BCE to buy CTV for $1.3B

BCE Inc. says it will spend $1.3 billion to buy the CTV television network, which would make it one of North America's biggest communications conglomerates.

BCE Inc. said Friday it will spend $1.3 billion to take full ownership of the CTV television network, which would make it one of North America's biggest communications conglomerates.

BCE CEO George Cope, seen here at the company's annual meeting in 2009, is moving to take full ownership of the CTV television network and other broadcasting assets. ((Nathan Denette/Canadian Press))

Montreal-based BCE plans to purchase the stakes in CTV held by Woodbridge Co., a holding company owned by the billionaire Thomson family; Torstar Corp., the owner of the Toronto Star; and the Ontario Teachers' Pension Plan.

The transaction is subject to regulatory approvals, including from the Canadian Radio-television and Telecommunications Commission and the Competition Bureau. BCE, which now owns 15 per cent of Canada's largest private-sector broadcaster, said its CTV takeover is expected to close by mid-2011.

Under the terms of the agreement, Woodbridge would receive $750 million worth of BCE stock, while Torstar and the Teachers' Pension Plan get cash for their stakes. 

The move will combine CTV's national television footprint with BCE's telephone and internet businesses to create a company that can reach customers in a variety of ways, BCE said.

"Acquiring CTV's range of premier video content enhances Bell's execution of our strategic imperatives by leveraging our significant broadband network investments, accelerating Bell's video growth across all three screens — mobile, online and TV," said George Cope, BCE's president and chief executive officer.

In a parallel deal announced Friday, Woodbridge would take 85 per cent ownership of the Globe and Mail, acquiring the stakes in the national daily held by Torstar and the Teachers' fund. BCE would keep a 15 per cent stake in the newspaper. Woodbridge's owners, Canada's wealthiest family, have had an interest in the 166-year-old publication dating back to 1980.

Second time around

BCE, formerly known as Bell Canada Enterprises, originally bought CTV in 2000 for $2.3 billion. The company then combined that stake with holdings in the Globe and Mail to form Bell Globemedia, known as CTVglobemedia since 2007.

"BCE's goal is to deliver integrated information, communications and entertainment services to Canadians," said Jean Monty, who headed BCE at the time and espoused so-called convergence.

A timeline of significant events in BCE's convergence strategy:

  • February 2000: BCE announces plans to acquire CTV Inc. under a plan spearheaded by CEO Jean Monty for $2.3 billion.
  • September 2000: The company combines the CTV assets with Globe and Mail, and Sympatico-Lycos to form Bell Globemedia.
  • April 2002: Monty resigns and Michael Sabia takes over.
  • December 2005: BCE announces plans to sell 8.5 per cent interest in Bell Globemedia to Woodbridge Co., increasing Woodbridge's stake to 40 per cent, and at the same time sells a 20 per cent interest to Torstar and another 20 per cent to the Ontario Teachers' Pension Plan. BCE retains a 20 per cent stake.
  • July 2006: Bell Globemedia makes $1.7-billion bid for Toronto's CHUM Ltd., acquiring a major slate of radio stations as well as cable channels including MuchMusic, Bravo! and Space.
  • December 2006: Bell Globemedia named changed to CTVglobemedia.
  • June 2007: BCE looks to sell out after receiving an offer from a group of investors including the Teachers' Pension Plan. But the proposal collapses.
  • September 2010: BCE agrees to take full ownership of CTV.

Canadian Press

BCE owned 70 per cent of the newly minted multimedia company, while Thomson interests held the rest in return for bringing control of the Globe and Mail to the enterprise.

In 2005, BCE sold the bulk of its holding in Bell Globemedia to Woodbridge, Torstar and the teachers' pension plan. Torstar and Teachers each paid $283 million for 20 per cent stakes in the multimedia company.

Torstar absorbed at least two writedowns in the value of its CTVglobemedia holding over the next five years. Still, Friday's sale implies Torstar makes a $62-million profit on its CTVglobemedia adventure.

Picture fuzzy

This time around, however, analysts do not appear to be any more optimistic about a BCE-CTV marriage.
3-month stock chart for BCE Inc.
"We have made no secret of our skepticism for content-conduit 'convergence,' so we are not going to be bullish on the prospect for any revenue synergies from this deal," said Greg MacDonald, a technology analyst with National Bank.

Industry experts have long questioned the strategy, which has telecommunications companies owning content — in this case CTV — and the method of transmitting this information — Bell Canada, Bell Mobility and BCE's internet assets.

Shares in BCE did not react much to the deal, closing up 14 cents Friday at $32.99. Torstar stock gained $2.08 on the session to end the week at $12.