Call this post a preview of coming attractions. Next Monday, the CRTC will commence hearings to look into the privatization of Bell.
It is the final exam for Teachers’. And it’s going to be oral, open book.
At the heart of the CRTC’s examination is the change in voting interest at CTV Globemedia. Bell currently holds 15% of CTVgm; Teachers has 25% of the voting shares. The transaction would result in Teachers’ increasing its interest to 40%, which requires regulatory approval.
The overall transaction for BCE equity is nearly $40B. Of that, only $110M has been allocated to the broadcasting undertakings. This is important because 10% of the value of almost any broadcasting transaction has to be allocated to “tangible benefits”: a kind of charitable gift to enhance broadcast life for those affected by the transaction.
Bell has proposed $11M in such benefits: $6.2 million over 7 years for the creation of HD programming that features “important and underserved Canadian entertainment properties on a pay or free per view basis.” It appears that 80% of these benefits would go towards “original programming that is both of popular interest and of specific relevance to viewers in Quebec.” Bell also proposed to add $4.1M to the Bell Fund and $700K to the Media Awareness Network, also over 7 years.
As a result, besides satisfying itself that “control of the broadcasting and distribution undertakings will be exercised by Canadians at all times”, the CRTC may look at the quantum of the transaction allocated to broadcasting, in order to extract the appropriate level of benefits for all Canadians.
Catalyst Asset Management, has continued its PR campaign against CRTC approval of the deal. In a full page ad in the Hill Times, Catalyst says:
The Pension Benefits Standards Act prohibits Teahers’ from holding, directly or indirectly, more than 30% voting control of BCE. To suggest this limitation allows Teachers’ to meet the Canadian ownership rules enforced by the CRTC is an artifice.
The CRTC’s file is filled with comments received from a variety of parties who wrote letters of support. Letters are on file from producers who have benefited from the Bell Fund in the past and look forward to the new money; letters from other Teachers’ buyouts such as Shopper’s Drug; Cybertip weighed in with its support – saying how happy it was to have received a new 3 year funding commitment.
On the other side sits Catalyst, a few disgruntled individual shareholders and citizens. Writing on behalf of “all Canadian Senior Citizens”, Paul Muser writes:
It is very obvious that BCE and Teachers are out “trolling” for letters in support of this transaction, as there are submissions from a number of groups like Kid Help Phone and others who are closely tied to BCE and Teachers, like Carol Stephenson of the Ivey School of Business, Michael McCain of Maple Leaf Foods, the Canadian Chamber of Commerce, and the Ontario Chamber of Commerce. All of these parties are closely linked economically to either Teachers’ and/or BCE.
It will be an interesting week of hearings. You can catch it live in Hull. The audio will be webcast. Prepare your own report card for the Teachers.