GATINEAU – Bell Canada and Astral Media say the list of new regulatory safeguards it has agreed to should allay any fears the CRTC has of a combined company – and that the deal should be approved.
In its final written submission to the CRTC filed late Tuesday, the companies say they have agreed to “an unprecedented package of regulatory safeguards relating to terms of trade with all independent producers, the negotiation of affiliation agreements (including tied selling, packaging flexibility, and other terms), the no head start rule, the availability of non-linear content, the timing of the Commission’s dispute resolution process, and the enforceability of regulatory protections. Should the Commission determine that they are necessary, these additional safeguards provide the means to comprehensively address every concern that has been the subject of any speculation in connection with this hearing and to eliminate any doubt that approval of our application is in the public interest,” reads the submission.
As noted in the final replies of various objecting interveners last week, most insisted there are no safeguards which could be created that would make the proposed transaction in the public interest and that it should be denied. Just like the first deal between the same two companies last fall was quashed by the CRTC, this one would make Bell too big, they argued.
However, Bell/Astral re-stated in its final submission that this deal is different than the first. Not only has it agreed to a number of divestitures (which were approved by the Competition Bureau), it has also okayed a wide range of regulatory protections. It has agreed to include the Vertical Integration Code of Conduct as part of its conditions of license, even though it notes in its submission: “We do not… share the view that the VI Code is simply a non-binding instrument; we have always complied with it and… it directly guides all of Bell Media’s conduct in the marketplace."
Bell Media also agreed to new provisions mandating the inclusion of non-linear rights as part of all content negotiations – and for the CRTC to be able to mediate carriage disputes even before contracts expire. “This safeguard would require us to negotiate the renewal of affiliation agreements at least 90 or 120 days in advance of their expiry and would make dispute resolution and (final offer arbitration) available at that point in time if necessary and should one of the parties determine that it would be appropriate,” reads the Bell/Astral document. “This responds directly to the concerns expressed by CCSA, Cogeco, and others regarding enforceability of the rules regarding affiliation negotiations.”
The document also raised objections to many accusations from the interveners that Bell Media has not played nice with many in the industry during various negotiations leading up to this. “(I)t is clear that many of the comments from BDU interveners did not provide any legitimate evidentiary basis on which to oppose the application before the Commission or impose additional, asymmetrical safeguards on Bell, but rather are directed at the Commission’s recently adopted regulatory framework in an effort to re-argue matters recently decided by the Commission in which some Interveners would have preferred a different result. There is no evidence on the record of anti-competitive or unreasonable conduct by Bell or of any finding by the Commission that Bell Media has acted in an anti-competitive manner or in contravention of the regulatory framework,” it reads.
It even quoted from broadcast and BDU competitor Shaw Communications which, although it didn’t appear during the public hearing, still filed a final submission which helped Bell/Astral swipe back at the objectors. “Interveners have unjustifiably used this hearing as a forum to re-argue the wisdom of vertical integration and the VI regulatory framework… [and] have leveraged the uncertainty faced by Astral’s employees, investors and industry stakeholders in an effort to force unnecessary accommodations from Bell,” reads the excerpt of the Shaw reply in the Bell final submission. “An overly-broad regulatory response will not only undermine the benefits of this proposed transaction, it may also chill healthy commercial responses by Canadian broadcasters to the new competitive environment and will encourage regulatory gaming as the pressures of competition within the market mount.”
As for the Canadian Cable Systems Alliance idea that wholesale rates for specialty channels be made publicly known, Bell didn’t say yes or no, but instead that a new public process would need to be undertaken to examine such a move. “Such a significant change could only be considered with a complete record addressing, among other things: how these rates could be established; how the needs of a BDU preferring a different rate structure could be met; how creativity and competition in the market will not be eliminated by imposing a single business model on all participants regardless of customer demand; how making these important contracts public would not promote co-ordination and dampen, rather than increase, competition; and why the proposal would not be commercially unreasonable in light of the Commission’s recognition that “it would be commercially unreasonable for a BDU to expect fixed unit pricing based on fixed penetration levels while enjoying the flexibility of delivering fluctuating penetration levels,” it reads.
“Our application and the additional safeguards we have outlined (should the Commission determine they are necessary) together address every possible concern that has been raised and ensure that we will be willing and able to continue to meet our obligations under the Broadcasting Act,” adds the submission.
Now it’s in the Commission’s hands. The time frame for a decision is not known at this point – and there is much on the Regulator’s plate right now (Wireless Code of Conduct, CBC license renewal, 9(1)(h), etc.). Under former CRTC chair Konrad von Finckenstein, the CRTC strove to get decisions on such deals out in 35 days (which would be June 25th in this case) but the companies themselves hope a decision will come prior to July 31, 2013. While the latest agreement has an expiry date of June 1st, both Bell and Astral have the option to extend that to July 31st, which of course, they will.
