Bell snaps up Astral Media for $3.38-billion
The blockbuster deal will cement the telecom giant's media unit as the owner of the deepest and most lucrative set of television assets in the country
Published Mar 16, 2012
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BCE Inc.
is pushing the envelope once more in what now plainly looks to be the telecom giant’s ambitious plan to become the epicentre of Canadian television content around which all others in the domestic marketplace orbit.
BCE agreed Friday to acquire outright?
Astral Media Inc.
in the latest in a string of deals that will make the country’s biggest telecommunications provider, through its new Bell Media division, the biggest holder of television properties in the country by far.
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Just as with its successful bid last spring for CTV Inc. ? Canada’s biggest TV network ? and the pending regulatory nod for a joint controlling stake in Maple Leaf Sports and Entertainment Ltd., which owns the most lucrative collection of sports properties in the land, the company expects a quick trip through the regulatory gauntlet put down by the Canadian Radio-television and Telecommunications Commission and the Competition Bureau.[np-related]
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“We see it being a pretty straightforward process,” Siim Vanaselja, BCE’s chief financial officer, said in an interview. The CRTC and bureau “have pretty clear policy statements” to which Bell is confident it can adhere.
Astral is no small constellation in the Canadian media universe, owning fully or in part 24 specialty channels and pay-TV networks, including The Movie Network, HBO Canada and Super Ecran in Quebec.
A brief review of the CRTC’s annual monitoring report reveals the magnitude of the deal for Bell’s market power in dealing with advertisers, adversaries seeking to access content to distribute on their own television and wireless platforms, and perhaps consumers.
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A combined Bell Media-Astral will hold more than 40% of specialty-channel viewing share among English-language viewers. Total commercial television revenues of the combined entity would amount to 40% of the market, or more than double its closest competitor in Shaw Communications Inc., which owns the former television assets of Canwest Global Communications Corp.
The strengthened position will give Bell unparalleled leverage over even other large, vertically integrated service providers such as Rogers Communications Inc. in negotiating content deals, analysts say.
One area in which tensions may boil over is in mobile. Astral has embarked on launching later this year the popular HBO GO service for smartphones, tablets and online. Under Bell’s ownership, it may be difficult for Rogers and Telus Corp. to secure the service for their subscribers, some industry observers said.
New rules guarding shared access have recently been erected by the CRTC, but BCE chief executive George Cope told reporters in Montreal it was his company’s job to “constantly push” the boundaries on what it can do with its broadcast content.
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With few domestic assets as large and valuable as Astral left, the $3-billion price tag (plus debt), which exceeds the $1.3-billion Bell paid for CTV less than a year ago, appears to be a fair valuation, analysts said.
Executives from both companies said the transaction will be immediately accretive to Bell’s cash flow, while the purchase of Astral equity (including buying out the controlling Greenberg family), won’t hinder Bell’s dividend growth plans or capital investments being made to broadband Internet and wireless networks ? the pipes that will carry Bell’s content to end users.
Astral shareholders are to vote on the transaction on May 25. However, with the support of the Greenbergs and Astral’s biggest holder of class B shares, the Bronfman family, no material opposition is anticipated, analysts say.
While the deal will expand Bell’s media presence nationally, another major strategic rationale is to bolster the company’s French-language media assets as Bell competes head-to-head with Quebecor Inc. in Quebec for advertising dollars as well as subscribers to Internet, wireless and television services.
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Astral owns several French-language television and radio assets that will enhance the telecom giant’s appeal in the Montreal-based company’s home province across all those categories, denting a significant cultural advantage held by Quebecor.
Mr. Cope said the deal is expected to close within six months, while Bell is prepared to “evolve” the transaction as needed, which may include divesting Astral radio stations in Vancouver and Toronto, where regulators will likely have concentration concerns.
The agreement, which took about two months of negotiating, came together with near-cosmic serendipity, Mr. Vanaselja said, under the code name “Aurora” used internally by Bell after the aurora borealis.
“We see Astral as the last remaining and brightest light in Canadian media,” the executive said. “Strategically, operationally and financially, the stars just seemed to be aligned.”
Following are the milestones in Astral’s evolution as a pure-play media company: 1961: Brothers Harold, Harvey, Sidney and Ian Greenberg establish Angreen Photo Inc, the photo-finishing booths in Miracle Mart stores. 1963: Angreen Photo enters photo processing market by buying Bellevue Photo Labs in Montreal. 1964: Forms Bellevue Photo Labs Inc with the acquisition of the WS Holland Lab. 1967: The Greenberg brothers get exclusive rights to sell photo products at the Montreal Universal Exposition. 1968: The Greenberg brothers acquire Pathe-Humphries, which provides technical services for the film industry and owns a film development lab and recording studio in Toronto. Buy the three Centre Photographique de Montreal stores and expand it into a chain of 125 stores across the country. 1969: The Greenberg brothers acquire Associated Screen News Industries, a Montreal film production centre. 1973: Bellevue Pathe merges with Astral Communications to become Astral Bellevue Pathe Ltd. The Greenberg family is the largest shareholder and Harold Greenberg becomes its president and CEO. 1981: Gets into videocassette production with Pathe Video Inc. 1982: Astral Bellevue Pathe produces Porky’s (Chez Porky in French), Canada’s biggest box office hit with more than $150 million in worldwide sales. 1983: The Greenberg brothers launch two pay television channels, First Choice and Premier Choix, now called The Movie Network and Super cran. Cease all film production activities to comply with regulations. 1984: Enters the videocassette distribution market with Bellevue Home Entertainment. 1986: Set up The Harold Greenberg Fund, a private fund supporting scriptwriting and production in the Canadian film industry. 1988: Launches youth channels, Family Channel and Canal Famille, now known as VRAK.TV. 1991: Astral Communications launches the Viewer’s Choice Pay Per View channel. 1995: Harold hands over his position of president and CEO to his brother Ian Greenberg. 1996: Ian Greenberg starts Astral’s transformation into a pure-play media company. 1997: Astral acquires 25 percent of Radiomutuel Inc shares and becomes full owner of Les rseaux Premier Choix. 1999: Buys Radiomutuel and also forms a radio division, known today as Astral Radio. 2000: Astral Communications changes its name and becomes Astral Media. 2002: Astral acquires 19 Telemedia radio stations in Qubec, New Brunswick and Nova Scotia. 2007: Astral acquires almost all Standard Radio assets. Becomes full owner of MusiquePlus Inc and its MusiquePlus and MusiMax channels. 2008: Launches North America’s first Virgin Radio station. 2009: Astral launches The Movie Network OnLine, Family OnLine and Playhouse Disney OnLine in collaboration with Bell TV. 2012: Astral agrees to be acquired by BCE in a C$3 billion deal.
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