The examination of the proposed Bell acquisition of Astral Communications took place last week in Montreal with the Canadian Radio-television and Telecommunications Commission hearing from a wide range of supporters and opponents of a deal that only last year was rejected as contrary to the public interest.
As Bell and Astral sought to defend their plan, a familiar enemy emerged – Netflix. What does a U.S.-based Internet video service with roughly two million Canadian subscribers have to do with a mega-merger of Bell and Astral?
My weekly technology law column (Toronto Star version, homepage version) notes that for the past few years, it has become standard operating procedure at CRTC hearings to ominously point to the Netflix threat. When Internet providers tried to defend usage based billing practices that led to expensive bills and some of the world’s most restrictive data caps, they pointed to the bandwidth threat posed by Netflix. When cultural groups sought to overturn years of CRTC policy that takes a hands-off approach to Internet regulation, they argued that Netflix was a threat that needed to be addressed. So when Bell and Astral seek to merge, they naturally raise the need to respond to Netflix.
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Appeared in the Toronto Star on May 11, 2013 as Bell and Astral Merger: Netflix Isn’t the Enemy The examination of the proposed Bell acquisition of Astral Communications took place last week in Montreal with the Canadian Radio-television and Telecommunications Commission hearing from a wide range of supporters and opponents […]
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Last week’s Canadian Radio-television and Telecommunications decision to reject the proposed Bell – Astral merger surprised most observers, as few predicted with much confidence that the deal would be flatly rejected. There was good reason to doubt such an outcome, given that the CRTC review of the merger transactions has historically focused on the “tangible benefits” package that often provide millions in funding for new Canadian television and radio productions.
The result was largely regulatory theatre. The purchaser would typically unveil a benefits package featuring self-interested proposals, often amend those plans at the CRTC hearing to demonstrate it was sensitive to criticisms from various groups, and the CRTC would proceed to further tweak the package to show it was not ready to rubber stamp the transaction.
My extra Toronto Star column (Toronto Star version, homepage version) notes the process generally served the companies and the tangible benefits recipients well. The merging companies were reasonably assured of getting their deal approved and the tangible benefits recipients received hundreds of millions in funding with few strings attached. â€¨â€¨The problem was that the public was missing from this process. Tough policy issues with a direct impact on the public were put off for another day as the public interest was supposedly served by trickle down benefits generated by market efficiencies or the creation of new Canadian programming.
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Several must-read posts and articles on the CRTC’s Bell – Astral decision from over the weekend from David Ellis, Dwayne Winseck, and Steven Chase of the Globe and Mail.
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Earlier today, the CRTC rejected
Bell’s proposed acquisition of Astral. The quick, unanimous decision – the hearings wrapped up just over a month ago – leaves no doubt about CRTC chair Jean Pierre Blais’ top priority. Simply put, the public (whether as the public interest or as consumers) comes first. This is not a decision many expected. I wrote several pieces
on the merger, but thought
that the Competition Bureau was a far more difficult regulatory hurdle for the deal.
The CRTC identified multiple problems with the Bell bid (radio, tangible benefits, lack of evidence that bigger is better online), but the conclusion says it all:
The Commission finds that BCE has not discharged its burden and demonstrated that, on balance, this transaction is in the public interest. The benefits proposed would advantage BCE and its services, but the Commission is not persuaded that the transaction would provide significant and unequivocal benefits to the Canadian broadcasting system and to Canadians sufficient to outweigh the concerns described above.
While demonstrating that the transaction is in the public interest is always the language used in these proceedings, the CRTC has in the past focused on the tangible benefits package (ie. the multi-million dollar payments to creator groups) as the primary proxy for public interest. No longer. The CRTC’s focus today is unequivocally on the broader public interest with consumer impact the leading concern.
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