Thursday, June 4, 2009

Battle for Canadiens Turns in Gillett's Favour

It seems that the sale of the Canadiens is finally going to happen sometimes next week and don't be surprised if the price is higher than predicted.

Every buyer dreams of having competing groups in a bidding war that sends the value of what is being sold beyond it's intrinsic value.

The current situation in relation to the sale of the Canadiens has Bell and Quebecor in a desperate fight that is less about owning the team than it is about preserving or enhancing the value of their broadcast assets.

The fact that the interests of both parties goes way beyond the actual value of the team augers well for Gillett.

Bell cannot allow Quebecor to buy the team from under them, as it would spell disaster for it's RDS network and perhaps Bell Expressvu, the satellite network.

Should Quebecor buy the team, it would certainly move the team's broadcasts over to it's TVA network or worse still, start it's own sports network that would showcase the Canadiens, rendering RDS virtually worthless.

By law, the TVA network, as a basic service, is obliged to provide Bell Expressvu it's signal for free.
By switching to a new sports network of it's own (unregulated), Quebecor can chose not to sell the channel to satellite providers and could carry it exclusively on it's own cable network, thus forcing fans to abandon satellite for cable.

For Quebecor, owning the Canadiens means that it's media network could get exclusive Canadiens content for it newspapers, television and soon to be, cell phone network.
It's a match made in heaven.

By owning the Bell Centre (it would become Centre Quebecor), the company can direct the lion's share of the advertising dollars in relation to shows and events into it's own newspapers and television assets, a synergistic dream come true.

All of this means that the team itself is more valuable to Bell or Quebecor than it is to an individual owner, like the Molson family and that will send the price soaring.

In this battle of titans, let's hope that Quebecor loses to Bell. The track record of the latter is ruthless.

Ownership of the Canadiens has always been considered a sacred trust and although Gillett has been a model owner, fans were nervous about someone outside the province owning the team.

If they are looking at Quebecor's Pierre-Karl Peladeau as a savior who'd buy the team and run it as a public trust, forget it.

He has a nasty history of squeezing every division for maximum profits. Quebecor World was sent into bankruptcy when it was obvious it was not longer viable. His lock-out of Journal de Quebec journalists is based solely on increased profits, not survival.

If Peladeau acquires the Canadiens, it will be to make money, as much as he can.

He will no doubt raise ticket prices and squeeze advertisers. The very worst case scenario is that he'll turn the team's broadcasts into a combination of pay-per-view or start a rival sports network that would charge much higher access fees than RDS.

Peladeau is immune to public pressure and is a fighter by nature. It's likely that the team will be milked mercilessly at the expense of fans and advertisers.

On the other hand Bell wouldn't change things much, with it's goal being to preserve what it already has. Riding rough over fans would negatively affect their other business divisions.

If I was a betting man, I choose Bell as the eventual winner, losing to Quebecor would be unacceptable and heads would roll in senior management.

Canadiens fan should hope that I'm right.

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