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Broadcasters may yet regret their victory over BCE

Be careful what you wish for, goes the saying, for it just may come to pass.

And now, as executives in some of the country's largest broadcasting companies quietly celebrate the national regulator killing off BCE's proposed $3-billion acquisition of Astral Media, they should probably also be a little terrified of what comes next. Because in appealing to the CRTC for help and encouraging its new chairman Jean-Pierre Blais to take a new, consumer-oriented, activist stand against one of their most fearsome competitors, those executives have helped usher in an era where they will no longer be able to write their own rules.

As he brought the hammer down on BCE, parent of Bell Media, Mr. Blais declared he was standing up for Canadian consumers. But in doing so, he may also be harking back to a classic time, in which broadcasting executives recognized they were responsible not just to shareholders, but to Canada's cultural life as well.

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For the past few years, industry executives have been trooping through the hearing rooms at the Hull headquarters of the Canadian Radio-television and Telecommunications Commission plaintively explaining that they needed regulatory relief to properly compete in a new era of consumer choice. The unregulated Internet could destroy them all, unless the commission stood aside and permit the formation of a large, consolidated Canadian alternative.

Gaining approval for transactions, then, was usually a matter of ticking off the regulatory boxes: selling off extraneous radio or TV stations to stay under CRTC-set thresholds of local market concentration, and promising to plow a chunk of money into the broadcasting system and the production community.

Not anymore. BCE lined up dozens of producers who attested to its promised generosity and good corporate name. It announced the creation of a $15-million production company with the Cirque du Soleil, and pledged $40-million that would help bring high-speed Internet service to the North. But the CRTC recognized that BCE regarded its $200-million package of so-called tangible benefits as just the price of doing business, rather than a necessary investment in Canadian culture.

The company, in other words, didn't really care about content, as long as it made a profit.

"BCE did not express a vision for radio," noted Mr. Blais during his press conference Thursday, looking mildly peeved. "It made no firm commitments regarding local and spoken word programming, or the promotion of emerging Canadian artists." He explained further than Bell's enormous share of the English-language TV market would be terrible for consumers, and that the company had not even acknowledged there was a legitimate reason for concern.

"At the end of the day, BCE demonstrated clearly that the proposed transaction was good for BCE, but we were not persuaded that it was in the best interests of Canadians. Our only option was to deny the transaction."

Bell may have sensed this was coming, in part because Mr. Blais understands the importance of optics.

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During the CRTC hearing in Montreal last month, he played to the crowd by reading aloud some of the more passionate e-mails from listeners upset over BCE's intention to change the format of a popular English-language local sports radio station to French so that it could stay under CRTC-set limits. And then, most unusually, rather than giving BCE and Astral a heads-up days in advance that its ruling would come down on Thursday, the commission simply informed the companies' executives on Wednesday that they might want to get themselves to Ottawa 24 hours later. Few made the trip.

"This should be a wake-up call to all carriers," said Dvai Ghose, the head of research at Canaccord Genuity, in a research note. "In our view, the regulatory environment has changed under the current Conservative government and consumer sentiment has become far more significant than in the past."

Read the CRTC's decision here.

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About the Author
Senior Media Writer

Simon Houpt is the Globe and Mail's senior media writer, charged with covering the industry's transformation. He began his career with The Globe in 1999 as the paper's New York arts correspondent, covering the cultural life of that city through Canadian eyes. More


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