Source: Toronto Star
Telus is among the objectors asking the Canadian Radio-television and Telecommunications Commission to uphold one of the remaining hurdles to BCE Inc. and Rogers Communications joint purchase of Maple Leaf Sports and Entertainment, fearing the sale will entrench Canada’s “sports duopoly.”
The $1.32 billion deal, which would give the media giants the Toronto Maple Leafs, Toronto Raptors, Toronto Marlies and Toronto FC, along with a massive real estate portfolio that includes the Air Canada Centre and Maple Leaf Square condominiums, has already been approved by the NHL and the federal Competition Bureau.
The CRTC’s oversight of the transaction is limited to the transfer of the MLSE’s Leafs TV, Raptors NBA TV and Gol TV licences (as well as two unlaunched channels) to the proposed new owners.
By way of TSN/RDS and Sportsnet, Bell and Rogers, currently control the main sports networks in Canada. Rogers also owns the Toronto Blue Jays and Bell holds a minority interest in the Montreal Canadiens.
And that’s worrisome to smaller, independent distributors like Telus, Eastlink and Cogeco Cable, who fear that, particularly in light of its pending purchase of Astral Media Inc., Bell Media will control the majority of premium sports content in Canada making it harder to negotiate reasonable terms to access and distribute popular events to their customers.
“The acquisition of the sports rights relating to some of the top sports teams as a result of their acquisition of MLSE will act as a further barrier to entry for other mainstream sports programming services,” wrote Telus in comments to the CRTC.
“Bell’s and Rogers’ market power in the sports services market is further compounded by the fact that both Bell and Rogers are also major television distributors. The vertical integration of the top sports programming services with the largest distributors creates incentive and opportunity for anti-competitive behaviour, some of which is already being felt in the market.”
Those sentiments were echoed in the bulk of the eight submissions received by the regulator’s June 18 intervention deadline. A rare supportive missive, from the Canadian Soccer Association, lauded Rogers and Bell for giving viewers access to “more live games” by their members.
“Eastlink’s experience is that an independent distributor, negotiating with a large vertically integrated company, is at a disadvantage when it comes to content negotiations,” said the Halifax-based entity in its submission.
“The largest vertically integrated companies negotiate with each other first, setting ‘standard’ terms that work to benefit each other but not independent distributors. Not only do the larger entities therefore obtain earlier access to content, but by ‘setting’ the standard terms by which such content will be available, they establish what they claim is a precedent that will apply to the non-integrated, or independent, distributors.”
Consequently, independent distributors could be forced to accept higher rates and packaging restraints, said Eastlink which urged the CRTC to “consider the effect of the MLSE acquisition on the broadcasting system as a whole” and deny the applications.
Cogeco suggested the MLSE bid be reviewed at a public hearing along with Bell’s Astral proposal to facilitate “regulatory scrutiny of the aggregate result in terms of the impact on competition, the consumer, the Canadian broadcasting system and Canadian telecommunications.”
Telus simply asked the CRTC to be “doubly vigilant” in enforcing its Vertical Integration Policy and accompanying Code of Conduct which was established in September to “preserve real competition and consumer choice at affordable rates.”
Cogeco, Telus and Eastlink are part of a coalition called the Canadian Independent Distributors Group which is in the midst of CRTC mandated arbitration with Bell Media to hash out agreements to carry the company’s specialty channels, such as Comedy Network, MuchMusic and Bravo.
“I very much doubt that any of the interveners actually think that they can stop the (MLSE) transaction; what I think they are hoping to do is to cause the CRTC to attach conditions that would, in their view, level the playing field,” said Ian Morrison, spokesperson for the watchdog group Friends of Canadian Broadcasting.
He believes the Leafs TV and Raptors TV portion of the deal is of less significance than the potential impact on Saturday night hockey broadcasts when CBC’s rights expire in 2013 — even though NHL rules wouldn’t allow Bell and Rogers to bid together.
“If Rogers and Bell learn to collaborate on matters of common interest, they would be well positioned, either one of them, to wrestle the rights to Hockey Night in Canada away from CBC and that would substantially upset the CBC’s business model,” said Morrison.
In granting its approval in May, the federal Competition Bureau noted that it had heard “a number of serious concerns” about the sale and could bring matters before its tribunal if it sees red flags in the year it continues to monitor the deal.
© Toronto Star