TORONTO (AP) -- Canada's broadcast regulator rejected BCE Inc.'s bid to buy Astral Media Inc. for US$3.4 billion on Thursday, saying the deal would have resulted in an unprecedented level of consolidation in the country's media landscape.
BCE, Canada's largest telecommunications company, said it was "appalled" by the decision and vowed it would ask the federal cabinet to intervene.
BCE had wanted to create a media powerhouse with more content to deliver to televisions, tablets and mobile devices.
Astral is Canada's largest pay and specialty TV broadcaster, owning 25 TV stations including The Movie Network and HBO Canada. It also owns 84 radio stations in 50 Canadian markets and is the third-largest outdoor advertising company.
Jean-Pierre Blais, who took over as chairman of the Canadian Radio-television and Telecommunications Commission, four months ago, noted the combined company would have controlled 107 radio stations, two national english language television stations and 49 pay and specialty television channels.
Blais said BCE is already Canada's largest internet service provider, the second largest wireless service provider and third largest television distributor in Canada.
"Simply put this was not a good deal for Canadians," he said. "All the services are mechanisms through which content is delivered to Canadians. This transaction would have resulted in an unprecedented level of consolidation in the Canadian marketplace and we had grave concerns that BCE would be able to use its market power in an unfair manner and to engage in anticompetitive behavior."
Many had expected the regulator would approve the deal with conditions. Blais said it's rare that the CRTC has turned down such deals but they had no other option. He dismissed the notion that they could have set conditions on the deal.
"We could not have ensured a robust Canadian broadcasting system without imposing extensive and intrusive safeguards, which would have been to the detriment of the entire industry," he said.
BCE, also known as Bell, said the decision breaches CRTC policy.
"This is a decision that should not stand," George Cope, President and CEO of BCE, said in a statement. "We met all the CRTC's rules."
BCE said the CRTC has said it would approve broadcasting transactions resulting in a company controlling less than 35 percent of total TV audience share and said Bell and Astral combined would have an English-language TV market share of 33.5 percent and 24.4 percent of the French-language TV market.
BCE had argued it needed to do the deal to compete with international rivals like video subscription service Netflix, and they pledged tangible benefits by adding $240 million in funding for programs.
Most of BCE's competitors said the deal would have placed significant market power in the hands of one company. Phil Lind, Vice-Chairman of BCE rival Rogers Communications, commended the CRTC for the "courageous decision" and said it was a good day for consumers. Quebecor, Bell's competitor in Quebec, had said the deal would create a "monster."
BCE said senior CRTC officials met privately with BCE's competitors multiple times and refused to meet with them before public hearings were held.
"The CRTC fell head over heels for their carefully orchestrated and well-funded propaganda effort that made a mockery of the entire process," BCE said in its statement.