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CRTC rejects Bell Canada's Astral Media acquisition

Telco seeks federal government override of decision
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Canada's telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), on Friday denied BCE's (NYSE: BCE) proposal to acquire Astral Media.

Jean-Pierre Blais, chairman of the CRTC, said that "BCE failed to persuade us that the deal would benefit Canadians" and that it "would have placed significant market power in the hands of one of the country's largest media companies."

If the deal had been approved, the CRTC said that BCE would have had a 42.7 percent share of the Canadian English-language television market and 33.1 percent of the French-language market."

George Cope, CEO of BCE, dismissed those claims in an earlier regulatory session. He said that acquiring Astral would only give it a 24.4 percent of the French-language market and 33.5 percent of the English-speaking market.

Already, BCE through its operating units Bell Canada, Bell Mobility, Bell TV, and Bell Aliant (Toronto: BA-UN.TO), is the third largest overall television distributor, and has a dominant position in the wireless, Internet service, IPTV and satellite services.

Beefing up its broadcasting capabilities has been a recent trend at BCE. Besides making a bid for Astral, BCE did successfully purchased CTV, Canada's largest private broadcaster, for $2.9 billion in September 2010.

While the CRTC's rejection of the deal is obviously a blow to BCE, "in terms of its ability to close deals," explained Barry Schwartz, a fund manager with Baskin Financial Services, in a Bloomberg article, it is a victory of sorts for the service provider's telco and cable competitors.

One service provider that's happy about the decision is cable operator Rogers Communications (NYSE: RCI).

"We commend the CRTC for this courageous decision," Rogers said in a statement. "We believe that Canadians should have fair and open access to content. This is a good day for consumers."

The Astral deal also was met with opposition from cable operator Quebecor and Vancouver-based telco Telus (Toronto: T.TO), which previously said that had it been approved it would have given BCE a "monopoly advantage."

But BCE is not giving up the fight for Astral as the company has already asked the federal government to step in and override the CRTC's decision.  

"This is a decision that should not stand," Cope said a statement on late Thursday. "We met all the CRTC's rules."

For more:
- Bloomberg has this article

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