The announcement that Bell Canada parent BCE Inc. and Rogers Communications Inc. – normally arch telecom rivals – are teaming up to take control of the company that owns the Toronto Maple Leafs and basketball’s Raptors (Maple Leaf Sports and Entertainment, or MLSE) has been analyzed relentlessly from a number of angles over the past two days.
Most observers note that it ensures the most lucrative sports franchise in the country won't fall into one telecommunications giant's hands at the expense of the other, and it keeps a third party from taking control over the valuable sports broadcasting rights.
But here’s another way of looking at it: Both Bell and Rogers are sending a message to Ottawa: We’re not going to stand still while you push us around on telecommunications policy.
The deal – should it be approved – poses problems for Ottawa in terms of competition and media concentration. The partners have already said they’ll divvy up Leaf broadcasting rights that the team owns for their own properties, Rogers’ Sportsnet and Bell’s TSN.
But Bell and Rogers are in no mood to do the Harper government any favours, a party they had hoped would be on their side. After all, it was this government that soon after it was elected told the Canadian Radio-television and Telecommunications Commission (CRTC) that the regulator was to lean in favour of the market doing its work.
What it got instead was a number of rulings that favour competitors: A 2008 spectrum auction that set aside frequencies for new entrants (and forced Bell, Rogers and Telus to spend more than they expected on spectrum); a cabinet order overturning the CRTC that allowed Wind Mobile’s parent to open its doors with a lot of foreign financing; pressure on the CRTC from the PM and Industry Minister Tony Clement to ditch a favourable decision to Bell on usage-based billing; and, if reports in the Globe and Mail are accurate, another loss on the upcoming spectrum auction rules.
If Bell [TSX, NYSE: BCE] and Rogers [TSX: RCI.A and RCI.B] haven’t already quietly sussed out the government’s feelings on the partnership, I can imagine a conversation going this way: “You guys have kicked us enough. Growth in our core businesses is slowing, wireless is the real growth area and you’re squeezing us by leaning over backwards for Wind, Mobilicity, Public Mobile and Videotron. We’re got obligations to our shareholders. This is about revenue growth. You owe us.”
I suppose the government will suppress a tear and reply that Rogers and Bell found no trouble coming up with $1.32 billion to buy the Leafs et al. And though it’s early days, it looks like Bell, Rogers and Telus still have about 90 per cent of the wireless market.
My point is, though, that this deal isn’t merely about the Leafs or broadcasting. It’s also about Ottawa’s telecom policy and what it plans to do.