Mr. fecan, your Web carriage awaits.

Such was the gist of a message from Jean Monty, ceo of Bell Canada Enterprises, to Ivan Fecan, his counterpart at the Canadian Television Network in the dark morning hours of Feb. 25. And with that, bce lit up phones, pagers and e-trading connections across the country with a whopping $2.3-billion cash offer for CTV Inc. The move, rumored to be en route for weeks, still startled the private network’s executive and shareholders, and left Canuck tv watchers everywhere standing by, blinking.

At a Feb. 25 news conference, Monty emphasized repeatedly that bce has no expertise in broadcasting and would welcome ctv management to his company as partners.

If the deal goes through, one big plus for the multimedia, tv and film production communities will be the benefits package required of bce. Benefits must be worth 10% of the deal price, which equals $230 million for content development. A spokesperson for bce says the company will see if ctv accepts the offer before announcing details of the benefits package.

At Playback press time, ctv’s board had not responded to the bce offer. The network hired Newcrest Capital and TD Securities as financial advisors, presumably to help assess whether bce is offering maximum value to shareholders. ctv stock rocketed up $7.20 on the tse Feb. 25, closing at $38.45, $1.20 below the 52-week high; the shares declined $0.55 to close at $37.90 on Feb. 29.

The investment community is hard-pressed to figure how rivals could manage a viable counteroffer. Said Dvai Ghose, telco analyst for CIBC World Markets: ‘CanWest and Corus [Entertainment] don’t have enough cash to make this sort of acquisition, and if they did a stock acquisition, it would have to be at a considerable premium [compared to bce’s offer of $38 per share]….Because of Canadian ownership restrictions, no other Canadian bidders are likely.’

Ghose did allow that a consortium counter-bid, pulling together six or seven players, remains a possibility. Corus’ John Cassaday offered ‘no comment on the ctv situation’ and CanWest Global could not be reached for comment.

Ghose, meantime, reckoned that if the network sells to bce, the deal could be completed as early as this fall, the regulatory approvals in place.

Not the money, Monty

Also at press time, Electrohome Broadcasting had indicated it would prefer bce change its offer so that Electrohome would receive stock for its 12.1% stake in ctv, rather than cash, to avoid excessive capital gains taxes.

The bce offer is contingent on several conditions being met:

* crtc approval has to be in place for ctv’s acquisition of NetStar, which owns Discovery Channel, tsn, rdi and Dome Productions. A decision is expected this month;

* crtc approval must be granted for the bce takeover;

* ctv has to tender more than 50% of its common shares, fully diluted;

* ctv must agree to terms permitting current and future programming to be distributed by Sympatico-Lycos or a bce affiliate for 10 years; and,

* ctv’s board must waive its shareholder rights plan.

BCEcravesCTV no iCraveTV

Industry commentators were quick to point out that the scenario in which bce would put ctv online via Sympatico-Lycos has little in common with the recent fracas over iCravetv in which the rebel website operator streamed broadcaster signals without paying for program rights.

Obviously, bce would clear rights to put ctv and its licensed programming on the Web. That said, cftpa president Elizabeth McDonald notes that, ‘the growth of the Net is going to have a significant impact. The whole rights protection regime will be an extremely significant issue because you’re dealing with a multiplicity of platforms all over the world.’

Stephen Stohn, chair of the cftpa’s Copyright Committee, says the first issue producers, broadcasters and international distributors will have to assess is when, or if, producers will want their productions webcast.

‘The whole concept of the orderly marketplace, and window-by-window sales is gone if you just have a blanket availability on the Web,’ he says. Few international distributors are likely to sell off Internet transmission rights if such a sale cuts into foreign sales potential.

Producers, he says, are considering different mechanisms for bringing licensed content to the Internet. ‘For example,’ he muses, ‘will there be a Web pay-per-view [setup] where you can go onto a website and pay for a single episode [of a series]?’

Or perhaps if a producer had a deal where the webcast was to precede broadcast or specialtycast, ‘maybe broadcasters would drop their licence fees….The good thing is, they [webcasts in a bce-ctv-type arrangement] will be worked out with the approval of the producer. It won’t just be iCrave coming along and transmitting things willy nilly….Until there is a tradition built up where everyone is comfortable with the Web as a separate window,’ says Stohn, ‘you won’t see too much activity on the Web.’

As for the idea of Web content making the move to conventional airways, Stohn says: ‘The stuff that’s working on the Web tends to be different than what works on tv. Lots of animation, full-face close-ups and so on. Maybe the after-Web market would appeal more to specialties. [In any event] you’d better get a nice high licence fee for that webcast. All those negotiations will be played out over the next few years. It’s a fun time.’

Fun for stocks

Convergence mania has engulfed investors who have been buying broadcast and prodco stocks in waves. Shares buoyed by bce’s sure-handed effort to press broadcast content onto the Internet include:

* CanWest Global (CSG.A closed up $2.15 on the tse Feb. 25);

* CHUM Limited (CHM.B closed up $4 on Feb. 25 and a further $6 Feb. 29 on the tse);

* TVA Group (TVA.B closed up $3.80 Feb. 25 on the tse);

* Alliance Atlantic Communications (AAC.A was up $2.05 on Feb. 25 and a further $5 Feb. 28, the day before it released its Q3 financials); and,

* Nelvana Limited (NTV up $1 on the tse Feb. 25, and a further $2.25 by Feb. 29).