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Decision
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Ottawa, 10 June 1988
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Decision CRTC 88-407
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Radio Côte-Nord Inc.
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Baie-Comeau and Forestville, Quebec -872982400 -872983200
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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 Côte-Nord Inc., licensee of CHLC and CKDO-FM Baie-Comeau and of CFRP Forestville, through the transfer of 1,976 common voting shares (96.35%) from Marcel Plamondon 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 Côte-Nord Inc., for its part, was licensed to operate station CHLC Baie-Comeau in 1962, and the Forestville rebroadcaster in 1976. According to BBM surveys, CHLC which is the only local radio station serving the Baie-Comeau area dominates its market. The Commission also notes that since 1984 the station's financial situation has been very strong.
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The Commission also authorized the licensee to operate a new FM station in Baie-Comeau on 26 November 1986 (Decision CRTC 86-1127). The new station was to be operated in the Group I music format on a joint basis with station CHLC. 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 and majority shareholder of Radio Côte-Nord Inc., Mr. Marcel Plamondon, stated that he had decided to dispose of his broadcast undertaking because of serious illness in his family which required a lot of his time, and because there were no relatives who could take his place.
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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. Plamondon stated that the illness in his family had commenced in the fall of 1986, at about the same time as the licence was issued, but that the process of implementing the station had nonetheless continued during 1987. He specified that between $35,000 and $40,000 in disbursements had been made for that purpose as of the 30 November 1987 hearing, that equipment had been ordered, and that an employee of the FM station was already working at the AM station. The licensee undertook to put the station on air by 31 March 1988 at the latest, notwithstanding the outcome of the present applications. The Commission notes that station CKDO-FM Baie-Comeau commenced broadcasting on 31 March 1988 and it considers that, in view of the circumstances, the licensee has satisfactorily responded to its concerns.
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As stated previously, Cogeco will acquire 96.35% of the common voting shares of Radio Côte-Nord Inc. for $1,150,000. Payment will be in the form of an $800,000 cash remittance to the vendor, with the balance to be paid in the form of restricted voting shares in Cogeco. 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 to it confirming the availability of a sum of $1 million 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 Côte-Nord Inc., 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 $148,500 over five years. It has undertaken to improve the news and information services of the stations by hiring a full-time journalist, at a cost of $100,000 over five years, to be responsible primarily for education and the arts. An additional sum of $26,000 over five years will be allocated for a stringer to cover the Escoumins, Grandes-Bergeronnes and Rivière Portneuf areas.
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In terms of the Canadian talent development, Cogeco has undertaken to broadcast an additional three performances each year featuring local artists and produced by a local independent production company, representing an additional commitment of $22,500 over five years. This is over and above Radio Côte-Nord's existing commitment to allocate $1,000 per year for the broadcasting of a live performance by local artists and an annual grant of $1,000 to the Salon des métiers d'art de Baie-Comeau.
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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 satisfied that approval of the transfer of control of this licensee, which was recently authorized to operate an FM station in Baie-Comeau, will not compromise the integrity of the licensing process.
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The Commission notes with interest that Cogeco is planning to provide distinctive programming at CFRP Forestville, including information programs specific to this area, and it invites the licensee to keep it informed of the result of its efforts in this regard. The Commission also expects the licensee to submit to it an annual report on its initiatives with respect to Canadian talent development.
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Further, the Commission is concerned about the licensee's inability to provide a self-assessment of the programming and clear and intelligible logger tapes for the broadcast week of 20 to 26 September 1987. The licensee explained that CHLC did not have in place at the time a system for monitoring its programming on a daily basis and that its recording equipment was out of order. At the hearing, it mentioned the steps it has taken to ensure compliance at all times with CRTC regulations and policies, including the requirement that all program hosts record hourly for analysis by the musical director the details of the material being broadcast, the replacement of the recording heads on the station's logger equipment and a complete supply of new logger tapes.
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The Commission notes the commitment given jointly by the licensee and Cogeco to honour fully the conditions of licence as well as all Commission policies and regulations and that it intends to review Radio Côte-Nord Inc.'s performance in this regard when the licences of the stations, which expire on 30 September 1989, come up for renewal.
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The Commission acknowledged the written intervention by the City of Baie-Comeau in support of these applications.
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Fernand Bélisle
Secretary General
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