Canada Regulator Clears BCE, Rogers Purchase of MLSE

Rogers Communications Inc. (RCI/B) and BCE Inc. (BCE) have cleared the last hurdle in their bid to acquire the most valuable team in the National Hockey League after receiving approval from Canada’s telecommunications regulator.

The Canadian Radio-television and Telecommunications Commission approved the C$1.32 billion ($1.34 billion) bid by BCE and Rogers for Maple Leaf Sports & Entertainment Ltd., which owns the Toronto Maple Leafs hockey team as well as the Toronto Raptors of the National Basketball Association. Rogers and BCE will buy 75 percent of the company from Ontario Teachers’ Pension Plan in a cash transaction.

The acquisition fits with the companies’ strategies of adding content they can sell to subscribers on smartphones, tablets and computers, and leveraging that content to extract more lucrative deals with advertisers. Both companies own sports television channels as well.

The assets are “the glue that brings in advertisers, ties it into the broadcasting unit and content production, all in one place,” said Maher Yaghi, an analyst with Desjardins Securities, by phone from Montreal. Yaghi has a buy rating on BCE and a hold rating on Rogers.

The companies must establish an independent programming committee and increase the amount they must pay into a fund dedicated to public interest programming to C$7.6 million from C$3.9 million as part of the approval, the regulator said.

Hockey, Soccer

Rogers committed C$533 million for a 37.5 percent stake in Maple Leaf Sports, according to a company statement. BCE and its pension fund will also contribute C$533 million for an equal stake. The transaction gives Maple Leaf Sports, also owner of Toronto FC soccer club, an enterprise value of C$2 billion.

Canadian businessman Larry Tanenbaum will increase his stake in MLSE to 25 percent from 20 percent and will remain as chairman of Maple Leaf Sports.

The Maple Leafs are the NHL’s most valuable franchise at about $521 million, Forbes said Nov. 30, up from $505 million the previous year. The Raptors are worth $399 million, placing them 10th out of 30 NBA franchises, Forbes said in January.

The deal also gives BCE and Toronto-based Rogers control of MLSE’s television channels dedicated to the hockey and basketball franchises, a soccer channel and the Air Canada Centre, which can seat as many as 19,800. Rogers owns the Toronto Blue Jays and the nearby Rogers Centre stadium.

Rogers’ SportsNet cable channel competes with Montreal- based BCE’s TSN.

“You can leverage these iconic brands to find a multilayer or multichannel advertising deal with a customer,” said Yaghi. “You get potential synergies not just from selling him positioning in the arena or the Leafs channel, but you can get different layers of advertising from one potential customer.”

To contact the reporter on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net

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