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Decision
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Ottawa, 28 September 1989
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Decision CRTC 89-771
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MH Acquisition Inc. on behalf of the following companies to be incorporated:
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NEWCO CFACCalgary, Canmore and Banff, Alberta - 890213200 - 890214000
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NEWCO CJOC
Lethbridge and Blairmore, Alberta;
Elkford, British Columbia - 890215700 - 890216500 - 890217300
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NEWCO CJIB
Vernon, British Columbia
- 890212400
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NEWCO CFGP
Grande Prairie, Alberta - 890218100
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NEWCO VANVIC
Vancouver, Victoria, Squamish, Whistler, Pemberton, Gibsons, Sechelt, Pender Harbour and Egmont, British Columbia - 890204100 - 890205800 - 890206600 - 890207400 - 890208200 - 890209000 - 890210800 - 890211600
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Following a Public Hearing commencing 29 May 1989 in the National Capital Region, the Commission approves the applications for authority to transfer effective control of the five companies to be incorporated (NEWCOs) listed above, and of Mountain FM Radio Ltd., a wholly-owned subsidiary of NEWCO VANVIC, through the transfer of 100% of the common voting shares of the NEWCOs from MH Acquisition Inc. (MHA) to Rogers Broadcasting Limited (RBL; the applicant).
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The unincorporated companies are the prospective licensees of the following broadcasting undertakings: NEWCO CFAC of CFAC Calgary, and CFHC Canmore, including its rebroadcasting station CFHC-1 Banff, Alberta; NEWCO CJOC of CJOC and CILA-FM Lethbridge and CJPR Blairmore, Alberta, including its rebroadcasting station CJEV Elkford, British Columbia; NEWCO CJIB of CJIB Vernon, British Columbia; NEWCO CFGP of CFGP Grande Prairie, Alberta; and NEWCO VANVIC of CJVI Victoria, CKWX and its rebroadcasting station CKFX-SW, CKKS-FM and CKWX-FM ("Carol Ships Flotilla") Vancouver, and of the radio network undertakings (The Satellite Radio Network; SRN) distributing The "Kim Calloway Talk Show", The "News" Network, The "All-Night" Network and The "Night Shift" Network. Mountain FM Radio Ltd. is licensee of CISQ-FM Squamish and its rebroadcasting stations CISW-FM Whistler, CISP-FM Pemberton, CISC-FM Gibsons, CISE-FM Sechelt, CIPN-FM Pender Harbour and CIEG-FM Egmont, British Columbia.
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All of these broadcasting undertakings were previously under the indirect ownership of Selkirk Communications Limited (Selkirk). In Decision CRTC 89-766 of today's date the Commission approved the transfer of control of the undertakings and their reorganization under the indirect ownership of MHA.
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RBL, which is herein authorized to acquire effective control of the undertakings from MHA, is itself licensee of CFTR and CHFI-FM Toronto. RBL also owns 25.6% of YTV Canada Inc., the English-language children's specialty service, and indirectly controls Multilingual Television (Toronto) Limited, licensee of CFMT-TV Toronto.
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RBL is owned 100% by Rogers Communications Inc. (RCI) whose holdings in Canada's cable television industry make it the country's largest cable operator. These holdings include the ownership, through Rogers Cable T.V. Limited, of cable television undertakings in Vancouver, Victoria and Calgary. RCI and RCL are ultimately effectively controlled by Mr. Edward S. Rogers of Toronto.
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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 in the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
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One such potential concern is concentration of ownership, an issue which is raised in the present context by the existing broadcast holdings of the Rogers group across Canada. In addressing this issue in its applications, RBL stated that the transactions would "expand and strengthen the radio roots of our company". At the hearing, however, it stressed that the Rogers group would still be considerably smaller in size than some other groups operating in the Canadian communications and media industries, even with the acquisition of these radio stations in British Columbia and Alberta.
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As expressed on several previous occasions, it is the Commission's view that concentration of ownership need not necessarily be a concern provided that, in any given region, there continues to exist a diversity of opinions, information and ideas flowing from broadcast and other media sufficient to ensure that residents have access to differing views on matters of public concern. As for the relative size of the Rogers group on a national basis, the Commission notes that, following these transactions, RBL's radio and television revenues will still be exceeded by those earned by such other Canadian broadcasters as Baton Broadcasting Incorporated, CFCF Inc., CHUM Limited, Global Communications Limited, MHL, Télé-Métropole Inc. and WIC Western International Communications Ltd.
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On a regional basis, the Commission notes that only in Vancouver, Victoria and Calgary, where RCI indirectly controls existing cable television undertakings and is thus indirectly responsible for supervising the program content of the community channel, is it possible to conclude that the number or diversity of media voices would in any way be reduced as a result of these transactions.
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The Commission is satisfied that, for all practical purposes, the impact of any such reduction will be minimal. In particular, the Commission is satisfied that the number of local radio, television and other media voices available in each of Vancouver, Victoria and Calgary is sufficient to ensure that residents continue to have access to differing views on matters of public concern. Based on the foregoing, the Commission concludes that these transactions will not create excessive or undue concentration of ownership.
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According to the applicant, the significant and unequivocal benefits to flow from these transactions represent direct cash expenditures amounting to $3,795,000 over five years. RBL emphasized that it deliberately did not claim as benefits any forecast of expenditures needed to maintain or upgrade the physical plant of the various stations, noting that it considered such expenditures to form part of the normal cost of doing business.The applicant also stressed that the proposed benefits are all incremental, in that they are over and above all expenditures necessary to fulfill outstanding commitments made on behalf of the various licensed undertakings by Selkirk. At the hearing, RBL confirmed that this includes commitments for the support of Canadian talent made by Selkirk in the context of its application for the licence renewal of CJIB Vernon (883701500).
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That application, heard at a public hearing in Winnipeg on 16 May 1989, was superseded by the application for authority to transfer the assets of CJIB to NEWCO CJIB, which was approved in today's Decision CRTC 89-766. One of the issues discussed at the Winnipeg hearing was CJIB's compliance with the regulatory requirements for Canadian content. The Commission notes in this regard Selkirk's assurances that appropriate safeguards have been put into place at the Vernon station to ensure that CJIB is in compliance with all regulatory requirements. The Commission also notes RBL's commitment to ensure that such compliance is maintained in the future.
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The Commission has assessed the various projects and initiatives put forward by the applicant as benefits associated with these transactions. The proposed benefits are summarized in the document entitled "Benefits Tables, Organization Charts and Preliminary Statistics Tables: Radio and Television" published by the Commission for the 29 May 1989 Public Hearing and placed on the public file.
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In general, with certain qualifications as set out below, the Commission is satisfied that the benefits proposed by RBL are significant and unequivocal, commensurate with the size and nature of the transactions, and take into account the responsibilities to be assumed by the applicant, the characteristics and viability of the broadcasting undertakings concerned, and the scale of the programming, management, financial and technical resources available to RBL. Moreover, the Commission considers approval of these applications to be in the public interest.
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The Commission expects RBL to ensure that all of the expenditures proposed under the $3,795,000 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 the assurances given by the applicant at the hearing that the proposed benefits represent minimum commitments in that it may spend more, but will not spend less than promised, and that the commitments are unconditional in the sense that they will be fulfilled regardless of the financial situation either of RBL or of the individual broadcasting undertakings concerned. In order that the Commission may assess RBL's performance in this regard, it expects that company to submit annual reports regarding the status of each benefit.
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RBL, on behalf of the individual radio stations, proposed the allocation of various sums as grants and contributions to local performing arts organizations, other amounts for scholarships and assistance for student radio stations, contributions to new and expanded initiatives in support of Canadian talent, including local talent searches, song contests, the production of recordings and the provision of free air time promotion. These benefits represent direct cash expenditures totalling $1,145,000.
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RBL gave further commitments to maintain the local character and community orientation of the Alberta and British Columbia stations in question. RBL also stated that it will establish a regional office in Vancouver and appoint two western Canadian representatives to its Board of Directors, including a "western Vice President ... who will have responsibility for overseeing the operation of these stations".
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Initiatives to be undertaken by RBL on a corporate level, include substantial new support for the development of Canadian musical talent through contributions over five years of $650,000 and $350,000, respectively, to FACTOR and to the Country Music Talent Development Fund. Rogers also committed to devote the sum of $750,000 over five years to revive and support the production of "Sunday, Sunday", a weekly national public affairs program to be made available to stations across Canada on a barter basis.
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As a further corporate benefit, RBL proposed direct expenditures of $650,000 over five years to extend Selkirk's existing Satellite Radio Network (SRN) into Alberta from its present British Columbia base. The largest portion of these expenditures ($450,000) will be to cover the costs of purchasing and operating two portable studio/ uplink vehicles in Alberta. Other capital costs of $100,000 and projected general operating costs of $100,000 make up the remainder of the proposed $650,000 expenditure.
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The Commission, however, discounted the quantifiable value attached to the benefit by $100,000, the amount that RBL forecasts will be required to operate the extended network in Alberta during the next five years. The Commission considers these general operating costs to be part of the normal cost of doing business rather than a tangible benefit, particularly in view of the extra revenues RBL can expect to derive from the Alberta radio stations that will become new subscribers to the SRN network.
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Finally, RBL proposed a one-time corporate grant of $250,000 to the Canadian Association of Broadcasters (CAB) to fund a study of the public's perception of AM radio. In the Commission's view, such a study would be market research of a type that any industry might conduct from time to time in order to remain competitive. Moreover, while a greater understanding of the public's perception of AM radio may be desirable, it is by no means clear that the results of the study would be translated into quantifiable, significant and unequivocal public benefits.
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Although the Commission does not dismiss the possible value to the industry that might be derived from the proposed study, it was unable to count the proposed $250,000 CAB grant as forming one of the significant and unequivocal benefits attached to these transactions.
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Fernand Bélisle
Secretary General
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