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Public Notice
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Ottawa, 5 June 1987
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Public Notice CRTC 1987-143
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Cable T.V. of Camrose Ltd. and Cable T.V. of Wetaskiwin Ltd.
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Camrose, Wetaskiwin and Millet, Alberta
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In Notice of Public Hearing CRTC 1986-90 dated 15 December 1986, the Commission called Cable T.V. of Camrose Ltd. (now known as 96111 Alberta Ltd.) (Camrose Ltd.) and Cable T.V. of Wetaskiwin Ltd. (now known as 255629 Alberta Ltd.) (Wetaskiwin Ltd.) and their shareholders according to the share transactions approved by the Commission on 16 April 1986, to the 17 February 1987 Calgary Public Hearing to discuss possible breaches of conditions of licence and whether unlicensed companies are providing cable television service to the communities of Camrose, Wetaskiwin and Millet.
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Background
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In Decision CRTC 76-554 dated 23 August 1976, the Commission granted a licence to establish a cable television undertaking at Camrose and Wetaskiwin and subsequently approved an application to extend the authorized service area of the incorporated company, Cable T.V. of Camrose Wetaskiwin Ltd., to add the community of Millet.
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Following a public hearing in Regina on 19 June 1984, the Commission approved applications by Wetaskiwin Ltd. for approval to acquire the assets of the licensee, Camrose Ltd., used to provide service to Wetaskiwin and Millet and for a licence to provide service to these two communities. The Commission also approved an application by Camrose Ltd. to delete these communities from its licence (Decisions CRTC 84-789 and 84-790 dated 13 September 1984).
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Under the share transfers approved by the Commission on 16 April 1986, the shares of Camrose Ltd. were to be held, directly or indirectly by Mr. Thomas A. McLaren, 39.3%; directly or indirectly by Mr. Richard E. Berday, 35.7%; and by Nelson Broadcast Services Ltd. (NBS), 25%. The Wetaskiwin Ltd. shares were to be held, directly or indirectly by Mr. McLaren, 33.9 %; directly or indirectly by Mr. Berday, 41.1%; and by NBS, 25%.
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In the fall of 1986, the Commission received applications for approval to transfer the assets of the Camrose Ltd. cable system to Cable T.V. of Camrose Inc. (Camrose Inc.), for approval to transfer the assets used to provide service to Wetaskiwin/Millet from Camrose Ltd. to Cable T.V. of Wetaskiwin Inc. (Wetaskiwin Inc.) and for the issuance of new licences to Camrose Inc. and Wetaskiwin Inc. on surrender of the existing licences. However, because the asset transactions appeared to have already taken place, the ownership structure of the licensees did not appear to be that approved by the Commission, and there were other uncertainties, including whether the licensees would and could consent in law to surrender their licences, the Commission returned the applications and called both the licensees and their shareholders to appear at the Calgary public hearing.
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The Hearing
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At the 17 February 1987 hearing, Mr. Berday and Mr. McLaren, two of the three principal shareholders of the licensees, Camrose Ltd. and Wetaskiwin Ltd., attended with their counsel, Mr. Douglas Sirrs and Mr. Michael MacDonald, who also represented the two licensees. The remaining shareholder, NBS, also attended the hearing and was represented by counsel, Mr. Robert Shouldice.
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Counsel for Messrs. Berday and McLaren informed the Commission that the ownership structure approved in 1986 had not been implemented, that Wetaskiwin Ltd. never implemented its authority and had no assets, that the assets and shares of Camrose Ltd. had been transferred to Camrose Inc. and Wetaskiwin Inc. and that, as a result of a shareholder dispute, the NBS shares in the licensees are currently deposited with the Alberta courts and cannot be voted.
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Moreover, evidence presented at the Calgary hearing shows that a plan to have Mr. Berday and his family control and operate the cable system serving Wetaskiwin and Millet, and to have Mr. McLaren and his family control and operate the cable system serving Camrose, appears to have been implemented. The existing corporate structures of the companies are as follows: NBS owns 100% of Camrose Ltd., which in turn owns 25% of each of Camrose Inc. and Wetaskiwin Inc.; of the remaining 75% of the shares of Camrose Inc., 67% are held indirectly by Mr. McLaren and his family through 336633 Alberta Ltd., while Mr. Berday and his family hold 8% indirectly through Business Management Ltd. The remaining 75% of the shares of Wetaskiwin Inc. are held indirectly by Mr. Berday and his family through Business Management Ltd. Furthermore, Camrose Inc. and Wetaskiwin Inc. acquired the assets of the Camrose, Wetaskiwin and Millet systems without prior Commission authority and have been providing cable television service to these communities without valid licences.
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Mr. MacDonald stated at the hearing that the Commission's September 1984 decisions regarding the transfer of assets to Wetaskiwin Ltd., had never been implemented because of Revenue Canada's tax rules.
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The Commission notes that an offer by NBS to sell its shares was received by Messrs. Berday and McLaren in November of 1984 but that they were dissatisfied with the asking price. NBS sought an independent appraisal of the value of the shares but disputed the appraised value and, as required by a 21 November 1986 Alberta court ruling, the NBS shares were deposited with the court until it determines a fair value for these shares.
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Mr. Shouldice stated that NBS, the shares of which are held 33.3% by each of Messrs. Ken Nelson, Lloyd Nelson and Morgan Anderson, intends to proceed with pursuing the court's valuation of its shares and that he was not present at this public hearing to "propose that the licence be cancelled, the licence be revoked or the licence be suspended in any way". He also stated that it was always the intention of NBS to ensure "that CRTC compliance be adhered to strictly."
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Mr. MacDonald told the Commission that Messrs. Berday and McLaren did not purposely breach the conditions of licence regarding ownership, but that they were unsure of the steps which should be followed, given the problems and court actions involving the licensee companies. He stated that his clients had filed applications with the Commission for authority to transfer the assets of the Camrose, Wetaskiwin and Millet systems to the new companies, within ten days of the disposition of an injunction application filed by NBS in an effort to stop the companies' reorganization. Mr. MacDonald acknowledged that his clients were aware that they required the Commission's prior approval for such transactions. He said that "we tried to comply and didn't do a good job of it," and characterized any breach of conditions of licence as "imperfect compliance."
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Conclusion
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After reviewing the record of the public hearing, the Commission considers that there have been breaches of conditions of licence. Effective control of the licensee companies has been changed and their assets transferred to Camrose Inc. and Wetaskiwin Inc. respectively, all without prior Commission approval. Moreover, it appears that the licensees are not providing cable service to the communities in question and that broadcasting receiving undertakings are being operated without valid licences.
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The Commission views this situation with strong disfavour. It considers the actions of Camrose Ltd. and Wetaskiwin Ltd. in these unauthorized transactions to have been antagonistic to the processes, and therefore to the accepted objectives of the Canadian broadcasting system. Nevertheless, it wishes to regularize the situation in these communities, and to do so with as little disruption as possible.
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Accordingly, the Commission is prepared to consider the applications that were filed and returned in the fall of 1986 for the issuance of new licences to provide cable television service to the communities of Camrose, Wetaskiwin and Millet, on surrender of the licences issued to Camrose Ltd. and Wetaskiwin Ltd. The applications would require re-filing, in order for the Commission to proceed to their consideration.
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In arriving at this position, the Commission cautions the principals involved that should regulatory requirements not be complied with in the future, it will not hesitate to take appropriate action, which can include prosecution and/or non-renewal of the licence.
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Fernand Bélisle Secretary General
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