CRTC Approves Maple Leaf Sale To Bell, Rogers – Why Am I Not Surprised?

by Gaurav Kheterpal on August 17, 2012

You don’t need to look back any further than last year for Canada’s biggest deal ever in sports entertainment. It was undoubtedly the ‘Powerplay of The Year‘ when Bell and Rogers, two of Canada’s largest telecommunication companies announced last December that they will buy the NHL’s Toronto Maple Leafs and NBA’s Toronto Raptors in a billion-dollar deal.

Despite widespread public criticism, the Competition Bureau in May blessed the deal stating that it won’t block the planned sale of Maple Leaf Sports & Entertainment Ltd., to two of the country’s biggest communications companies. However, concerns remained over whether the CRTC would approve the deal, especially in wake of the recent outcry against the Bell-Astral merger.

In a monumental decision, the CRTC yesterday approved the proposed deal thereby paving way for the $1.32-billion acquisition of MLSE by BCE and Rogers. As part of the approval, the ‘Big Two’ will need to spend $7.5 million over the next seven years on new sports-themed programming by Canadian independent producers.

As part of the deal, Rogers and Bell will pay Teachers’ about $533 million apiece for their respective 37.5% chunks of MLSE. Minority owner Larry Tannenbaum, through his company Kilmer Sports, will boost his current stake in MLSE by five per cent to 25%.

“When deciding whether or not to approve a proposed ownership transaction, the Commission must be persuaded, in light of the application and the public record that an approval is in the public interest”, said Jean-Pierre Blais, Chairman of the CRTC. “In this case, we have been convinced that the transaction benefits Canadians as it will lead to the creation of new home-grown sports programming.”

With all due respect to the regulatory body, the CRTC’s response looks to be no different than the Competition Bureau. In May, the  Bureau had raised concerns about the “vertical integration in the broadcasting industry”. However, it seems, it eventually gave into the lobbying efforts of the rich and the famous from Canada’s wireless industry. All along, Rogers and BCE have claimed that the acquisition is a ’strategic fit’ for adding content they can sell to subscribers on smartphones, tablets and computers.

Understandably, the implications of this deal could be huge. Apart from their wireless muscle power, BCE (CTV and TSN) and Rogers (Sportsnet) already have a significance presence in Canada’s sports broadcasting industry. To add to that, Rogers already owns the Toronto Blue Jays baseball team and their stadium, while Bell also has a minority ownership stake in the NHL’s Montreal Canadiens, who compete against the Leafs.

Therefore, it’s no surprise that consumer watchdog groups like the Public Interest Advocacy Centre and Friends of Canadian Broadcasting have warned the deal would push prices up for subscribers, while limiting competition. The CRTC, though, approved the deal while stating that it’s “committed to ensuring that Canadians have access to a wide choice of programming on different platforms.”

Period.

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

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