MONTREAL and TORONTO – Bell Media will pay Corus Entertainment $211 million in order to gain national access to the pay-TV market.
The two companies made separate announcements today where Corus will wind down pay TV brands Movie Central and Encore Avenue as Bell will take The Movie Network national while also becoming the sole Canadian rights holder for HBO content, across all platforms.
This leaves Allarco’s Super Channel as the only other pay-TV service in the country.
"Bell Media now has the national scale required to create, negotiate and deliver more premium TV programming to Canadian consumers, across more platforms and more quickly than ever before," said Mary Ann Turcke, president of Bell Media, in her company’s press release. "Our extensive new content agreement with HBO also announced today… and with significant original co-production opportunities, is a great example of the benefits for Canadian viewers nationwide."
Corus is waiving its HBO content rights in Canada to allow Bell Media to become the sole operator of HBO Canada. TMN, formerly available only in Eastern Canada, will launch as a national pay TV platform in the first quarter of 2016, increasing its customer base to a total of approximately two million subscribers across the country, says Bell, assuming negotiations with BDUs on shifting those Movie Central customers over to TMN go without too many hiccups.
(According to the most recent CRTC figures available, Movie Central had 927,000 subscribers at the end of the 2014 broadcast year, August 2014, earning $85 million in revenue. TMN had 1.1 million subs and $124.5 million in revenue in that broadcast year)
The two companies are working together to support a seamless transition of Movie Central and Encore Avenue subscribers to TMN. (Encore Avenue reported 2.1 million subscribers and $20.3 million in revenue at the end of August 2014.)
BCE will pay Corus a consideration of $211 million, $195 million net of tax benefits, “to support the national expansion of TMN and HBO Canada, equivalent to a valuation multiple of approximately 5.6x fiscal 2015 EBITDA of Movie Central and Encore Avenue after operational synergies are applied," reads the release.
UPDATED: No CRTC approval is needed for these moves since Bell isn’t purchasing Movie Central, but is expanding a pay service formerly limited to the eastern half of the country and negotiating the move of Movie Central subscribers to TMN. TMN asked for and was granted permission by the CRTC to change to a national discretionary service license in July, choosing to change its nature of service under the terms of the CRTC's 2015 Talk TV decisions (Click here and go to filing number 2015-0640-4). So Bell is really, buying nothing from Corus other than its willingness to walk away from the market and its western Canada HBO content deal.
“We have always believed that the best way to serve pay TV subscribers is through a national operator and brand." – Doug Murphy, Corus Entertainment
"After an extensive strategic review of our business, we made the decision to strengthen our focus on one of our biggest growth opportunities, our powerful national media brands targeted to kids, women and families," said Doug Murphy, president and CEO, Corus Entertainment, in his press release. "Therefore, we have decided to exit our regional pay TV business concurrent with Bell Media's plans to expand their premium offering nationally. We have always believed that the best way to serve pay TV subscribers is through a national operator and brand."
The cash coming to Corus will be used to invest in the advancement of Corus' strategic priorities and retire debt, says the release.
Bell’s newest HBO deal ensures that HBO content will be owned and distributed by Bell on all platforms “into the next decade,” reads the release.
With the deal, Bell Media gains the flexibility to exclusively deliver all current, past, and library HBO programming, in English and French, across linear, on-demand, and OTT platforms as sole operator of HBO Canada. Plus, the two companies will embark on a new original co-production partnership.
The agreement also marks the first time HBO has granted exclusive subscription video on demand (SVOD) rights for first-run programming throughout Canada. As a result, Bell Media will have the flexibility to provide current HBO content such as Game of Thrones, Girls, and Veep over-the-top in Canada on its platforms. Financial terms of that deal were not disclosed.
This deal also means the rapidly growing U.S. OTT service, Time Warner-owned HBO Now, will not come to Canada. Although, Bell could choose to do something like that on its own under the new agreement, but it would seem more likely the HBO content will anchor Bell’s OTT brand CraveTV, which will be available to all Canadians in January 2016.
French-language HBO programming will continue to be seen on Bell Media's Super Écran pay service.
The agreement’s new original production development program has the goal of co-producing premium, made-in-Canada content for the world stage, added the release. The two companies will co-develop original, Canadian drama, comedy, and factual productions for their platforms and for distribution everywhere. Several projects have already been selected for development from production companies Inverted Pictures/Artists Studio, Rhombus Media and Force Four Entertainment. Additionally, new HBO Comedy specials featuring established and emerging Canadian comedians will also be considered.
"Bell Media and HBO enjoy a partnership of shared respect and admiration," said Charles Schreger, president, programming sales, HBO. "Together, we secured a deal that will allow both our businesses to continue to grow and evolve."
"We are delighted to have the opportunity to bring all HBO programming to Canadians on whatever platform they choose," added Turcke. "With this agreement, HBO's incredible premium content will power subscriptions to Bell Media brands for many years to come."
