Bell lays out its plans for $20-million purchase of V network

Bell Media is proposing to bring V’s local news broadcasts in-house, but otherwise isn’t putting much substantive on the table to convince the CRTC it should be allowed to acquire the V network of television stations in Quebec for $20 million.

The CRTC published the application on Tuesday, setting a hearing date of Feb. 12 in Montreal to hear the application. Bell is proposing to buy the five V stations (CFAP-DT Quebec City, CFJP-DT Montreal, CFRS-DT Saguenay, CFKS-DT Sherbrooke and CFKM-DT Trois-Rivières), plus digital assets like Noovo.ca, but leave the specialty channels Elle Fictions (formerly MusiquePlus) and MAX (formerly Musimax) to a yet-to-be-named company owned by the current owners of V.

V’s affiliate stations in Gatineau, Abitibi, Rimouski and Rivière-du-Loup, owned by RNC Media and Télé Inter-Rives, are unaffected by the transaction, and Bell says it intends to renew its affiliation agreements with them when they expire in 2020.

In the brief included in the application, Bell and V say the conventional TV network is continuing to lose money, despite the ratings gains it has generated and the synergies from owning two specialty channels (which Bell had to sell off to get its acquisition of Astral Media approved in 2013). Groupe V Média says it has lost almost $7 million in the past two years.

“For a small independent broadcaster in the Quebec market, these losses cannot be supported and have begun to have an impact on its other services,” the application says.

Malgré ces efforts, Groupe V Média n’a pas suffisamment stabilisé la situation financière de ces stations. Le secteur de la télévision traditionnelle est précaire. Les revenus sont en baisse depuis un certain temps et les stations perdent de l’argent. Ces problèmes ne sont pas cycliques, ils sont structurels. Ce sont des défis qui touchent tous les exploitants de télévision traditionnelle.

Après un examen attentif, Groupe V Média a déterminé qu’elle ne peut plus assumer les pertes des Stations V et que ces services seraient mieux positionnés pour assurer leur succès futur s’ils faisaient partie d’un portefeuille plus vaste de services de langue française et d’une entité intégrée telle que Bell Média.

Competition concerns

The application deals with concerns from a competition point of view, which will surely be raised by V’s main commercial competitor Quebecor.

Bell argues that CRTC policy calls for applications to be generally approved if they result in a group owning less than 35% of audience listening hours, and generally denied if they result in a group owning more than 45%. The combined force of Bell and the acquired V stations would give it a 22% market share in French Canada, Bell argues, while Quebecor’s TVA and related specialty channels have a 40% market share.

Since V does not derive subscription revenue, concerns about competition in subscriptions is not material, Bell argues.

Instead, Bell revives an argument that has been made several times before, that this acquisition will provide more competition against Quebecor.

Bell’s proposal

When V emerged from the ashes of the TQS bankruptcy in 2009, it was given a break on some of its obligations related to local programming. Though those reduced obligations have mostly ended, V still doesn’t have the same requirements as TVA, and doesn’t produce nearly as much news programming. A half-hour program called NVL, which consists mainly of a faceless anchor voicing over video, is how V meets that requirement. Its production is outsourced, since V has no news department.

Bell proposes to bring the production of news in-house, and increase the amount of local news:

  • Montreal and Quebec City: 90 minutes a day during the week, 30 minutes on weekends
  • Trois-Rivières, Sherbrooke and Saguenay: 60 minutes a day during the week, 30 minutes on weekends

But it doesn’t propose any increase to V’s local programming or local news quotas established in 2017. Nor does it propose to increase V’s quotas related to Canadian programming expenditures or “programs of national interest” to match the rest of the Bell French-language group. Instead, the PNI quota will be averaged as V is integrated, adding Bell’s 18% quota and V’s 10% quota and coming to a 16.5% figure.

In its questions, the CRTC asked what would happen if it simply imposed the 18% quota on the V stations. Bell said that would only hurt its investments in local news.

Bell argues that the continued existence of V is the main benefit here. And since V would no longer be eligible for the $3 million it gets every year from the Independent Local News Fund, that benefit will help other stations in that fund. (Bell would be able to redirect money from some of its TV distribution business to subsidize local news on V, as it already does with CTV.)

Services agreement

Part of the deal between Bell and V includes a services agreement for the orphaned specialty channels. Elle and MAX would have advertising sales, master control and technical support provided by Bell, in exchange for some commission (the financial details are redacted). If the competition bureau doesn’t like the agreement, or it’s cancelled for another reason, Bell can still acquire V for $2 million more.

The agreement includes a curiously specific provision for a sale of Elle and MAX to a Quebec-based telecom/media competitor of Bell with consolidated revenue above $3 billion. By my count that would mean either Cogeco or Quebecor. Coincidentally, both of those companies have previously been owners of TQS. A sale to Quebecor would probably not go over well for competition concerns, and Cogeco has no interest in getting back into the TV game.

Tangible benefits

Bell is proposing $2.52 million in tangible benefits, consistent with the 10% of the value of the transaction as set by CRTC policy. Rather than anything too complex, Bell proposes to send 60% of that money to the Canada Media Fund and 40% to the Bell Fund, a certified independent production fund. Because V is a French-language network, Bell would ask the CMF to earmark the additional funding for French-language productions.

The CRTC is accepting comments on the proposed transaction until 8pm ET on Nov. 28. You can file comments here. Note that all information provided, including contact information, becomes part of the public record.

7 thoughts on “Bell lays out its plans for $20-million purchase of V network

  1. Dilbert

    First, let me say that I think that traditional over the air broadcasting is bordering on being a dinosaur. In fact, much of our traditional media such as broadcasting, magazines, newspapers, and similar are all getting overtaken by technology.

    What really hurts is that the traditional advertising pricing by distribution size model is failing. Online marketing allows for a much more direct correlation between viewers and actions they take with your brand or product. Advertisers don’t want to pay for just views, they want to pay for results. Much of the brand recognition advertising is fading away, replaced by much more targeted campaigns with activation, tracking, and ROI calculations based on real results and not some cloudy product awareness metric.

    Consumers have also moved online to research and locate the products they desire, so it’s often much better to pay Google (or whoever) for clicks than it is to run 30 second spots on a TV channel that might not have any potential consumers watching.

    After that, second is really simple: Bell and a very few companies own almost all of the broadcast media, they have developed a sort of slash and burn process that allows them to maintain the veneer of being a local broadcaster while paying for almost none of it. Bell will certainly leverage their existing Toronto switching and production to include the new stations. That will likely improve their overall bottom line (splitting the costs more ways) and at the same time will save the V stations a whole lot of money.

    However, that will take away their ability to ever be stand alone stations again. Once assimilated by the Borg (oops, I mean Bell) they are gone, part of the bigger whole and really not separable.

    The only saving grace? See my first point. This stuff borders on Titanic deck chair relocation projects.

    Now, if Bell said “oh, and we will add subchannels in all of our current Anglo markets to distribute V french programming to better serve minority communities across Canada”, they might get my vote. That’s not going to happen, though.

    Reply
  2. Jack Nathanson

    Considering the way Bell totally destroyed CFCF-12 after it acquire it in 2001, it will presumably do the same to V-tele.

    Reply
    1. Fagstein Post author

      Considering the way Bell totally destroyed CFCF-12 after it acquire it in 2001, it will presumably do the same to V-tele.

      Since V produces no local programming in-house, what exactly are you worried about them destroying?

      Reply
          1. Dilbert

            No, they were not. But as part of Bell, you can be SURE it won’t happen unless the CRTC absolutely utterly mandates it. Otherwise, no chance. A independent operator might consider it, might team up with another group to network some news, or what have you.

            With Bell, the certainty is there.

            Reply
      1. Jack Nathanson

        Well, at least they still show a few watchable movies. CFCF stopped doing that after being swallowed up by Bell.

        Reply

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