Rogers Communications Inc. (RCI/B) and BCE
Inc. (BCE) have cleared the last hurdle in their bid to acquire the
most valuable team in the National Hockey League after receiving
approval from Canada’s telecommunications regulator.

The Canadian Radio-television and Telecommunications
Commission approved the C$1.32 billion ($1.34 billion) bid by
BCE and Rogers for Maple Leaf Sports Entertainment Ltd., which
owns the Toronto Maple Leafs hockey team as well as the Toronto
Raptors of the National Basketball Association. Rogers and BCE
will buy 75 percent of the company from Ontario Teachers’
Pension Plan in a cash transaction.

The acquisition fits with the companies’ strategies of
adding content they can sell to subscribers on smartphones,
tablets and computers, and leveraging that content to extract
more lucrative deals with advertisers. Both companies own sports
television channels as well.

The assets are “the glue that brings in advertisers, ties
it into the broadcasting unit and content production, all in one
place,” said Maher Yaghi, an analyst with Desjardins
Securities, by phone from Montreal. Yaghi has a buy rating on
BCE and a hold rating on Rogers.

The companies must establish an independent programming
committee and increase the amount they must pay into a fund
dedicated to public interest programming to C$7.6 million from
C$3.9 million as part of the approval, the regulator said.

Hockey, Soccer

Rogers committed C$533 million for a 37.5 percent stake in
Maple Leaf Sports, according to a company statement. BCE and its
pension fund will also contribute C$533 million for an equal
stake. The transaction gives Maple Leaf Sports, also owner of
Toronto FC soccer club, an enterprise value of C$2 billion.

Canadian businessman Larry Tanenbaum will increase his
stake in MLSE to 25 percent from 20 percent and will remain as
chairman of Maple Leaf Sports.

The Maple Leafs are the NHL’s most valuable franchise at
about $521 million, Forbes said Nov. 30, up from $505 million
the previous year. The Raptors are worth $399 million, placing
them 10th out of 30 NBA franchises, Forbes said in January.

The deal also gives BCE and Toronto-based Rogers control of
MLSE’s television channels dedicated to the hockey and
basketball franchises, a soccer channel and the Air Canada
Centre, which can seat as many as 19,800. Rogers owns the
Toronto Blue Jays and the nearby Rogers Centre stadium.

Rogers’ SportsNet cable channel competes with Montreal-
based BCE’s TSN.

“You can leverage these iconic brands to find a multilayer
or multichannel advertising deal with a customer,” said Yaghi.
“You get potential synergies not just from selling him
positioning in the arena or the Leafs channel, but you can get
different layers of advertising from one potential customer.”

To contact the reporter on this story:
Ari Altstedter in Toronto at
aaltstedter@bloomberg.net

To contact the editor responsible for this story:
David Scanlan at
dscanlan@bloomberg.net

Article source: http://www.businessweek.com/news/2012-08-16/canada-regulator-clears-bce-rogers-purchase-of-mlse

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