BCE Looks for Break on CTV Deal

by Jordan Richardson on December 13, 2010

BCE is gearing up to appear before the federal broadcasting regulator in February with designs on getting approval for its deal to purchase CTVglobemedia Inc. Along with hoping the deal goes through, BCE Inc. will be trying to augment part of the proceedings to suggest that the ownership structure isn’t changing all that much.

The point of making such an argument is to save money. A lot of money.

BCE is requesting to not have to pay “tangible benefits,” a fee to the tune of $300 million that goes towards “improving the Canadian broadcast system.” Tangible benefits come into play each time a television license changes hands, apparently, and BCE is going to argue that they’ve already paid $230 in benefits the first time they bought CTV in 2000.

BCE sold off most of its interest in CTV in 2006,  but they kept 20% stake. The 20% was eventually reduced to 15%.

BCE is suggesting that its ownership stake is proof positive that they’ve never actually stepped away from CTV and they should have to spring twice for a property they already own. See, the BCE/CTV deal is essentially broken down to BCE’s purchase of the remaining 85% stake from Woodbridge Co., the Ontario Teachers’ Pension Plan and Torstar. The company will pay $1.3 billion for that stake, but debt and the potential tangible benefit would raise the total value of the deal to $3.2 billion.

According to The Wire Report, BCE was on the hook for about $386.6 million in its tangible benefits arrangement the first time it acquired CTV. You can see why the telecommunications giant wouldn’t want to pay the benefit again, of course.

Some consider this to be merely another example of a big corporation shirking its responsibilities and trying to bend the rules. To some extent, that’s true. BCE has purchased something, sold it to someone else and now wants to buy it back. And they don’t want to pay the associated fees with it, so they’re playing semantics and hoping for a little regulatory leniency. Whether they’ll get it or not remains to be seen.

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Written by: Jordan Richardson. www.digitcom.ca >. Follow TheTelecomBlog.com > by: RSS >, Twitter >, Identi.ca >, or Friendfeed >


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