OTTAWA – BCE insists that it does not have to pay tangible benefits on its proposed acquisition of CTVglobemedia, noting requiring it to pay a second time is inconsistent with Commission policy.
In reply comments, the company argues that it paid a $230 million benefits package in 2000 when it first acquired CTV and despite the decision to sell an 85% stake in the broadcaster in 2006, it never relinquished control and therefore shouldn’t be required to pay again.
“If the Commission were to require that the same acquirer (BCE) pay tangible benefits on the same assets (CTV) on which it has already paid tangible benefits ($230 million), it would be unprecedented and inequitable,” states Bell. Forcing it pay a second time will amount to BCE paying upwards of $450 million in tangible benefits for acquiring the same assets,” the company adds.
Bell wants Shaw’s discount
Bell acknowledges that the Commission may determine that tangible benefits are payable and in such an event, it should get the same discount that Shaw Communications Inc. received in its acquisition of Canwest. BCE argues that because Shaw only had to pay a benefit policy rate of 5%, then it should be too.
BCE says a finding that Canwest’s assets were distressed – the company was operating in creditor protection at the time of the acquisition by Shaw – isn’t factually correct. Actually, it was Canwest’s newspaper operations that were in financial trouble, says BCE, and because of Canwest’s corporate structure, it had to put the entire company in bankruptcy protection.
Bell counters arguments that its benefits package proposal runs counter to Commission policy and in fact it’s proposing to support a broad number of initiatives including conversion to digital and satellite capacity upgrades, spending which should be a natural business expense and not paid for through the benefits package, argue the content creators.
“Specifically, 2011 will herald the once-in-a-lifetime occurrence of the conversion from analog to digital distribution for conventional television. BCE’s proposed benefits package will assist in making that conversion a smooth one,” the company tells the CRTC in its reply comments. “Similarly, conventional television, and especially local news in small markets, will benefit from BCE’s benefits proposals. Finally, programs of national interest (PNI) will receive a large additional infusion of funding from the tangible benefits package.”
Bell argues that its proposed tangible benefits package would benefit the Canadian broadcasting system. It says more over-the-air channels would be carried on its direct-to-home satellite platform, local news production would be enhanced, there would be greater conversion of specialty channels to HD and it would support A-Channel markets. The company notes that if Shaw Communications’ proposal to offer free local TV to those losing OTA signals in non-mandatory markets, it’s prepared to allocate an additional $10.8 million to on-screen programming initiatives.
Many interveners called for the commission to ensure that 85% of BCE’s tangible benefits monies go third-party productions funds for on-screen programming. BCE says this “practice” was used when Canadian production needed funding, but this is no longer the case following the reinstitution of the CPE requirement last year in Broadcasting Regulatory Policy CRTC 2010-167. The company adds that the broadcasting system has changed in the last few years from a linear-focused system to a multi-platform environment with competition coming from unregulated services.
Besides, BCE argues there is already considerable money available for independent producers, including $100 million CTV has yet to spend – of which a big portion will go to PNI. “But if the commission determines that it is appropriate to allocate a figure even approaching 85% of the tangible benefits dollars from this transaction to on-screen production as opposed to other more urgent initiatives, then a significant opportunity will be lost,” states the company.
In its reply comments, Bell also reiterated its argument that making Bell pay benefits monies based on the full value of the transaction is inappropriate. The company says it’s consistent with commission policy to pay benefits related only to the transfer of broadcasting licences.
“The non-broadcast operations of Dome Productions and certain on-line properties do not belong in the asset base when the Commission is calculating the value of broadcasting licences because these assets are not regulated or have been exempted from licensing by the commission,” BCE says, adding that CHUM’s online properties were excluded when CTV acquired CHUM in 2007.
No new regulations on BCE resulting from vertical integration
Bell says there aren’t any reasons to impose new restrictions on the company if its proposal to acquire CTV is approved. It argues that comments from competitors are “misguided” for a number of reasons. Safeguards already exist to protect against anti-competitive behaviour and they have been sufficient for Rogers Communications Inc., Quebecor Media Inc. and Shaw Communications Inc., are cited as two reasons.
BCE adds that imposing new regulatory restrictions “would be asymmetrical and punitive” because the other large, integrated competitors already in the market would not be subject to the same restrictions. As well, the Commission chose not to impose any new restrictions on Shaw when it approved its acquisition of Canwest three months ago.
Bell notes that over the last decade the existing safeguards have been sufficient in the face of large vertically integrated companies. “
The CRTC’s hearing on BCE’s proposed acquisition of CTV will start on February 1. Cartt.ca will be there.
