At presstime, Canada's largest cable company Rogers Communications, was rebuffed in its bid for Maclean Hunter, a consumer, trade magazine and newspaper publisher that also owns cable TV and radio properties.
But regardless of the outcome, Rogers needs another leg up to compete with Le Groupe Videotron. Rogers, Canada's leading cable TV operator with 25% of the country's 7.2 million subscribers, also has interests in long-distance and cellular telephone companies. Adding Maclean's 700,000 cable subscribers would give Rogers control of 35% of Canada's cable market, nearly twice the size of its nearest cable competitor, Groupe Videotron.
Rogers, so far only dabbling into two-way interactive systems, "does not really have the interactive technology yet, but there's no question that's why [Rogers] wants Maclean Hunter," said Lis Angus, exec VP of Angus Telemanagement, an Ajax, Ont. consulting company.
It is difficult to ascertain Rogers' current status in developing interactive technology. Industry executives say the company is involved, but repeated telephone calls to the Toronto-based company were not returned.
Still, industry observers say it is Groupe Videotron's entrance into interactive media that sparked Rogers' sudden interest in Maclean Hunter. Videotron, a broadcast and cable TV company operating throughout Quebec, is building its first two-way system in the town of Chicoutimi in conjunction with six companies including Hearst Corp. The project will include catalog shopping, home banking, lottery games and electronic mail.
Videotron doesn't currently consider Rogers an equal competitor.
Videotron may have the jump on Rogers in multimedia, but "Rogers is an extremely advanced cable company and in most respects, like video compression, is ahead of Videotron," said Andrew McCreath, partner and communications industry analyst at Gordon Capital Corp., Toronto. Rogers wants Maclean's plant and equipment from a strategic point of view and the publishing arm to feed an interactive system.
Rogers is also looking over its shoulder at this fall's startup of direct broadcast satellite services that will deliver hundreds of TV channels to homes. Other competition comes from Canada's phone companies, now seeking the right to offer video programming over phone lines.
"The conclusion that media companies have come to is there is going to be a convergence of players-the telephone companies and cable companies-all trying to be the first to offer a number of interactive products," said Bruce Claasen, president, Genesis Media, an independent Toronto media buying and planning company, which has worked with both Rogers and Maclean.
Any combination of Rogers and Maclean will face severe Canadian regulatory scrutiny. But Mr. Claasen believes Rogers can argue successfully that if Canadian companies don't act now, the door will be opened to foreign media.
"They'll point to the deals between TCI and Bell Atlantic, and QVC-Viacom-Paramount, that this is the way media is going around the world," he said.