Tuesday, 5 June 2012

BCE, Rogers seek to clear last regulatory hurdle in MLSE deal

BCE, Rogers seek to clear last regulatory hurdle in MLSE deal
Jamie Sturgeon  May 17, 2012 – 12:58 PM ET | Last Updated: May 17, 2012 4:36 PM ET
BCE Inc. and Rogers Communications Inc., the two largest telecom and media providers in the country who are jointly buying the Toronto Maple Leafs, sought Thursday to gain regulatory approval to acquire the club’s television licences.

Although a small component of the deal, approval for the licence transfer is required. The regulatory condition is also the last standing in front of the blockbuster transaction’s closing, which could come as early as later next month.
To win a nod from regulators, the two companies are proposing to pay just under $4-million in “benefits” commitments.
As a rule, acquiring parties of an established TV licence must set aside 10% of the net asset value of the property above the purchase price. Those funds are invested into the maintenance of the domestic broadcast sector — which is reaping a windfall from the wave of consolidation that has swept over the industry in recent years.
Investment of so-called tangible benefits is overseen by the Canadian Radio-television and Telecommunications Commission, the federal regulator which grants television and radio licences.
BCE and Rogers made a $1.3-billion offer last December to buy a controlling 75% interest in Maple Leaf Sports and Entertainment from the Ontario Teachers’ Pension Plan. MLSE chairman Larry Tanenbaum will see his stake rise to 25% from 20% under the proposed plan, which was given clearance from the Competition Bureau on May 2.

MLSE owns the Leafs, the NBA’s Raptors and professional soccer club Toronto FC among other assets. The company also owns six television licences, operating three of them: Leafs TV, NBA TV and Gol TV.
Mirroring the broader deal, Rogers and Bell would jointly own 75% of the group of channels. An independent audit conducted by Ernst & Young shortly after the friendly offer was announced valued MLSE’s TV properties at $51.1-million, according to documents filed with the CRTC.
Leafs TV, the biggest of the three operating channels which airs a small number of live National Hockey League broadcasts and other team-related programming including minor-league Toronto Marlies games, had revenues of $8.7-million last year, up 15%.
It is unclear what the two companies plan to do with the TV properties once acquired.
BCE owns the country’s top-rated sports network in TSN while Rogers is the owner of the Sportsnet suite of channels.
Under the shareholder proposal, Rogers and Bell have formed wholly owned subsidiary companies that will each own 50% of “8047286 Canada Inc.”, the entity that Teachers’ is selling its stake to.

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