Canadian Ops Ponder BCEs Game Plan

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Ottawa -- Canada's cable-TV industry is waiting to see the
aftermath of the $US1.6 billion purchase offer by BCE Inc. -- the country's largest
telecommunications company -- for broadcaster CTV.

The acquisition target is Canada's largest privately held
TV company, but also owns stakes in a string of cable channels. BCE, in turn, owns Bell
Canada, direct-to-home service Bell ExpressVu, wireless-telephone carrier Bell Mobility
and Internet-access provider Bell Sympatico.

Despite BCE's grand pronouncements in the media, the
takeover is little more than "a big if," said Harris Boyd, the Canadian Cable
Television Association's senior vice president of industry.

In order for the deal to go ahead, BCE must convince CTV
shareholders to accept its bid of $C38 ($US26.21) per share. At press time on March 1, CTV
shares were trading at $C38.75 ($US26.11).

BCE must also win regulatory approval from the Canadian
Radio-television and Telecommunications Commission (CRTC). CTV's assets include 25
broadcast stations, two wholly owned cable-TV channels -- CTV Newsnet and TalkTV -- and
stakes in three others, The Comedy Network, Outdoor Life and CTV Sportsnet.

Government approval is by no means guaranteed.
Historically, the CRTC has prevented system distributors from owning TV channels, fearing
such combined companies could end up with control of the Canadian market.

The CRTC recently allowed distributors to apply for new
digital-cable licenses, but that is different than ownership of existing systems.

MSO Shaw Communications Inc., for example, still doesn't
know if the CRTC will approve its ownership of specialty-channel licenses through Corus
Entertainment Inc., the arm's-length company Shaw set up specifically for that reason.

By contrast, BCE's proposition appears audacious, since the
telecom giant has recently purchased the international carrier Teleglobe Inc., and
invested $US66 million in Internet portal Lycos Inc.

BCE CEO Jean Monty makes no apologies for the CTV bid.
"The strength of the CTV brand, its strong programming lineup and its award-winning
expertise in the areas of news and sports will squarely place BCE as a leading player in
the converging broadcasting and new media industries," he told reporters

Ironically, Shaw and Corus own a combined 9.74 percent of
CTV, and could lead a countercharge against BCE.

But an opening bid of $US1.6 billion could prove too rich
for the Shaw family. BCE is flush with cash, after selling off stakes in Bell Canada Inc.
and Nortel Networks Corp.

It could back off from the CTV deal, though, should the
CRTC deny an existing CTV bid to take over Netstar Communications, owner of pay-TV
channels The Sports Network and Reseau des Sports and 80 percent of Discovery Channel
Canada.

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