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Decision
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Ottawa, 22 October 1990
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Decision CRTC 90-1073
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Global Communications Limited
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Toronto, Ottawa, Paris, Stevenson, Bancroft, Owen Sound, Midland, Peterborough, Oil Springs and Sarnia, Ontario - 900247800 - 900250200
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Following a Public Hearing commencing 13 June 1990 in Hamilton, the Commission approves the application by Global Communications Limited (Global) for authority to transfer effective control of that company to CanWest Communications Enterprises Inc. (CanWest), a corporation indirectly controlled by Mr. I.H. Asper of Winnipeg.
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Global is the licensee of the Ontario independent television station CIII-TV-41 Toronto and its rebroadcasters located at or near Ottawa (CIII-TV-6), Paris (CIII-TV), Stevenson (CIII-TV-22), Bancroft(CIII-TV-2), Owen Sound (CIII-TV-4), Midland (CIII-TV-7), Peterborough (CIII-TV-27), Oil Springs (CIII-TV-29) and Sarnia (CFOT). For its part, CanWest holds direct or indirect controlling interests in licensee companies operating CKVU-TV Vancouver, CKND-TV Winnipeg, CKND-TV-2 Minnedosa, CFRE-TV Regina, CFRE-TV-2 Fort Qu'Appelle and CFSK-TV Saskatoon.
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Global is owned 100% by Global Ventures Western Ltd. (Ventures), a holding company beneficially owned 60.76% by CanWest. For several years, notwithstanding its beneficial ownership of a majority of the share equity, CanWest voted only 50% of Ventures pursuant to the terms of a unanimous agreement among Ventures shareholders. In accordance with that 1978 agreement, the other 50% of Ventures was voted by Seyton Ltd., the owner of all but a small portion of the remaining 39.24% of the issued and outstanding shares of that company. Seyton Ltd. is a corporation indirectly controlled by Messrs. P.G. Morton and S. Epstein.
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Under the application approved herein, ownership of the 39.24% block of Ventures voting shares referred to above passes to a wholly-owned CanWest subsidiary, 171181 Canada Ltd. As part of this decision, the Commission also approves Global's application for the deletion of a condition of its licence imposed in Decision CRTC 88-815 and pertaining to the composition of Global's Board of Directors. CanWest thus assumes effective control of the licensee by virtue of its indirect ownership of all voting shares of Global and its control of that company's Board of Directors.
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The application for the transfer of control was assessed by the Commission within the framework of its policies relating to transfers of ownership and control as set out in previous decisions and public notices. As specified by these policies, the onus was on Global to satisfy the Commission that its applications represent the best possible proposal under the circumstances, and to demonstrate that the benefits to be realized under the transaction are significant and unequivocal, and will yield measurable improvements to the communities served by the broadcasting undertaking and to the Canadian broadcasting system as a whole. Global was also required to demonstrate that the proposed benefits are commensurate with the size and nature of the transaction, taking into account the responsibilities to be assumed by CanWest, the scale of the programming, management, financial and technical resources available to it, and the characteristics and viability of Global's television stations in Ontario.
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Based on the evidence filed with the application, as well as that provided pursuant to requests made by the Commission at the hearing, the Commission has no concerns with respect to the financial arrangements underlying CanWest's share purchase and accepts as reasonable the valuation of approximately $79.8 million attached by the applicant to the 39.24% block of Global shares transferred to CanWest's subsidiary under this transaction.
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According to the applicant, one of the most significant benefits resulting from this transaction is that it puts an end to a dispute ongoing for several years between Ventures' principal shareholders, CanWest and Seyton Ltd., thus ensuring "...that Global will be in a position to carry out its programming and other commitments to the Commission". The Commission notes that the current application for authority to transfer control flows from a December 1989 court-ordered auction between CanWest and Seyton Ltd., each bidding for the other's shares in Ventures, and in which CanWest was the higher bidder. The Commission agrees that the resolution this approval brings to Global's long unsettled ownership difficulties should enable the licensee to focus more effectively on fulfilment of its principal role and mandate, that being the provision of a high-quality regional television service to viewers in southern Ontario.
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The benefits package proposed by the applicant represents direct, incremental expenditures amounting to $10 million over a five-year period. The benefits include a commitment to spend a minimum of $1 million on licence fees for new television drama programming to be produced by "untried creative Canadians". Global stated that at least ten new half-hour Canadian drama programs would be licensed for broadcast during the next five years. At the hearing the applicant confirmed that this minimum expenditure of $1 million in licence fees, and the five hours of drama programming that are to result from this initiative, will be over and above the minimum quantitative levels for Canadian programming and Canadian program expenditures required by existing conditions of Global's licence. The Commission considers this to be an acceptable benefit of the transaction. It reminds the licensee, however, that the adequacy of its overall commitment to Canadian program expenditures will be re-assessed at the time the Commission considers renewal of Global's current licence, which expires 31 August 1992. The remaining $9 million in benefits proposed by Global is to be directed towards the development of a strengthened alternative national and international news service:
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It is our plan to provide our Ontario audience with an enhanced... news source, with a fresh, Canadian viewpoint. To do this, we are proposing to establish bureaux or offices in Halifax, Montréal, London (Ontario), Winnipeg, Calgary and Vancouver, plus...offices probably in Washington and continental Europe. There will be a mix of full and part-time Global personnel working in these news desks. All will be trained by Global, paid by Global, and report to Global news in Ontario.
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The operating costs of this initiative are estimated to amount to a minimum of $7.5 million over five years. An additional capital expenditure of $1.5 million will be required to purchase satellite equipment to send the news programming produced across Canada back to Global's Toronto facilities for broadcast within Ontario, and to disseminate the Global news service to other Canadian independent television stations outside the province.
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The Commission is satisfied that the licensee's plan to establish a high-quality, alternative, national and international news service constitutes an acceptable benefit to the public, including Global's viewers in Ontario, and to the Canadian broadcasting system as a whole. The service will increase the diversity of news voices available to television viewers in Ontario and across the country. Moreover, the licensee's commitment to establish news bureaux in Washington and Europe should reduce significantly Global's reliance upon U.S. network news feeds for coverage of international stories.
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In general, the Commission considers that the benefits proposed by the applicant, both those that can be quantified in monetary terms and others that are not measurable in monetary value, are significant and unequivocal, and commensurate with the size and nature of the transaction. The Commission is also satisfied that approval of the application is in the public interest.
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In an intervention presented at the hearing, Ontario Closed Captioned Consumers, Inc. (OCCC) expressed its strong displeasure with the fact that, despite Global's planned expenditures of $9 million to improve its news service, no provision has been made within these plans to add closed captioning to the licensee's news programming. According to the intervenor, even if Global were initially to add closed captions for only part of its news programming, this would be preferable to the present situation where none of this programming is captioned.
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The Commission discussed this matter with the licensee as long ago as November 1986, at Global's last licence renewal hearing. Subsequently, in Decision CRTC 86-1086, the Commission encouraged Global to "...follow up on its commitment to investigate further the possibility of captioning its news".
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At the June 1990 hearing, Global advised that it remains its intention to implement closed captioning, "...but not as tokenism... We would like to do this in a proper manner". Global, confirming that it is in the course of assessing the various closed-captioning systems available on the market, added:
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We intend, in conjunction with our licence renewal application, to present a proposal that will meet our requirements, and be responsive to the OCCC's request.
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The Commission considers Global's response to the intervention by OCCC to be unsatisfactory. In the Commission's view, Global has had ample time to investigate the technology and implement a system to caption its news programming. Given that other broadcasters with fewer resources have already made significant efforts to provide closed-captioned news and since Global's licence does not expire until August 1992, the Commission expects Global to introduce closed captioning for at least the headlines and appropriate scripted portions of its newscasts within the remainder of the current licence term.
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A second intervention was presented at the hearing by CTV Television Network Ltd. (CTV). CTV suggested that the licensee's plans to establish an alternative national and international news service, and to make this available by subscription to other independent stations across the country, will effectively change Global's status to that of an operator of a "de facto" network. It also argued that this proposed benefit is inappropriate, given Global's southern Ontario mandate:
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... it is our position that the benefits must be measured in terms of the existing licence granted to Global, and measured in terms of their unequivocal benefit and whether it is in the public interest within southern Ontario.
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Based upon the available evidence, including the licensee's responses to questions at the hearing, the Commission is satisfied that Global's present activities, whether by themselves or in combination with those proposed in its application relating to the transfer of control, do not constitute a network as defined in the Broadcasting Act or as described in Commission policy. With regard to CTV's second point, and as stated earlier, the Commission considers that the licensee's plans for the development of an expanded, alternative news service offer a genuine benefit, both to Global's viewers in Ontario and to the Canadian broadcasting system as a whole. Moreover, the Commission is generally satisfied that the overall benefits proposed are significant and unequivocal, and commensurate with the size and nature of the transaction.
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At the same time, however, the Commission notes that Global, in assembling its package of benefits, could have chosen to pursue initiatives more clearly focused on fulfilling its mandate to provide a regional service to its southern Ontario audiences, such as further measures to improve its regional news and public affairs programming. In this regard the Commission reiterates the statement it made in Decision CRTC 86-1086, concerning Global's role and mandate:
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Global's contribution to a national programming service is confined principally to facilitating the distribution of new Canadian programming, particularly drama, documentaries, music and dance, variety and children's programs, to stations outside its coverage area. The Commission rejects any wider interpretation of Global's role at this time.
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The Commission recognizes that some of the news segments produced by Global are used by other Canadian stations, and considers that this contributes to the diversity of news voices within the Canadian broadcasting system. This does not confer a national mandate on Global. The Commission wishes to be assured that Global's southern Ontario regional service is improved... [emphasis added]
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Now that Global's ownership difficulties have been resolved, the Commission puts the licensee on notice that, at the time of licence renewal, it will be called upon to demonstrate that it has responded fully to all of the licence conditions, expectations and concerns set out in Decision CRTC 86-1086, including concerns regarding the quality of Global's southern Ontario regional service. The Commission also expects Global to ensure that all of the direct expenditures of $10 million proposed as benefits are made in accordance with the schedule outlined in the application.
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Alain-F. Desfossés
Secretary General
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