BCE and Quebecor Engage in a Battle of Endurance in the Realm of French-Language Specialty TV

23 Aug, 2023

BCE and Quebecor Engage in a Battle of Endurance in the Realm of French-Language Specialty TV

The decision by Bell Media, a subsidiary of BCE Inc., to discontinue a French-language specialty TV channel has stirred up waves of sentimentality among Quebeckers in their 20s and 30s, challenging the notion that millennials are impervious to nostalgia. Once a captivating haven for adolescents, the now-defunct channel, VRAK, had etched its place in the hearts of those born in the 1980s and 1990s with its homegrown shows that achieved cult status.

VRAK's glory days played a pivotal role in BCE Inc.'s acquisition of Astral Media Inc. in 2013 for a staggering $3 billion, excluding debt. This purchase propelled Bell Media into the second spot in Quebec's television market, pitting it against its formidable rival, Quebecor Inc. The rivalry between BCE and Quebecor was not new; they were already entrenched competitors in the wireless and cable service sectors. However, Bell Media's foray into the realm of French-language specialty TV, during a time when convergence was paramount and loyalty to local content was unyielding, elevated their rivalry to a dramatic saga akin to the gripping téléromans on Quebec TV.

As the French-language market confronted challenges from declining ad revenues and the rise of streaming services, BCE and Quebecor embarked on attrition warfare. The recent decision by Bell Media to terminate VRAK's operations effective October 1 raises concerns about the future of other struggling specialty channels in Quebec.

Bell Media attributed VRAK's demise to an outdated regulatory framework that failed to address contemporary challenges. The company also pointed fingers at Quebecor's subsidiary, Videotron, for eliminating the channel from its cable offerings, leading to a substantial loss of subscriber revenues for VRAK.

The conflict between the two rivals came to a head when Videotron declared its intention to remove VRAK from its lineup due to a lack of agreement on carriage fees with Bell Media. Bell Media sought intervention from the Canadian Radio-television and Telecommunications Commission (CRTC) to prevent this move, arguing that Quebecor's actions unfairly favored its own specialty channel over VRAK. Although the CRTC ruled against Bell Media, it encouraged the two companies to continue negotiating distribution terms for VRAK. However, this possibility was extinguished when Videotron permanently removed VRAK from its cable offerings.

Quebecor's CEO, Pierre Karl Péladeau, defended the decision by asserting that Videotron's customers shouldn't have to subsidize declining specialty channels with low viewership.

VRAK's financial trajectory tells a tale of its decline. In 2013, post its acquisition by BCE, it boasted 2.2 million subscribers with a substantial pretax profit. Fast forward to 2022, and its subscriber base has dwindled drastically, accompanied by significantly lower profits.

In contrast, English-language specialty TV managed to weather the storm of streaming and cord-cutting more effectively. Bell Media's English specialty TV properties remained highly profitable. TSN, for instance, reported substantial pretax profits. However, Bell Media's French-language sports channel, RDS, faced challenges, reflecting the broader struggles in the French-language TV landscape.

Overall, the French-language specialty channels experienced a notable decline in profits and margins from 2013 to 2022, mirroring the industry-wide shifts and challenges.