The Montreal CTV offices are seen Friday, September 10, 2010.Ryan Remiorz/The Canadian Press
What the analysts said:
"Reaction could be negative short term. Investors in BCE own it for yield, dividend growth and return of capital. That thesis could stall here. Leverage increases to 2x which could limit future buyback and dividend increases. This could impact the stock in the near term. Strategically makes sense. Like [Shaw Communications]buying CanWest, this deal secures key content. Validates [Shaw]strategy, Rogers already has media assets and Quebecor's strategy in Quebec. While Telus may benefit from fund flows short term (yield investors moving out of BCE), this puts Telus at a strategic disadvantage when it comes to content negotiations in the future (ie: content costs may go up more for Telus than its competitors)." Jeff Fan, Scotia Capital
"We have made no secret of our scepticism for content-conduit 'convergence' so we are not going to be bullish on the prospect for any revenue synergies from this deal. Of course there will be no real cost synergies so from a strategic perspective we would call it a small positive in that it gives Bell a hedge in the event that content on-demand and mobile distribution rights gain more value. In our view, this deal will not affect the dividend growth outlook which we think is in the 3-5 per cent range for the foreseeable future. However, we do think some investors would have preferred the cash to be used for share buybacks so sentiment may be slightly negative. Like Shaw's acquisition of CanWest, we would call this a neutral for the stock." Greg MacDonald, National Bank
"The business of communications is changing rapidly. It's no longer about black rotary dial telephones. I think they've actually figured that out. It's about delivering other things." Iain Grant, managing director at Seaboard Research in Montreal, to Bloomberg News
"From industry perspective, less risk of over the top/disintermediation of video operators in Canada. The content purchasers are now very concentrated [Shaw, Rogers, BCE]and the purchasers also own the pipes. This means less likely to see content going over the internet to disintermediate the cable/TV operators." Jeff Fan
|
Read more about the BCE-CTV deal:
|