Dramatic changes in Canada media balance

Canadian telecommunications company BCE is throwing the "balance" of media distribution in Canada up for grabs. It's not clear even whether the moves will be approved.

BCE is selling most of its stake in Bell Globemedia, owner of Canada's largest private television broadcaster (CTV) and The Globe and Mail newspaper.

The sale is for $1.3 billion Canadian and involves three buyers. Under the plan, Torstar, publisher of Canada's biggest newspaper, the Toronto Star, gets a stake in its rival, The Globe and Mail, a national newspaper with a much more affluent readership. Torstar, which also owns the romance novel publisher Harlequin, gets a broadcasting property, which it has wanted.

Under the arrangement announced on Friday, BCE reduces its holding to 20 percent from 68.5 percent. Torstar and the Ontario Teachers' Pension Plan will take 20 percent stakes, paying $283 million Canadian each.

To make it more interesting, Woodbridge, the holding company of the Thomson family and BCE's original partner in the media venture, increases its stake in Bell Globemedia to 40 percent from 31.5 percent, paying $120 million Canadian. Woodbridge is controlled by the billionaire Kenneth R. Thomson, who once owned the Globe and Mail.

Bell Globemedia was how BCE wanted to get involved in the game. In 2000, BCE bought control of The Globe and Mail. Then it bought CTV for $2.3 billion Canadian, a mark seen as inflated. CTV owns several leading cable channels, including the Discovery Channel Canada and TSN, Canada's version of ESPN. CTV was eventually combined into Bell Globemedia.

As for approval of the deal, the Communication, Energy, and Paperworkers of Canada, which represents employees at the Star and The Globe and Mail, said it would oppose the plan, according to the CBC. The deal is subject to approval by Canada's broadcast regulator as well as Canadian competition authorities.

Torstar emphasizes it would maintain The Globe and Mail's editorial independence and added that it would not merge any operations of The Globe and Mail into the Star.

So what will this mean for Canadian consumers? Hard to tell. Joint-operating agreements for U.S. newspapers generally do what they set out to do, but competition never seems to be a high priority. My biggest concern would be the Star/Globe and Mail relationship. Hopefully, concessions of some kind will be built into the deal, so we have several firewalls just in case.

And that is not even considering that Torstar has no broadcast history, so it is difficult to see what they will do to CTV, TSN, etc.