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BCE Plans Online Film Service in Canada to Challenge Netflix

BCE Inc. (BCE), Canada’s largest telecommunications company, plans to use programming gained in its $3 billion acquisition of Astral Media Inc. (ACM/A) to create an online movie service that can challenge Netflix Inc. (NFLX)

The service will showcase “movies from Astral’s pay-TV services, such as HBO Canada and the Movie Network, and great news, entertainment and sports content from Bell Media,” BCE Chief Executive Officer George Cope said today in Montreal.

Cope has gone on a buying spree over the past two years, spending $7.6 billion to acquire sports franchises, television and radio stations, and specialty movie channels that can be broadcast on the growing number of smartphones and tablets Canadians are buying.

Netflix has been a hit in Canada, despite offering more limited content than in the U.S. Since debuting in 2010, the service has signed up 10 percent of the broadband households in Canada, a feat that took six years in the U.S., Netflix Chief Content Officer Ted Sarandos said a year ago.

BCE, which owns Bell Canada, rose 0.3 percent to C$44.26 at the close in Toronto. Netflix fell 1.3 percent to $55.92 in New York trading.

Cope’s roughly $3 billion cash-and-debt purchase of CTV won regulatory approval in 2010. His partnership with Rogers Communications Inc. (RCI/B) to buy a controlling stake in Maple Leaf Sports & Entertainment Ltd. was then given the blessing of regulators last month. The acquisition of Astral, however, has run into greater opposition.

‘Say No’

A campaign called “Say No to Bell” is fighting the plan, arguing that a combined Bell-Astral would control 37.6 percent of television viewership in Canada, more than double the nearest competitor. Telus Corp. (T), which competes with Bell in selling wireless services and cable TV packages, and Quebecor Inc. (QBR/B), which operates TV channels in Quebec, also are opposing the deal.

Speaking today in Montreal at regulatory hearings into the proposed acquisition, Cope said opponents have spread “misinformation” about how big the companies would be together.

It would have only 24.4 percent of the French-language market and 33.5 percent of the English-speaking market, below a regulatory threshold of 35 percent, he said. A successful purchase of Astral would still leave Canada with four large and well-financed private media companies, the public broadcaster CBC, and U.S. and international channels, he said.

Bell also plans to divest 10 radio stations in Vancouver, Calgary, Winnipeg, Toronto and Ottawa as part of the deal, Cope said today. Bell currently has 33 radio stations, while Astral has 84.

“Some of our current market rivals would like you to impede our plans to compete through regulatory challenges and fear mongering,” Cope said. “This is a healthy and diverse marketplace.”

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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