BCE dials up $1.6 bil for CTV net
Bell Canada's parent co. makes unsolicited takeover bid
Megadeal, worth $26 per CTV share, would dramatically alter the entertainment landscape in the Great White North and turn telecom giant BCE into a major player in the content business here. BCE is involved in telephone service, direct-to-home satellite television (via its ownership of Bell ExpressVu) and specialty TV (through its stake in French-language travel web Canal Evasion). The CTV Network is one of Canada's leading webs and it's also a big player in the specialty TV arena.
Friday's move escalates the long-awaited battle for control of the Canuck entertainment biz, pitting telecommunications companies such as BCE against the major cable companies, notably Rogers and Shaw.
Earlier this month (Daily Variety, Feb. 8), Rogers, Canada's top cable operator, inked a deal to acquire Groupe Videotron, the country's third-largest cable company, for $4.2 billion. BCE topper Jean Monty admitted that the Rogers/Videotron deal and the much larger AOL/Time Warner merger south of the border sparked his company into action.
"Ownership of CTV significantly enhances BCE's consumer strategy of providing our customers with integrated information, communications and entertainment services," said Monty. "The strength of the CTV brand, its strong programming lineup, and its award-winning expertise in the areas of news and sports will squarely place BCE as a leading player in the converging broadcasting and new-media industries."
Driven by Internet
"The whole thing is driven by the Internet strategy," said John Grandy, telecom analyst at Yorkton Securities in Toronto. "What they're saying is, the Internet is their top priority in the consumer business and they really want to find some assets that add value. CTV has two areas where they're quite strong: news and sports, both of which are key content sectors for the Internet."
Not that it's a done deal. There has been talk for months that CTV was a possible takeover target, with a list of potential suitors that includes BCE, CanWest Global, Corus Entertainment, TVA Group and Quebecor. Grandy predicted that another bidder would indeed step forward, and he believes BCE is prepared to up its price in the event of a bidding war. "It'll probably go on for a few weeks," he said.
CTV's shares leapt $4.95 on news of the offer, closing at $26.43 on the Toronto Stock Exchange. The fact that the shares were bid up higher than BCE's takeover offer price indicates that investors are expecting other offers to be forthcoming, Grandy said. BCE shareholders, meanwhile, were less enthusiastic, with shares slipping $3.95 on the TSE to close at $110.84. While the technology market has been down lately, Grandy feels the "not very positive" market performance is "a knee-jerk reaction to any acquisition. Investors tend to get nervous about things."
BCE president and CEO Monty announced the takeover bid Friday at a press conference in Toronto. It is the second major deal in two weeks for the company. BCE, which has a well-stocked war chest following its recent spinoff of its interest in Nortel Networks, announced Feb. 15 that it was shelling out $6.6 billion to acquire the shares it didn't already own in international telecommunications company Teleglobe, also based in Montreal.
