2 Canadian Firms Join in Multimedia Deal

Two of Canada’s most powerful companies, BCE Inc. and Thomson Corp., announced a $2.7-billion multimedia joint venture Friday that combines the Internet, telecommunications and news media to create a powerful Canadian competitor in the digital world.

Officials of the new venture hope it will have the scope and resources to compete with the tentacles of AOL-Time Warner and other multimedia giants reaching into the Canadian market.

BCE owns Canada’s largest telecommunications company, Bell Canada, and the country’s top Internet portal, Sympatico, as well as television network CTV. Thomson, owned by Canada’s wealthiest man, Ken Thomson, brings Toronto’s premier newspaper, the Globe and Mail, and its Web sites to the fold.

“This new company shows tremendous growth potential that each entity would not have obtained if they continued to stand alone,” said Jean Monty, chairman and chief executive of BCE. “I believe we have the right recipe.”

The birth of the new conglomerate follows a corporate rush toward convergence of traditional and new media, while harnessing the means to deliver it.

BCE bought CTV in April to gain sports content for Sympatico, but had been eclipsed by acquisitions of its Canadian rivals since then.

The partners will contribute assets to the new company valued at $2.7 billion ($4 billion in Canadian dollars). The venture has not yet been named.

BCE will contribute CTV and a 71% stake in Sympatico. The Thomson family, which controls Thomson Corp., will take a 9.9% stake through a contribution from its Woodbridge Co. holding company. Thomson Corp. itself will add the nationally distributed Globe and Mail and related Internet sites, and its 50% stake in business cable-TV channel ROBtv.

Thomson Corp. sold all of its newspapers but the flagship Globe and Mail this year to concentrate on Internet businesses and has developed nine Web sites, including extensive databases.

The new company will be headquartered in Toronto and employ 4,000 in offices and news bureaus across Canada. It projects revenue of about $1 billion in 2001.

Ivan Fecan, president and chief executive of CTV, will be chief executive of the new company. Monty will be chairman.

“The scope of the new organization and the commitment of its owners to pursue new opportunities presented by the convergence of traditional and new media industries would ensure that Canada plays a leading role in this evolving industry,” Thomson said Friday at a news conference.

But analysts say that scope doesn’t necessarily mean success in the competitive arena of the Internet.

“There’s been a lot of talk about new media,” said Ian Angus, president of Angus Telemanagement Group in Toronto. “But starting with AOL-Time Warner, up, down or sideways, none of these new groups knows how to make money on the Internet. At the very best, we have to view this [new company] as an experiment.”

The $2.7-billion deal is in ways modeled on AOL-Time Warner, but the new company is tiny by comparison. However, Thomson and BCE’s Monty say they hope to make their mark in the North American market with distinctive content.

Their main rivals in Canada, Rogers Communications and CanWest Global Communications, have been busily shoring up their assets in the last year. National television broadcaster CanWest spent $2.4 billion ($3.5 billion Canadian) to acquire a national network of newspapers in August to augment its Internet holdings. Rogers holds Canada’s biggest cable and wireless companies plus radio, television and magazines and the Toronto Blue Jays baseball club.

The new company hinted it may also attempt to buy Maple Leaf Sports & Entertainment Ltd., which owns the Toronto Maple Leafs hockey team and the Raptors basketball team. Monty said there was no immediate plan to buy the sports clubs, but that it could happen later.