ARCHIVED -  Decision CRTC 89-766

Decision

Ottawa, 28 September 1989

Decision CRTC 89-766

Selkirk Communications Limited

39 Applications (Agenda Reference 1a., Part A)MH Acquisition Inc.- 40 applications (Agenda Reference 1b., Part B)

Various locations across CanadaFollowing a Public Hearing commencing 29 May 1989 in the National Capital Region, the Commission approves the 39 applications by Selkirk Communications Limited (Selkirk), as set out in the Agenda for that hearing, comprising the first phase of the divestiture of Selkirk's broadcast holdings across Canada, and including the transfer of effective control of the following licensee companies: Selkirk Broadcasting Limited, Mountain FM Radio Ltd., Niagara Television Limited, Lethbridge Television Limited, Calgary Television Limited, Ottawa Cablevision Limited and Pembroke Cablevision Limited; and the transfer of Selkirk's 50% voting interest in Okanagan Valley Television Co. Ltd., as well as its 36.9% voting interest in British Columbia Broadcasting Company Ltd. (BCBC). The above ownership transfers will be effected by the transfer of 2000 Class "B" voting shares (100%) of Selkirk to MH Acquisition Inc. (MHA), a wholly-owned subsidiary of Maclean Hunter Limited (MHL). Further, as part of this decision, the Commission approves the 40 applications, divided into 16 groups as described on pages 4 through 10 of the said Agenda, pertaining to the reorganization of the assets of Selkirk.

As stated in a number of decisions relating to applications for authority to transfer ownership or effective control of broadcasting undertakings, because the Commission does not solicit such applications, and because there is thus only one proposal presented to the Commission, 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. Two such potential concerns are concentration of ownership of broadcast undertakings and media cross-ownership, issues raised in the present context by MHL's existing holdings in radio, television, cable and newspapers across Canada, and the extent to which approval of these transactions will expand MHL's broadcast holdings.

Through various subsidiaries, MHL holds effective control of radio stations in Alberta, Ontario and the Maritimes, making it the third largest private radio broadcaster in Canada when measured by revenues, and the fifth largest by audience. These stations inlude CIWW and CKBY-FM Ottawa and CKEY Toronto. With the acquisition of CFNY-FM, MHL will remain the third-largest private radio broadcaster in revenues, but will become the fourth-largest in audience.

This change in MHL's relative position within the radio industry does not take into account the audiences or revenues of CJCA and CIRK-FM Edmonton. MHL will have interim ownership of these two properties as a consequence of the Commission's decision to deny transfer of effective control to WIC Western International Communications Ltd. of Vancouver (see Decision CRTC 89-770 of today's date). In the present decision, however, the Commission requires MHL, in keeping with its undertaking, to file applications within six months for the divestiture of CJCA and CIRK-FM.

According to the applicant, the cable television undertakings owned by MHL in Toronto and 17 other Ontario locations serve 6% of all cable subscribers in Canada. MHL's acquisition of Ottawa Cablevision Limited (OCL) and its wholly-owned subsidiary Pembroke Cablevision Limited (PCL) will increase this figure to 8%, but will not alter MHL's ranking as the third largest cable operator in Canada.

MHL, which currently controls the CTV affiliate CFCN-TV Calgary and its partial rebroadcaster in Lethbridge, ranks 12th and 14th among Canadian television broadcasters in revenues and audience, respectively. As a consequence of the denial of the application to transfer effective control of CHCH-TV Hamilton to CFPL Broadcasting Limited (CFPL) in Decision CRTC 89-768 of today's date, MHL will have effective control of the Hamilton station, and thereby become the seventh-largest private television broadcaster in Canada.

Clearly, MHL's acquisition of CFNY-FM, CHCH-TV, OCL and PCL represents a considerable expansion of that company's relative position and influence within the Canadian broadcasting system. MHL is becoming a significantly larger player, notably in the Toronto/Hamilton and Ottawa regions. As reiterated by the Commission on several previous occasions, however, concentration of ownership and media cross-ownership need not necessarily be of concern provided that, in any given region, there continues to exist a diversity of opinions, information and ideas flowing from broadcast and other media sources sufficient to ensure that residents have access to differing views on matters of public concern.

Following an examination of these issues, a majority of the Commission has concluded that the greater prominence MHL will assume within the Canadian broadcasting system through acquisition of these Selkirk properties does not represent excessive or undue concentration of ownership. Specifically, the Commission considers that the diversity of broadcast and other voices present in the Ottawa and Toronto/Hamilton regions is sufficient to ensure that residents continue to have access to differing views on matters of public concern.

In the Ottawa region, for example, in addition to the AM and FM radio stations owned by MHL, The Ottawa Sun and OCL's community channel, local residents are served by a total of 15 other local radio stations and 8 local television stations receivable over the air, and the English-language and French-language daily newspapers The Citizen and Le Droit, respectively. In the Toronto/Hamilton area, in addition to CKEY, CFNY-FM, CHCH-TV and The Toronto Sun, area residents have access to 24 other local radio services and 7 other local television services available over the air, and can select from at least three other daily newspapers, The Globe and Mail and The Star in Toronto and The Spectator in Hamilton.

Other issues canvassed at the public hearing include the circumstances surrounding MHL's bid to purchase Selkirk, details of the arrangements and agreements that were made for the disposal of certain Selkirk properties to third parties, and the question as to whether MHL, as a result of the disposal of certain broadcasting undertakings, stands to make a financial gain by obtaining assets of a value in excess of the costs it incurred to acquire them.

Mr. Ron Osborne, MHL's President and Chief Executive Officer, touched on each of these issues at the hearing during his presentation of the applications. In explaining why MHL's first step had been to purchase Southam Inc.'s non-voting shares in Selkirk, Mr. Osborne noted Southam's unwillingness to allow the purchase of these non-voting shares to be made conditional upon subsequent Commission approval of applications for authority to transfer effective control. As noted by Mr. Osborne, "If we wanted to buy Selkirk, as we did, these were the terms on which it was available."

Regarding the question as to why MHL, after making its bid to purchase Southam's shares in Selkirk, did not seek out others to participate in the share purchase as a consortium, Mr. Osborne advised that the formation of such a consortium was effectively prohibited by Southam:

 Southam wanted to ensure that all players had an opportunity to better our offer for Selkirk. If we had put together an advance consortium, a significant level of potential competition for the shares would have been removed.

It was noted at the hearing that MHL was obliged to made a public offer to purchase all of the non-voting Class "A" shares of Selkirk, and not just those owned by Southam, in order to comply with Ontario Securities Commission requirements designed to protect minority shareholders of publicly-traded companies.

Mr. Osborne stressed that MHL made public its intention to sell certain assets to third parties as soon as its plans crystallized. He also noted that, assuming Commission approval, following MHA's acquisition of the voting shares in Selkirk and the reorganization of those properties under the ownership of new companies (NEWCOs), the transfer of effective control of certain assets to third parties would be immediate: "Maclean Hunter will have controlled these properties only for a moment in time".

He added that MHL's negotiations with Selkirk's shareholders and with the third parties had all been conducted at arm's length and that the prices agreed to were fair:  So the answer to the question of whether we made a profit as a result of this transaction is no... We do not believe that approval of this application involves in any way ... trafficking in broadcast licences.

Based on the evidence before it, the Commission agrees with the applicant that it was Southam's publicly-announced decision to sell its holdings in Selkirk that largely dictated the way the proposed transaction was eventually put together.

At the hearing, the Commission examined carefully MHL's assertion that its costs of purchasing the Selkirk shares would be equal to or greater than the value of the acquired assets. According to MHL's own estimates, and as discussed at the hearing, the total value of Selkirk's assets is approximately $616,200,000 after reflecting an $8,300,000 write-down in the CHCH-TV program inventory. The figure of $616,200,000 also includes a negative value of $11,000,000, this being the difference between the price Selkirk had agreed to pay for the assets of CKOI-FM and CKVL Verdun and MHL's estimate of the value of these assets.

Prior to the hearing, the Commission hired the chartered accountancy firm of Peat Marwick to conduct an independent audit of Selkirk's assets. The Commission notes that the Peat Marwick valuation is only marginally greater than MHL's valuation, the difference being approximately 1% of the price paid by MHL for the Selkirk shares. The Commission therefore accepts as reasonable MHL's valuation of $616,200,000. It notes, however, that its decision to deny Selkirk's applications to purchase the assets of the Verdun radio stations (see Decision CRTC 89-767 of today's date) has the effect of increasing the value of Selkirk's assets by $11,000,000 to a total of $627,200,000. This figure represents a value of $21,200,000 in excess of the amount paid by MHL for the Selkirk shares.

At the hearing, MHL argued that any calculation of the cost of acquiring these shares should properly include its net interest expenses on the cash paid for the shares, calculated from the time of their purchase to the date of the Commission's decision. MHL claimed that, because it had been necessary for it to pay cash for the shares up front, without having just obtained Commission approval for the transfer of control of Selkirk, the interest costs it has incurred to date should be included in calculating the total cost of the share purchase. At the hearing, MHL estimated that its net interest costs would have amounted to $18,500,000 by 1 September 1989, over and above the $606,000,000 it paid to purchase the equity in Selkirk.

The Commission notes that at the time MHL obtained ownership of the non-voting Selkirk shares, it also obtained all of the rights and benefits attached to such ownership. Thus, if the net interest costs incurred to the present are to be included as part of the purchase price, as suggested by the applicant, then that larger figure should also be measured against the present value of the Selkirk assets. Rather than attempt to calculate all developments involving the various Selkirk properties, both those regulated by the Commission and those not so regulated, the Commission has determined that it would be most practical and fair not to include MHL's estimated net interest expenses in the calculation of MHL's cost of purchasing the Selkirk shares. Instead, the Commission has taken the purchase price as being $606,000,000, and has compared this figure to the valuation of $627,200,000 for the Selkirk assets, as calculated above.

On this basis, the Commission concludes that MHL, by divestiture of certain broadcast undertakings and through approval of these transactions, is making a financial gain by acquiring assets having a value of $21,200,000 in excess of the price paid for the Selkirk shares. The Commission is of the view that it would not be appropriate or warranted in the circumstances for this excess value to accrue to the applicant. Rather, and as discussed with MHL at the hearing, this excess is to be devoted to achieving the greatest possible benefit for the Canadian broadcasting system as a whole.

The Commission therefore directs MHL, within three months of the date of this decision, to invest a minimum of $21,200,000 for the creation of a permanent capital fund. The fund should have as its purpose the strengthening and improvement of the Canadian broadcasting system and should be administered by a board of trustees, the majority of whom are independent of MHL, its subsidiaries and its owners. MHL is further directed to file a report, within this same three-month period, providing the names of those who will serve as trustees and setting out its views as to how the fund's purpose can best be achieved, whether this be through the endowment of new, worthy and effective broadcast initiatives, or through extending financial support to existing projects. The Commission will wish to examine MHL's proposals before pronouncing on their acceptability.

The Commission emphasizes that this fund is to be separate and distinct from any commitments made by MHL in its applications and identified by MHL as benefits flowing from these transactions. These benefits, both tangible and intangible, are summarized in a document prepared by the Commission and placed on the public file for the 29 May 1989 hearing, and entitled "Benefits Tables, Organization Charts and Preliminary Statistics Tables: Radio and Television".

MHL has attached a cash value of approximately $36,730,000 to its commitments for the provision of various benefits over a five-year period. In Public Notice CRTC 1989-109 of today's date, the Commission has issued a policy statement which summarizes the types of benefits, that for one reason or another, it is generally unable to accept in its deliberations with respect to applications for the transfer of control of broadcasting undertakings, as distinct from those benefits it is generally prepared to accept as "significant and unequivocal" with respect to such transfers.

Those benefits proposed by MHL which fall into the former category, and which have thus not been taken into account by the Commission in assessing the current transaction, include the sum of $2,585,000 which, MHL stated, it would allocate to extend cable television service outside of the existing licensed territory of OCL. The Commission notes that any such extension of service would be conditional upon receipt of Commission approval for future applications by OCL.

A second proposed benefit not accepted by the Commission is the $4,250,000 in interest MHL calculates would be earned over the next five years on the amounts it has committed to invest in two endowment funds, the "Drama Series Endowment Fund" and the "Children's Broadcast Institute Trust Fund". In the Commission's view it would amount to double counting to accept as a benefit the interest generated by the investments in these funds, as well as the investments themselves.

The Commission notes that, with the removal of these two items from those claimed as benefits by MHL, a benefits package remains having a dollar value of approximately $29,895,000, including indirect expenditures of $325,000, for various capital projects, system improvements, initiatives in support of Canadian talent, plans for the production of new Canadian programming and other proposals made by MHL, either on its own behalf as "corporate benefits" or on behalf of OCL, PCL and NEWCO CFNY.

In general, and with certain qualifications discussed below, the Commission is satisfied that the proposed benefits are significant and unequivocal, commensurate with the size and nature of the transaction, and take into account the responsibilities to be assumed by MHL, the characteristics and viability of the broadcasting undertakings concerned, and the scale of the programming, management, financial and technical resources available to MHL. Further, the Commission is satisfied that approval of these applications is in the public interest.

The Commission expects MHL to ensure that all of the proposed expenditures under the $29,895,000 benefits package are made over the course of the next five years in accordance with the schedule outlined by the applicant. The Commission notes in this regard MHL's confirmation at the hearing that its proposed benefits represent minimum commitments in that it may spend more, but not less than promised, and that the commitments are unconditional in the sense that they will be fulfilled regardless of MHL's financial situation or that of the individual broadcasting undertakings concerned. In order that the Commission may assess the applicant's performance in this regard, it expects MHL to submit annual reports regarding the status of the various projects and initiatives.

MHL's largest single initiative will be the creation of the Drama Series Endowment Fund. This permanent capital fund of $8,000,000, which is to be administered by an independent private foundation, is expected to generate approximately $800,000 in interest income each year. Although by far the largest portion of this amount will be used to assist in the production of new dramatic series, MHL stated at the hearing that "... approximately $100,000 per year would be used for script development for dramatic series programming to ensure a continuous flow of product." MHL estimated that the interest from the fund might be used to invest in the production of one, or perhaps as many as two, new dramatic television series each year. It emphasized that the principal focus of the fund will be to provide financing "where all other tentative financing components are in place." MHL added that, "... to the extent any investment makes a return, that return goes back into the fund."

According to the applicant, although requirements and rules may vary from time to time, a series will normally only be eligible for funding for the first year of production. In addition, episodes must be a minimum of 30 minutes in length, production must be completed within 12 months of receipt of funding, and the series must be broadcast domestically within the following 12 months.

In the Commission's view, this initiative should contribute to ensuring the production of a number of worthy new Canadian drama series that, but for the fund's support, might fall short of attracting all of the financing needed to ensure their production. The Commission considers that access to the fund should be administered in such a manner as to guarantee that applications by all potential beneficiaries, including independent producers across the country, are treated in a fair and equitable manner. The Commission notes in this regard MHL's suggestion that the fund's board of directors would consist of a number of "senior television executives and established industry leaders." The Commission, however, considers that the board's membership should contain a balance between representatives of the television broadcasting industry in Canada and the independent television production sector, and that members should be selected with a view to providing effective representation of regional perspectives.

The Commission therefore expects MHL to follow these criteria in selecting the board's members, and to provide a list of their names. Further, the Commission expects the annual reports it is requiring of MHL to contain details of the various projects for which financial assistance from the Drama Series Endowment Fund is requested.

A second major initiative proposed by MHL is called the "CAPS Radio Project", CAPS being an acronym of Canadian Artists and Programs on Satellite. The project represents direct and indirect expenditures of $3,600,000 over five years and, according to MHL, is in support of the objectives set out in the Commission's "Radio Networks and Syndication Policy" (Public Notice CRTC 1989-3).

Specifically, the initiative is intended to stimulate the development of independently-produced syndicated radio programming in Canada. To accomplish this, MHL will establish a Syndication Development Fund which will provide independent producers with grants to defray the costs of developing and launching syndicated programs. For a period of five years, MHL will also lease and make available to independent producers, without charge, a full-time satellite channel to deliver their programs across the country. Further, MHL will construct, equip, and make freely available to independent syndicators, production studios in each of Toronto, Charlottetown and Calgary, with a control room in Toronto. It was initially proposed that a studio would be constructed in the Montreal area, contingent upon approval of the applications to acquire the assets of the two Verdun stations. MHL confirmed at the hearing that, should these applications be denied, the studio will be constructed at Calgary.

MHL has allocated a budget of $200,000 over five years to advertise and promote the CAPS Radio Project. In order that this budget be put to the most effective use, the Commission expects MHL to ensure that all advertising and promotion be carried out through industry and trade publications such as RPM, The Record, Broadcaster and Radio Activité. It directs MHL to ensure that none of the funds related to this aspect of the project is allocated against unsold advertising availabilities in any MHL publication or on any MHL-owned station.

Further, the Commission expects the applicant to adhere to its commitment at the hearing that, should the CAPS facilities be rented at any time, the rental income will be reinvested in the project. The Commission also expects MHL to ensure that independent syndicators have right of first access to the studio facilities and satellite time. MHL is to furnish details regarding those making use of the studio facilities and satellite time, and the extent of such use, as part of the annual reports requested above concerning the status of MHL's commitments. This report should also include details pertaining to any use of these facilities by MHL or MHL-associated companies.

Among the other initiatives proposed by MHL are contributions on behalf of CFNY-FM, totalling $500,000 over five years, to produce recordings of music by hitherto unrecorded artists. A further initiative on behalf of CFNY-FM involves the allocation of $500,000 over five years for the purchase of radio programs from Canadian independent producers.

As corporate benefits promised on its own behalf, MHL made commitments to establish a music reference service for broadcasters (Canadian Music Key) at a cost of $575,000 over five years, and to produce a series of six videotapes dealing with the Commission's policies and regulations and the Broadcasting Act (the Broadcast Educational Series), representing a further cost of $500,000.

At the hearing the Commission questioned whether the cash value of these two projects might not be more effectively put to use in other areas. In the case of the Canadian Music Key, it was suggested to MHL that much of the information the service would provide subscribers is already available from existing sources. As for the Broadcast Educational Series, the concerns related to how quickly the information contained in the series might become outdated by the passage of new legislation and changes to CRTC policies and regulations. With respect to the first concern, MHL argued that its proposed music reference service would be much more comprehensive than existing reference publications. Mr. Ted Kennedy, author of "Canada's Top 40", a reference book prepared primarily for the use of radio stations and containing various categories of information such as hit status and Canadian content, filed an intervention which addressed this element of the MHL benefit package. Although he questioned the usefulness of the additional information that MHL proposed to provide to radio programmers, he acknowledged in his intervention at the hearing that the proposed Music Key would contain more data than his publication.

With regard to the proposed educational series, MHL conceded that the currency of the information would be susceptible to changes in legislation and regulation over time, but argued that the programs would, for some years, continue to be useful to students planning to pursue careers in broadcasting. MHL also stated that the production of certain of the segments in the series, such as those pertaining to broadcast legislation or FM radio regulations for example, could be delayed for one or two years until any changes are put into place.

Although it remains the Commission's view that the expenditures proposed for these two initiatives might be spent with greater effectiveness in other areas, it agrees that the proposals do promise to be of some benefit, albeit largely intangible and indirect in nature. One other item claimed as a benefit by MHL is a proposed expenditure by OCL of $286,000 for the development and training of staff employed in its community channel operations. The Commission considers that such an expenditure is most appropriately considered as part of the normal cost of doing business, and that it is thus not acceptable as a proposed benefit. Nevertheless, it reiterates the expectation stated earlier in this decision that MHL make this and all of the other proposed expenditures included in the $29,895,000 benefits package over the course of the next five years. The Commission will monitor the implementation of these initiatives with interest.

Following are the licence terms, conditions of licence and other details pertaining to the broadcasting undertakings whose assets are being acquired by MHA on behalf of various NEWCOs and by Key Radio Ltd., under the second phase of the transaction:

MH Acquisition Inc. on behalf of a company to be incorporated (NEWCO CFNY)

(Agenda Reference 1b., Part B, 2)

The Commission will issue a joint FM licence to the company to be incorporated (NEWCO CFNY) upon surrender of the current licence for CFNY-FM Brampton. The licence will expire 31 August 1994 and will be subject to the conditions specified below and in the licence to be issued.

This authority will only be effective and the licence will only be issued at such time as the Commission receives documentation establishing that the company has been incorporated in accordance with the application in all material respects.

The Commission authorizes the licensee to make use of the Subsidiary Communications Multiplex Operation. The Commission expects the licensee to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM). This authority may only be implemented when the Department of Communications gives the technical approval required by the Radio Act and regulations made thereunder.It is a condition of licence that the licensee adhere to the Canadian Association of Broadcasters' (CAB) self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.

It is also a condition of licence that the licensee adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.

The Commission notes that, as a consequence of this decision, no further action is required with respect to the licence renewal application (882950900) by Selkirk Broadcasting Limited in respect of CFNY-FM, which was heard at a Public Hearing in Toronto on 13 March 1989. In that renewal application, the former licensee of CFNY-FM had proposed changes to the station's Promise of Performance, the effect of which would have been to move the station's sound closer to that of a typical Group II FM station. Several interveners filed comments with the Commission concerning the application to transfer effective control of CFNY-FM to MHL, and urged that the station continue to provide an alternative voice in the market by retaining its existing Promise of Performance.

In responding to the concerns of CFNY-FM listeners, MHL emphasized its commitment to maintain diversity and to perform as an owner "dedicated to preserving [CFNY-FM's] role in supporting new Canadian talent and new music". The Commission notes in this regard the new licensee's proposals, set out in its Promise of Performance, to increase the size of CFNY-FM's playlist from 900 to 950 and to decrease the hit: non-hit ratio from 45:55 to 40:60.

The Commission also notes that, as the holder of a joint FM licence, NEWCO CFNY will increase the amounts of foreground and mosaic programming on the station. Moreover, all of the benefits related to Canadian talent development that were proposed by MHL on behalf of NEWCO CFNY are over and above the commitments made by Selkirk Broadcasting Limited in its renewal application mentioned above. These commitments of the former licensee are now assumed by NEWCO CFNY, and represent direct expenditures on Canadian talent development totalling $292,000 annually, including financial support for a provincial talent search, for the Casby Awards and for the recording of music by Canadian artists.

Apart from the modifications described above, the new licensee has not proposed to make any substantial changes to CFNY-FM's current Promise of Performance other than to reduce the amount of news from 5 hours 58 minutes to 4 hours per week. The applicant argued that the station's effectiveness in performing its role as an alternative radio station, in particular the station's ability to promote new music, would be diminished if it were to be required to maintain the present news commitment.

The Commission has considered the applicant's request, but is concerned by the negative effect the proposed reduction in news would have on CFNY-FM's ability to provide adequate coverage of news and events occurring in the region that forms the station's primary service area, Brampton and Peel County. Moreover, the Commission does not agree with the applicant that retention of the current news requirement will have an impact on the station's role as an alternative radio station. The Commission notes further in this regard that the combined amount of news and public affairs programming proposed for CFNY-FM is substantially less than the amount being broadcast by other music-oriented stations in the same listening area. Accordingly, the Commission denies the proposed reduction in news, and also expects the new licensee to provide adequate coverage of local Brampton news.

The Commission notes the statement by the present owners of CFNY-FM that the station is currently operating in compliance with the regulations and places particular importance on the assurances by the applicant that such compliance will be maintained.

Key Radio Ltd.
Toronto, Ontario

(Agenda Reference, 1b., Part B, 4)

The Commission will issue a licence to Key Radio Ltd. to carry on an English-language FM radio network to distribute the "Dick Bartley's Original Rock and Roll Oldies Show". The licence will be issued upon surrender of the current licence issued to Selkirk Broadcasting Limited, operating under the name and style of Westwood One Canada. The licence will expire 31 August 1993, subject to the conditions specified below and in the licence to be issued.

In line with Public Notice CRTC 1989-4 dated 10 January 1989, the network operator, Key Radio Ltd., is required by condition of licence to file a report with the Commission every three months listing the affiliates of the network.

The Commission reminds the affiliated stations that they retain complete responsibility for their entire program schedule and that they are required to include the musical compositions broadcast during network programming when calculating Canadian content.

MH Acquisition Inc. on behalf of various companies to be incorporated

(Agenda Reference 1b., Part B, 11, 12, 13, 14, 15 and 16)

The Commission will issue new AM and FM radio licences to the various companies to be incorporated (NEWCOs) upon surrender of the current licences issued to Selkirk Broadcasting Limited in respect of its broadcasting transmitting undertakings in British Columbia and Alberta. The licences will expire 31 August 1992 and will be subject to the conditions of licence specified below and in the licences to be issued.

These authorities will only be effective and the licences will only be issued at such times as the Commission receives documentation establishing that the new companies have been incorporated in accordance with the applications in all material respects.

In the case of each FM radio station, the Commission authorizes the licensee to make use of the Subsidiary Communications Multiplex Operation. The Commission expects the licensee to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM). This authority may only be implemented when the Department of Communications gives the technical approval required by the Radio Act and regulations made thereunder.

It is a condition of each licence that the licensee adhere to the Canadian Association of Broadcasters' (CAB) self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission. It is also a condition of each licence that the licensee adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.

It is a condition of licence in respect of CJVI Victoria that the licensee operate this undertaking as part of the English-language AM radio network operated by the Canadian Broadcasting Corporation.

In the case of CKKS-FM Vancouver, it is a condition of licence that the licensee maintain a minimum level of 17 hours per week of combined Jazz and Jazz-oriented music.

Concerning CJIB Vernon, the Commission notes that as a result of this decision, no further action is required with respect to the application by Selkirk Broadcasting Limited for renewal of the CJIB licence (883701500) which was heard at a public hearing in Winnipeg on 16 May 1989.

With respect to CJCA and CIRK-FM Edmonton, as a consequence of Decision CRTC 89-770 of today's date denying the transfer of effective control of these two Edmonton radio stations to Westcom Radio Group Ltd., such control remains, for the present, with MHL. At the same time, as a result of today's Decision CRTC 89-772, MHL becomes the indirect shareholder of 27.5% of CHED and CKNG-FM Edmonton. MHL's media holdings also include indirect control of the daily newspaper The Edmonton Sun. At the hearing, MHL reiterated the undertaking contained in its application for authority to acquire control of Selkirk that, should the Commission deny any of the applications to transfer control of the former Selkirk broadcasting undertakings to third parties, MHL would, if so required by the Commission, file other applications for authority to transfer control of the undertaking or undertakings concerned to a third party.

Taking into account the fact that it had not been MHL's intention to retain ownership of CJCA and CIRK-FM, and in light of its holdings in CHED, CKNG-FM and the Edmonton Sun, the Commission considers that it would be in the public interest for MHL to divest itself of CJCA and CIRK-FM.

Accordingly, the Commission directs MHL, in keeping with its commitment, to submit applications within six months of today's date for the transfer of effective control of CJCA and CIRK-FM to a third party.

The Commission has also taken note of MHL's commitment to ensure that the level of benefits promised in the refiled applications would be at least equal to the level proposed in the denied applications.

Nevertheless, the Commission reminds MHL that the benefits package it is required to bring forward within the next six months on behalf of a third party seeking to acquire control of the Edmonton stations will be assessed on its own merits by the Commission, taking into account the responsibilities to be assumed and the scale of the programming, management, financial and technical resources available to the prospective purchaser. MH Acquisition Inc. on behalf of a company to be incorporated (NEWCO VANVIC)

Vancouver, British Columbia

(Agenda Reference 1b., Part B, 11)

The Commission will issue new licences to NEWCO VANVIC to carry on English-language radio networks for the purpose of distributing The Kim Calloway Talk Show Network, The "News" Network, The "All-Night" Network and The "Night-Shift" Network. The licences will be issued upon surrender of the current licences issued to Selkirk Broadcasting Limited. The licences will expire 31 August 1992 and will be subject to the conditions specified below and in the licences to be issued.

These authorities will only be effective and the licences will only be issued at such time as the Commission receives documentation establishing that the new company has been incorporated in accordance with the application in all material respects.

In line with Public Notice CRTC 1989-4 dated 10 January 1989, the network operator is required by condition of licence to file a report with the Commission every three months listing the affiliates of each network.

The Commission reminds the affiliated stations that they retain complete responsibility for their entire program schedule and that they are required to include the musical compositions broadcast during network programming when calculating Canadian content.

Fernand Bélisle
Secretary General

DISSENT TO DECISION CRTC 89-766 BY COMMISSIONER PAUL MCRAE

For the following reasons, I am registering my dissent to this decision, which I believe is not in the best interest of the Canadian broadcasting system:

(1) In a country as large as Canada and with such strong regional interests, it is vital that we maintain a large number of strong national entities. Strong national broadcasters, through networking or by co-operating in the development, production or distribution of programs, can contribute to nationhood. These broadcasters, through co-operation in the utilization of their resources and with their different perspectives, can contribute to nationhood by reflecting the diversity of Canada to viewers and listeners. It is important, therefore, when a transfer of ownership occurs, that the opportunity for networking not be lessened. Rather, if possible, it should be enhanced. Selkirk had interests in broadcasting operations in many regions of Canada and thus was a national broadcaster. As a result of this decision there will be one less national broadcaster that can participate in this networking, thus lessening the opportunities broadcasters have to contribute to nationhood in the manner I have described.

(2) A drift toward fewer, but more powerful broadcasting voices does not maintain the kind of diversity of voices that a healthy nation requires of its broadcasting system. While we are not yet at a critical point in terms of diversity, the drift toward fewer, but more powerful voices is unmistakable. This decision hastens that drift.

(3) MHL owns Maclean's, Chatelaine and L'Actualité and Châtelaine magazines, the Toronto Sun, Ottawa Sun, Calgary Sun, Edmonton Sun and Financial Post newspapers, numerous trade journals, AM and FM radio stations, a television station and several cable television undertakings with community channels. As a result of this decision, MHL is authorized to obtain control of additional broadcasting operations, including a television station and an FM radio station in the Toronto/Hamilton area, the largest market in Canada. MHL, especially in the Toronto/ Hamilton market, will be an example of the concentration of editorial power which I find potentially damaging to the maintenance of a strong, pluralistic society. While MHL has declared that the managers of its many media operations will continue to have editorial independence, there can never be a certainty this will be a policy accepted by a future board of directors and management of MHL. My concern is heightened because a change in the board or management of MHL does not need prior commission approval.  The concentration of media interests that results from this decision, particularly in the Toronto/Hamilton market, is such that MHL should be required to divest itself, at a minimum, of CHCH-TV Hamilton.

(4) The procedure whereby a corporation applies to the Commission to acquire control of another broadcast entity, with the intention of divesting itself of the majority of that entity's assets before the initial transaction has been approved, is not, in my opinion, desirable from the regulatory point of view. The presentation as a "fait accompli" of a dismantled Selkirk, which would be very difficult, if not impossible, to reconstruct in its entirety, undermines the role of the Commission and should, therefore, not be condoned.

 The negative aspects of this transaction which I have outlined above outweigh, in my opinion, the benefits accepted by the majority of the Commission. Therefore, I cannot accept the majority decision to approve the transfer of control of Selkirk to MH Acquisition Inc.