Fans of TSN 690 are cheering now that the CRTC has approved Bell’s acquisition of Astral Media, and allowed the combined company to keep four of the five English-language commercial radio stations in this market, despite the fact that this goes beyond limits set in the commission’s common ownership policy.
You can read my story explaining the station’s future in The Gazette, read Bell’s press release announcing its acceptance of the decision, or get nerd-level detail below.
The decision makes Bell a dominant player in the television and radio markets in Montreal, owning the top-rated TV station with by far the top-rated local TV newscast, as well as the largest English-language radio newsroom and both English-language commercial talk stations.
In radio, Bell’s commercial market share reaches 76%, with the remaining quarter held by CKBE (92.5 The Beat). That might change once a new talk-radio station owned by TTP Media goes on the air, but we don’t have a date for that yet, and it could be as late as November 2014.
Perhaps even more troubling than the market share of Bell and Astral combined is what happens when you consider Bell and now-rival Cogeco. The two players will have a 96% commercial market share in Montreal’s French-language market (Radio Classique and Radio X are the only others big enough to subscribe to ratings agency BBM) and a 100% commercial market share in English Montreal.
The CRTC cited a few factors that swayed its decision to grant the exception: TSN 690’s niche format, the thousands of submissions it received asking for it to remain on the air, and the fact that the combined company would own only two French-language radio stations in Montreal.
It also put forward special conditions: The station must keep the English-language all-sports format (at least 90% of programming must be sports-related) for its entire seven-year licence term. At that point, it would have to apply for an amendment when its licence comes up for renewal to change its format. It must also maintain a level of at least 96 hours a week of local programming (it’s hard to say what it has now because of how much live sports changes the schedule from week to week), and it must spend $245,000 over seven years on Canadian content development initiatives “with an emphasis on emerging artists from Montreal’s English official language minority community.”
Originally, Bell had proposed splitting that money between a sports scholarship at Concordia University’s journalism program and money to support amateur sports in Montreal. But the latter was criticized because it doesn’t benefit the broadcasting system directly.
I couldn’t get Bell to comment on the decision. This was their statement in its entirety (which it also put on Twitter):
“We’re assessing the details of the CRTC’s decision, and will issue a detailed statement before markets open tomorrow (Friday).”
TSN 690 station manager Wayne Bews didn’t return my phone call seeking comment.
But Mitch Melnick, who was on the air after the decision came out, wasn’t as tight-lipped. He talked about “one big happy family” under Bell, and thanked listeners who wrote in to support the station. “You went to bat for us a couple of times in the past year and we really greatly appreciate it,” he said. “You can applaud yourselves.”
Melnick joked that “we will be all-sports longer than Vinny Lecavalier’s next contract.”
Very appreciative of all the good wishes and the support. Listeners LITERALLY saved TSN 690. That should never been forgotten. Grazie.
— Ted Bird (@manofbird) June 27, 2013
Ted Bird and other personalities also thanked listeners on Twitter.
Since Bell isn’t talking, we don’t know what’s going to change at any of the stations. Right now, it’s business as usual.
In the medium term, we should expect that Bell moves English-language broadcasts of Alouettes and Impact games from CJAD to TSN 690. That could happen immediately or they could wait until next season.
It also makes sense to wonder about on-air synergies. Does CJAD need a sports department now, or can it just rely on TSN 690’s staff? Will CJAD and CTV Montreal share a newsroom or news-gathering resources? These are all longer-term questions.
UPDATE (July 5): Bell says in announcing the closing of the deal that CTV National News segments will start appearing on CJAD and Newstalk 1010 in Toronto, and RDS sports updates will be on NRJ.
Divestment plan unchanged
As for the larger decision, it follows mainly what Bell had proposed. There weren’t any big curveballs. Bell has to divest the 10 radio stations they said they would (CKQB-FM Ottawa-Gatineau and CJOT-FM Ottawa-Gatineau have been promised to Corus, CFQX-FM Selkirk/Winnipeg, CHIQ-FM Winnipeg and CKCE-FM Calgary to the Jim Pattison Broadcast Group and CHHR-FM Vancouver, CKZZ-FM Vancouver, CISL Vancouver, CHBM-FM Toronto and CFJX-FM Toronto to as-yet-unknown buyers). Its list of TV assets to sell is also unchanged: The Family Channel, TELETOON Retro, TÉLÉTOON Rétro, TELETOON/TÉLÉTOON, Disney XD, Disney Junior, Cartoon Network, Historia, Séries+, MusiquePlus and MusiMax.
Astral’s stakes in Historia, Séries+, Cartoon Network and the Teletoon channels have already been promised to Corus, which owns the other half of Teletoon and will acquire Shaw’s half of Historia and Séries+.
Higher purchase price, higher tax
The CRTC increased the value of the transaction, taking into account things like debt and leases. It calculated the purchase price at $4.017 billion, and the full value of the transaction at $4.154 billion.
Determining the actual value of the transaction is important because the CRTC places a “tangible benefits” obligation on companies that acquire TV and radio assets. This usually amounts to 10% of the purchase price in television and 6% in radio. Bell had calculated the total at $174.64 million.
As a result of the CRTC’s calculations, the value of the transaction goes up, and so does Bell’s benefits package. With $175.4 million for TV alone, and $71.5 million for radio (representing 7%, instead of the minimum 6%, of the purchase price), Bell will have to pay $246.9 million total in benefits, or $70 million more than they had expected.
The exact amount is unknown because it depends on the value of the radio stations and TV channels that Bell has to sell as part of the deal.
Bell had proposed spending its tangible benefits package as of 2017, because the industry has been flooded with cash through recent major acquisitions (CTV-CHUM, Bell-CTV, Canwest-Alliance-Atlantis, Shaw-Canwest) and that money would dry up in a few years. Bell said it would accept if the CRTC said it had to start spending that money immediately, and that’s what it did.
Money for English producers in Quebec
One of the parts of the decision concerned how this tangible benefits package is spent. This is what a lot of groups came to the CRTC hearings last month to talk about. Everyone wanted a piece of the pie (or, in the case of various producers’ associations, a larger one). The Quebec English-language Production Council asked that the CRTC force Bell to spend 10% of its English-language production budget in Quebec, after having successfully argued on a guaranteed percentage from Rogers and CBC be spent on English minority-language production here.
The CRTC gave them part of what they wanted. Of the $68.21 million that Bell will spend on “programs of national interest” (dramas, comedies, long-form documentaries and awards shows), $24.56 million was proposed for English-language productions (proportional to the fraction of English-language assets being acquired). The CRTC said 10% of that, or $2.456 million, must be “directed to English-language OLMC producers in Quebec.”
A similar requirement is also in place requiring 10% of the $43.65 million for French-language programming be directed to French-language producers outside Quebec.
New rules bind Bell TV, not just Bell Media
Aside from the big increase in benefits spending, the big hit on Bell is that the CRTC has applied new competition rules not just to Bell Media, but to Bell’s TV distributors as well. Bell argued that there was no need to restrict its distribution arm, which isn’t dominant in Canada and wasn’t part of this transaction. The CRTC disagreed, and now its rules apply to both arms of the company. So if, say, Rogers Media has trouble getting a new specialty channel carried on Bell TV, it can go to the CRTC.
The rules aren’t much different than a code of conduct already in place for vertically integrated companies, but having the rules as a condition of licence gives them more teeth against Bell.
One big rule imposed on Bell is that carriage contracts for specialty channels can be brought to the CRTC’s dispute resolution process 120 days before those contracts expire. Previously, the parties had to wait until contracts expire to seek arbitration, and a rule that protects the pulling of specialty channels during carriage disputes meant that both parties would be unsure how much money they would spend/receive between the time the previous contract expired and the time a new one was signed. Neither side liked the uncertainty much, and so both sides supported this proposal.
- Bell had proposed opening up regional development offices in Vancouver and Halifax. The CRTC accepted that, but said it should also open one up in Winnipeg, and must provide detailed information on how they would work, including a detailed budget and reports on which independent producers they meet.
- Bell proposed “Canadian programming champions” in Montreal and Toronto (one for each language) to oversee program development. The CRTC also demanded more reporting here, including budgets.
- The CRTC has accepted, and imposed, Bell’s proposal for emerging artists. English-language stations in hit music formats, including Montreal’s Virgin Radio 96, must devote 25% of their Canadian music airplay to emerging artists. French-language stations that are part of the NRJ network must devote 25% of their French-language music airplay to emerging artists. The CRTC wasn’t that enthusiastic about this initiative because it’s not much more than what stations already play. It imposed reporting requirements on Bell for this campaign.
Here are the paragraphs in the decision related to TSN 690 (CKGM):
110. In Broadcasting Decision 2011-721, the Commission approved BCE’s application to amend the broadcasting licence for CKGM in order to change its frequency from 990 kHz to 690 kHz. During this competitive process, Bell Media argued that improving the station’s signal quality, particularly with respect to its night-time coverage of Montréal, would permit it to better serve its audience, especially those situated in the western part of Montréal Island, and to ensure its financial viability. In support of its position and to demonstrate CKGM’s importance to the Montréal public, Bell Media convincingly mobilized its audience in order to maintain its point of view before the Commission and fully committed, during the hearing, to continue to serve its audience. Moreover, Bell Media indicated that the granting of frequency 690 kHz fell under its strategic plan. The Commission considered that Bell Media’s application was well founded and that the public interest was best served by granting the frequency 690 kHz to CKGM. The Commission therefore granted the frequency to Bell Media rather than to the other applicants.
111. The Commission notes that as part of this proceeding, residents of Montréal, both anglophone and francophone, as well as people living outside Montréal unequivocally demonstrated their affinity to CKGM’s programming and stressed the importance of maintaining the presence of a unique English-language sports programming station in Montréal.
112. The Commission is of the view that CKGM’s programming is unique and that it contributes to the diversity of programming in Montréal and to maintaining an English-language radio offering for the community. In light of all of the foregoing, the Commission is of the view that it would not be appropriate for BCE to divest itself of CKGM. The Commission is also of the view that BCE’s desire to adhere to the Common Ownership Policy in this manner would result in a curtailing of the commitment that it made to CKGM’s audience in 2011. The Commission therefore requires that BCE continue to operate CKGM under its current format.
113. Throughout the hearing, the Commission considered the possibility that BCE might not acquire one of the three of the English-language stations currently operated by Astral. The Commission notes that forcing BCE to divest of a station other than CKGM would considerably weaken its competitive position in the Montréal radio market. BCE would be deprived of a profitable station generating a relatively high level of revenue. It would also lose some of the synergies that are generated from that group of stations. Following this review and given the distinct nature of each station’s programming, the Commission finds that separating the ownership would disrupt the balance – both economic and cultural – in the Montréal radio market and that this is not in the community’s interest. The Commission expects that these stations will continue to be operated with distinct formats.
114. Further, while BCE would become the owner of four English-language radio stations in Montréal, it would own only two French-language stations. This would result in fewer than the maximum number of stations permitted by the Common Ownership Policy, if the English- and French-language markets were considered as one. The Commission also considers that CKGM’s niche format, combined with the respective programming formats of CJAD, CHOM-FM and CJFM-FM, would mitigate the impact that granting this exception would have on the competitive state of the market.
115. Moreover, the Commission notes Astral and BCE’s proposal that, if granted an exception to the Common Ownership Policy in Montréal, BCE would make a contribution of $245,000 to various initiatives targeting Montréal’s English-language population over seven consecutive broadcast years. The Commission considers, however, that these proposed financial contributions should be to eligible CCD initiatives in order to directly benefit the Canadian broadcasting system and, more specifically, Canadian artists.
116. In light of the above, the Commission finds that Astral and BCE’s requested exception to the Common Ownership Policy is warranted under the circumstances, as long as CKGM is operated as a sports station.
117. In order to ensure that CKGM remains a sports station, BCE stated that it would accept conditions of licence requiring it to maintain its current format, to ensure that not less than 90% of the programming broadcast during each broadcast day consists of programs drawn from content categories 1 (Spoken Word), 4 (Musical Production) and 5 (Advertising) as defined in Broadcasting Regulatory Policy 2010-819, and to ensure that not less than 96 hours of programming broadcast each broadcast week is devoted to local programming as defined in the 2006 Commercial Radio Policy.
118. In light of the above, the Commission authorizes BCE to acquire all three English-language radio stations owned by Astral and to continue to operate CKGM, as an English-language radio station. Consequently, the Commission approves the request for an exception to the Common Ownership Policy in Montréal. The Commission directs BCE, as conditions of approval, to apply by no later than 29 July 2013 to amend the broadcasting licence for CKGM in order to add the above-noted conditions of licence as well as a condition of licence relating to $245,000 in CCD contributions, which covers the reallocation of the proposed $140,000 in donations from amateur sports, with an emphasis on Montréal official language minority community (OLMC) emerging artists. These conditions of licence are set out in Appendix 2.
And here are the actual conditions of licence that CKGM must abide by over the next seven years:
The licensee shall operate CKGM Montréal as an English-language commercial AM radio programming undertaking whose programming is dedicated predominantly to all aspects of sports, including coverage of professional and amateur sports events, sportscasts, magazine shows, interviews, commentaries, documentaries, audience participation and open-line programming, instruction and training programs and other programs that promote physical fitness. CKGM will devote its programming principally to Canadian sports coverage.
The licensee shall ensure that not less than 90% of the programming broadcast during each broadcast day consists of programs drawn from content categories 1, 4 and 5 as defined in Revised content categories and subcategories for radio, Broadcasting Regulatory Policy CRTC 2010-819, 5 November 2010, as amended from time to time.
The licensee shall ensure that not less than 96 hours of the programming broadcast during the broadcast week is devoted to local programming as defined in paragraph 207 of Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006.
The licensee shall contribute $245,000 over the next seven broadcast years ($35,000 per broadcast year) to Canadian content development initiatives that will benefit the radio sector, with an emphasis on emerging artists from Montréal’s English official language minority community.