TORONTO (Reuters) - Canadian telecom giant BCE Inc (BCE.TO) offered to spend C$200 million ($196 million) on Canadian programming and sell 10 radio stations on Tuesday as it tries to win regulatory support for its C$3 billion acquisition of Astral Media Inc ACMa.TO.
Shareholders of Montreal-based television and radio company Astral Media approved the deal in May. But it is bound to face close regulatory scrutiny because of the growing media heft of BCE - the country’s largest telecom company - especially after its 2011 acquisition of CTV, Canada’s largest private broadcaster.
BCE is buying Astral to lock up more programming for its wholly owned Bell Media subsidiary and to expand its presence in French-speaking Quebec.
It had already indicated it would sell some of Astral’s radio stations after the purchase so that it does not run afoul of Canadian regulations that limit the number of radio stations that one company can own in each geographical market.
In its statement on Tuesday, BCE said regulations would require it to sell nine FM stations and one AM station in Vancouver, Toronto, Calgary, Ottawa-Gatineau and Winnipeg for the deal to win approval.
BCE said its commitment to spend C$200 million on Canadian programming shows the “tangible benefits” that will be created by the deal. Such payments are a condition for approval of takeover deals in the industry.
A final verdict from industry regulator, the Canadian Radio-Television and Telecommunications Commission, on the deal won’t come until mid-October following the completion of a one-month public comment period that has just begun and the hearings that will follow it.
BCE has also asked the CRTC to allow it to convert the TSN Radio 990 English-language sports station in Montreal into a French-language sports station. The move would allow it to work around regulations governing the ownership of multiple radio stations in a given market.
“Bell’s commitment to provide $200 million in additional funding for Canadian broadcasting initiatives builds on the outstanding contributions Astral has made to the industry, especially in the French-language market,” said George Cope, who is chief executive of BCE and Bell, in a statement.
Nearly half the funds will be earmarked to develop additional Canadian television programming, while about C$60 million being allocated to promote and develop Canadian musical talent, and assist community radio and other initiatives. The remainder will be used for other initiatives, the company said.
Astral is one of Bell’s biggest content providers and the deal will give Bell more than 20 television services, including HBO Canada, the Movie Network, Canal Vie and Disney Junior. It also brings into Bell’s fold about 80 radio stations, including Virgin Radio, EZ Rock and Boom.
The assets would allow Bell to raise its profile in one of Canada’s biggest media markets and broaden its footprint.
T he deal positions Bell to compete more effectively against Quebecor Inc (QBRb.TO), which owns a rich array of French-language content and rival telecom company Videotron that also operates in the Quebec - Canada’s francophone heartland.
“Bell’s acquisition of Astral intensifies competition by leveling the playing field with Bell’s dominant competitor in the important Québec media marketplace,” the company said.
The proposed Astral acquisition must also pass muster with Canada’s antitrust regulator - the Competition Bureau, which is reviewing the deal, but has yet to issue a ruling.
$1=$1.02 Canadian Reporting by Euan Rocha; Editing by Peter Galloway and M.D. Golan