BCE to buy CTV for $1.3B

BCE Inc. said Friday it will spend $1.3 billion to takefull ownership of the CTV television network,which would make itone of North America's biggest communications conglomerates.

Montreal-based BCE plans to purchase the stakes in CTV held by Woodbridge Co., a holding company owned by thebillionaire Thomson family; Torstar Corp., the owner of the Toronto Star; and the Ontario Teachers' Pension Plan.

The transaction is subject to regulatory approvals, including from the Canadian Radio-television and Telecommunications Commission and the Competition Bureau. BCE, which now owns 15 per cent of Canada's largest private-sector broadcaster, said itsCTV takeoveris expected to closeby mid-2011.

Under the terms of the agreement, Woodbridge would receive $750 million worth of BCE stock, while Torstar and the Teachers' Pension Planget cash for theirstakes.

The move will combine CTV's national television footprint with BCE's telephone and internet businesses to create a company thatcan reach customersin a variety of ways, BCE said.

"Acquiring CTV's range of premier video content enhances Bell's execution of our strategic imperatives by leveraging our significant broadband network investments, accelerating Bell's video growth across all three screens mobile, online and TV," said George Cope, BCE's president and chiefexecutive officer.

In a paralleldeal announced Friday, Woodbridge would take85 per cent ownership of the Globe and Mail, acquiringthe stakes in the national dailyheld by Torstar and the Teachers' fund.BCE would keep a 15 per cent stake in the newspaper. Woodbridge's owners, Canada's wealthiest family, have had an interest in the 166-year-old publicationdating back to 1980.

Second time around

BCE,formerly known as Bell Canada Enterprises,originally boughtCTV in 2000 for $2.3 billion.The company thencombined that stake withholdings in the Globe and Mail to form Bell Globemedia, known as CTVglobemedia since 2007.

"BCE's goal is to deliver integrated information, communications and entertainment services to Canadians," said Jean Monty, who headed BCE at the time and espoused so-called convergence.

BCE owned 70 per cent of the newly minted multimedia company, while Thomson interests held the rest in return for bringing control ofthe Globe and Mail to the enterprise.

In 2005,BCE sold the bulk of its holding in Bell Globemedia to Woodbridge, Torstar and the teachers' pensionplan. Torstar and Teachers each paid $283 million for 20 per cent stakes in themultimedia company.

Torstar absorbed at least two writedowns in the value of its CTVglobemedia holding over the next five years. Still, Friday's sale implies Torstar makes a $62-million profit on its CTVglobemedia adventure.

Picture fuzzy

This time around, however, analysts do not appear to be any more optimistic about a BCE-CTV marriage.

"We have made no secret of our skepticism for content-conduit 'convergence,' so we are not going to be bullish on the prospect for any revenue synergies from this deal," said Greg MacDonald, a technology analyst with National Bank.

Industry experts have long questioned the strategy,which hastelecommunications companiesowning content in this case CTV and the method of transmitting this information Bell Canada, Bell Mobility and BCE's internet assets.

Shares in BCE did not react much to the deal, closing up 14 centsFriday at $32.99. Torstar stock gained $2.08 on the session to end the week at $12.