How To Address Canadian Media Convergence if Bell – Astral is Approved

Summer is rarely a time of heated broadcast policy battles, but the proposed Bell – Astral merger has generated considerable public attention and fostered a growing war of words between Bell and groups that have banded together under the “Say No to Bell” banner.

The anti-merger campaign, supported by consumer groups as well as several leading cable and telecom companies, has garnered tens of thousands of signatures on an online petition and the Canadian Radio-television and Telecommunications Commission has received more than 1,700 submissions on the deal.

Despite the mounting public opposition, my weekly technology law column (Toronto Star version, homepage version) argues that stopping the $3 billion merger remains a longshot as none of the big three – government, the CRTC, or the Competition Bureau – seems ready to call it off.

The government has remained silent on the matter, suggesting it does not want to wade into the transaction, particularly when it is struggling to address the proposed Nexen purchase by Chinese interests.

The CRTC will probably pressure Bell to make some adjustments to the deal, but squashing it altogether is unlikely given the many prior approvals of media mergers. Much of the CRTC hearing will be devoted to debate over the “tangible benefits” package, with cultural groups trading short-term gain for long-term pain by supporting the merger in return for a bigger payday.

The most obvious benefits package target is Bell’s proposal to spend tens of millions on infrastructure development in the north, which seems certain to be rejected. Indeed, a cynic might suggest that Bell added the proposal with the expectation the CRTC would kill it, thereby allowing the Commission to appear responsive to public criticism while leaving the bulk of the transaction untouched.

The Competition Bureau could become active on the issue given its previous willingness to closely examine the Quebec media market, but with imminent changes in bureau leadership and the expected sale of several Astral radio stations to third parties, it may reluctantly give the deal a pass.

Should the Bell-Astral merger receive the required regulatory approvals, Canada would be left with one of the most concentrated media markets in the world, with a single company controlling a remarkable array of broadcast television networks, radio stations, specialty channels, as well as telecom, satellite, and Internet services.

While there will be no easy answers to address media convergence concerns, several policy reforms may help build the foundation for a more competitive Canadian market. First, the government should remove foreign ownership restrictions on broadcasting companies. While this raises obvious cultural sensitivities, there is little reason to believe that Canadian-owned broadcasters are any more likely to air Canadian programming than their foreign counterparts.

All broadcasters invariably adopt whatever strategy maximizes revenues without regard for the origin of the content. In many instances, this means cheaper U.S. programming is preferred. Canadian content regulations ensure a baseline level of support for Canadian programming and there is little evidence that Canadian businesses are more likely to comply with these rules than foreign companies.
Second, Canada’s net neutrality rules, which restrict the ability of network operators to discriminate against competitive content or grant preferential treatment to their own programming, require tougher enforcement. Recent studies suggest that Canadian Internet providers are still using throttling technologies that render it more difficult for Internet-based new media companies to compete with the established broadcast giants.

Third, the Competition Bureau and the CRTC must be vigilant in ensuring that the new Bell entity does not unfairly leverage its position by refusing to deal with competitors. The CRTC has waded into this issue in the past and will undoubtedly be called upon to do so again should the market become even more concentrated.


  1. David Collier-Brown says:

    Can we go back to a “Regulated Monopoly”?
    If the concentration is high enough Bell-Astral will possess monopoly power, and should be treated exactly like Bell (land-line) Telephone.

    What’s the Canadian process of declaring a monopoly? Is this a function of the courts?

  2. Anthony Reimer says:

    Not all about entertainment programming
    I think the flaw in the argument about opening up foreign ownership is around news departments, not entertainment programming. We already see lots of “filler” news from the U.S. on Canadian stations. What if the “hard” news was covered by Americans, for instance? I could easily see someone like NBC Universal (which already has offices here) buying up, say, Global, and merging the news departments such that it would look like NBC News with an expanded Canadian bureau. It would technically be Canadian but not functionally.

    Perhaps Global is a bad example—they are barely a Canadian broadcaster as it is.

  3. South of the border there have been some naughty shenanigans from AT&T to their customers, and they will be a show of vertical integration next to the new Bell Canada if this goes through …

  4. Bottom line – Cost to consumers
    If and when this does pass, the bottom line is what is it going to cost the consumers? The competition will just pass down any increase in licensing fees that Bell will require for their newly acquired Astral programs. Or the competition will strip those channels out of their basic programming packages and tack them on as premium channels. Folks that don’t want to pay those additional fees will then flee to Bell.

  5. Granny
    Do you remember ‘Ma Bell?” Can you say “CAN-Bell?” A monopoly is why the US broke up Bell, not that it improved anything, except the emergence/improvement of cell phone companies. Now THAT I don’t thing “MA” could have handled.

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