TORONTO – Bell Canada’s purchase of CTV is the latest in a trend of broadband purchases of TV outlets that bring potential downside implications for credit quality, according to a new report from Moody’s Investors Service.
In the report ‘Broadband-Company Investments in Television are Credit-Negative’, Moody’s says that the acquisition means that Canadian broadband companies now control or influence up to 77% of private TV content in Canada.
"The recent purchases hurt the broadband companies’ consolidated credit metrics and increased their cash flow volatility", said vice-president and senior credit officer, Bill Wolfe, author of the report. "While not enough to move ratings, the prospect of negative credit implications is very real."
Wolfe also said the competitive dynamics within the broadband industry could “frustrate commercial negotiations to share TV programming”, which in turn could result in re-regulation by the government. He also described competition from over-the-top video providers as “a long-term threat even without re-regulation".
