Major Relief For BCE-Rogers, Competition Bureau Won’t Challenge MLSE Deal

by Gaurav Kheterpal on May 3, 2012

It was undoubtedly the ‘Powerplay of The Year‘ when Bell and Rogers, two of Canada’s largest telecommunication companies announced last December that they have agreed to buy the NHL’s Toronto Maple Leafs and NBA’s Toronto Raptors in a billion-dollar deal.

Ever since the ‘Big Two’ announced their intentions to buy Canada’s largest sports conglomerate, industry experts and critics circled to predict the eventual winners and losers in this high profile deal. The media hype coupled with the likely impact on key stakeholders – consumers and teachers increased the likelihood of the deal being scrutinized by Canada’s Competition Bureau.

While such scrutiny was considered business as usual few years back, the failed merger between AT&T and T-Mobile rang alarm bells in Canada as well. However, in a major relief to BCE Inc and Rogers, Competition Bureau Wednesday said it won’t block the planned sale of Maple Leaf Sports & Entertainment Ltd., owner of the National Hockey Leaque’s Toronto Maple Leafs, to two of the country’s biggest communications companies.

All’s well that begins well. Really?

The Competition Bureau has already issued a “no action” letter to BCE and Rogers, effectively meaning that the deal won’t be reviewed under the Competition Act. However, the Bureau still has the right to challenge the acquisition for one year after it’s completed, and is “actively reviewing” the transaction. It states

“Notwithstanding the foregoing in respect of the review under the merger provisions of the Act, the Bureau has heard a number of serious concerns from market participants about the effect that incremental increasing concentration and vertical integration in the broadcasting industry is said to be having on consumers, as well as onnon-vertically integrated broadcasting distribution and programming undertakings. The Commissioner is actively reviewing these concerns and will not hesitate to take action should she determine that there has been a violation of the Act.”

To be honest, I’m bewildered by the Bureau’s response. On one hand, it’s concerned about the “vertical integration in the broadcasting industry”. On the other, it seems to have given into the lobbying efforts of the rich and the famous from Canada’s wireless industry. The two wireless carriers claim the acquisition is a ’strategic fit’ for adding content they can sell to subscribers on smartphones, tablets and computers. In that context, I strongly believe that there are no friends in the business world and there’s no doubt there are vested business interests at work here.

FWIW, Maple Leaf Sports & Entertainment Ltd. (MLSE) is one of hockey’s richest clubs globally and is widely regarded as the most profitable NHL franchises in the league. The club owns Maple Leafs, which have won the Stanley Cup championship 11 times and the National Basketball Association’s Raptors team. Maple Leafs also owns the Air Canada Centre, the home of the Maple Leafs and Raptors and a major concert venue.

While this is a crucial hurdle cleared, the deal still needs to be blessed by the CRTC and various Canadian sports leagues.

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Written by: Gaurav Kheterpal. Follow TheTelecomBlog.comby:RSS,TwitterFacebook, or YouTube.

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