Telco CEO buys Canada's No. 1 web to woo cell phone subs

It’s not often that $3.1 billion deals are inspired by a bus ride.

But that’s where George Cope, the man behind Canuck phone company Bell’s mega-bucks deal to acquire the country’s leading TV network CTV, had his epiphany.

Cope, CEO of Bell parent BCE, flipped open his cell phone and whiled away the time on the trip from Whistler to Vancouver by watching the Canadian women’s hockey team beat the U.S. 2-0 to win the gold medal at the winter Olympics.

That’s when he realized content for mobile devices wasn’t the future of broadcasting — it was the present.

The topper decided then and there that he needed to secure content for his company’s Bell Mobility service. Eight months later, on Sept. 10, BCE snared CTV, the crown jewel of Canadian broadcasting.

CTV has been the top-rated network for much of the past decade. In addition, the network owns many of the country’s leading cable channels, including the popular sports channels TSN and its French-language sister channel RDS.

Those channels were a key part of the package because Cope — still thinking about that Olympic gold-medal hockey game — realized that sports in general and hockey in particular would attract cell phone subscribers.

It also helps that BCE is part of the consortium that bought the Montreal Canadiens hockey team last year.

“We have access to the best media assets in Canada,” says Cope. “Our ownership of the Montreal Canadiens was forward-thinking to these developments.”

Those comments are clearly directed at BCE’s arch-rival in Quebec, media giant Quebecor, which this month announced it was entering the mobile phone business, positioning itself to go head-to-head with Bell in Quebec.

Quebecor also owns cable operator Videotron and TVA, the top French-language TV network in Canada, and it has access to TSN and RDS content for its mobile service.

But BCE is unlikely to renew that deal once it expires.

The BCE-CTV deal is the latest sign that the broadcast business here is dominated by cable operators and telco players. Earlier this year, cable operator Shaw Communications acquired the financially troubled CanWest Global’s TV assets for $1.9 billion.

Rogers, Canada’s biggest cabler, also now is a major broadcast player, having picked up the City-tv stations from CTV a couple of years back.

“Canada was the most converged country in the world even before Shaw bought CanWest and Bell picked up CTV,” says Stephen Waddell, national executive director of Canadian actors union ACTRA. “There is something fundamentally wrong with a system that has the distribution system in control of all of the content.”

The one wrinkle in the CTV takeover is that longtime CTV CEO Ivan Fecan announced just hours after the deal was unveiled that he would leave the company. Fecan said he will step down once the deal is completed and has made its way through the regulatory process.

Fecan was the man most responsible for transforming CTV into the dominant TV network, taking a loose-knit group of regional stations and turning them into a strong, centralized network based in Toronto. His decision to leave shocked his staff, and apparently took BCE executives by surprise.

The odd thing is that BCE had already bought CTV 10 years ago and then sold it in 2005, keeping only a 15% stake.

With this deal, BCE is buying the remaining 85% from Woodbridge, the holding company that includes the Thomspon family, the Ontario Teachers Pension Plan and Torstar Corp., which owns the Toronto Star newspaper.

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