ARCHIVED -  Decision CRTC 88-771

Decision

Ottawa, 25 October 1988

Decision CRTC 88-771

Gagnon TV Ltée Chibougamau, Chapais, La Doré and Saint-Félicien, Quebec -873938500 873939300 -873940100 -873941900

Dolbeau T.V. Service Inc. Dolbeau and Mistassini, Quebec -873942700

Following a Public Hearing in Trois-Rivières, Quebec on 5 July 1988, the Commission approves the applications to transfer effective control of Gagnon TV Ltée (Gagnon TV) and Dolbeau T.V. Service Inc. (Dolbeau T.V.) licensees of the broadcasting receiving undertakings serving the above-mentioned communities to Télésag Inc. In the case of Gagnon TV, the transaction will involve the transfer of 32,000 common voting shares currently held by Jacques Gagnon (6,200), Madeleine Gagnon (6,200), Pierre Gagnon (6,200), Yves Gagnon (6,200), Odette Gagnon-Bédard (6,200), Lucien Leclerc (700) and Raymond Boily (300), and of 100 preferred multiple voting shares from the estate of Fernand Gagnon. In the case of Dolbeau T.V., the transaction will involve the transfer of 150 common voting shares currently held by 1849-0920 Québec Inc., a company owned equally by Louis-René Perron, André Perron, Jacques Perron, Claire-Isabelle Perron and Louise Perron-Ruel.

The purchaser, Télésag Inc. (Télésag) is a company that indirectly controlled by Mr. Gérard Tremblay of Chicoutimi. Télésag is authorized to operate cable systems that serve, among other communities, Chicoutimi and Jonquière and, with almost 30,000 subscribers, its undertaking is largest of its kind in the Saguenay/Lac Saint-Jean region. As a result of this approval, Télésag will have more than 40,000 subscribers and will rank among the five largest cable undertakings in the province of Quebec.

Under the terms of the agreements between the parties, Télésag will acquire 80% of the common shares and 100% of the preferred shares in Gagnon TV for a maximum of $1,833,728, as well as 100% of the common shares in Dolbeau T.V. for a maximum of $1,700,000. The Commission notes that it has been given a bank letter attesting to the availability of the amount needed to acquire all of the said shares. It therefore has no concerns in this regard.

At the public hearing, the vendors gave a number of reasons for selling their interests in the cable systems, among them the fact that these undertakings have limited potential for expansion given the relatively small communities they serve. The undertakings also lack the necessary human and financial resources to meet the growing needs of subscribers and to respond to the rapid technologal changes taking place in the industry. The vendors also pointed to Télésag's expertise and the extensive resources at its disposition. They also consider that it would be better for the subscribers if their undertakings were acquired by a cable operator that was already well established in the region.

As stated in a number of decisions relating to applications for authority to transfer ownership or 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.

The Commission reaffirms that the first test any applicant must meet is that the proposed transfer of ownership or control yields significant and unequivocal benefits to the communities served by the broadcasting undertakings and to the Canadian broadcasting system as a whole, and that it is in the public interest.

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 broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.

Télésag emphasized at the hearing that the Saguenay/Lac Saint-Jean region is very homogenous and isolated from the rest of the province by reason of its geographical location. Télésag stated that because it knows the region and its needs very well, these transactions represent a natural extension of its service within this region and will allow the company to consolidate its position and further rationalize its operations. It also indicated that this pooling of resources and expertise will be advantageous to the staff of each of these undertakings because being part of a larger organization will be a source of motivation and will offer better opportunities for training and advancement.

In addressing the issue of tangible and quantifiable monetary benefits the Commission has accepted $76,000 in capital expenditures and $88,000 in operating expenditures for Dolbeau T.V. and $156,000 in capital expenditures and $146,000 in operating expenditures for Gagnon TV over five years.

In this regard, Télésag noted that it will add the Infovision service to the four Gagnon TV undertakings, and provide an alphanumeric display of Canadian Press news, Communications Québec information and Environment Canada weather reports. The licensee mentioned that the Infovision service is already provided by Dolbeau TV and that it will add the Montreal stock exchange service. In addition, the Commission notes Télésag's plan to add the TV5, Canal Famille, MusiquePlus and MeteoMedia specialty programming services as of 1 September 1988, and to add the Réseau des sports service as soon as it is available.

Further, Télésag proposed to make a greater contribution to community programming services. It offered to assist local organizations in reviving Dolbeau TV's community channel, which ceased operation a few years ago because of a lack of human and material resources. To this end, it intends to make available for the purpose of community programming, facilities and the necessary technical production equipment, to offer technical training programs and set up an exchange program involving some 150 hours of programming each year with Télésag's existing community television service. With regard to the Gagnon TV undertakings, the applicant stated that, in addition to the above-mentioned training programs and community program exchanges, a videotext unit will be made available free of charge for the purpose of broadcasting community service announcements.

The Commission also notes Télésag's plan to improve customer service by computerizing the billing and accounting systems used by the undertakings in order to prevent billing errors and as a means of improving subscriber relations by providing the required billing information or the status of an account instantaneously, upon request. Further, to ensure better co-ordination and quality control of its services, Télésag indicated that a general manager will be given responsibility for the entire Lac Saint-Jean area, and that this person will be assisted by a technical director and an administrator. Because the undertakings are a considerable distance apart, the management of the undertakings will be divided into three sectors: Dolbeau/Mistassini, Saint-Prime/La Doré/Saint-Félicien and Chibougamau/Chapais. According to Télésag, these improvements represent a total of $10,000 in capital expenditures and $95,000 in operating expenditures for Dolbeau T.V. over five years, and of $10,000 in capital expenditures and $175,000 in operating expenditures over five years for Gagnon TV.

In view of the tangible and intangible benefits associated with these applications, which represent in total $252,000 for capital expenditures and $504,000 for operating expenditures, the Commission is convinced that they constitute significant and unequivocal benefits for the communities served by the broadcasting undertakings, and that they are commensurate with the size and nature of the transactions and the resources available to the parties involved.

The Commission expects the licensees to adhere to all of the commitments set out in the applications and made at the public hearing. In this respect, the Commission requires a progress report within six months of the date of this decision. The Commission notes, in this regard, Télésag's commitment at the public hearing that none of the proposed benefits will result in applications for rate increases, other than pass-through charges associated with the addition of the specialty programming services.

Furthermore, the Commission notes that, in response to the intervention by the Conseil des usagers des médias de la Sagamie and following discussion of this matter at the hearing, the applicant indicated in a document provided to the Commission after the hearing that it had asked a consulting firm to conduct a [TRANSLATION] "study on providing service to communities presently without cable in areas adjacent to the authorized service areas of" Gagnon TV and Dolbeau T.V. In this respect, the Commission requires that a report be submitted within six months of the date of this decision outlining the specific measures to be taken as a follow-up to the report in question. At the time of the next renewal of these licences, which expire on 30 September 1990, the Commission intends to review with the licensee of each undertaking the progress made in this regard.

Fernand Bélisle
Secretary General