being sold, and the status of those sales:

To Corus Entertainment:

  • 50% interest in Teletoon (includes four Teletoon channels and Cartoon Network Canada), for $249 million total (Corus already owns the other half)
  • 50% interest in Historia and Séries+, for $138.6 million total (Corus is also acquiring Shaw’s 50% interest for the same amount)
  • CKQB-FM Ottawa (106.9 The Bear) for $10 million
  • CJOT-FM Ottawa (Boom 99.7) for $3 million

All of the acquisitions listed above (with a total purchase price of $400.6 million) were dealt with at a CRTC hearing that began Nov. 5. We are now awaiting a decision. The acquisitions were approved in December and January.

To Jim Pattison Broadcast Group:

These acquisitions were announced on May 16. The purchase price is unknown. The CRTC has not yet set a hearing date for this acquisition. UPDATE (Jan. 15): The total purchase price is $25.5 million (but valued by the CRTC at $29.8 million). The transaction was approved without a public process.

To Newcap Radio:

These acquisitions, total price of $112 million, were announced on Aug. 26. The CRTC has not yet set a hearing date for this acquisition.

To DHX Media:

These acquisitions were announced on Nov. 28. The CRTC has not yet set a hearing date for this acquisition.

To V Media:

  • MusiquePlus Inc. (MusiquePlus and MusiMax). Price unknown (La Presse reports $15 million).

The CRTC has not yet set a hearing date for this acquisition.

V, turnaround artist

It’s been a bit over five years since a company effectively owned 50% each by Maxime and Julien Rémillard got CRTC approval to take over the bankrupt TQS network. Thanks in part to a successful reboot that banked on a counter-programming strategy, and in part to getting the CRTC to agree to virtual elimination of its news department, the Rémillards got the network that has never made money to finally make some money.

The road hasn’t been easy, though. As competitors like Bell Media, Quebecor Media, Radio-Canada and others can make liberal use of other sources of funding, V had only advertising revenue to go on. It had no money-making specialty channels or lucrative cable distribution networks.

Remstar does have licences for three unlaunched specialty channels:

Each of these has four years (so until 2015) to launch before their licences are taken away.

It also had a licence for a user-generated-content channel, which has since expired because it never launched.

Launching new specialty channels is difficult for various reasons, but a big one is that you need to get carriage. And unless you own a cable provider, that can be an uphill battle.

Getting control of MusiquePlus and MusiMax means V doesn’t have to go through that process. MusiquePlus already has 2.4 million subscribers. MusiMax has 1.9 million. They’ll already have the audience. It’ll just be a question of turning that into profits.

Unlike most popular specialty channels, MusiquePlus and MusiMax are not highly profitable. MusiMax has been hovering around the break-even mark, and MusiquePlus has lost more than $5 million since 2009. (This is probably why Bell decided to let them go.)

Media critics blame this unprofitability on the channels having lost their way. There’s no music on MusiquePlus, they complain, but rather a series of reality shows about pregnant teenagers, models, carswashed-up celebrities, people who are famous for being famous and whatever Criss Angel is.

Sure, there’s Rajotte, but MusiquePlus has a long way to go to make itself a music channel again. On the bright side, V has already shown that it can revitalize a television channel and keep it young at heart. If it can do the same with these channels, while also keeping them tied to their raison d’être — music — then they should be able to win a lot of fans, and hopefully make a good amount of money too.

Posted in Media

Bell says emails about pro-Bell study are not an attempt to influence CTV News coverage of Bell

Was Bell Media President Kevin Crull misinterpreted by the managers under him? Bell won't say.

Was Bell Media President Kevin Crull misinterpreted by the managers under him? Bell won’t say.

Dwayne Winseck, an Ottawa-based media analyst, came out with a rather shocking allegation on his blog on Tuesday: Bell, which is in the middle of a very public battle with the Conservative government and others over rules for an upcoming auction of wireless spectrum, sent memos to news directors at CTV asking for them to cover a study that was favourable to Bell’s position.

Attached to that post is a Word document with partially redacted emails. One is from Kevin Crull, the president of Bell Media. Titled “Fw: Wall Report 2013″, it gives some highlights from a report that came out in July that seemed to show wireless prices in Canada were lower than the U.S. The recipients of this email included Wendy Freeman, president of CTV News.

The other two emails are forwards of the report, one by Chris Gordon, who runs Bell Media radio and local TV news, and the other by Kevin Bell, general manager of CTV Vancouver Island, apparently forwarded from Gordon.

“Kevin is asking if this report can get some coverage today on Talk Radio. National news is covering for TV,” Gordon wrote in his email. “Kevin Crull our President wants us to give this report some coverage. It’s a report on phone charges in Canada,” Bell wrote in his.

Damning charges, if they’re true. Michael Geist picked up the story on his blog. Since neither of them had comment from Bell, I went to get one myself.

Here’s their statement, issued through Scott Henderson, VP of communications for Bell Media:

The Wall Report was a key news story covered by most major news outlets. CTV News and Bell Media Radio provided fair and balanced coverage and stand by their journalistic integrity.

Our news divisions are independently managed and have the full power to make editorial decisions, as outlined in the CTV News Policy Handbook (excerpted below).

2.32 Stories Concerning CTV or Affiliated Companies

Stories concerning the CTV Television Network, affiliated companies or shareholders should be covered in accordance with the same standards of fairness, balance and accuracy applied to any other story. Stories should be neither underreported nor over-reported. Reports on our parent companies, Bell and BCE should include an acknowledgement that they are the owners of our networks. CTV News employees invited to participate in stories should be treated with the same standards as other contributors.

2.33 In-Kind interviews and Product Reviews

Our journalism must remain free from undue commercial influence. If we compromise our principles for financial gain, we damage our credibility and the audience will turn away. If you receive a request to cover an event, review a product or interview an individual who has a commercial relationship with the company, that coverage should be proportional to the event’s newsworthiness.

From time to time, as President of Bell Media, Kevin Crull communicates to his Senior Leadership Team items of interest to the business. Kevin Crull’s e-mail with the Wall Report attached did not request coverage by Bell Media news properties.

Regardless, there is never any expectation for our news divisions to cover issues affecting the company – those decisions rest with the news directors alone and are based on the newsworthiness of the issue. When these issues are covered by Bell Media news properties, we are transparent with our viewers and listeners by acknowledging that Bell is our parent company.

In short: Yes, Kevin Crull sends emails like this one with news about stuff affecting Bell. But no, these emails should not be interpreted as Crull directing CTV News to cover these issues.

I asked Henderson whether the statement in Chris Gordon’s and Kevin Bell’s emails suggest a communication failure here. His response: “We have no further comment.”

In case you’re curious, here’s how CTVNews.ca covered the report: a Canadian Press story (which tends to be a good option when news outlets have to post news stories about themselves) packaged with a video of a CTV News Channel interview with the person who did the report. The video ends with a disclaimer from the anchor that CTV News Channel is owned by Bell Media.

I’ve seen enough CTV News reports about its parent company to know that it doesn’t toy with its reports to make the big bosses happier. But Crull and his executives must be well aware of the pressures that journalists face when it comes to stories about their employers and parent companies, and how much easier it is to follow a suggestion from a boss than it is to argue against it. Not to mention that the amount of importance given to a story is just as important as the content of those stories.

And while it’s perfectly fine to say in an official policy that CTV News deals with its parent company fairly, emails like this from the boss give the opposite message. The head of Rogers or Public Mobile or Option consommateurs can’t send an email to every BCE employee by simply pressing a button. If anything, Bell and Bell Media should be extra careful about even the appearance of possible conflict or interference in news coverage, and this seems to be the exact opposite of that.

At best, these emails show an embarrassing communication failure within Bell Media that needs to be corrected quickly. At worst, they’re indicative of a serious issue of journalistic ethics within the organization, and of the need to separate the business operations of Bell and Bell Media from the editorial operations of CTV News, BNN and Bell Media Radio.

Either way, those who are already convinced that vertical integration is ruining the Canadian broadcasting system have another talking point to bring up about the Evil Bell Empire.

Posted in TV

Colbert Report’s time on CTV comes to an end: “exclusive to Comedy”

I remember when the Colbert Report first launched in 2005. I remember the three weeks between the time it debuted on Comedy Central in the U.S. and the time that CTV began airing it in Canada. I remember the handoffs between Jon Stewart and Stephen Colbert, which got viewers of the first show to tune in to the second.

But after eight long and truthy years, the Colbert Report aired its final new episode on CTV on Aug. 15. When it comes back from vacation in September, CTV will have replaced Colbert at 12:35am with Late Night with Jimmy Fallon, a move being made in anticipation of the replacement of Fallon with SNL’s Seth Meyers in early 2014.

Stewart is staying on CTV, as is Conan O’Brien, whose show gets pushed back by half an hour. The new schedules, as of Sept. 2, will look like this:

  • CTV: National news at 11pm, local news at 11:30pm, Daily Show at 12:05am, Late Night at 12:35am, Conan at 1:35am, a Comedy Now! rerun at 2:05am, and then infomercials
  • CTV Two: Local news at 11pm, Tonight Show at 11:35pm, Criminal Minds rerun at 12:35am, then infomercials
  • Comedy Network: Daily Show at 11pm, Colbert Report at 11:30pm, Conan at midnight

The move makes sense for Bell Media for two main reasons:

  • Simultaneous substitution: Airing Late Night instead of Colbert means that CTV can take over NBC’s signal for that hour each night and insert its own ads. Because Comedy Central isn’t available in Canada, there’s nothing to substitute with Colbert (which airs at a different time anyway). It’s the same reason why NFL games air on CTV but CFL games air on TSN. The system favours airing U.S. network programs on broadcast channels.
  • Must-have programming on Comedy: With Colbert being “exclusive to Comedy”, a fact that CTV isn’t hiding (it even bragged about that during ads shown to the audience at Just for Laughs galas this summer), fans of the show must subscribe to that channel to get it. I suspect most fans already subscribe to that channel, but this is even further incentive. And specialty channels are where the big money lies in television right now.

There are other bonuses too. Colbert no longer airing on CTV might push more cable distributors to offer Comedy in high definition (Videotron, for example, currently doesn’t, which means Videotron subscribers won’t be able to watch the show in high definition anymore.)

Of course, the wishes of viewers aren’t really factored in here. Given the choice, they would probably prefer the existing system, seeing Stewart and Colbert on CTV and having the option to watch classic late-night on NBC. But when the wishes of the viewers conflict with the ability to game the system for more profits…

Posted in Media, Radio, TV

The new convergence utopia: Who owns what in Canadian media

A little under three years ago, I published a post with a chart of Canada’s media giants and what they own. Now that the CRTC has given a green light to a major acquisition by one of them, I thought it was a good time to revisit and update that chart.

The following represents who will own what once all the various deals go through, including related deals for asset acquisitions involving Corus, Shaw and Pattison Group.

UPDATE: I’ve moved the chart to this page, where I will be keeping it updated.

Posted in Radio

Campaign to save TSN 990 should focus on the CRTC

In the week since Bell’s application to switch CKGM from TSN Radio to RDS Radio became public, the station’s small group of loyal fans has mobilized. A Twitter account, a public protest set for Aug. 4, and lots of comments online. Many of those comments seem to be based on misconceptions about what’s going on. In particular, many blame the CRTC even though the commission has yet to make a single decision about Bell’s application (besides deciding to consider it).

As of Monday night, 456 interventions had been filed with the CRTC about this application alone. I haven’t been able to read all of them yet, but a handful selected at random are all from individual people, all opposed to the application.

People have been asking me if this number of interventions is high. It is. Very high. I don’t know what the record is, and it’s hard to compare this to other “average” applications in front of the CRTC, because not all applications are the same, and most are non-controversial. But even controversial ones don’t usually generate quite this much attention. As an example, RNC Media’s application to turn CKLX-FM (Planète Jazz) into a talk station modelled on Radio X – which is to be heard at the same hearing on Sept. 10 – has received only 76 interventions. (I compiled some highlights of those here.) The $3.38-billion acquisition of Astral Media by Bell has only generated 18 so far, and many of those are as much about TSN 990 as they are about Astral and Bell.

The biggest reason for this is probably social media. The link to file interventions has been passed around, published on this blog and others, retweeted and posted on Facebook with instructions telling people how to file. The CRTC, probably annoyed that so many people were using the complaint form instead of the intervention one, has taken the unusual step of posting a special link on its homepage telling people where to file interventions related to TSN 990. (The link, it should be noted, refers to the brand “TSN 990″, rather than the company name “Bell Media Canada Radio Partnership” or the station’s callsign CKGM, which are the more formal ways the commission usually refers to radio stations in public notices.)

The result of making this more accessible is yet more interventions. It’s something commissioners and commission staff love to see more of – individual people getting more involved in the process and making their opinions heard. But if those interventions just call on the CRTC to be dismantled or demand something not in the commission’s power, they won’t be very useful.

In an effort to give people a better idea of the regulatory hurdles in front of Bell Media’s application to change CKGM from English to French (and perhaps prompt some more insightful interventions with the CRTC, whether they’re for or against the application), I wrote a piece that appears in Tuesday’s Gazette: The five ways to save TSN 990.

Specifically, they are:

  • The Competition Bureau could reject the Astral purchase. Unlikely considering it hasn’t stood in the way of these kinds of acquisitions in the past. But still possible.
  • The CRTC could reject the Astral purchase. Also unlikely. Even if the commission finds serious issues of media ownership concentration, it would more likely order Bell Media to sell off assets that put it over a specific threshold.
  • The CRTC could issue an open call for applications. This is much more likely. CKGM was given the frequency of 690 kHz last fall (it’s moving there this fall, with 990 kHz going to Dufferin Communications for Radio Fierté) based on an application that argued, among other things, that the English sports-talk station needed a clear channel to better reach the anglophone community. If this station becomes French-language, that argument goes out the window. Additionally, the CRTC could concern itself with the fact that this switch would make all three clear-channel frequencies in Montreal (690, 730 and 940) French-language stations, disrupting a historic language balance. There’s precedent for issuing an open call: CKGM got 690 in the first place after people objected to an application by Cogeco to reactivate it and 940 kHz for (heavily subsidized) all-traffic stations. The CRTC responded by issuing an open call for applications for 690 and 940, and Cogeco was left empty-handed. (It cannibalized CKAC 730 for its French all-traffic station, and the status of the English all-traffic station is unclear.) Of course, if the CRTC does issue an open call, Bell could apply for this frequency for RDS Radio, and it would stand a good chance of succeeding. But the prospect of losing the frequency might scare Bell off. It said in its application that if the CRTC issued such an open call, it might reconsider.
  • The CRTC could deny the language switch. It’s the simplest thing. Bell has applied for a language switch, because it needs an amendment to its license (or a new license) to do so. The CRTC could simply deny this request, and say if Bell wants RDS Radio it needs a new application for a new radio station.
  • The CRTC could issue an exemption. This is the one everyone’s calling for, and it’s possible, though rumour has it Bell unofficially asked the commission if an exemption could be granted and were told it was highly unlikely. Bell would have to make a serious case that one of the four stations is so vital to the broadcasting system that an exemption is warranted, and make the case that the station simply couldn’t survive if it was sold to someone else. I don’t think most of the station’s listeners really care who owns the station, only that it stays on the air.

You can read more about these five options and the regulatory process in the Gazette story.

Interventions are still being accepted at the CRTC until 8 p.m. Eastern time on Aug. 9. The hearing is Sept. 10 at the Palais des congrès, and those who indicate a wish to appear in their interventions will be allowed to present their arguments in front of the commission in person.

UPDATE (July 17): Pat Hickey argues that the CRTC has a responsibility to keep CKGM running as an English station. Mike Boone adds that TSN 990 is such a small piece of the Bell empire that they couldn’t care less what happens to it and its employees. For more commentary about the application and the station, see the bottom of my previous post.

Posted in Radio, TV

Bell’s purchase of Astral: The issues in front of the CRTC

While everyone’s attention here was naturally focused on what Bell’s plans are for CKGM, the bigger issue up in front of the CRTC on Sept. 10 is the overall $3.38-billion purchase of Astral Media by Bell Media.

The deal would be a straight purchase, gobbling up everything owned by Astral including non-broadcast assets like its outdoor billboard advertising business. Bell would sell off only those things it is required to.

It’s a deal that has prompted a lot of worries about media concentration (though you could say it’s far too late to worry about that). Quebec’s Option consommateurs has already come out against it, generating some media buzz, but otherwise there hasn’t been much organized opposition.

10 radio stations to be sold

As I noted in the post when the deal was announced, a look at the combined assets of both companies shows they would be over the limits (two AM, two FM, and no more than three total in markets with fewer than eight commercial stations) in six markets, and would need to divest itself of 11 stations to meet the limit. In its application, Bell says it plans to sell 10 stations, and convert CKGM to French.

Bell’s application indicates it has provided the CRTC with a list of the 10 stations it plans to sell, but it wants that kept confidential so that those stations don’t become lame ducks, losing staff and morale. Knowing what markets it needs to sell stations in (two FM in Ottawa, one FM in Calgary, two FM in Toronto, two FM in Winnipeg, and two FM and one AM in Vancouver) and what the ratings are for those markets, it wouldn’t take a rocket scientist to find the likely castaways.

Because most of those markets have many English FM stations and multiple independent players, the concern about market concentration isn’t as high there as it is for Montreal’s English market.

Two calculations for TV viewing share

On the TV side, the CRTC’s concern isn’t so much the number of TV services (cable channels are a dime a dozen these days), but viewing share. Specifically, it says it will not allow any one player to control more than 45% of the overall viewing share in either language, and will closely scrutinize any purchase that gives a player between 35% and 45% of the viewing share.

Where Bell fits in depends on how you calculate that share. If you include Canadian viewing of American and overseas TV channels (like PBS, CNN and Spike TV), it falls just under that 35% threshold (33.5%). If you include only Canadian services, it’s just above (38.7%). Naturally, Bell believes U.S. services should be included in the calculation (they represent about 10% of Canadian viewing hours), which makes sense, but also means that one player could own 100% of Canadian television channels so long as 65% of Canadian television viewing is of foreign services. In addition, Bell argues that part of that share is its CTV Two network, which it has agreed to keep operating even though it loses money as part of a commitment made in the purchase of CTV by Bell.

There are also qualitative arguments that Bell uses. For one, Astral has no news or public affairs departments at its TV properties, so there would not be a reduction in diversity of voices here. (Bell conveniently ignores the fact that Astral has many radio newsrooms, and in a market like Montreal it means controlling the biggest TV newsroom and the biggest radio newsroom.) And Astral’s English-language television is limited mainly to its pay TV services like The Movie Network and Family Channel. It doesn’t own many specialty channels in English.

On the French side, because of the dominance of Quebecor and Bell’s virtually nonexistent presence (aside from RDS), combined they would represent only 24.4% of the overall TV viewing share.

Two B.C. stations

It’s a footnote in any discussion of Astral, but it does own two conventional television stations in tiny markets in northern B.C. – CJDC in Dawson Creek and CFTK in Terrace. Both are CBC affiliates with local newscasts. Bell’s application says they would remain that way “for the immediate term” but that this could change. “Following closing, we will determine if, when and how these stations will be integrated into the broader Bell Media conventional television group.”

Disaffiliating from CBC requires a separate CRTC application. But it’s hard not to see them eventually being converted into CTV network stations. Neither is anywhere close to an existing CTV station.

Tangible benefits

Aside from CKGM and other concerns about concentration of ownership, the biggest debate over this acquisition is probably going to be over what’s called the “tangible benefits” package. When ownership of a television service or radio station changes hands through a purchase, the CRTC requires that what can best be described as a sales tax be spent to improve the broadcasting and cultural system in some way. Usually (and particularly for radio stations), this means giving money to an organization that develops Canadian music talent. Or it could be some increase to Canadian programming beyond the minimum requirements of broadcasting licenses.

Tangible benefits packages are usually calculated as 6% of the purchase price for radio and 10% for television. In cases where the purchase price is effectively negative (such as when Channel Zero bought CJNT and CHCH for $12), tangible benefits packages don’t apply.

Bell’s proposal is for $200 million in tangible benefits, breaking down as $140 million for television (based on a $1.4-billion value), and $61 million for radio (based on a $1-billion value). The latter is to be adjusted based on the value of radio assets it will be forced to divest in the deal. Both, bell proposes, would be paid over 10 years instead of the usual seven, mainly because Bell is still paying off the tangible benefits packages from CTV’s acquisition of CHUM and Bell’s acquisition of CTV.

In case you’re doing the math in your head, the two purchase prices add up to about $2 billion. The rest of the acquisition price includes non-broadcast assets like outdoor advertising, as well as 50% stakes in Teletoon, Teletoon Retro, Historia and Séries+, which Bell feels should be exempt from this calculation because it would not mean an effective change in control of those channels. (Judging by correspondence on this matter, the CRTC might not accept this argument at face value.)

The biggest chunk of Bell’s proposed benefits package is $96 million that will go to “programming of national interest” (comedy, drama, documentary and certain awards shows), the majority of which will be spent on French-language programs because of Astral’s French-language skew. Then there’s the $61 million in radio benefits that will go to developing Canadian music talent and community radio funds.

It’s the other two chunks that are causing some consternation, though. About $40 million is being pledged to “support Canadian programming by making it more widely available in Canada’s North through the extension of next-generation broadband wireline and wireless service.”

That sounds fantastic, doesn’t it? The problem, aside from how odd it is that Bell associates upgrades to 4G wireless service as somehow helping the television broadcasting system, is that this is essentially a network upgrade for Northwestel, the main telco in the territories. And as if we need to point this out, Northwestel is a subsidiary of Bell.

This has not gone unnoticed for Northwestel’s competitors, who call the blatantly self-serving investment “shameful,” particularly since Northwestel has been heavily criticized for failing to modernize its system. The fact that the CRTC has just opened up local phone service to competition only makes such an investment in one company seem even more anti-competitive.

Another chunk of the package getting noticed is $3.5 million over seven years that would go to Bell Let’s Talk Day, which is an annual campaign to raise money and awareness for treating mental illness. I’ve written before about how Bell seems fine with ordering its assets (and even local news departments) to participate in and cover this campaign.

It’s hard to come out against such a charity campaign, but what does this have to do with broadcasting? The CRTC’s goal with tangible benefits is pretty clear, and though such causes are laudable, there’s no provision for essentially donating part of this package to a favourite charity.

The CRTC asked Bell to justify this expense, and here’s their response:

The proposed benefits initiative will be used to help raise money and awareness to help battle mental health issues through the development of PSAs and educational materials, among other things, and will yield measurable improvements to the communities served by BCE and by Astral by contributing to the earlier identification and better management of mental illness in those communities. That is why so many municipalities and provincial governments devote significant funding to pursuing exactly those goals. This multi-platform media initiative will leverage the merging parties’ unique expertise in broadcasting, a different sphere of endeavour than that in which municipalities and provincial governments work.

These improvements are also significant and unequivocal benefits to the Canadian broadcasting system itself. Parliament left no doubt as to the importance of this policy goal, which it required the Commission to pursue, when it declared that the Canadian broadcasting system should strengthen the social fabric of Canada; serve the needs and interests, and reflect the circumstances and aspirations, of all Canadians; provide information and enlightenment; and expose the public to differing views on matters of public concern. As a result, we respectfully submit that making space in the Canadian broadcasting system to address key social issues, which include mental health, and that raise both money and awareness in support of those issues, is the very epitome of the significant and unequivocal benefits to which the tangible benefits policy was directed.

I don’t know about that.

As the Globe and Mail’s Simon Houpt explains, all this stuff might be boring financial policy stuff, but it’s important. We’re talking about hundreds of millions of dollars being injected into Canadian broadcasting. It’s the CRTC’s job to ensure Bell is spending it properly to benefit the system more than itself.

Correspondence between the CRTC and Bell that forms part of the public record on the application makes it clear that the commission is challenging Bell on all of these matters. Expect them to get discussed in depth at the September hearing.

The CRTC hearing into Bell’s proposed purchase of Astral Media is scheduled to begin Sept. 10 at the Palais des congrèsPeople wanting to file comments with the CRTC or appear at the hearing can file an intervention here (the application number is 2012-0516-2: Astral Media inc.). The deadline is Aug. 9. Note that comments – including names and contact information – are on the public record.

UPDATE: In a somewhat unrelated press release about winning an old lawsuit against Bell related to its ExpressVu satellite service (now Bell TV satellite), Quebecor CEO Pierre Karl Péladeau made it very clear he and his company are against the Bell-Astral merger, using language you don’t usually see from bosses of big companies:

Bell puts forth considerable efforts to obtain a virtual monopoly of French specialized channels through the acquisition of Astral Média, that would give it 8 of the 10 most popular French specialized and pay TV channels, as well as 67% of the audience and 80% of ad revenues in this market. In the Canadian market, in both languages, over 41% of monthly subscription fees paid by specialized channel viewers would go to Bell, as would 45% of these channels’ advertising revenues. Of the 51 specialized and pay channels that would be controlled by Bell as a result of this transaction, 28 are genre-protected and 30 are must-carry channels in their respective markets. The situation is equally problematic in radio, where Bell would own 117 radio stations across the country, while also exerting total control over all specialized music television channels.

“We call on the CRTC to refuse to approve this transaction on the basis that Bell’s business practices do not meet the ethical standards expected from a company that has the privilege to exploit broadcasting services through licences granted by the CRTC for the benefit of all Canadians. If such practices were to go unsanctioned, Canadians’ slowly eroding confidence in its regulatory authorities would only be further undermined. It is essential for anyone concerned with a healthy and competitive TV industry to take a look at these judgments and oppose Bell’s takeover of Astral. Only by staying vigilant and by denouncing Bell’s unacceptable practices by all possible means will we be able to prevent it from recreating the monopolistic model it relied on for so long,” concluded Mr. Péladeau.

Despite this rather inflammatory statement, Quebecor has not, as of July 25, filed a formal intervention with the CRTC about this case.

Posted in TV

CRTC sides with Bell Media in dispute with cable companies

The title of the decision is “Request for dispute resolution by the Canadian Independent Distributors Group relating to the distribution of specialty television services controlled by Bell Media Inc.” – but its boringness hides how much of an effect it could have on your cable or satellite television bills.

The case involves a complaint to the Canadian Radio-television and Telecommunications Commission from a group of independent telecom groups about their attempts to come to a deal with Bell Media over its specialty services like TSN, Discovery Channel and Space.

The cable companies formed an alliance called the Canadian Independent Distributors Group. Its members are:

  • Bragg Communications (EastLink)
  • Cogeco Cable
  • Manitoba Telecom Services
  • Telus
  • The Canadian Cable Systems Alliance, which represents more than 100 independent distributors including dozens of small-town companies and cooperatives

Of note is that none of these companies are vertically integrated – they don’t have specialty channels of their own. They argue in their complaint that Bell is using its ownership of some of Canada’s most popular specialty channels as leverage to give its affiliated television services better deals than it gives to independent cable companies.

Giving undue preference to an affiliated company is not allowed by CRTC rules. What’s more, when it became clear that mega mergers would create giant corporations with significant holdings in both television services and the cable and satellite companies used to distribute them, the CRTC set up a framework to ensure they weren’t abusing their positions.

The framework set rules for these companies, which include:

  • forbidding them from setting “unreasonable” wholesale rates for specialty channels
  • forbidding them from requiring minimum subscription numbers that would force people to pay for services they didn’t want
  • requiring them to make services available on a stand-alone basis
  • forbidding them from establishing an “excessive” activation fee
  • in general, offering conditions to affiliated companies that are not offered to competing companies

This is all well and good in theory, but would it work in practice? Bell’s purchase of CTV and Shaw’s purchase of Canwest/Global certainly gives the impression that they believe they can gain an advantage through this vertical integration and that they believe there are benefits to controlling both sides of the equation.

The independent distributors group complained that Bell Media, in negotiating a new contract for its services, made unfair demands of them. Among them:

  • Making no changes to how they package Bell Media’s specialty channels without first gaining Bell Media’s consent
  • Setting minimum penetration levels so high, particularly for TSN and RDS, that the cable companies would be forced to force customers to carry those channels whether they wanted to or not
  • Requiring high fees and interest be paid when new contracts are agreed to after the previous one has expired
  • Refusing to include “non-linear rights” (i.e. video on demand and mobile) in the agreements

Bell Media responded by saying its services required a certain amount of revenue predictability, but offered an option called a penetration-based rate card, which adjusts wholesale rates based on the number of subscribers. The more subscribers, the lower the wholesale price per subscriber (the retail rate is at the discretion of the distributor). With that option, the cable companies would be free to offer services à la carte (but Bell would still require at least 50% of customers carry the most popular Category A channels like TSN and Discovery).

It also pointed out that more than 150 other distributors had signed an agreement with them.

Bell wouldn’t budge on “non-linear” rights, saying it isn’t regulated and has a high market value. Bell said it currently isn’t offering those rights to other distributors, but would be willing to provide the rights at commercially reasonable rates once they do.

The cable companies responded to Bell Media saying that while the penetration-based rate card makes sense in theory, if the price is much higher than the rates with minimum penetration guarantees, it wouldn’t solve the problem.

A win for Bell Media

The CRTC’s decision came down mostly on the side of Bell Media. While the commission has pronounced itself strongly in favour of consumer choice and à la carte subscription options, it said the older, bigger-budget specialty channels “will need time to adapt to an increasingly consumer-focussed environment.” It endorsed the variable rate system proposed by Bell, with the caveat that it would be unacceptable “if it had the effect of making flexible packaging options commercially unviable or resulted in a company that offers programming services using its market dominance so as to insulate it completely from the effect of consumers exercising choice.”

On the issue of what Bell called “incentives” to sign contracts on time, the CRTC agreed that such practices are commercially reasonable and did not order Bell to cease using them or to stop charging interest on retroactive balances.

And in the debate over “non-linear” programming rights, the CRTC also sided with Bell, saying it did not have to include those rights in negotiations with the cable companies and could negotiate them separately when it is prepared to do so.

The next stage, if the groups can’t come to an agreement before then, is arbitration. The arbitration process used here is called final offer arbitration, also referred to as “baseball arbitration” or “pendulum arbitration“. Both sides present final offers and the arbitrator chooses which one he or she thinks is more reasonable. The idea behind this form of arbitration is that it encourages both sides to be reasonable in their demands, and is likely to reward the side that is seen as being more conciliatory.

What does it all mean for me?

A lot still has to be determined at the arbitration stage. If the wholesale rate on the penetration-based rate card is too high, small cable companies won’t take advantage of it to offer consumers more choice. If it’s low enough that it makes sense to offer more packaging choice, we might see other cable and satellite providers try à la carte models. Currently choosing channels that way is available only in Quebec, and really only because of competitive pressure from Videotron that has forced Bell and Cogeco to do the same in Quebec but not elsewhere. Bell and Rogers both come out against more packaging flexibility for consumers, saying it’s either too complicated or consumers aren’t interested in it. (Bell Media even said at the hearing, when speaking of allowing Videotron to move to an à la carte model: “In hindsight, I wish that horse could be put back in the barn”)

But while the CRTC could have taken a strong stand in favour of consumer choice, it decided instead to stay on the side of some of the biggest money-makers in Canada. Channels like TSN, Space and Discovery are hardly in financial distress. Instead, they are the most profitable specialty channels and each make millions of dollars every year. Still, the CRTC has decided that it’s okay for big companies like Bell Media to impose minimum levels of subscribers for these channels, which means if not enough consumers choose them, cable and satellite companies can be forced to add them to basic packages and charge people for the channels whether they want them or not.

If there’s one bright spot, it’s that the CRTC believes that there’s an adjustment period here, and that eventually these specialty services will have to stand on their own two feet without this crutch of a minimum subscriber base. By the time of the next contract in a few years, all cable and satellite companies could be entirely free of contractual headaches that put limits on packaging flexibility, and consumer choice could reign.

Assuming we haven’t all moved to Netflix by then.

Posted in Radio, TV

Bell to buy Astral: But what about media concentration?

CORRECTION (July 14): Fixed list of stations to include an Astral one in Winnipeg that I had missed.

The HuffPost Québec and La Presse scoops ended up lasting only a few hours (most of which people spent asleep), but they were right: Bell has announced it will buy Montreal-based Astral Media in a deal worth $2.8 billion (or $3.38 billion, depending on how you count it).

The deal has serious implications in terms of diversity of voices in media, and has a pretty big regulatory hurdle before it can be approved. Astral owns 22 television services and 84 radio stations, many of which compete with Bell’s 30 specialty channels and 35 radio stations. In Montreal, notably, the deal would create a monopoly for English-language talk radio in Montreal, with CKGM (TSN 990) and CJAD both owned by the same company, and a near-monopoly for English-language commercial radio overall, with four of five stations owned by the same company.

Probably the most telling statement of the press release is this: “Astral products currently represent Bell’s largest single content cost.”

(Imagine that: Just going out and buying your biggest expense. If only I had a few billion dollars lying around, I could go out and buy Videotron and maybe Hydro-Quebec too.)

The competition bureau is obviously going to look into this. The CRTC must also approve the transaction, and could reject the deal or force Bell to sell off some assets if it believes they would harm competition. (The deal includes a $150-million payout from Bell to Astral if the CRTC rejects the purchase.)

Here’s a bit of a breakdown of how this might play out:

Television

Conventional (over-the-air) television: Astral has stayed out of the conventional television game so far, and owns only two stations in small markets in British Columbia, and both are CBC affiliates.

French-language specialty and pay television: Bell is selling this deal as a big push into the French-language Quebec market, and specialty channels will form a large part of that. Right now, Bell owns only a controlling stake in RDS and its related channels. Astral owns channels including Canal D, Canal Vie, MusiMax, MusiquePlus, VRAK.tv and Ztelé, but no sports-related channels. The CRTC shouldn’t have a problem here. Same for pay television, where Astral is the biggest (really, only) player with Super Écran. The deal would give the company a 26.8% viewing share among French-language specialty channels, but that would still be below Quebecor at 29.6%.

English-language specialty and pay television: Astral also has an interest in English-language specialty, with services including the Family channel and a 50% ownership of Teletoon (with Corus). But the big money is in pay television. Astral owns the Movie Network, Super Écran and related channels, and has a controlling stake in Viewers Choice Pay-Per-View. There isn’t much direct competition with Bell, though it does own channels like MuchMusic and MTV Canada (and related channels for both) which also target a younger audience. But the deal would give bell 41.4% viewing share among specialty channels in English Canada, twice its next-largest competitor (Shaw), which might concern the commission.

Radio

Bell is already the biggest player in commercial radio, with 31% of total listening hours among the big commercial radio players, according to the latest CRTC monitoring report. With Astral, that would go up to almost 45%, in both English and French-language radio. Revenue-wise, 31% of radio advertising revenue across the country would be going to Bell/Astral, which would be twice the next-largest player (Corus).

French radio: Astral has substantial radio holdings in Quebec, with the NRJ, Rouge FM and Boom FM radio networks that in many markets hit the limit of common ownership. But Bell has no French-language radio assets, which means there aren’t any big regulatory concerns here.

English radio: Here’s where the deal is going to run into some serious problems. Both Bell and Astral are major radio players, and the deal would put the combined company in violation of the CRTC’s ownership rules set in 1998 that state only two stations in one band/language/market can be owned by the same company in a market with eight or more stations, and a maximum of three total (and no more than two in one band) in markets with less than eight stations.

If we assume that the company would keep the highest-rated stations in each market/language/band and sell off the rest, that would put quite a few stations on the chopping block. Affected markets would include the following, with stations ranked according to BBM market share and stations in bold the ones the selling block (again, based on ratings alone – there could be any number of reasons for keeping a lower-rated station):

  • Montreal: Two FM and two AM (with only five commercial stations total, one would need to be sold)
    • #1 CJAD 800 AM (Astral)
    • #2 CJFM-FM Virgin Radio 95.9 (Astral)
    • #4 CHOM-FM 97.7 (Astral)
    • #6 CKGM TSN Radio 990 AM (Bell)
  • Calgary: Three FM and one AM.
    • #4: CIBK-FM Virgin Radio 98.5 (Astral)
    • #6: CJAY-FM 92.1 (Astral)
    • #14: CKCE-FM Kool 101.5 (Bell)
    • #16: CKMX Classic Country 1060 AM (Astral)
  • Ottawa: Four FM and two AM.
    • #2 CFRA 580 AM(Bell)
    • #4: CJMJ-FM Majic 100.3 (Bell)
    • #10: CKKL-FM BOB 93.9 (Bell)
    • #11: CKQB-FM The Bear 106.9 (Astral)
    • #13: CFGO Team 1200 (Bell)
    • #14: CJOT-FM EZ Rock 99.7 (Astral)
  • Toronto: Four FM and two AM. The AM situation, with a news-talk owned by Astral and a sports station owned by Bell, is similar to the situation in Montreal.
    • #3: CHUM-FM 104.5 (Bell)
    • #6: CKFM-FM Virgin 99.9 (Astral)
    • #7: CHBM-FM Boom 97.3 (Astral)
    • #8: CFRB NewsTalk 1010 AM (Astral)
    • #19: CFXJ-FM Flow 93.5 (Bell)
    • #21: CHUM TSN 1050 AM (Bell)
  • Vancouver: Four FM and three AM. Vancouver is the only market where the combined company might own more than two AM radio stations. Bell’s stations are in the unusual situation of being co-branded, with one as a secondary station to the other. It’s not clear whether that would be enough to bypass the CRTC’s ownership rules.
    • #1: CHQM-FM QM 103.5 (Bell)
    • #4: CFBT-FM The Beat 94.5 (Bell)
    • #5: CKZZ-FM Virgin 95.3 (Astral)
    • #10: CKST Team 1040 (Bell)
    • #14: CISL 650 (Astral)
    • #16: CHHR-FM Shore 104.3 (Astral)
    • #19: CFTE Team 1410 (Bell)
  • Winnipeg: Four FM and one AM

In Montreal, the CRTC would take note of the fact that the combined company would own both English AM talk radio stations here. Overall, Bellstral would own four of the five English-language commercial radio stations in Montreal, with only Cogeco’s CKBE-FM The Beat 92.5 as competition of any sort.

As you can see from the list, there aren’t many big national brands at play here. The company would probably keep its Virgin-branded stations from Astral, and its Team/TSN sports radio stations from Bell, and sell off stations that are weaker performers in their markets.

Telecom

Astral doesn’t own any cable or satellite companies, so there aren’t any issues directly here. But the fact that Bell sees this purchase as a benefit to its satellite and Fibe TV service by owning one of its biggest expenses will be looked at.

Other assets

Bell doesn’t have any newspaper holdings (aside from its interest in the Globe and Mail), which might also cause issues with regulators (the CRTC won’t allow a company to own a newspaper, TV and radio station in the same market). Astral doesn’t own any significant online assets that aren’t tied to other assets.

There’s also Astral’s huge outdoor advertising business, but I do my best to ignore that.

My take

I’m a bit surprised that Bell thinks it can get away with this. People are already worried about concentration of media ownership in Canada, and now one of our few big players is buying another. It’s not as significant as if, say, Bell decided to buy Shaw or Rogers, but it’s still very worrisome, especially in English radio and English specialty television. Even if the CRTC forces some assets to be sold off, they’d probably be sold to other major players.

In short, it’s a horrible day for diversity in voices in media.

I have a brief story in Saturday’s Gazette about what the deal means for Quebec, to go with the national story giving the overall picture.

Other coverage