ORAL PRESENTATION OF COGECO CABLE AT THE PUBLIC HEARING OF THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION (CRTC) ON THE PROPOSED ACQUISITION OF ASTRAL MEDIA INC. (ASTRAL) BY BCE INC. (BCE or BELL)
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ORAL PRESENTATION OF COGECO CABLE
AT THE PUBLIC HEARING OF
THE CANADIAN RADIO-TELEVISION AND
TELECOMMUNICATIONS COMMISSION (CRTC)
ON THE PROPOSED ACQUISITION OF
ASTRAL MEDIA INC. (ASTRAL) BY BCE INC. (BCE or
BELL)
8 May 2013
Check against delivery
LOUIS AUDET
1. Mr. Chairman, Mr. Vice Chairman and Commissioners, we
thank you for giving us the opportunity to present orally our
point of view during this second public hearing on the proposed
acquisition of Astral by Bell, which is once again so critically
important for the future not only of the Canadian broadcasting
system but also the entire communications industry in Canada.
I am Louis Audet, President and Chief Executive Officer of
Cogeco Cable. Also appearing today on behalf of Cogeco Cable
are, to my right, Yves Mayrand, Vice-President, Corporate
Affairs, to his right, Suzanne Blackwell, President of
Giganomics Consulting, who assisted us in the preparation of
our intervention and several appendices attached to our
intervention, and to her right, Professor Roger Ware of Queen’s
University, who authored expert studies also attached as
appendices to our intervention.
2. This second attempt to have the acquisition of Astral by Bell
approved by the Commission has been presented by the
applicants as a very different proposal that now meets all the
Commission’s requirements and adresses all the concerns that
caused the proposed transaction to be refused in October of last
year.
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3. Let us set things straight here : this proposed transaction remains
in fact the largest transaction in the history of the Canadian
broadcasting system, a transaction that involves an
unprecedented and unhealthy level of concentration of
ownership across over-the-air television, specialty television,
pay television, radio and new media throughout Canada, and a
transaction that involves also an unprecedented level of vertical
integration between production, aggregation and distribution of
all types of audiovisual content in both official languages across
all fixed and mobile electronic communications platforms
throughout Canada, including the province of Quebec. We have
reiterated in our written submission that these levels of
concentration and vertical integration would be largely
unmatched among the G8 countries.
4. Thus, the proposed transaction raises the very same overarching
public interest issues and concerns that were specifically and
clearly noted in your decision issued in October of last year.
Please allow me to review them briefly since they go to the heart
of the matter that you must deal with in this proceeding.
5. First, paragraph 63 of your decision states that convergence,
integration, and scale may lead to a point at which the size of an
entity on a national level becomes so large that it hinders
effective and healthy competition among Canadian broadcasters.
In addition to being already Canada’s largest communications
company, Bell is still attempting to control more broadcasting
properties, including movie pay television services, more of the
most profitable Category A specialty services, and a greater
number of commercial radio stations in more commercial radio
markets, both in English-language and in French-language
markets across Canada.
6. Second, paragraph 64 of your decision states that the market
power of a combined BCE/Astral could threaten the availability
of diverse programming for Canadians and endanger the ability
of distribution undertakings to deliver programming at
affordable rates and on reasonable terms on multiple platforms.
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BCE, Canada’s largest vertically integrated broadcasting group,
is still attempting to absorb Astral, Canada’s largest remaining
non-vertically integrated broadcaster and Bell’s competitor in
the supply of television programming to the downstream
broadcasting distribution market. As a graphic illustration of the
resulting consequences, Bell would thus end up controlling over
40% of Cogeco Cable’s programming service affiliation
payments at current wholesale rates. This is mentioned in our
latest public financial report. Yet, Bell is our direct competitor as
a BDU, with both extensive nationwide satellite footprint and
regional IPTV footprint in Ontario and Quebec. Bell’s share of
the Canadian downstream broadcasting distribution market is not
insignificant : it is already two and a half times the size of
Cogeco Cable’s share, and it is growing rapidly.
7. Third, paragraph 65 of your decision states that, in the event of
an approval, BCE’s level of market power would be so
significant that the Vertical Integration framework would be
insufficient to effectively address disputes and facilitate program
availability and distribution. It is Bell who originally insisted
that you replace the words « shall not» by the words
« should not» in the Code of Conduct. Coming into this hearing,
Bell once again resisted any meaningful regulatory safeguards.
And Bell is still denying that it can use the regulatory process to
its advantage despite having done so previously.
8. Fourth, paragraph 66 of your decision states that the significance
and breadth of a combined BCE/Astral are such that safeguards
to properly supervise this level of market power would be
extensive and unduly burdensome, contrary to the regulatory
policy set out in section 5(2) of the Broadcasting Act. This is
obvious given Bell’s insistence on being able to put forward its
own interpretation of the rules in any dispute, as well as the
sheer complexity of writing, and eventually policing, formal
conditions of licence or other regulatory safeguards.
9. We submit that Bell and Astral, despite having been put on
notice in your October decision, have clearly failed to address,
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much less overcome, these overarching public interest concerns,
whether in their application, their subsequent filings with the
Commission, including their written reply to interventions, or
their appearance at this hearing.
10. In fact, George Cope went so far as to say that it is 100%
incorrect to even consider the possibility of abuse in the
downstream broadcasting distribution market. Yet, several small
BDUs are on record in this proceeding as confirming that this is
precisely what has happened.
11. The adjustments in the new application now before you are
clearly focussed on : 1) coming more closely within reach, but
not below, the 35% television audience threshold of the
Commission’s Diversity of Voices policy for English-language
television market; 2) disposing of Astral’s joint venture interests,
as well as the related tangible benefit obligations, to the benefit
of the second largest vertically integrated broadcasting group in
Canada, Shaw/Corus, who has supported the initial and the
second application; 3) keeping all of Astral’s movie properties,
including the monopoly pay television service in the French-
language market; and 4) keeping the same overwhelming
number of English-language and French-language commercial
radio stations overall, namely 107 stations.
12. We submit further that Bell and Astral have also clearly
failed to even acknowledge, much less address in a meaningful
way, the continued opposition of Canadian consumers and their
advocacy groups to this proposed transaction.
13. As in the previous proceeding last year, Bell and Astral had
the burden of demonstrating that, on balance, their proposed
transaction is in the public interest. We submit that Bell and
Astral have failed to make this demonstration and to discharge
their burden of proof.
14. On the contrary, we submit that Bell’s behaviour
throughout this process demonstrates once again that it views its
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own private commercial interests as equivalent to the public
interest. Bell also considers itself entitled to have this
extraordinary transaction approved with only very ordinary or
vague commitments for the real benefit of the Canadian
broadcasting system and the communities served.
15. We wish to reiterate that Bell’s proposed acquisition of
Astral is not only without any credible justification under the
public interest test and clearly harmful to effective competition
and the best interest of Canadian consumers, it is also
unnecessary since both Astral and Bell are doing extremely well
on their own as unrelated competitors, and vis-a-vis their other
respective competitors from within or from outside the Canadian
market.
16. For all these reasons, we submit that you should reach the
same conclusion as you did in Broadcasting Decision CRTC
2012-574 and find that the concerns related to competition,
ownership concentration in television and radio, vertical
integration and the exercise of market power are very substantial
and fatal to this application as well.
17. We urge you to play fully, right to the end, your critical
role as the ultimate regulatory authority over the Canadian
broadcasting and telecommunications industries in Canada, to
uphold the public interest, and to protect Canadian consumers of
broadcasting and telecommunications services from potential
abuse by denying this application.
18. Bell is already too large as it is within the Canadian
broadcasting and telecommunications industries. The
Commission must draw the line here and now, deny any further
incremental acquisition of broadcasting properties by Bell in the
most unequivocal terms and ensure that Bell and Astral will
make no further attempt to combine any of their respective
properties.
19. We will now be pleased to answer your questions.
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COGECO CABLE INC.
APPEARANCE SEATING PLAN
COMMISSIONERS
COMMISSIONERS
Louis Audet
President and
Chief
Executive
Officer
Yves Mayrand
Vice-President,
Corporate Affairs
Suzanne Blackwell
President,
Giganomics
Consulting
Dr. Roger
Ware
Professor,
Queen’s
University