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Ottawa, 4 July 1986
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Decision CRTC 86-642
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The Regina Limited Partnership Regina, Colgate, Willow Bunch, Swift Current and Marquis, Saskatchewan - 860150200
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The Saskatoon Limited Partnership Saskatoon, Stranraer and North Battleford, Saskatchewan - 860151000
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576454 Saskatchewan Ltd. Prince Albert, Alticane, North Battleford, Greenwater Lake, Big River, Spiritwood, Tisdale, Yorkton, Wynyard, Norquay, Hudson Bay, Humoldt, Warmley and Carlyle Lake, Saskatchewan - 860147800 - 860359900 - 860148600 - 860149400 - 860217900 - 860216100 - 860218700
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576454 Saskatchewan Ltd. and The Saskatoon Limited Partnership Melfort, Saskatchewan - 860182500
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Following a Public Hearing in Saskatoon commencing 22 April 1986, the Commission approves the applications by the two limited partnerships and the numbered company noted above, each effectively controlled by Baton Broadcasting Incorporated (Baton; the applicant), for authority to acquire the assets, and for licences to continue the operation, of the television stations in Saskatchewan currently licensed to Harvard Developments Limited (Harvard), Yorkton Television Co. Ltd. (Yorkton Television), Prince Albert Television Inc. (P.A. Television) and Russwood Broadcasting Limited (Russwood).
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In Decision CRTC 86-640 of today's date, the Commission approved an application by P.A. Television for a new CTV-affiliated station at Prince Albert.
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As part of the transactions proposed herein, the Commission now approves the application by the numbered company for a licence to operate this new Prince Albert television station, upon surrender of the licence issued to P.A. Television.
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The licences for the other television stations listed in the appendix to this decision, will also be issued upon surrender of the current licences. All of the licences will expire 30 June 1991, and will be subject to the conditions as specified in this decision and in the licences to be issued.
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The Applications
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Baton is effectively controlled by members of the Eaton family of Toronto through their indirect ownership of 51.6% of Baton's voting shares. Baton owns 100% of CFTO-TV Limited of Toronto and, through that company, 100% of CFGO Radio Limited of Ottawa.
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Baton's broadcast holdings in Saskatchewan include indirect ownership of 100% of Russwood, licensee of CFQC and CFQC-TV (CTV) Saskatoon and its rebroadcasting stations. Russwood is also an equal partner with P.A. Television in the ownership of CKBQ-TV Melfort.
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As part of the various ownership changes proposed in these applications, ownership of the assets of CFQC-TV Saskatoon and its rebroadcasting stations, and of 50% of the assets of CKBQ-TV Melfort, will be transferred from Russwood to The Saskatoon Limited Partnership (Saskatoon Partnership). This partnership is indirectly controlled 90% by Baton; the remaining 10% interest is held by Harvard. The Commission notes that the ownership changes described above are essentially an intra-corporate restructuring of assets already effectively controlled by Baton. It also notes that Russwood will continue as licensee of CFQC Saskatoon.
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Harvard, for its part, is controlled indirectly by the Frederick Hill family of Regina, and is the licensee of CKCK-TV (CTV) Regina and its rebroadcasting stations. It is also the licensee of CKRM and CFMQ-FM Regina. Under these proposals, the assets of CKCK-TV and its rebroadcasting stations will be transferred to The Regina Limited Partnership (Regina Partnership) which, like the other partnership described above, is indirectly controlled 90% by Baton, with Harvard holding the remaining 10% interest. Harvard will retain ownership and continue as licensee of the two Regina radio stations.
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Yorkton Television is controlled indirectly by the Ron L. Skinner family of Yorkton. It owns 100% of Image Cable Systems Ltd. and 30% of North Eastern Cablevision Ltd. which, together, are the licensees of more than 50 cable television undertakings in Saskatchewan.
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Yorkton Television is also the licensee of the twin-stick operation consisting of CKOS-TV (CBC) and CICC-TV (CTV) Yorkton, and of their rebroadcasting stations. In addition, Yorkton Television owns 100% of P.A. Television, licensee of CKBI-TV (CBC) Prince Albert and its rebroadcasting stations, and of the new CTV affiliated station in Prince Albert licensed today.
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As proposed in these applications, the assets of the existing Yorkton and Prince Albert stations and all associated rebroadcasting stations, and 50% of the assets of CKBQ-TV Melfort, will be transferred to 76454 Saskatchewan Ltd. (Saskatchewan Ltd.), a company controlled 100% by Russwood. As was also proposed, the Commission will issue a licence to Saskatchewan Ltd. to operate the new CTV station at Prince Albert upon surrender of the licence granted today to P.A. Television. Members of the Skinner family will retain their ownership interests in cable television in Saskatchewan.
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At the hearing, Mr. Ron Skinner referred to his 29 years of involvement in Saskatchewan's television industry, and advised the Commission of his decision that, after that number of years, it was simply time to sell:
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For some time now our company ... has realized only too well the desire on the part of our viewers for increased television services. The fragmentation arising from the growth of cable, use of VCRs, rapid growth in home TVRO installations, MATV systems, and last but not least, the number of unauthorized services that have sprung up in our area have brought home to us the magnitude of the challenges we face as a small market station ...
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Mr. Paul Hill, speaking on behalf of Harvard, expressed essentially the same views as Mr. Skinner:
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We had long ago accepted the fact that sooner than later the inevitable growth of viewer choice in markets outside of the very large urban centres would create a level of fragmentation that would challenge our ability to maintain and improve the high level of service to which our people have always been committed.
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Mr. Hill noted that Harvard would retain a 10% ownership interest in CKCK-TV Regina and would acquire a similar interest in CFQC-TV Saskatoon. He added, however, that even during the period the Hill family controlled the Regina station, it considered its role to be that of an investor in broadcasting and was not active on a day-to-day basis in the station's operation.
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The rationale underlying Baton's applications to purchase the assets of the Saskatchewan television stations owned by the Hills and the Skinners was explained by Mr. Douglas Basset, Baton's President and Chief Executive Officer. Mr. Basset noted his company's participation in, and commitment to, broadcasting in Saskatchewan since its purchase of CFQC and CFQC-TV Saskatoon in 1972.
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We are prepared to make the sizeable investment necessary to acquire the stations involved because we think that this commitment is necessary to ensure that these stations thrive, grow, and strengthen their local service ... We know that local stations face increasing fragmentation and segmentation of their market base as an inevitable consequence of the growing demand for greater number and diversity of viewing choices ... We believe that the economic challenge of having strong local service in an environment of expanded viewer choice in the relatively small markets of Saskatchewan can be met by providing, through a larger economic unit and cooperative effort, the financial stability and the resources necessary not only to ensure but to enhance the quality and excellence of service to the communities involved.
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The Test of Clear and Unequivocal Benefits
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Under the applications herein approved, effective control of all private, originating television stations in Saskatchewan will pass to Baton, except for CJFB-TV Swift Current licensed to Swift Current Telecasting Co. Ltd. (Telecasting), and the new Regina and Saskatoon third service television stations which are licensed to SaskWest Television Inc. (SaskWest). These last two stations are expected to be in operation no later than 30 September 1987. The fact that approval of the transactions will place ownership of most of the province's private television undertakings in the hands of one company, and the increased concentration that will result on a provincial and national level, were among the key issues of the three-day Public Hearing in Saskatoon.
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The Broadcasting Act requires the Commission 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, 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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Although all applications for changes of ownership or effective control of broadcasting undertakings are and will continue to be examined by the Commission on a case-by-case basis, the Commission has developed general policy guidelines for dealing with applications of the magnitude and importance of those currently before it.
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In accordance with these guidelines, the onus is on the applicant to demonstrate, as a "first test", that clear, significant and unequivocal benefits will accrue to the communities served by the various television stations in question and to the Canadian broadcasting system as a whole, and that approval of the applications is in the public interest. Baton's response to this first test was examined closely by the Commission, both at the hearing and in its subsequent deliberations.
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Baton submitted that the larger and stronger financial base resulting from the proposed transactions, and the economies of scale that can thus be realized, will permit a dramatic increase in the quality and quantity of local and regional production by the Saskatchewan television stations, including new Canadian drama. It will also permit the establishment of new rebroadcasting stations and power increases at a number of existing stations, thereby improving and extending service to Saskatchewan residents. In support of its submission that the proposed transactions will result in fundamental benefits to the Canadian broadcasting system, Baton made a number of specific commitments to the Commission, and these are examined below:
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1. Baton stated that it will initiate the development of a new regional programming package consisting of 4 hours 30 minutes per week, to be made available in all of the communities in the province served by CTV-affiliated stations. Three hours of this package will be broadcast in prime-time and will replace non-Canadian programming otherwise broadcast in those time periods. The package will include news, agricultural information, entertainment and variety programs.
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In the area of news, Baton described plans to develop an effective and well-staffed province-wide service entitled "Saskatchewan Television News". This program will be aired at 6:30 p.m. Monday to Friday and will employ 15 full-time reporters, producers, announcers and field technicians throughout the system, including a news editor at the new Prince Albert station, in keeping with Baton's objective to offer a truly province-wide news service. The program will be co-anchored at CKCK-TV Regina and CFQC-TV Saskatoon, with regular input from the stations at Yorkton and Prince Albert.
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In addition, a proposed series entitled "Premier" will be aired weekly on Sundays at 6:30 p.m. As described by the applicant, it will consist of a variety of programs covering both series and specials, such as a mini-series for children produced by CKCK-TV, a number of comedy specials produced by CFQC-TV, a program directed to native viewers, a mosaic feature covering people and events in the province, and a magazine program on Saskatchewan business issues.
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In addition to the regional programming package, Baton made a commitment at the hearing to produce local public affairs programs at each of Yorkton and Prince Albert over and above the local programming commitments contained in the application. With respect to Prince Albert, the Commission also notes Baton's commitment to produce a five-minute community news update to be broadcast by the new station during the noon hour on weekdays. This represents an increase over the 25 minutes per week of exclusively local production proposed by P.A. Television, and will assist in establishing a local identity for the new CTV station, distinct and separate from that of CKBI-TV Prince Albert.
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Baton stated that the regional programming package and other proposed increases in local production would represent estimated capital expenditures of $620,000 and direct programming expenses of $745,000 during the first year.
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2. The applicant stated that approval of these applications will lead to the creation of 44 new positions, including 15 associated with the Saskatchewan Television News and 15 positions created by the new CTV station at Prince Albert.
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3. Baton made a commitment that, over and above the expenditures for the proposed new local and regional program production described above, it would allocate the sum of $1,080,000 over a four-year period covering years two to five following approval of the applications for the production of television drama programs produced in Saskatchewan using the creative resources of communities throughout the province. The applicant confirmed that this commitment is distinct and separate from the amount of $540,000 already committed by CKCK-TV and CFQC-TV for year one, and any additional amounts these stations may be required to contribute in future, as participants with other CTV affiliates in the Western Canadian Drama Project.
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4. Baton made a commitment to expand the amount of weekly CBC network programming broadcast on CKOS-TV Yorkton and CKBI-TV Prince Albert by 8 hours and 9 hours respectively. As noted by the applicant, this additional CBC programming will increase the Canadian content broadcast on these stations and will extend the broadcast day considerably without any reduction in the amount of local programming.
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5. Baton undertook to ensure that all of the television stations coming under its ownership have full access to the expertise, management, financial and other resources of Baton; it also made a commitment to ensure that the programming plans associated with these applications are not diluted or diminished by any shortfall in projected revenues:
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We are committed to the programming that we have talked about, whatever happens.
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6. To enable an exchange of news and other program content between all of the six originating stations on a real-time basis, Baton stated that it will build a new bi-directional microwave system to link the stations at a capital cost of $2.3 million.
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7. Baton indicated that it will make capital expenditures of approximately $2.8 million to improve the signal quality of certain existing stations and to establish new rebroadcasting stations, thereby extending service to "40,000 to 50,000 people who do not now receive CTV service, 30,000 of whom will be added by the twin-stick application for Prince Albert." In this regard, the Commission notes the applicant's plans for new CTV-affiliated rebroadcasting stations at Nipawin, Spiritwood, Big River and possibly Riverhurst. The applicant also indicated its intention to seek authority to increase the power of CFQC-TV-1 Stranraer and CKBQ-TV Melfort. Baton also undertook to make capital expenditures of $5.6 million to upgrade the studio and production facilities of existing stations.
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The Commission has examined the commitments described above, in both the areas of new programming initiatives and technical improvements, and considers that they adequately reflect the important new role and responsibility to be assumed by Baton in Saskatchewan's television broadcasting industry. Moreover, the Commission considers that these commitments are fully commensurate with the magnitude of the transaction. In this regard, the Commission notes Baton's estimate at the hearing that implementation of its commitments will require an expenditure in the range of $16 million.
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Based on the Commission's assessment of Baton's commitments, both those that can be qualified in monetary terms and others not measurable in terms of their dollar value, the Commission is satisfied that their implementation will bring significant and unequivocal benefits to the many communities served by the television undertakings concerned, to the province of Saskatchewan and to the Canadian broadcasting system as a whole.
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Concentration of Ownership
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As expressed by the Commission in a number of previous decisions on ownership transfer applications, concerns raised with regard to concentration of ownership can be outweighed by clear and unequivocal benefits so long as 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 [Broadcasting] 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 [see Decision CRTC 86-367].
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The twin issues of concentration of ownership in the Canadian television industry, and the fate of the small independent operator in a growing environment of mergers and large entities, were explored in considerable depth by the Commission through the course of the hearing.
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With respect to the former, Baton's contention was that, in light of today's highly competitive broadcasting environment, concentration of ownership should perhaps be viewed as inevitable, or even as a positive phenomenon, particularly in circumstances such as are present in Saskatchewan with its relatively small urban centres and widely dispersed rural population.
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In the present circumstances, the applicant argued that increased concentration is in the public interest, because it provides the larger economic unit that makes it possible to produce the clear and unequivocal benefits described above.
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It also submitted that concerns regarding concentration were effectively reduced by such factors as Baton's commitment to local management autonomy:
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We want the people who are presently running that operation in Yorkton and Prince Albert to stay there and run it and expand it; the same in Regina. And we shall continue to do the same in Saskatoon ... That is a commitment ... This is a ... philosophy that has had 14 years of actual practice here in the Province of Saskatchewan at CFQC.
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The applicant also emphasized that, at the local level, there would be no decrease in the diversity of voices resulting from approval of these applications, and no lessening of competition.
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The trend towards fewer and larger broadcasting entities in Canada, and the potential impact this might have on small independent broadcasters, was discussed extensively with the applicant and several interveners, most particularly with Telecasting, the licensee of CJFB-TV Swift Current. Telecasting expressed apprehension about the effect of the applications on the continued viability of CJFB-TV Swift Current. According to Mr. Forst, owner of the Swift Current station:
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A combination of this size will make these stations the ninth largest market in Canada ... it will be sold to national advertisers as a package; as a matter of fact a many faced package, but excluding the Swift Current and southwest Saskatchewan market ... This will make it next to impossible for us to sell nationally.
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In response to the concerns expressed by Mr. Forst, Baton stated that it was prepared to implement and abide by a number of provisions designed to ensure that approval of these applications does not affect the viability of CJFB-TV. These provisions were summarized by the applicant at the hearing, and were reiterated in a letter dated 9 May 1986 to the Commission from Baton as follows:
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1. Baton would agree to allow Telecasting to delete "local commercials" carried on CKMC-TV (the CKCK-TV rebroadcasting station serving the Swift Current area), and to substitute therefor any other commercials, including national, regional or chain operation advertisements. "Local Commercials" is to be defined as "any commercial that is a non-advertising-agency account". Such deletion and substitution would be at Telecasting's sole expense. However, Mr. Forst would not be required to contribute to any of the operating costs or capital costs associated with the CKMC-TV signal.
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2. Baton's subsidiary, Glen Warren Broadcast Sales ("Glen Warren"), would agree, upon the execution of a normal representation contract, to include CJFB-TV in all of its Saskatchewan National Sales offerings.
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3. Baton would agree to guarantee for a period of two fiscal years the gross national selective advertising revenue of CJFB-TV. This two-year guarantee would run from the time that Glen Warren commenced to represent CJFB-TV, and the amount guaranteed would be the gross amount (subject to a reasonable audit) which Telecasting had received as national selective advertising revenue for the twelve month period immediately preceeding the date that Glen Warren commenced its representation.
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4. CKCK-TV would undertake to negotiate an operating contract with CJFB-TV for the gathering and forwarding of Swift Current and area news to the proposed Saskatchewan Television News Service.
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The letter confirmed that CKCK-TV would continue its current practice of not selling local commercials in the Swift Current area.
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In addition, the letter reiterated that Baton would be prepared to accept a condition of licence requiring it:
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to execute and deliver to Mr. Forst an agreement containing the provisions set out above. It would subsequently be up to Mr. Forst to decide whether he would make such agreement operative by executing it.
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Conclusion
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In light of the overall commitments and benefits noted above, the Commission is satisfied that the proposed transactions will yield significant and unequivocal benefits to the many communities served by the television stations now or about to come under Baton's ownership, to Saskatchewan, and to the Canadian broadcasting system as a whole and, accordingly, that approval is in the public interest. Moreover, the Commission is convinced that the value of the benefits received through the common ownership of these stations by a well-financed, experienced and committed broadcaster such as Baton clearly outweighs any concerns raised by the applications with regard to concentration of ownership.
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In reaching its decision, the Commission has also taken into account the assurances given by Baton with respect to the preservation of local management autonomy in the operation of each of the Saskatchewan stations it is acquiring. Moreover, the Commission is satisfied that the proposed safeguards offered by Baton to the licensee of CJFB-TV Swift Current will adequately protect CJFB-TV against any undue impact that might be caused by increased competition from Baton.
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The Commission has also taken note of the fact that there will be no increase in concentration of ownership at the local level as a consequence of this decision. In Regina, diversity among the over-the-air broadcast voices will, in fact, be increased since Harvard will retain ownership of CKRM and CKMQ-FM while Baton will have effective control of CKCK-TV. In Regina and Saskatoon, this diversity will expand further when the new television stations licensed to SaskWest commence operations.
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The Commission acknowledges the several interventions submitted by elected municipal officials, individuals and other interested parties, the vast majority of whom expressed strong support for approval of the applications. In this context, the Commission notes the intervention submitted by SaskWest, and the following comment made by this new licensee at the hearing:
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We want to assure the Commission that these proposed changes do not change our view of our commitment, of our ability to perform here, and our objectives will not be diminished ... The only thing we ask ... is that we be allowed to compete on an equal footing.
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With reference to SaskWest's contention that a high degree of competition is likely to develop between it and Baton in the Regina and Saskatoon markets, and potentially elsewhere in the province, the Commission is confident that such competition will serve as a positive force by promoting the production of local programming of greater quality and quantity than would otherwise be achieved.
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Conditions of Licence
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As discussed with Baton at the hearing, and consistent with the commitments made by the applicant, the licences to be issued pursuant to this decision shall be subject to a number of conditions.
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1. The licences to be issued for CKCK-TV, CFQC-TV, CICC-TV and the new CTV station in Prince Albert are subject to the following condition of licence:
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It is a condition of licence that the station broadcast 4 hours 30 minutes per week of regional programming produced by any one or combination of CKCK-TV Regina, CFQC-TV Saskatoon, CKOS-TV and CICC-TV Yorkton, CKBI-TV Prince Albert and the new CTV station in Prince Albert. This regional programming shall include a provincial news program to be aired five evenings per week and shall be distributed by means of a bi-directional microwave system;
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2. Each of the licences issued pursuant to this decision is subject to the following condition of licence:
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It is a condition of licence that the station spend, jointly with the other Saskatchewan stations controlled by Baton, a minimum of $1,080,000 during this licence term on television drama programs produced in Saskatchewan using the creative resources of communities throughout the province;
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3. The licence to be issued for CKCK-TV is subject to the following condition of licence:
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It is a condition of licence that the licensee execute and deliver to the licensee of CJFB-TV Swift Current an agreement containing the provisions set out in the letter from Baton to the Commission dated 9 May 1986;
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4. The licence to be issued for the new CTV station in Prince Albert is subject to the following condition of licence:
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It is a condition of licence that construction of the station be completed and that it be in operation within twelve months of the date of this decision or such further period as the Commission may, upon receipt of a request for extension before the expiry of the said twelve months, deem appropriate under the circumstances.
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Related Matters
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It should be noted that after these applications were gazetted, the Commission received a telex on behalf of the prospective licensee of CKBQ-TV Melfort proposing that the station receive its programming entirely from CFQC-TV Saskatoon, rather than from CFQC-TV and CKBI-TV Prince Albert as currently authorized. This amendment to the application was accepted by the Commission in accordance with Section 8 of the Rules of Procedure, and is hereby approved.
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Fernand Bélisle
Secretary General
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APPENDIX
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Pursuant to Decision CRTC 86-642, broadcasting licences expiring 30 June 1991 will be issued to the applicants for the television stations indicated below, upon surrender of the current licences:
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Call sign and Location/ Current Licensee/
Applicant/Requérante Indicatif d'appel et endroit Titulaire actuelle
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576454 Saskatchewan Ltd. CKBI-TV (CBC/SRC) Prince Albert Prince Albert
CKBI-TV-1 Alticane Television Inc.
CKBI-TV-2 North Battleford
CKBI-TV-3 Greenwater Lake
CKBI-TV-5 Big River
CKBI-TV-6 Spiritwood
CKBI-TV-7 Tisdale
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New CTV Prince Albert
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CKOS-TV (CBC/SRC) Yorkton Yorkton Television
Co. Ltd.
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CHSS-TV (CBC/SRC) Wynyard
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CFSS-TV (CBC/SRC) Warmley
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CICC-TV (CTV) Yorkton
CICC-TV-1 Wynyard
CICC-TV-2 Norquay
CICC-TV-3 Hudson Bay
CICC-TV-4 Humboldt
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CIEW-TV (CTV) Carlyle Lake
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Regina Limited Partnership CKCK-TV (CTV) Regina Harvard Develop-
CKCK-TV-1 Colgate ments Limited
CKCK-TV-2 Willow Bunch
CKMC-TV Swift Current
CKMJ-TV Marquis
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Saskatoon Limited Partner- CFQC-TV (CTV) Saskatoon Russwood Broadcast-
ship CFQC-TV-1 Stranraer ing Limited
CFQC-TV-2 North Battleford
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Saskatoon Limited Partner- CKBQ-TV Melfort Prince Albert Tele-
ship and/et 576454 Saskat- vision Inc. and/et
chewan Ltd. Russwood Broadcast-
ing Limited
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