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Ottawa, 19 June 1986
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Decision CRTC 86-586
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Multilingual Television (Toronto) Limited
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Toronto, Ontario - 860698000
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Following a Public Hearing in Toronto on 6 May 1986, the Commission approves the application for authority to transfer effective control of Multilingual Television (Toronto) Limited (MTV), licensee of CFMT-TV Toronto, which is the only full-time ethnic television station in Canada, to Rogers Broadcasting Limited (RBL). It is a condition of approval, however, that the status of CFMT-TV as an ethnic television station, as defined in its conditions of licence, be maintained.
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The transfer will result from the issue of shares representing 80% of the outstanding voting shares of Daisons Multicom Inc. (Multicom) to RBL. Multicom owns approximately 73% of the voting shares of MTV and is itself currently controlled by Daniel A. Iannuzzi of Toronto. As a result of this transaction, control of both Multicom and the licensee company will pass to RBL.
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Background
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RBL is the licensee of CFTR and CHFI-FM Toronto, as well as of AM and FM stations in each of Sarnia and Leamington. RBL is a subsidiary of Rogers Cablesystems Inc. which also holds indirect control of Rogers Cable T.V. Limited (Rogers Cable), the licensee of cable television undertakings serving parts of Toronto, Mississauga and Hamilton, and several other communities in southern Ontario. Rogers Cablesystems Inc. also holds indirect control of cable television licensees serving a number of communities in Western Canada, including parts of Vancouver, Victoria and Calgary. The Rogers group of companies is ultimately controlled by Edward R. (Ted) Rogers of Toronto.
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Mr. Rogers' involvement with ethnic program production and with Toronto's ethnic community dates back to the early 1970s when Rogers Cable began the distribution of multilingual programming on the community channel of its Toronto system. In fact, as noted by the applicant at the hearing, many of the producers now employed by MTV began their careers in ethnic program production with the Rogers Cable community channel. In 1974 Rogers Cable established a multilingual television channel (MCTV) as a special programming service distinct from its community channel.
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CFMT-TV was founded by Mr. Iannuzzi and others in 1979 (Decision CRTC 78-780. In accordance with its mandate, the station has provided a variety of ethnic programs to serve the distinct needs and interests of the many ethno-cultural groups in southern Ontario, and has provided a unique source of enrichment to its diverse audiences.
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CFMT-TV is currently required to devote a minimum of 60% of its program schedule to ethnic programming broadcast in at least fifteen languages and directed to eighteen or more cultural groups (Decision CRTC 86-371). As recognized by interveners at the hearing, the station in fact exceeds these minimum requirements.
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Originally, Mr. Iannuzzi together with his brother Paul controlled 36% of the voting shares of MTV, directly or through Daisons Communications Inc. (Daisons), a family holding company. The remainder of the licensee's shares were held by approximately 35 other shareholders, none with more than 4% of the total vote. In spite of the enthusiasm surrounding the inauguration of the multilingual service, CFMT-TV encountered severe financial difficulties and required repeated infusions of new capital. Over time, other minority shareholders either declined or were unable to meet their share of MTV's additional capital requirements, and control of the licensee company passed to Daisons.
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In 1981, due to a continuing need for funding to support the operations of MTV, Daisons became indebted to Seaway Trust for approximately $7.6 million. In late 1982, Daisons was placed in receivership. Matters became increasingly complicated when the Ontario government seized the assets of Seaway Trust in early 1983, and called in the loan to Daisons.
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Seaway Trust offered Daison's assets, including its shares of MTV, for sale in September 1985. The successful buyer was Multicom, the new company formed by Daniel and Paul Iannuzzi. Multicom's purchase of these assets was upheld both by the courts and by the CRTC. The purchase price, $5.3 million, was to have been met in large part through a private placement debenture. This financing, however, did not materialize.
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After years of financial difficulty, Mr. Iannuzzi faced a situation in which he stood to have the assets of Multicom, as well as those of the licensee company, sold unless a scheduled payment of $2.3 million was repaid to the receiver of Seaway Trust by 3 March 1986.
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Consequently, Mr. Iannuzzi pursued negotiations with Ted Rogers to arrange for financial assistance. Just prior to the 3 March 1986 deadline Mr. Rogers agreed to provide Multicom with the required $2.3 million in cash, thereby preventing the liquidation of MTV. Messrs. Rogers and Iannuzzi also negotiated the proposal currently before the Commission whereby RBL would acquire indirect control of approximately 73% of MTV.
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At the May hearing Mr. Iannuzzi emphasized that the proposed transaction had been the only realistic option available to the licensee. He noted that RBL would be able to provide the licensee with the requisite financial strength and stability to maintain CFMT-TV in operation, while ensuring the continuity of management and ethnic programming.
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Mr. Iannuzzi expressed confidence that RBL had the experience and the necessary commitment to preserve and foster the station's ethnic mandate. In this regard, Mr. Iannuzzi emphasized the long-standing involvement of Rogers Cable with ethnic groups in the production of multilingual programs for cable audiences in the Toronto area, its participation with CFMT-TV in the co-production of ethnic programs, as well as the cooperation and support it has given MTV by distributing the signal of CFMT-TV on both the basic service and a rerun channel on all of its cable systems in the Toronto area. As stated by Mr. Iannuzzi:
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This kind of continuity and track record gives some assurances, specifically to continuity. The Canadian broadcasting system, and in particular, ethno-cultural audiences deserve no less than the kind of commitments that are an integral part of this application.... The participating partnership with Rogers Broadcasting could enable multicultural television to play its important role within the Canadian broadcasting system.
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The Test of Clear and Unequivocal Benefits
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The current application raises the issues of concentration of ownership and of media cross-ownership in the Toronto market as a consequence of the ultimate ownership by Ted Rogers of radio, television and cable television undertakings in that market, and his substantial broadcast holdings elsewhere in Canada. Before considering these issues, however, the Commission examined the application in order to determine whether clear, significant and unequivocal benefits would accrue to the Canadian broadcasting system as a whole and to the community served by CFMT-TV, and whether approval of the transaction was in the public interest. The importance of this "first test" was acknowledged by RBL at the hearing:
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We understand, and we accept that your approval will come to the extent that we demonstrate clear and unequivocal benefits in addition to restoring the financial stability of this station. The total value of these additional benefits is in excess of $3.5 million, which represents an unconditional commitment to these undertakings during the first 60 months following approval of this application.
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As noted in paragraph 5 below, this amount includes $1.5 million as a contribution to a satellite-delivered ethnic television network service proposed by MTV Broadcasting System Inc. (MTN), should it be licensed (in Decision CRTC 86-585 of today's date, the Commission has denied this application).
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The benefits enumerated by the applicant at the hearing as unconditional commitments include the following:
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1. "Approval of this transaction will bring financial stability to CFMT's parent company for the first time in a long time, and management and staff will be able to focus exclusively on strengthening the mandate of the station and upon its programming."
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2. "You have a firm and unequivocal commitment in writing and orally from Rogers Broadcasting Limited to preserve, and indeed to enhance the multilingual and multicultural character of the station."
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3. "This particular application will ensure the continued participation of Dan Iannuzzi, the principal founder of CFMT, and other key members of his management team." [The applicant also confirmed during the hearing that other existing directors will be invited to retain their places on MTV's Board of Directors, and that representatives of the ethnic communities served by CFMT-TV will continue to form a majority on that board].
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4. "MTV will be able to benefit from sharing the skills and experience present in the Rogers organization, by combining their talent with the talent already present, and we feel that there will be real synergies developed through the proposed partnership."
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5. "Rogers is prepared to provide substantial support to the MTN project; should it be licensed, we have undertaken to advance one-and-a-half million dollars to assist in getting that project off the ground."
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6. "Rogers will invest some $200,000 in significant and much needed improvements to the CFMT facilities. This will improve the working environment, and by the use of computer technology, modernize their marketing and business methods."
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7. "Rogers is committed to a substantial expansion of the research program presently carried on by CFMT. We feel that this investment of $375,000 will help us to produce better, more relevant and more creative multilingual and multicultural programming. And incidentally, that it will help substantially in sales and marketing."
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8. "A program conversion unit ... (at a cost of $200,000) would enable the station to acquire programs from any place in the world and convert them to Canadian use ... that would enable us to market programs produced by CFMT in any part of the world in a form compatible with the technology employed in the particular country."
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9. "The ability to have immediate and instant news coverage and programming that one can put directly on air." [through use of a Live Eye Mobile costing approximately $250,000.]
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10. "We are committed to enhancing the role of the Community Advisory Committee, and if this application is approved, we are totally committed to engaging and employing a full-time community liaison officer to help keep the station and its programming sensitive and responsive to the needs of the various communities."
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11. If this application is approved, CFMT will be in a position to co-produce a series of quality television programs ... to feature a number of successful men and women of non-French or English background who have made a great success of their lives in Canada. This would include a contribution of $500,000, and a further investment from the Rogers Telefund of $250,000."
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12. "If the application is approved, there will be substantial resources made available to the education and training of students of various backgrounds who show promise in broadcasting." [Under this proposal, a contribution of $125,000 over five years will be made to provide scholarships to students of ethnic background enrolled in the Radio and Television Arts program at Ryerson Polytechnical Institute, and to fund a series of lectures at the Institute by people with expertise in multilingual and multicultural broadcasting.]
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13. "We would ensure that CFMT became a member of the Canadian Association of Broadcasters ... we believe that it would not only enlarge the horizons of CFMT, but that it would enlarge substantially the horizons of the CAB."
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14. "[We will] establish a fairness and safeguards committee consisting of three totally independent and respected Canadians, and they will be asked to monitor and respond to any complaints which may arise out of the fact that companies in the Rogers group overall have interests in radio, television and cable, paticularly in the Toronto market."
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15. "In our view the benefit plans for the employees of CFMT have somewhat lagged behind. We intend to improve them."
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16. "[The transfer] will remove this broadcast undertaking from the hands of a receiver/liquidator ... and return it to a partnership of experienced, sensitive and innovative broadcasters".
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The Commission has assessed the applicant's commitments and is satisfied that their implementation would represent significant and unequivocal benefits to the many ethnic communities served by CFMT-TV and to the Canadian broadcasting system as a whole, and that such implementation would be in the public interest.
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As stated in Public Notice CRTC 1985-139 entitled A Broadcasting Policy Reflecting Canada's Linguistic and Cultural Diversity, the Commission has long recognized that the Canadian broadcasting system has the potential to serve the cultural and social needs of new Canadians and to contribute to the development of Canada's multicultural character.
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Accordingly, the Commission considers of fundamental importance RBL's commitments to bring financial stability to the operations of CFMT-TV. This will be made possible through RBL's infusion of new equity capital in excess of $4 million and the agreements to guarantee the expected debt of MTV and Multicom, representing approximately $5.5 million. The Commission also notes the loan arrangements in favour of Mr. Iannuzzi which allow him to acquire 20% of Multicom and up to 5% of MTV, as shares become available in the licensee.
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At the hearing, Mr. Rogers offered the Commission the further assurance that, should the licensee require an infusion of capital over and above the amounts contemplated in the application, any such additional need would be met without jeopardizing the implementation of, or diluting, the commitments enumerated above.
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Issues of Concentration of Ownership and Media Cross-ownership
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The Commission's regulatory and supervisory mandate under the Broadcasting Act requires it to ensure that the structure of the Canadian broadcasting system provides for sufficient diversity among its constituent parts to achieve the objectives set out in subsection 3(d) of the Act, which stipulates that:
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the programming provided by the Canadian broadcasting system should be varied and comprehensive and should provide reasonable, balanced opportunity for the expression of differing views on matters of public concern.
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The Commission notes that approval of the application to transfer effective control of MTV to RBL will result in an increase in the level of concentration of ownership and media cross-ownership in the Toronto market.
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However, as stated by the Commission on a number of previous occasions, most recently in Decision CRTC 86-367 which denied applications for authority to transfer control of Télé-Métropole Inc. to Power Corporation of Canada, concentration of ownership is not in itself necessarily of concern, provided that there continues to be:
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an effective degree of diversity of ownership and of programming sources to ensure that the objectives of the Act are met. Today's highly competitive communications environment in every market as well as the high costs and risks involved dictate that the ownership structure must undoubtedly be composed of broadcasting holdings of various sizes, including larger entities with larger pools of resources, which are strong enough to compete with foreign competition and have the capacity to produce Canadian programming of competitive quality.
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Further, with respect to applications raising the issue of media cross-ownership, the Commission stated:
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The central concern is that in any given region there continues to be available a diversity of information, opinion and broadcast sources to provide the communities served with differing points of view on matters of public concern .... the onus is on the purchaser to demonstrate that adequate safeguards have been put in place to protect that requisite diversity.
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In addressing these issues of concentration and media cross-ownership, RBL submitted that concerns regarding the impact of an approval on the diversity of information, opinion and broadcast sources available in the Toronto market are greatly attenuated by the number and variety of media outlets available in that highly competitive market.
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RBL noted that, in addition to three major English-language dailies, Toronto residents have access to the signals of some 16 television and 30 radio stations, as well as to the cable-delivered signals of 7 Canadian and 8 U.S. discretionary services. It argued that the number of broadcast voices would expand further with the addition of four new radio stations which were recently licensed by the CRTC to serve Toronto and other communities in Southern Ontario.
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RBL also referred to the intense competition and diversity that can be found within each subsector of the Toronto market, particularly among the media voices directed to Toronto's many ethnic groups. According to RBL, there are more than 20 sources of ethnic programming in Toronto, including the full-time services offered by CFMT-TV, Telelatino, Chinavision, three off-air radio stations and four SCMO or cable audio services; additionally, there are a number of conventional television stations that broadcast some ethnic programming and a number of mainstream radio stations that devote significant amounts of their broadcast schedules to programs directed to ethnocultural communities. It also noted that there are approximately 112 newspapers published either daily, weekly, monthly or quarterly, in languages other than English or French.
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One of these newspapers, the Corriere Canadese, has been under the ownership of the Iannuzzi family since the early 1950s. This Italian-language newspaper is published in Toronto three days per week. RBL stated that, under the provisions of its agreement with Multicom, the assets of the newspaper have been purchased from Multicom by a newly-formed Iannuzzi family holding company operated fully independently of CFMT-TV. RBL noted that approval of the current application effectively reduces media cross-ownership in Toronto's ethnic market.
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RBL further emphasized that effective safeguards would be put in place to prevent its media cross-ownership in Toronto from having any detrimental impact on other broadcasters and on the diversity of broadcast voices in that market.
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In that respect, RBL underlined the role to be played by the Safeguards and Fairness Committee which it is committed to establish. The Committee will monitor and respond to complaints by broadcasters regarding cable access and carriage and will protect against any possible abuse resulting from cross-ownership by ensuring "that any perceived problems of this nature would receive top level and immediate attention".
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As described by Mr. Philip B. Lind speaking on behalf of RBL:
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The Safeguards and Fairness Committee will be made up of three distinguished Canadians: Jane Pepino, a lawyer in private practice who serves her community in a number of capacities including as a member of the Metro Toronto Police Commission; Bill McGregor, President of CAP Communications, Chairman of the CTV Executive Committee, and a member of our board; and one other member, upon whose consent I am still waiting ...
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The safeguards and fairness committee would hear the complaint, undertake an investigation, and would make its written recommendation to the board of [Rogers Cable]. A copy of that recommendation would be sent to the CRTC, and the Commission would be advised in writing what subsequent action had been taken with respect to the recommendation.
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RBL stated that a further safeguard would be the strong, independent and decentralized management structure that it would put in place in accordance with the longstanding corporate policy of the Rogers group:
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We are committed to decentralization as an imperative ... Our companies have independent Boards of Directors with very little overlap. Each company functions within its own mandate.
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Disposition
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In assessing the overall benefits to be derived from implementation of the commitments made by RBL, the Commission has considered the very special circumstances of this transaction, in light of the significance of the continuation of this service to the ethnic communities served by CFMT-TV and to the Toronto market as a whole.
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The Commission has given particular weight to the fact that, given the serious financial problems encountered by the licensee's principal shareholder in recent years, without RBL'S ongoing financial support for CFMT-TV, there was a risk that the station may not have been able to continue in operation resulting in the loss of this valuable and unique service to ethnic television audiences in the Toronto area. The Commission has furthermore placed particular emphasis on the applicant's firm and unequivocal commitment to preserve and enhance the multilingual and multicultural character of CFMTTV, along with other commitments which should strengthen and improve the service.
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It has also considered the solid financial and managerial resources of RBL, its experience and demonstrated track record in working with various groups in the production of programs for Toronto's ethnic communities.
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As noted earlier, the licensee has demonstrated to the Commission's satisfaction that the proposed transaction will yield significant and unequivocal benefits to the many ethnic communities served by CFMT-TV and to the Canadian broadcasting system as a whole, and that, accordingly, it is in the public interest.
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Moreover, the Commission is satisfied that the value of these benefits, in conjunction with the safeguards noted above, and taking into account the special nature of this programming service, outweigh any concerns raised in this instance with respect to concentration and media crossownership. The Commission therefore approves the application to transfer effective control of MTV.
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In reaching its decision the Commission has also given careful consideration to the 157 interventions submitted by a broad spectrum of ethnic groups, individuals and other interested parties. More than three-quarters of these, including the interventions submitted by the licensees of Canada's two ethnic discretionary specialty network services, Chinavision Canada Corporation and Telelatino Network Inc., expressed support for approval of the application; many interveners reiterated their long-standing confidence in the abilities of Daniel Iannuzzi and their support for the management of CFMT-TV.
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The most frequently expressed concern by the remaining interveners was that the Commission not allow the ethnic character and mandate of CFMT-TV to be diminished in any way. In this regard, RBL assured interveners and the Commission that it would not apply for any changes to CFMT-TV's status as an ethnic television station or to its current Promise of Performance.
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This commitment was confirmed by RBL at the May hearing in Toronto:
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We are clearly committed to the continuance of the mandate of the station as expressed by your [ethnic] policy, and as undertaken by Dan Iannuzzi, the founder.
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As a result of this and the other commitments made by the applicant, a number of appearing interveners who had initially expressed concerns regarding the transaction in their written interventions advised the Commission that all of their major concerns had been put to rest.
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Consistent with the purchaser's assurances, the Commission requires that the status of CFMT-TV as an ethnic television station be maintained. Should the licensee at any time determine that it no longer wishes to operate CFMT-TV as an ethnic station in accordance with its mandate, the Commission would expect it to surrender the licence.
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It is the Commission's firm expectation that the licensee implement and maintain all of the commitments noted in this decision. In this regard, the licensee is advised that, at the time of the renewal of this licence which expires 31 March 1987, the Commission may well impose these commitments as conditions of licence, with a view to preserving and strengthening CFMT-TV's role in the field of ethnic television broadcasting in Canada.
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Reference was made at the May hearing to an application by MTN, a wholly owned subsidiary of MTV, for a broadcasting licence to carry on a network operation to distribute an
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ethnic television programming service via satellite throughout Canada. This application was considered by the Commission earlier at a public hearing held in Toronto on 16 December 1985.
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In Decision CRTC 86-585 of today's date, for the reasons stated therein, and based on the record of the 16 December 1985 Public Hearing, the Commission has denied the application by MTN for the satellite network licence. Nevertheless, the Commission acknowledges the strong demand among ethnic groups in communities across Canada for programming directed to their particular needs and interests, as expressed in the many submissions considered by the Commission in the context of the review of its ethnic broadcasting policy early last year, as well as in the many positive interventions submitted in support of the satellite network proposal by MTN.
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To ensure that this demand is met adequately and without undue delay, the Commission encourages all interested parties, including MTN, to explore all possible means of establishing a viable and responsive national ethnic television service.
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Fernand Bélisle
Secretary General
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