When executives from BCE Inc. went to Gatineau, Que., this week looking for a bargain in their deal to buy the TV and radio assets of CTVglobemedia Inc., they couldn't have foreseen just how bad the timing would be. The federal broadcast regulator was in no mood to haggle.
BCE, which last year struck a $1.3-billion deal to buy the 85 per cent of CTV it doesn't already own, is looking for a break on the so-called "tangible benefits" that companies are required to pay when a broadcast licence changes hands. Those benefits are usually calculated as 10 per cent of the value of the deal, and come in the form of promises to spend money on the Canadian broadcast system - upgrading TV service for rural communities, for example, or funding documentaries by independent producers.
Including debt and other adjustments, the regulator calculated that BCE should pay $236.4-million in benefits. On Friday, BCE put forward a new proposal to pay $204-million.
But CRTC chairman Konrad von Finckenstein, who found himself in the centre of a political storm this week for a decision on Internet pricing that favoured BCE, sent the company back to the drawing board to come up with a better offer.
BCE is arguing it should get a discount because the deal comes with money-losing A Channel stations - a network that serves smaller urban centres like London, Ont. and Victoria. The company also pointed out that it paid the tangible benefits already in 2000, the first time it bought CTV. (It sold down to a minority stake in 2005.)
"The absolute dollars that we're putting forward … setting aside percentages … is a very significant amount," CTV chief operating officer Kevin Crull told the CRTC on the first day of hearings. The $204-million package represents 10 per cent of the value of CTV's radio assets and 5 per cent of its television assets.
On Friday, Mr. von Finckenstein shot that down. "Five per cent doesn't fly," he said at the hearing.
He also asked BCE to explain why more than $17-million in proposed benefits was actually money set aside to support programming for A Channel stations. Cogeco Cable Inc. suggested earlier in the week that this type of spending would be a private benefit for BCE, not a public benefit to the system.
Mr. Crull responded by reminding the CRTC that it has said it supports local programming, and by suggesting those local stations are in jeopardy. The A Channel stations lost $29-million last year.
"I haven't wanted to tell the commission that absent this [approval]I would close them … but I would see them as 100-per-cent incremental," Mr. Crull said.
Aside from the tussle over programming benefits, Mr. von Finckenstein also suggested that BCE could beef up its offer by establishing a fund for accessibility in broadcasting - including money to improve closed captioning services for hearing-impaired viewers and described video (in which a narrator explains the action on the screen) for the visually impaired. This was suggested by interest group Media Access Canada earlier in the hearings.
"This is something that is very dear to our hearts. … I would strongly suggest you reflect on that," he told Bell executives, adding that funding for accessibility "solves a major problem of society and also makes your whole package more acceptable."
BCE now has until Monday to file any changes to its plan and answer questions raised at the hearings. The CRTC's decision on the deal is expected by March 8, and Bell estimates the deal will close in the second quarter.
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