OTTAWA-GATINEAU, August 16, 2012 — Today, the Canadian Radio-television and Telecommunications Commission (CRTC) approved the sale of sport television channels owned by Maple Leafs Sports & Entertainment (MLSE) to BCE and Rogers Communications. While this $1, 32 billion transaction, involved several sports-related properties such as professional teams, the CRTC’s review was limited to the five television services owned by MLSE : Leafs TV, Gol TV and NBA TV Canada, as well as two services that have not yet launched, Mainstream Sports and Live Music Channel.
“When deciding whether or not to approve a proposed ownership transaction, the Commission must be persuaded, in light of the application and the public record that an approval is in the public interest”, said Jean-Pierre Blais, Chairman of the CRTC. “In this case, we have been convinced that the transaction benefits Canadians as it will lead to the creation of new home-grown sports programming.”
The CRTC’s policy for ownership transactions in the broadcasting sector requires the buyer to demonstrate clear tangible and intangible benefits associated with the approval of a proposed transaction. In particular, applicants are expected to make specific incremental commitments to fund initiatives that will enhance the Canadian broadcasting system. The applicants had proposed a $3,8 million in tangible benefits. After a review of the value of the transaction, BCE and Rogers will be required to spend $7,5 million over the next seven years on the creation of new sports-themed programming by Canadian independent producers.
Finally, the CRTC is committed to ensuring that Canadians have access to a wide choice of programming on different platforms. In 2011, the CRTC prohibited companies from offering television programs on an exclusive basis to their mobile or Internet subscribers. Any program broadcast on television must be made available to competitors under fair and commercially reasonable terms.
Broadcasting Decision CRTC 2012-443
The CRTC is an independent public authority that regulates and supervises broadcasting and telecommunications in Canada.
George Cope, president and chief executive officer of Bell Canada and BCE Inc.; Larry Tanenbaum, chairman and part-owner of MLSE and Nadir Mohamed, president and chief executive officer, Rogers Communications pose for a photo following a press conference at Air Canada Centre in Toronto, December 9, 2011
Broadcast regulators green-lit Thursday the transfer of ownership of Maple Leaf Sports and Entertainment Ltd.’s TV licences to Rogers Communications Inc. and BCE Inc., setting the stage for the $1.32-billion acquisition of MLSE by the two telecom conglomerates to close.
While approval was widely anticipated, the Canadian Radio-television and Telecommunications Commission doubled the financial commitments Rogers and BCE must invest back into the broadcast industry.
Language in the decision also suggests the commission is taking a heightened level of scrutiny to BCE’s far larger $3.38-billion bid for Astral Media Inc., which faces a review next month.
MLSE’s five channels consisting of Leafs TV, NBA TV Canada, Gol TV and two others yet to be launched, represent a fraction of the value that the sports powerhouse’s pro clubs are worth. Alongside soccer franchise Toronto FC and basketball team Toronto Raptors, MLSE owns the Toronto Maple Leafs, the most valuable team in professional hockey.
As part of the decision, the CRTC said the two companies must spend $7.5-million over seven years on programming initiatives, double what Rogers and BCE suggested in their submission.
The fate of the channels, which are sparsely watched cable networks situated well down the TV dial, isn’t clear but BCE’s television unit Bell Media and Rogers Media are expected to divide broadcast rights for use on their respective sports properties, TSN and Sportsnet.
Approval from the CRTC for the channels’ change of ownership was a mandatory condition of the deal, which was first announced in December, and was the last hurdle to be cleared by the two companies.
The National Hockey League, National Basketball Association, Major League Soccer and the American Hockey League had previously approved the transaction, as has the federal Competition Bureau.
“Now that all the regulatory and league approvals are complete we expect to close the deal shortly,” said Patricia Trott, a spokesperson for Rogers.
Rogers and BCE jointly bid for MLSE on Dec. 9, agreeing to take a 37.5% interest each in the entity for $553-million in cash. The remaining balance is to be financed.
MLSE chairman Larry Tanenbaum will own the remaining 25% of the new company. The two integrated telecom and media giants acquired the stake from the Ontario Teachers’ Pension Plan, who put its 80% interest in MLSE up for sale last year.
Broadcast rights to the Leafs, Raptors and TFC will bolster each firm’s sports networks, strengthening their ability to charge higher rates from subscribers and advertisers, analysts say. The approval comes as the CRTC gears up for a public review of BCE’s latest bid for content assets in Astral Media Inc., an acquisition that, if approved, will cement Bell Media as the largest content player in the country.
Critics of that deal, which include major cable and television distributors like Cogeco Cable and Telus Corp. argue a Bell-Astral merger would create a behemoth that would dominate the broadcast and new-media marketplace. Consumer watchdog groups like the Public Interest Advocacy Centre and Friends of Canadian Broadcasting have warned the deal would push prices up for subscribers, while limiting competition.
“When deciding whether or not to approve a proposed ownership transaction, the commission must be persuaded, in light of the application and the public record that an approval is in the public interest,” commission chairman Jean-Pierre Blais said in a statement.
Competition Bureau officials meanwhile have said they are actively reviewing the transaction.