Bell Canada appeals to feds after Astral Media acquisition rejected

Bell Canada (NYSE: BCE) thought it had a great patriotic reason why it should be allowed to spend CAD 3.38 billion (USD 3.41 billion) to acquire Astral Media: It would use the content it gained to create a Canadian anti-Netflix and effectively push the invader back over the border and into the United States.

The telco, in hearings about why it should be allowed to make the deal, said it would result in a "made in Canada" service available "on demand on any device" that would showcase Canadian and international movies and leverage the assets of Astral Media.

The service would be available "to all Canadians through the cable, satellite or IPTV provider of their choice," Bell Canada CEO George Cope told the Canadian Radio-television and Telecommunications Commission (CRTC) during a hearing into the acquisition.

The CRTC apparently didn't buy the argument--or preferred the arguments of Bell competitors who claimed the deal would give the company too much power--and rejected the deal. Now the carrier is trying to get the rest of the Canadian government to reverse that ruling.

"The Broadcasting Act explicitly empowers the cabinet to issue directions to the CRTC on broad policy matters," Bell legal officer Mirko Bibic said in a statement reported in the Toronto Sun.

Well, said Heritage Minister James Moore, "[t]here actually is not a mechanism by which cabinet can intervene in this process."

Moore called the CRTC's action an "independent decision" and said he believed the agency adequately explained its reasons for making it: That the acquisition would make BCE too big and potentially a bully threat to competitors like Cogeco and Rogers Communications (NYSE: RCI), who opposed the deal.

Another government executive, Industry Minister Christian Paradis on Friday told reporters the government saw no reason to get involved.

"We respect what the CRTC said," Paradis said to reporters in a story reported by C21media. "The CRTC operates an arm's length from the government. They made their decision so I will no longer comment."

If appeals to the broader government do not work--and it appears the response is a Canadian cold front--BCE will be forced to move on to the courts. And that probably won't work either, independent media analyst Carmi Levy told the Sun, noting that the grounds for the rejection seemed reasonable.

"The more content you own, the more networks that you own, the more infrastructure that you own, the more you can control how much that content should cost, who has access to it, who can license it, who can't," Levy said.

For more:
- the Toronto Sun carried this story
- C21media had this story

Related articles:
Bell Canada announces online video service to challenge Netflix
Bell Canada wants to fight U.S. OTT invasion with 'made in Canada' service