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Decision
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Ottawa, 11 December 1987
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Decision CRTC 87-918
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Huron Broadcasting Limited
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Sault Ste-Marie, Ontario - 871464400 - 871465100 - 871466900
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Pursuant to Public Notice CRTC 1987-213 dated 25 September 1987, the Commission approves the application for authority to transfer effective control of Huron Broadcasting Limited (Huron Broadcasting), licensee of CJIC-TV, CHBX-TV and the broadcasting receiving undertaking serving Sault Ste-Marie, through the transfer of 1,818 common voting shares (30.3%) held by nine minority shareholders, to Soo Mill and Lumber Company Limited (Soo Mill).
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Currently, Soo Mill Holdings Limited (Holdings), which is ultimately owned and effectively controlled by the Hollingsworth family of Sault Ste-Marie, holds 50% of the common voting shares, representing negative control of Huron Broadcasting. As a result of this transaction, the combined interest of the related companies, Soo Mill and Holdings, will effectively control Huron Broadcasting with 4,818 common voting shares (80.3%). The remaining common voting shares would continue to be held by four local shareholders.
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The Commission has examined the financial elements of these transactions and is satisfied that there are no concerns with respect to the availability or adequacy of the required financing.
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As stated in a number of decisions relating to applications for authority to transfer effective control of licensee companies, and because the Commission does not solicit applications for such transfers, the onus is on the applicant to demonstrate to the Commission that the application is consistent with its criteria for assessing applications involving changes in ownership of effective control, and that it is the best possible proposal under the circumstances.
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In evaluating the benefits to be derived from this proposal, the Commission has taken into account that this is an intra-corporate transaction which will result in an existing 50% shareholder gaining clear-cut effective control of the licensee company.
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In Decision CRTC 84-281 dated 21 March 1984, the Commission had approved applications for authority to transfer effective control of Huron Broadcasting to investors from the Sault Ste-Marie area, which resulted in the percentage of local ownership increasing substantially to 100%.
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The Commission notes that the present offer from Soo Mill was precipitated by an initial outside bid received from a company not located in the Sault Ste-Marie area. In response, Soo Mill exercised its right of first refusal and matched the outside offer to those minority shareholders who wished to sell. The applicant indicated that the primary purpose of this transaction is to maintain 100% local ownership.
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In its assessment of the current applications, the Commission has given thorough consideration to the involvement of the Hollingsworth family in the community of Sault Ste-Marie, as evidenced by their local business interests and extensive participation in local and provincial organizations. The Commission notes that the family's commitment to the community has been translated into generous contributions of air time and personnel to an extensive cross section of charitable and non-profit organizations such as the Royal College of Physicians and Surgeons of Canada, the Crimestoppers Program, the Alzheimer Society of Canada, the Canadian Medical Association and the Sault Ste-Marie Association for the Mentally Retarded.
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In addition, the Commission acknowledges that Soo Mill, which has been directly involved in the operation of the licensee company, although from a position of negative control, would now, through this consolidation of ownership, solidify and strengthen its position in the management and direction of the licensee company. The Commission has also attached particular importance to the applicant's statement that existing policies and objectives will be maintained and that key management personnel will continue to be active in the operation of the company.
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With respect to expenditures for fixed assets, the Commission notes the proposed capital expenditure of $106,000 for the licensee's television undertakings in the broadcast year 1987/88. The licensee further committed to update the technical capabilities of the television stations for a total expenditure of $114,249 over the same time period.
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The Commission has also noted the licensee's commitment to the development of local programming, for which it has allocated a total of $92,500 for the broadcast years 1986/87 and 1987/88. The Commission will expect the licensee to continue to provide local programming of particular interest to its community of viewers, given the size and competitive nature of its market.
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The Commission has taken note of the applicant's firm commitment not to increase its cable fees to subscribers in order to finance this purchase of common voting shares. This is consistent with the Commission's long-standing policy that subscribers should not be required to pay higher fees merely because the ownership or control of a cable system has changed and, as such, the Commission views the applicant's statements in this regard as being particularly important.
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In its assessment of these applications, the Commission has placed particular emphasis on the retention of 100% local ownership of the licensee company. The Commission considers that the stability and continuity that is expected to flow from such a consolidation will result in an overall enhancement of the services provided by Huron Broadcasting.
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Under the circumstances, and given the nature of the transaction, the Commission is satisfied that the proposed transfer is in the public interest and that the benefits to the community of Sault Ste-Marie are commensurate with the size of the transaction, the viability of the undertaking, the responsibilities involved and the resources available to the applicant.
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Fernand Bélisle
Secretary General
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