Could the CRTC really deny Bell-Astral again?

My prediction for the CRTC’s decision on Bell-Astral, round two, is that it’s coming next week.

Everyone is talking about which way the regulator will go, with a little bit of nervousness in the air. Why? Because last fall, everyone seemed to get their Bell-Astral predictions wrong. The fear now is that they could get them wrong again.

The CRTC, at a hearing in May, took second look at BCE’s proposal to acquire Astral for $3.38 billion.

The CRTC denied the first application in a surprise decision last fall, saying it was not in the public interest and that it had concerns about BCE’s resulting market power. BCE and Astral came back to the CRTC with a reworked proposal and an agreement with the Competition Bureau in March to sell off 12 specialty channels, including Teletoon and Disney, with half going to Corus Entertainment Inc.

Well, that should be enough for an approval, right?

Broadcasting industry sources, speaking on background, say they can’t be sure what the CRTC will do with the new application. Will it outright deny it again? Could it effectively deny it by ordering more divestitures (e.g. TMN) that are deal breakers for BCE? Will it approve it with more conditions to limit BCE’s market power? And more broadcast regulations applying to big, converged companies? How will the commission’s focus on consumer interests influence the decision?

“We are applying a more rigorous public interest test for ownership transactions,” CRTC Chair Jean-Pierre Blais said in a speech this month at the Banff World Media Festival in Alberta. “Our [BCE-Astral] decision last fall sent a clear signal that the public interest is paramount. It is the lens that Parliament has entrusted to us, under legislation, and we fully intend to carry out that public trust.”

Blais said the commission needs to ensure “no citizen is left behind,” and that the regulator’s decision making process will mean “sometimes being audacious” with intervention and in other cases taking a “step back” and deregulating.

What did that speech mean in terms of Bell-Astral? Other than consumers won’t take a back seat, I don’t know.

Bloomberg reported June 17 that the roughly $1.50 gap between Astral’s stock price and the $50 per share in the deal means “investors anticipate a positive decision by the regulator.” The gap has “averaged 2.7% over the past month,” which “compares with 3.6% in the month before the previous decision on Oct. 18,” Bloomberg reported.

The Wire Report also reported this month on the “short positions” in Astral. Investors with short positions borrow stock, sell it high and then buy it back low, profiting from its fall, and short selling in Astral, this time around, is far lower than last year.

The short position in Astral’s stock represents only 0.18 per cent of shares, while last year, before the CRTC denied the deal, short positions in Astral were at 6.25 per cent.

According to the markets, another denial is unlikely.

For Veritas Investment Research, according to its research note this month, Blais’ speech indicated the regulator may make a second “audacious” regulatory decision following this month’s wireless code decision, which effectively reduced three-year wireless contracts to two years.

I’ll make a prediction on when the decision is coming. As for its contents, I’ll leave that up to you.




Super Bowl paywalls on the way?

The Super Bowl—the world’s most widely viewed annual sporting event—could be a little harder to watch for millions of American cord-cutters next year if Fox elects to move its online broadcast of the game behind a paywall.

MediaPost News reported Wednesday that Fox, the official 2014 Super Bowl broadcaster, is considering restricting online access to the big game to “authenticated” TV subscribers. In other words, any American who doesn’t pay for a TV service can’t watch the game for free online.

The online news service reported that Fox has blocked popular content from cord-cutters in the past, most notably in 2011, when it restricted access to new TV episodes to paying TV subscribers.

If Fox restricts access to its Super Bowl stream, it would be bucking an early trend that has seen the NFL’s championship game streamed online for free each of the past two years, and which led the game to establish a North American online viewing record for a single sporting event last year.

The Wire Report reported last year that Super Bowl XLVI established a North American online viewing record a for single-game sporting event. In all, 2,105,441 unique users in the U.S. viewed at least part of the game through one of the broadcast’s two official live feeds on NFL.com and NBC.com or on the NFL mobile app available to Verizon Wireless customers, NBCUniversal said at the time.

On television, this year’s Super Bowl’s ratings in Canada fell ten per cent year-over-year to an average audience of 7.33 million viewers, according to BBM Canada data released by CTV and reported by The Wire Report.

Although Fox’s decision won’t directly impact Canadians’ ability to watch next year’s Super Bowl for free online, it’s probably safe to say that Canadian broadcasters will be keeping a close eye on what Fox does, and whether any move to restrict online access helps drive TV viewer numbers.

With broadcast distributors clinging to live sports events as a bastion of the traditional TV model, the biggest draw of them all could be used to discourage cord cutting.

Of course, the broadcast distributors don’t want you to know about all the online streaming sites pirating live sports …




CETA ‘will be done’ … or will it

The Canada-EU free trade discussions have been going on for long enough that this inaugural blog post for The Wire Report is actually a follow-up, of sorts, to our first story ever, which reported on the progress of the Comprehensive Economic and Trade Agreement (CETA) back in early January 2010.

The Wire Report launched at that time, and reported on a leaked internal EU strategy document that showed the European Commission was pressuring Canada for significant amendments to its intellectual property regime.

The document, obtained by The Wire Report, was intended to help EU officials “facilitate the coordination of messages in the contacts with the respective government authorities,” and showed EU designs to use the negotiations as “a good opportunity to exert pressure” on Canada to change its intellectual property laws.

Three and a half years later, there is still no deal, and on Tuesday Prime Minister Stephen Harper, empty-handed, headed home to Canada from a G8 summit in Northern Ireland.

Canada and the EU are negotiating the Comprehensive Economic and Trade Agreement (CETA), covering all sectors including intellectual property and foreign ownership restrictions in telecom, according to previous leaks from the negotiations.

The text has changed over time, but last year the EU’s demands included the elimination of foreign ownership restrictions for Canada’s telecommunications and book publishing sectors as well as removing reviews under the Investment Canada Act for transactions involving European companies (the Harper government last year removed the foreign ownership restrictions in Canada for small telecos with less than 10 per cent market share).

Michael Geist, the Canada research chair in Internet and e-commerce law at the University of Ottawa, wrote in a blog post Monday that there were indications a deal could be concluded before the end of the week, but “if the past few years are any indication, we can expect continued speculation without a deal for many more months to come.”

Geist said a deal may not happen at all as both sides “still have reasons to hold back.”

Canada may also be reluctant give in on issues it could use as bargaining chips in free trade discussions surrounding the Trans Pacific Partnership, he said, while Europe’s concern is that for any concessions it makes for Canada, it must concede more to the United States as it embarks on EU-U.S. free-trade discussions.

Harper arrived for the G8 summit in Enniskillen, Northern Ireland, this week after visits to London, Paris and Dublin last week.

The PM told reporters at the summit Tuesday that the start of talks between the EU and the U.S. shouldn’t affect Canada’s negotiations with the EU.

“I don’t think it changes the fundamental calculus, which is we should stay at the table until we get a deal that is in the best interests of Canadians,” he said. ”We’re not quite there, but we continue to make progress and we continue to be committed to progress.”

British Prime Minister David Cameron told reporters Tuesday:

“It wasn’t possible to do it right here and that’s a pity. But the pressure of this G8 I think really got through a lot of the final issues. It’s now down to the last few yards and I’m sure that it will be done.”