BCE asks CRTC to deny Rogers-Shaw deal

The company said the merger's negative impacts will "echo" throughout the broadcasting system for years to come.

BCE urged the Canadian Radio-television and Telecommunications Commission to deny Rogers’ proposed acquisition of Shaw Communications on Thursday, telling regulators Rogers will become an “unavoidable gatekeeper” if the deal is approved.

BCE, which owns Bell Media, raised many of the same issues as other broadcasters and special interest groups who appeared in front of the CRTC’s five-person panel this week, emphasizing concerns the deal would give Rogers too much market power.

“The market power that Rogers seeks to acquire will have a long-lasting negative impact that will echo throughout this interdependent ecosystem,” said Robert Malcolmson, chief legal and regulatory officer at BCE. “The merger of Rogers and Shaw would anoint Rogers as the unavoidable gatekeeper of the linear and OTT platforms that programmers depend on for access to audiences and subscribers. For English-language programmers, it will be Rogers that decides who gets carried and the terms of carriage.”

Malcomson described the current English-language BDU market as “relatively balanced.” Bell and Shaw both have a 27% share, while Rogers has 20%. Approval of the deal would give Rogers a combined 47% market share, which would give the company “a degree of control over the broadcasting sector at levels never before contemplated with no clear countervailing benefits for the Canadian broadcasting system.”

He went on to argue that, just as the CRTC initially denied Bell Media’s acquisition of Astral Media in 2012 due to market power concerns, regulators should deny Rogers’ takeover of Shaw.

BCE executives also said if the deal is approved there would be “less revenue available for programming undertakings because of the massive leverage Rogers will apply.”

“Less revenue means less funding for CPE and PNI expenditures, and this will, without doubt, erode our ability to produce made-in-Canada original content, and the ability of many independent producers to do so as well,” said Stewart Johnson, SVP Bell Media sales and sports.

BCE also echoed Telus in concerns the proposed takeover would allow Rogers to secure exclusive rights to international programs available only to direct subscribers to its streaming services.

Rogers has said the acquisition will allow them to invest in the networks and IPTV platforms necessary to compete with foreign streaming platforms such as Netflix and Amazon Prime. The company believes that giving viewers access to Canadian networks alongside global streamers will increase the exposure local channels receive.

Malcolmson challenged that assertion, telling the panel not to be “fooled into thinking” Rogers’ current IPTV platform “is some panacea for helping Canadian programming services manage the transition from the regulated ecosystem to the OTT world.”

BCE also complained that should the deal be allowed, the company would become dependent on Rogers for $348 million of subscriber revenue.

“Now you might be sitting there thinking, BCE will be just fine. It will be able to fend for itself, but as you know, there’s a ripple effect throughout the system,” said Malcolmson.

The Globe and Mail previously reported the company made its own offer to buy Shaw Communications but was unwilling to take on as much regulatory risk as Rogers. BCE reportedly made a higher offer, but The Globe’s sources said Rogers won the bid by agreeing to a “hell or high water” clause, meaning it would accept any conditions imposed on it by regulators in order to gain transaction approval. Had Shaw accepted the bid from BCE, the company would have had a combined 54% market share.

“It’s not very often that BCE gets to describe itself as the little guy,” noted Ian Scott, CRTC panel chairperson.