Canadas Cable Ops Push for Equality9/24/2000 8:00 PM Eastern
Toronto-Size matters more and more in the telecommunications industry, even in sparsely populated Canada. And this nation's cable-TV operators are seeking equal treatment from regulators as they consolidate and expand into content.
With an eye trained firmly on the Internet, BCE Inc.-owner of the country's biggest telephone company, direct-to-home satellite platform and Internet portal-two weeks ago agreed to partner with publishing and online heavyweight Thompson Corp. in a $2.75 billion deal.
The merger would create a Canadian powerhouse that could marry BCE's distribution infrastructure with Thompson's content, including the respectedGlobe & Mailnewspaper and a number of Web sites. For its part, BCE owns stakes in such cable networks as The Sports Network, Discovery Channel and The Comedy Network.
Meanwhile, Rogers Communications Inc., owner of Canada's biggest MSO, agreed last week to pay $105 million for 75,000-subscriber operator Cable Atlantic.
The Thomson deal is the latest expansion move by BCE, whose purchase of broadcast-TV network CTV is under review by the Canadian Radio-television and Telecommunications Commission (CRTC). If the CTV deal is approved, BCE-Thomson would likely be approved, although the companies might have to sell some assets.
The cable industry is watching the BCE deal closely.
"The combination of local telephone, broadcast-satellite and Internet with the No. 1 national television network and the pre-eminent national newspaper would be unheard of in most industrialized countries, because of the market power of the new entity," said Canadian Cable Television Association (CCTA) president Janet Yale. "Competition and fairness demand that other groups be able to integrate in order to discipline the dominant supplier in the marketplace."
BCE doesn't quite look at it that way. Despite the size of the as-yet-unnamed company, BCE CEO Jean Monty denied that it would stifle competition in Canada.
"Too big? What's too big?" he told reporters when the BCE-Thomson deal was announced. "I think we're far from that."
He pointed to printing giant Quebecor Inc.'s deal to purchase top Quebec MSO Le Groupe Vidéotron Ltée.-a deal that combines the French-language private TV network TVA with the Sun Media newspaper chain-plus other mergers here and abroad as examples of consolidation.
"We don't disagree that media companies need to be big to compete in the world market these days," said Harris Boyd, the CCTA's senior vice president of industry affairs. "We can't disagree with their strategy. What we do disagree with is, if the CRTC allows it to go ahead, then they should allow cable companies-who are in diverse businesses-to likewise own all of those operations, particularly services."
To date, this hasn't happened. For instance, in order to win CRTC approval for its purchase of TV and radio broadcaster Western International Communications Ltd. (WIC), No. 2 Canadian MSO Shaw Communications Inc. was required to sell WIC's local broadcast-TV stations to CanWest Global Communications. CanWest has since become Canada's third biggest broadcaster.
Shaw also was forced to spin all of its radio and TV assets into a separate company called Corus Entertainment Inc., to assuage longstanding CRTC fears about distributors' control of content providers. Those assets also included whole or partial ownership in a handful of cable channels. Last week, Corus agreed to buy Toronto-based animator Nelvana Ltd. for $372 million.
Currently, Rogers CEO Ted Rogers is intent on grabbing CTV's 40 percent share of cable and satellite channel Sportsnet, which the CRTC has ordered CTV to sell.