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Decision
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Ottawa, 10 June 1988
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Decision CRTC 88-406
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Radio St-Hyacinthe (1978) Ltée
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Saint-Hyacinthe, Quebec -872980800 -872981600
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Following public hearings in Quebec City on 30 November 1987 and 7 March 1988, the Commission approves applications for authority to transfer effective control of Radio St-Hyacinthe (1978) Ltée, licensee of CKBS and CFEI-FM Saint-Hyacinthe, through the transfer of 1,000 common voting shares (100%) from Mr. Michel Chapdelaine (350), Mr. André Lagacé (300), Mr. Roger Duceppe (230), and Mr. Richard Loiselle (120) to COGECO Inc.
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Through its subsidiaries, COGECO Inc. (Cogeco) operates television stations CKTM-TV and CFKM-TV Trois-Rivières and CKSH-TV and CFKS-TV Sherbrooke, as well as radio stations CFGL-FM Laval and CJMF-FM Quebec City. Cogeco also has indirect interest in a number of cable undertakings in central and eastern Quebec with more than 130,000 subscribers, making it the third largest cable operator in the province of Quebec. Cogeco also holds a minority interest in Premier Choix: TVEC Inc., which is licensed to operate the French-language pay television service Super Ecran and the specialty programming service, Le Canal Famille. In addition, Cogeco is a member of the Consortium de télévision Québec-Canada which is licensed to operate the French-language specialty television programming service TV5, and has an interest in Les Productions SDA Ltée, a private production company.
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Radio St-Hyacinthe (1978) Ltée for its part was licensed to operate station CKBS Saint-Hyacinthe in 1959. This AM station receives strong competition in terms of audience share from Montreal area AM and FM stations and, according to BBM surveys, it obtains a very limited share of the listeners in its market. The Commission also notes that over the past six years CKBS has been only marginally profitable.
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The Commission also authorized the licensee to operate a new FM station in Saint-Hyacinthe on 21 January 1987 (Decision CRTC 87-57). The new station was to be operated in the Group I music format on a joint basis with station CKBS. At the time of the hearings in November 1987 and March 1988, this FM station was not yet on the air and the Commission had extended its implementation deadline until 31 March 1988.
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At the 30 November 1987 public hearing, the President of the company and general manager of station CKBS, Mr. Roger Duceppe, stated that the shareholders had decided to dispose of the business because he had been in poor health for the previous three years and the fact that he had recently had major surgery.
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In response to the Commission's concerns regarding the FM station and the proposed rapid change of control of a licensed undertaking which had not yet been implemented as of the date of the hearings, Mr. Duceppe stated that his illness had become more serious in January 1987, at about the same time as the licence was issued, but that the process of implementing the station had nonetheless continued during 1987. He stated that as of the 30 November 1987 hearing about $10,000 worth of disbursements had been made for that purpose and that in light of the measures taken up to that time he could assure the Commission that the new FM station would be on the air by 31 March 1988. The Commission notes that station CFEI-FM Saint-Hyacinthe commenced broadcasting on 30 March 1988, and, in view of the particular circumstances of this case, it considers that the licensee has responded satisfactorily to its concerns.
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As stated previously, Cogeco will acquire 100% of the common shares in Radio St-Hyacinthe (1978) Ltée for $370,400; this amount is to be paid in full on the day of closing. Cogeco stated at the hearing that it was also assuming the licensee's outstanding financial obligations, which amount to some $300,000. The Commission has noted the statement made at the hearing to the effect that (TRANSLATION) "the Cogeco Group and its shareholders guarantee the financial aspects" of the transaction. It further notes that a bank letter was submitted confirming the availability of a sum of $950,000 for this transaction and, accordingly, it has no concerns as to the availability or adequacy of the required funds.
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As stated in a number of decisions relating to applications for authority to transfer effective control of broadcasting undertakings, 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 filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
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The Commission reaffirms that the first test any applicant must meet is that the proposed transfer of ownership or control yield significant and unequivocal benefits to the communities served by the broadcast undertakings and to the Canadian broadcasting system as a whole, and that it is in the public interest.
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In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others which may not easily be measurable in terms of their dollar value, are commensurate with the size of the transaction, and that they take into account the responsibilities to be assumed, the characteristics and viability of the broadcast undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.
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At the hearing, Cogeco pledged to honour all of the conditions and commitments with respect to each of the stations, to maintain and enhance their local involvement and distinctive character, and to contribute to the development of the new FM station. Cogeco further indicated that by retaining the existing management of Radio St-Hyacinthe (1978) Ltée, it would be ensuring continuity of service while making available the considerable human, financial and technical resources pertaining to a larger communications organization.
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With respect to the quantifiable benefits, Cogeco has committed to spend $195,000 over five years. It has undertaken to improve the news and information services of the stations at a cost of $65,000 over five years by hiring two stringers to cover the Beloeil/Saint-Hilaire and Acton Vale areas, and to broadcast Saint-Hyacinthe city council meetings, and to broadcast weather reports geared specifically to the regional farming community. In terms of Canadian talent development, Cogeco has undertaken to provide two annual bursaries of $500 each for students in the theatre arts program at the Saint-Hyacinthe CEGEP, representing a cost of $5,000 over five years.
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In addition, in an effort to improve signal quality at the new FM station in order to make it more competitive in terms of sound quality with FM signals from outside its market, Cogeco has undertaken to invest a further $125,000 in capital expenditures for the purchase of stereo broadcasting equipment and to set up an additional studio for the FM station.
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The Commission has carefully assessed Cogeco's financial and managerial resources and its commitments with respect to local service. The Commission is satisfied that Cogeco has demonstrated that the proposed transaction will bring significant and unequivocal benefits to the communities served and to the Canadian broadcasting system, and that these benefits are commensurate with the size and nature of the transaction. The Commission has concluded, therefore, that approval of these applications is in the public interest.
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Following a close examination of the circumstances surrounding the proposed transfer, and owing to the fact that it was brought on largely by personal problems beyond the control of the licensee and its shareholders, the Commission is also satisfied that approval of the transfer of control of this licensee, which was recently authorized to operate an FM station in Saint-Hyacinthe, will not compromise the integrity of the licensing process.
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The Commission is nonetheless concerned about the licensee's inability to provide a complete and accurate record of the programs broadcast by CKBS and clear and intelligible logger tapes for the broadcast week of 20 to 26 September 1987. At the hearing, the licensee explained that the problem with the logger tapes was caused by a technical defect in its recording equipment. It indicated that the problem was rectified on the same day it was discovered and that since that time a system for monitoring the logger tapes on a daily basis has been in effect.
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The Commission notes, however, that the logger tape submitted by the licensee of the programming broadcast on 13 April 1988 was also incomplete. In a letter dated 5 May 1988, the licensee explained that this was due to a malfunctioning of the logger equipment which has since been corrected.
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Subsections 8(5) and 8(6) of the Radio Regulations, 1986 (the regulations) require each licensee to retain and furnish to the Commission upon request "a clear and intelligible tape recording or other exact copy of all material broadcast" for a period of at least four weeks from the date of the broadcast.
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The Commission reiterates the importance of ensuring that the regulations are adhered to at all times and requires the licensee to submit a report within three months of the date of this decision outlining the measures it has taken to adhere to the regulations and confirming that logger tape equipment is in place, operating and capable of meeting the requirements of subsections 8(5) and 8(6) of the regulations.
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Fernand Bélisle
Secretary General
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