Rivals Bell and Telus spend $3-billion in very different ways

Which high-stakes strategy will pay off best for the future of communications

The $3-billion gambles
Paul Chiasson/CP

Bell Canada Inc. and Telus Corp. share a similar history as former phone monopolies, but their visions of the future could not be more different. Last week, Bell parent BCE Inc. said it was buying Astral Media Inc. in a deal valued at $3.4 billion, part of an ongoing effort to bulk up on content for its broadband, wireless and satellite TV distribution businesses. Astral owns 24 specialty channels and pay-TV networks, including the Movie Network and HBO Canada. The Astral buy is on top of BCE’s $1.3-billion purchase of CTV in 2010 and last year’s $1.32-billion co-purchase (with Rogers Communications Inc., which owns Maclean’s) of Maple Leafs Sports and Entertainment. By some estimates, BCE could now control 34 per cent of the Canadian TV universe.

BCE has been here before. It used to own a host of online and traditional media assets, including CTV, which it later sold. However, CEO George Cope is adamant that things are different this time around as consumers increasingly turn to their iPhones to watch TV and use their TVs to browse the Internet.

By contrast, Telus said earlier this month it would spend a similar amount, $3 billion, on a further rollout of fibre optic cable in B.C., more wireless coverage, a $750-million office and residential tower in downtown Vancouver and expansion of its Internet protocol television offering. So far, Telus is the only major telecom or cable company in Canada that hasn’t purchased a television asset, focusing instead on its core businesses of connecting customers.

Analysts are split on which strategy is the right one. Some say the Astral deal will guarantee Bell’s access to cheap content, and give it a leg up in Quebec where it competes with Quebecor Media. But Dvai Ghose, an analyst at Canaccord Genuity, argues that Quebecor’s success has more to do with “superior broadband and customer service” than ownership of French TV shows, which must be made available to competitors under new regulatory rules.

Marshall McLuhan famously said the “medium is the message.” But in 2012, everyone except Telus is betting the precise opposite is the case.