ARCHIVED -  Decision CRTC 85-146

Decision

Ottawa, 27 March 1985

Decision CRTC 85-146

Mid-Canada Communications (Canada) Corp.

Sudbury, Ontario - 841994700 - 841995400 - 841996200

Blind River, Elliot Lake and Espanola, Ontario - 842157000 - 842158800 - 842159600

Following a Public Hearing in Sudbury on 1 December 1984, a majority of the Commission approves the applications for authority to acquire the assets of CHNO, CFBR and CJMX-FM Sudbury from Sudbury Broadcasting (1977) Ltd. (Sudbury Broadcasting); as well as the assets of CJNR Blind River, CKNR Elliot Lake and CKNS Espanola from Huron Broadcasting Limited (Huron); and for broadcasting licences to continue the operation of these six radio stations.

The Commission will issue licences to Mid-Canada Communications (Canada) Corp. (Mid-Canada) upon surrender of the current licences. The licences will expire 30 September 1989 and will be subject to the conditions specified in this decision and in the licences to be issued.

Evolution of Broadcasting in Northern Ontario

In its decisions over the years, the Commission has consistently given special recognition to the social, geographic and economic factors which set Northern Ontario apart from most other regions of the country. The vastness of the region, the dispersion of its population, the cyclical nature of the regional economy and the limited availability of advertising revenues are among the factors which, in the past, have challenged broadcasters serving the area and have been responsible for delays in the introduction of new services. Broadcasters in the region have frequently been required to co-operate closely with each other in order to overcome these difficulties.

Although it has been a consistent policy of the Commission to preserve the diversity of broadcast voices in all parts of Canada, the social, geographic and economic realities of Northern Ontario have also made it necessary to accept a considerable degree of media concentration in the region in order to ensure the continued viability of the area's existing broadcasting undertakings and to accommodate the introduction of new services.

The introduction of the CTV television network service in the region did not occur until the early 1970's. Up until that time, CBC English-language service had been provided by Cambrian Broadcasting Limited (Cambrian) at Sudbury and by J. Conrad Lavigne Limited (Lavigne) at Timmins. In the fall of 1969, the Commission considered four competing applications to establish second television service at Sudbury. These specific applications were denied on the grounds that, in view of the market's limited broadcasting base, the licensing of such service, at Sudbury only, would have rendered the extension of second service to other parts of the region unlikely for many years (Decision CRTC 70-44).

Accordingly, the Commission proposed an alternate framework to provide for the early introduction of second television service in Northern Ontario, which was predicated upon co-operation between the region's existing broadcasters and designed to preserve a balance between them. On the basis of this co-operative approach, Lavigne and Cambrian were subsequently licensed to provide CBC and CTV service respectively at each of Sudbury, Timmins, North Bay and other surrounding communities (Decisions CRTC 70-211 to 70-215, 71-252, 71-305 and 71-313).

The preservation of local services, and the need for co-operation among the area's licensees to ensure a combined and efficient use of the limited available resources, were again emphasized in the Commission's 1974 decisions which authorized the introduction of cable television service at Sudbury and Timmins (Decisions CRTC 74-212 and 74-215). In each case, the ownership of the new licensee companies included participation by F. Baxter Ricard, owner of The Sudbury Broadcasting Company Limited which is the parent company of Sudbury Broadcasting, one of the vendors involved in the current transactions. In its decisions, the Commission deferred approval of the cable carriage of a second non-Canadian television service and required the Timmins and Sudbury cable licensees, in accordance with their commitments, to pay stabilization fees to the local television broadcasters in order to offset any negative impact of the new cable services on the limited revenues of the local television services.

The viability of local services was also the focus of Decision CRTC 80-152 which approved applications whereby the competing CTV and CBC affiliated stations licensed to Cambrian and Lavigne came under the ownership of Mid-Canada, and under the ultimate control of Northern Cable Services Limited (Northern), which owns 95.8% of Mid-Canada.

In that decision, the Commission again acknowledged the various factors which make Northern Ontario a difficult and unusually expensive market to serve. The marginal profitability and frequent financial losses encountered by Lavigne and Cambrian in the operation of their CBC and CTV television affiliate services provided clear evidence of these difficulties. The relatively slow growth rate of the area's economy, the escalating costs of program production and acquisition, increasing cable penetration and the introduction of additional television services were identified as placing further strains on the viability of over-the-air broadcasting services in the region.

The Commission said that it viewed the purchase of the CBC related assets by Mid-Canada as being a realistic interim measure towards achievement of the goal of improved television service in the region, and noted the applicant's statement that this was an "in trust" arrangement until the CBC had sufficient funds to purchase the transmitters and associated equipment. The Commission also noted the applicant's commitment to offer the CBC the opportunity to buy or rent surplus equipment for the production of a CBC regional news service.

While the CBC has yet to develop a full regional service in these northern communities, the Commission continues to consider the establishment of CBC owned-and-operated television stations in Northern Ontario to be of paramount importance.

Ownership and Current Broadcast Holdings of Mid-Canada and Norther

As stated above, Mid-Canada is owned 95.8% by Northern. The largest shareholder of Northern is CUC Limited with 48.3% of the outstanding voting shares. CUC Limited has extensive cable television interests across Southern Ontario and is deemed to be controlled by G.R. Conway and its other founding shareholders. The remaining 51.7% of Northern's voting shares are owned by Northern Ontario investors who also form a majority on Northern's Board of Directors. The largest of these is The Sudbury Broadcasting Company Limited, which owns 20.1% of Northern's voting shares and is controlled by F. Baxter Ricard. Mr. Ricard has been involved in broadcasting in Northern Ontario since the late 1940's and is a long-time associate of G.R. Conway.

Northern is the licensee of cable television undertakings serving 11 communities in Northern Ontario, and is the sole shareholder of three other licensee companies providing cable television service to a further 11 communities in the region, including Sudbury, Blind River, Elliot Lake, Espanola, Timmins, Kapuskasing and Hearst.

Through its direct and indirect ownership of shares in Mid-Canada, Cambrian and other licensee companies, Northern also controls the following over-the-air broadcasting undertakings in Northern Ontario: English-language CBC television affiliates CKNC-TV Sudbury, CHNB-TV North Bay, CFCL-TV Timmins, CFCL-TV-2 Kearns, CFCL-TV-3 Kapuskasing, CFCL-TV-4 Hearst and CHRO-TV Pembroke; CTV television affiliates CKNY-TV North Bay, CICI-TV Sudbury, CICI-TV-1 Elliot Lake, CKSO-TV-2 Timmins, CKSO-TV-3 Kearns and CKSO-TV-4 Kapuskasing; radio stations CHRO Pembroke (English language) and CFCL Timmins (French language) and CFCL's rebroadcasters CFLH Hearst and CFLK Kapuskasing. As a result of Decision CRTC 85-147 issued today, Northern, through Mid-Canada, has also acquired 45% of the voting shares of Gateway City Broadcasters Limited, licensee of CHUR North Bay.

Principal Reasons for the Current Transactions

a) Sudbury Broadcasting

Mr. Ricard's involvement in broadcasting in Northern Ontario spans almost four decades, beginning with the establishment of CHNO in 1947. CHNO was operated as a bilingual station until 1957 when CFBR was established to serve the large French-language population of the Sudbury area. Today, CFBR Sudbury and Mid-Canada's CFCL Timmins are two of only three privately-owned French-language stations currently operating in Ontario. Mr. Ricard has continued to fund the operation of CFBR despite accumulated losses approaching $1 million. He now wishes to sell CFBR, CHNO and CJMX-FM Sudbury for estate planning purposes. In explaining his choice of Mid-Canada as purchaser, Mr. Ricard noted that, as a major shareholder in Northern and as President and Chairman of Mid-Canada, he will be able to continue to have an active role in the orientation of the stations. The sale to Mid-Canada, he stressed, would allow control of the three stations to remain in the hands of Northern Ontario residents and, in accordance with the firm commitment given by Mid-Canada, would ensure the continued availability of CFCL's French-language service to Sudbury residents.

b) Huron

The proposed sale by Huron of its stations at Blind River, Elliot Lake and Espanola reflects that company's plan to sell its radio interests in Northern Ontario in order to focus its efforts and attention on the operation of its television stations and cable undertaking in Sault Ste. Marie. Huron indicated that Mid-Canada was the only prospective purchaser for these three radio stations. Earlier this year, in Decision CRTC 85-67, the Commission approved the first phase of Huron's radio divestiture by authorizing the transfer of the assets of its other radio stations, two in Sault Ste. Marie and one in Wawa, to CKCY 920 Ltd.

c) Mid-Canada

For its part, Mid Canada described the proposed acquisitions as offering a viable solution to the financial and operational problems experienced by each of these small market radio stations, and stressed the cost savings that would flow from a consolidation and a sharing of expertise in management, programming, engineering and in other areas of operation.

Mid-Canada also stated that the current proposals will provide stability for the broadcasting services in Northern Ontario, and will ensure that control over their operation remains in the region.

With respect to the Blind River, Elliot Lake and Espanola stations owned by Huron, Mid-Canada stated that they constitute a logical purchase since these communities identify more strongly with Sudbury than with Sault Ste. Marie where their current ownership is based. It also argued that the transactions, overall, would create a stronger base for Mid-Canada's television services in the region and allow it to compete more effectively against the competition offered by existing distant television signals.

Towards Preserving the Diversity of Broadcast Voices

In the Commission's view, the most central and significant concern raised by the current applications is not so much the degree to which their approval will increase the level of concentration of broadcast ownership in the region, but the impact this concentration could have, in the absence of adequate safeguards, on the diversity of broadcast voices available in Northern Ontario.

In light of its concern, the Commission discussed at length with Mid-Canada its management and operational plans, and the mechanisms it proposes to institute, to ensure that the local character of the different communities served is adequately reflected by the various stations, particularly in their news and public affairs programming, and that the diversity of broadcast voices in each community is retained.

In this regard, the Commission notes Mid-Canada's firm commitment to maintain separate staff and facilities for its radio and television news departments at Sudbury, and to ensure that day-to-day coverage of news, public affairs and community events by the Sudbury radio stations is fully independent of the coverage provided by its television operations. The Commission also notes the applicant's undertaking to provide access on each of its stations for the fair and balanced expression of differing views and opinions. Mid-Canada further assured the Commission that the number of news staff currently employed by the various stations would be maintained.

With respect to the French-language service provided by CFBR, the applicant gave its firm commitment to continue to support the station and stated that the station's news staff may be increased.

The Commission is concerned by the amount of automated programming currently broadcast by CFBR during the evening and night-time hours, and on weekends. It therefore views the commitment by Mid-Canada to maintain and strengthen the French-language service as being particularly important.

Accordingly, the applicant is required to make every effort to reduce the amount of automated programming on CFBR, as financial resources permit. The Commission also expects Mid-Canada to proceed with its plans to hire additional news staff with a view to providing the large French-language population of Sudbury with a more immediate, effective and distinctive local French-language news service.

Regarding the three radio stations to be purchased by Mid-Canada from Huron, the applicant plans to maintain the current situation whereby programming broadcast on CJNR Blind River is received from the studios of CHNR Elliot Lake. Mid-Canada indicated that the operation of a separate studio at Blind River would be impossible to implement at this time due to the small size of the community and the high costs involved. With respect to CKNS Espanola, however, the applicant acknowledged the increasing demand expressed by Espanola residents for greater amounts of programming directed specifically to their needs and interests, and stated that it would undertake an early study of the feasibility of producing more local programming at Espanola.

The Commission expects the applicant to pursue this initiative and to advise the Commission of its findings. The Commission also notes Mid-Canada's statement that it is prepared to abide by the existing condition of licence which precludes the Espanola station from soliciting advertising in Sudbury directed primarily to a Sudbury audience.

In further response to the concerns regarding the potential impact of these applications on the diversity of broadcast voices in the region, Mid-Canada stated that it would be prepared to draft, and to circulate for public comment in the communities it serves, a statement of editorial policy which would effectively encompass the commitments described above regarding the provision of balance in its news and public affairs programming, accessibility to air time for the expression of differing views, and the maintenance of a clear division between its radio and television operations in Sudbury. The Commission expects Mid-Canada to adhere closely to this editorial policy.

In approving these applications, the Commission has taken into account the evolution of broadcasting services in Northern Ontario. The Commission notes that many, if not all, of the conditions identified as having shaped this evolution in the past are equally prevalent today, particularly the high cost of providing broadcasting services to the region's small and widely dispersed population. The Commission has also weighed the resources available to Mid-Canada and Northern, the arguments advanced by Mid-Canada concerning its need for a larger operating base, and the fact that control and responsibility for the day to day management of the stations in question will remain in the hands of Northern Ontario residents.

In light of all the foregoing, especially the continuing difficulties encountered by the smaller market stations in providing viable services, a majority of the Commission considers that the creation of a chain of Northern Ontario stations such as that proposed by Mid-Canada is in the public interest, provided that Mid-Canada adheres strictly to the following conditions of licence designed to ensure that the diversity of broadcast voices in the region is maintained:

1. Within three months of the date of this decision, the licensee must prepare and publicize in each of the communities it serves, a statement of its editorial policy which will govern the operation of its separate radio and television divisions. The statement should set out clearly how Mid-Canada will guarantee accessibility to air time for the expression of differing views on matters of public concern on a fair and equitable basis, and the control mechanisms it will establish to ensure the continuing availability of separate voices in its news and public affairs programming. Three months following publication of the statement, the licensee shall submit a report to the Commission on the public comments generated by the statement and on any changes it may consequently propose to make in its editorial policy.

2. Mid-Canada shall maintain a strict and clear separation between the news operations of its Sudbury radio stations and those of its Sudbury television stations in terms of the staff and facilities allocated to the production of local news and public affairs programming by each division and, consistent with the above, shall employ separate news directors to oversee its separate radio and television news departments at Sudbury;

3. The licensee shall ensure that the local character of the communities served by its various stations is adequately reflected in their programming, particularly their local news and public affairs programming, through the allocation of sufficient staff and other resources;

4. The licensee shall maintain the French-langage radio service provided by CFBR Sudbury and is required to make every effort to reduce the amount of automated programming on CFBR as financial resources permit; and

5. With respect to CKNS Espanola, the licensee shall not solicit advertising in Sudbury directed primarily to a Sudbury audience.

The Commission received 20 interventions concerning these applications. They represented the views of a broad cross section of the region's population, including those elected provincial and federal politicians, town councils, community groups, union representatives and individual members of the public. The interventions were evenly divided in their support or opposition to the proposals. In general, the concerns of those opposed to the applications were related to the issue of concentration of ownership and the potential loss of broadcast voices in the region, an issue which has already been addressed in the decision.

In its intervention, United Broadcasting Limited, the licensee of CKSO and CIGM-FM Sudbury, expressed concern that approval of these applications would give Mid-Canada an unfair competitive advantage in its ability to "cross sell" its stations to local and national advertisers. The Commission notes the statements by Mid-Canada in this regard, that it has no plans to cross sell its stations and will retain separate rate cards for each.

The Commission reminds Mid-Canada that the conditions imposed by this decision are designed primarily to ensure that the diversity of broadcast voices in Northern Ontario is effectively maintained. The Commission will monitor closely the licensee's performance in adhering to the letter and spirit of these conditions, and will review this performance when it next considers the renewal of these licences in 1989.

Minority Opinion

Commissioners Monique Coupal, Rosalie Gower and Paul McRae dissented from this decision. On the basis of Mid-Canada's existing broadcasting ownership interests in Sudbury, which include both the CBC and CTV television network affiliated stations and the cable television service, the Commissioners are of the opinion that there are no compelling reasons in the present case to warrant the increased concentration of ownership. Approval of the applications to acquire the AM and FM English-language radio stations and the AM French-language station in Sudbury would not, in their view, be in the interest of the Sudbury and neighbouring communities, and could put the only other English-language radio service in Sudbury at a severe competitive disadvantage. In the opinion of Commissioner Coupal, this threat will be further increased as a result of the acquisition by MidCanada of the three radio stations currently owned by Huron Broadcasting at Elliot Lake, Espanola and Blind River.

Further, the Commissioners commented that, "such a strengthened single voice could well be overwhelming in a market such as Sudbury. The need for a strong alternate voice was clearly expressed in interventions during the public hearing and would be welcomed by the community."

Fernand Bélisle Secretary General