Bell Canada (NYSE: BCE) and cable rival Rogers Communications (NYSE: RCI) have joined forces to up their respective content libraries by acquiring a joint 75 percent stake in Maple Leaf Sports & Entertainment (MLSE) from the Ontario Teachers' Pension Plan. MLSE owns NHL ice hockey team the Maple Leafs and NBA basketball team the Raptors.
Under the terms of the agreement, Rogers will contribute CAD 533 million (USD 519.3 million), representing a 37.5 percent equity interest in MLSE, with Bell contributing the same amount in the venture.
In a separate deal, KSI Investments will increase its ownership stake in MLSE from 20 to 25 percent. When the acquisition is complete, the trio of KSI, Bell and BCE Master Trust Fund and Rogers Communications will own a 25, 47.5 and 37.5 percent stake, respectively.
Larry Tanenbaum, the owner of KSI Investments, will continue to serve as MLSE's board chairman.
A key benefit for both Bell and Rogers is that they can deliver all of MLSE's sports content over their respective TV, mobile and radio assets.
Having already acquired CTV, Bell Canada is quite familiar with operating broadcasting operations. CEO George Cope said what piqued his interest to add sports content to its cadre of services was that its sponsorship of the 2010 Vancouver Winter Olympics drove up viewership on smartphones and tablets.
However compelling this recipe sounds, some analysts like Dvai Ghose of Canaccord Genuity in Toronto aren't entirely convinced that service providers should be in the content ownership business.
"They should be spending on what they are there in existence for, which is providing network connectivity to customers, wireline and wireless," said Ghose in a Bloomberg Businessweek article.
- Bloomberg Businessweek has this article
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