BCE is Canada’s largest communications company, providing a range of services to residential and business customers across the country. Operating under the Bell brand, its services span wireline, wireless, high-speed internet, digital television, IP broadband and ICT markets.
Like many others in the telecoms sector, BCE has long recognised the importance of broadening its offer beyond traditional communications services, and to further this strategy moved in mid-2010 to acquire 100% of Canadian broadcast company CTV. At the time, BCE already owned 15% of CTV, the Canadian leader in specialty television and digital media, as well as conventional TV and radio broadcasting.
So what is the rationale behind the acquisition, which is set to complete in 2011? The CTV move potentially makes sense for BCE in a number of ways. On the one hand, the CTV buy-out will be an incremental way for BCE to leverage its huge investment in broadband infrastructure. It also helps BCE achieve a more competitive cost structure, consolidating its spend on the development of content, a market it is already active in, as well as enhancing overall appeal to advertisers. But perhaps most importantly the deal enriches BCE’s ‘three screens’ strategy, giving it reach across three streams of video content - mobile, online and TV – thus bringing it right up to speed with the offers of competitive carriers.
George Cope, president and CEO of Bell Canada and BCE, stresses how important it is for BCE to be vertically integrated, and to be able to take advantage of video delivered on multiple screens.
“Our industry is changing rapidly,” he says, speaking of the CTV acquisition. “Increasing vertical integration across the communications landscape, ongoing technological advancement and key regulatory developments introduce new opportunities with the ownership of high-demand content by Bell. Our acquisition of CTV more than levels the playing field in our increasingly competitive industry.”
Why video matters
So why is having a vertically integrated content strategy so important in today’s communications market? Demand for video content has never been higher, for one thing. As in other well developed economies, video is growing rapidly in popularity among Canadian consumers, who are increasingly moving to mobile, online and digital TV platforms in order to consume it. Patterns of consumption are clearly changing. Some 30% of Canadians now watch an online TV show every month, while 20% regularly watch video clips on a mobile phone, according to Solutions Research Group Consultants.
But it’s not just consumer demands that are on the move. The whole communications landscape in Canada and elsewhere has changed dramatically in the last five years, and it is no longer possible for the country’s traditional telecommunications players to stick to tried and tested services alone. Competitors from the cable TV sector are expanding into new service areas, including wireless. Deregulation is happening in sports and news coverage, as well as the market for internet and mobile services. Every one of these evolutionary developments acts to increase the need for telcos to span different sectors to ensure their future competitiveness.
Video content is not, it should be noted, a sector that is new to BCE. The company already offers Canada’s leading high-definition TV and online services and its most advanced mobile TV products, and has launched its Bell Fibe IPTV service in major urban centres. Video now accounts for approximately 40% of the company’s total residential service revenues.
Bell owns the infrastructure to go on from here and make a three screens offer a reality. It has been accelerating its wireline and wireless video capabilities with new investments in broadband networks, including capital expenditures of almost $3 billion in 2010 alone. Bell is rolling out high-speed fibre to more houses, apartments, condominiums and businesses in Québec and Ontario to support new internet and TV services and is enhancing its new world-leading HSPA+ wireless network, which already serves 93% of the Canadian population.
Now with CTV, this strong basis is set to be built on further: “The CTV team has built their organisation into the number one media company in Canada - including the nation’s most-watched television network, most popular roster of specialty channels and leading digital media offerings - and of course skillfully delivered the best Olympic Games in history to Canada and the world at Vancouver 2010,” said Mr. Cope.
