Bell Media, Astral Argue Merger Necessary to Compete with Netflix

Back in March the Competition Bureau approved the revised $3.38 billion merger between Bell Media and Astral. Today marked the first day of a CRTC hearing for both companies as executives argued why their merger should be approved.

One of their primary arguments? According to The Globe and Mail, both companies said joining together would enable them to create an alternative to Netflix, as the latter threatens the traditional TV since it is able to acquire exclusive deals and let consumers cut their cable cords.

Astral CEO Ian Greenberg argued the deep pockets of Bell Media would enable the smaller company to buy TV content for Canadians and outbid the growing threat of Netflix, which sits at about 2 million Canadian subscribers. With the latter showing signs of slower growth, more cable customers will continue to turn to cheaper streaming solutions, hence the reason for a merger to make perfect sense:

“Netflix is just one prominent example of the kind of scale being brought to bear on Canada’s industry – challenges to our business that we believe we must meet head-on by expanding our own scope and scale. That is what this transaction enables,” said Mr. Greenberg, as he reminded the commission he started the company with his brothers 50 years ago with a $15,000 bank loan.

Companies such as Netflix are under no obligation to offer Canadian content to Canadian subscribers, and also don’t give back a portion of their revenue to fund Canadian productions in the way Canadian television providers must. They are also increasingly competing with television providers by financing their own exclusive television series.

BCE chief executive officer George Cope said his company – with its $37-billion market cap compared to Astral’s $2.7-billion – can better compete with Netflix (which has a market cap of $11.8-billion) when movie and television rights are available.

The CRTC says in order for the merger to be final and approved, both Bell Media and Astral must prove their deal will benefit the interest of Canadians. Jean Pierre Blais, chairman of the CRTC said “we will determine if this transaction would benefit Canadians, as well as the Canadian broadcasting system.”

Bell and Astral will make their closing statements on Friday.

[via The Globe and Mail]