Advanced Television

Bell boosts broadband content with Astral acquisition

March 16, 2012

Leading Canadian telco Bell is actively pursuing its strategy of delivering the best content across every broadband screen in Québec by acquiring Québec’s leading media company Astral in a $3.38-billion deal. Astral’s broad national media portfolio includes top-tier TV, radio, digital and out-of-home properties. The move follows its 2011 acquisition of CTV, Canada’s leading commercial broadcaster.

The deal sees Bell acquire all of the issued and outstanding shares of Montréal-based Astral Media Inc. (Astral) and its leading specialty and pay-television channels, radio stations, digital media properties and out-of-home advertising platforms in Québec and across the rest of Canada. Greatly strengthening Bell’s competitive position in the important Québec media marketplace, this transaction directly supports Bell’s strategy of investment and innovation in broadband networks and content.

Bell will acquire all Class A Non-Voting Shares of Astral for $50 per share, representing a premium of 39 per cent based on Astral’s volume-weighted average closing share price on the TSX for the last five trading days, for a total consideration of approximately $2.8 billion. Bell will also acquire all Class B Subordinate Voting Shares for $54.83 per share, for a total consideration of approximately $151 million, and all Special Shares for a total consideration of $50 million.

The transaction will be funded with a combination of cash (approximately 75 per cent of the equity purchase price) and BCE common equity (approximately 25 per cent or $750 million), with Bell retaining the right to replace shares with cash, in whole or in part, at closing. The enterprise value represents an approximate multiple of 10x estimated 2012 EBITDA (earnings before interest, tax, depreciation and amortisation), consistent with similar recent media industry transactions including Bell’s acquisition of CTV in 2011.

George Cope, President and CEO of BCE Inc. and Bell Canada, said that Astral’s strong financial position enabled Bell to accelerate further its significant investment in broadband innovation across Québec, such as the launch of ultra high-speed Fibe service directly to homes and businesses across Québec City and rollout of next-generation mobile LTE. “With our advanced networks and next-generation Mobile TV and Fibe TV services, Bell looks forward to delivering Astral’s unbeatable content to customers in new and innovative ways,” he added.

The transaction provides multiple other benefits for the Bell team and its strategy, including enhanced control of rising content costs, particularly French-language media, and strong opportunities for cross-platform innovation and advertising packages spanning digital, TV, radio and out-of-home advertising. Astral products currently represent Bell’s largest single content cost.

Astral operates 22 television services (including 13 French-language channels), with premium offerings such as Super Écran, The Movie Network and HBO Canada, and top specialty brands such as Canal Vie, Canal D, VRAK TV, MusiquePlus, Télétoon/Teletoon, Family and Disney Junior; 84 radio stations in 50 markets, including big brands like NRJ, Virgin Radio, Rouge fm, EZ Rock and boom; more than 100 websites and digital media properties; and 9,500 out-of-home advertising signage locations in Québec, Ontario and British Columbia.

The Astral team will join the Bell Media business unit, which was formed in April 2011 following Bell’s acquisition of CTV. With the addition of Astral, Bell Media will become a $3-billion national media leader with annual EBITDA of more than $850 million.

In pursuit of its broadband growth strategy, Bell has made significant investments in content and network distribution including the acquisition of CTV, an ownership stake in the Montréal Canadiens, and Maple Leafs Sports and Entertainment (MLSE – expected to close in mid-2012); the ongoing rollout of fibre to the home, including to Québec City this month; the deployment of next-generation mobile LTE to cities across Canada; the earlier launch of Bell Fibe TV and Fibe Internet in Montréal and Toronto; and the continuing development of leading Bell Mobile TV and online TV services.

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