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Ottawa, 9 May 1991
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Decision CRTC 91-280
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Western World Communications Corp.
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Edmonton, Alberta - 902814300 - 902813500
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Following a Public Hearing commencing 12 February 1991 in Vancouver, the Commission approves the applications by Western World Communications Corp. (Western World) for authority to acquire the assets of CJCA and CIRK-FM Edmonton from NEWCO CJCA Limited, and for broadcasting licences to continue the operation of these undertakings.
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The Commission will issue licences to Western World for the two Edmonton radio stations upon surrender of the current licences. The authorities granted herein are subject to the same terms and conditions as those specified in the current licences, as well as to any other conditions that may be specified in the licences to be issued.
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The licence for CJCA will expire 31 August 1995, which will enable the Commission to consider the renewal of this licence at the same time as that of other AM stations in the region. In the case of CIRK-FM, the licence will expire 31 August 1992; this date will allow the Commission to consider the licence renewal of CIRK-FM at the same time as that of other FM stations following implementation of the new policy and regulations for FM radio.
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The vendor is a wholly-owned subsidiary of Maclean-Hunter Limited (MHL). MHL acquired effective ownership and control of the two Edmonton stations in 1989 as part of a much larger transaction involving its purchase of the extensive broadcast holdings of Selkirk Communications Limited (Decision CRTC 89-766 dated 28 September 1989). It had then been MHL's intention to transfer ownership of CJCA and CIRK-FM to Westcom Radio Group Ltd. (Westcom). The applications pertaining to that subsequent transfer, however, were denied by the Commission in Decision CRTC 89-770, for the reasons stated therein.
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As a consequence of another decision issued on 28 September 1989 (Decision CRTC 89-772), MHL became the indirect shareholder of Moffat - MH Limited, the licensee of two other Edmonton radio stations (CHED and CKNG-FM). In light of the fact that it had not been MHL's intention to retain ownership of CJCA or CIRK-FM, and taking into account its holdings in the other two Edmonton stations as well as in the Edmonton Sun, the Commission directed MHL in Decision CRTC 89-766 to submit applications within six months for the transfer of CJCA and CIRK-FM to a third party. The present applications are in response to the Commission's direction contained in Decision CRTC 89-766. Western World, the purchaser, is indirectly controlled by Mr. Clint Forster of Saskatoon. Western World is currently the licensee of six radio stations, including joint AM/FM operations in Winnipeg and Regina, and stand-alone AM stations serving Saskatoon and Langley. Western World also owns 100% of Balsa Broadcasting Corp., the licensee of CHMG St. Albert.
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The assets of the two Edmonton radio stations are to be purchased by Western World for the price of $18,750,000, subject to adjustments. Based on the documentary evidence submitted with the applications, the Commission has no concerns regarding the availability and the adequacy of the required financing, or the purchaser's ability to meet its existing and new commitments and programming responsibilities.
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The applications were 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. In accordance with these policies, the onus was on Western World to satisfy the Commission that its applications represent the best possible proposal under the circumstances, taking into account the Commission's general policy concerns with respect to transactions of this nature.
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One such Commission policy is the general prohibition against the common ownership of two undertakings of the same class serving all or a portion of the same market. The issue is raised in the present context as a consequence of Western World's effective control of the licensee of CHMG, which station serves the community of St. Albert, adjacent to Edmonton's northwest boundary.
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In responding to this concern, the applicant made a commitment at the hearing to divest itself of ownership of the St. Albert station "...as soon as it is possible to do so." The Commission expects the applicant to adhere to this commitment and to ensure that an application for the approval of the transfer of effective control of CHMG is submitted to the Commission within six months of the date of closing of the transaction approved herein. The Commission reminds Western World that until such time as approval is granted for the transfer of ownership of CHMG to a third party, it should manage the operations of the station with the same due care as one operating in a fiduciary capacity.
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The Commission notes that, in Decision CRTC 91-279 of today's date, it has renewed administratively the broadcasting licence for CHMG for a period of one year only, to 31 August 1992. This term is to enable the Commission to hear an application and render a decision with respect to the anticipated transfer of effective control of CHMG to a third party.
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In line with the Commission's policies, Western World was called upon to demonstrate that the benefits to be realized under the current transaction are significant and unequivocal, commensurate with the size and nature of the transaction, taking into account the resources and responsibilities of the purchaser, and will yield measurable improvements to the community served by the broadcasting undertakings concerned and to the Canadian broadcasting system as a whole.
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The benefits package proposed by Western World consists of various programming initiatives and improvements representing, according to the applicant, new, incremental expenditures on its part of $2,813,635 over five years.
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In addition, as part of the overall benefits package, MHL committed to contribute the sum of $870,000 over five years to the Canadian Television Series Development Foundation. This independent foundation was established to administer other funds contributed by MHL pursuant to Decision CRTC 89-766.
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The largest single initiative proposed by Western World, representing direct expenditures of $1,043,500 over five years, is the applicant's proposal to establish and operate a new Satellite Western News service (SWN). This new service, with headquarters in Edmonton, is to be staffed by two journalists in that city and one in each of Winnipeg and Regina. It is proposed that SWN will be separate from, and will complement, the existing Standard Broadcast News service operating primarily in central and eastern Canada and the Satellite Radio Network operating in British Columbia.
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Western World also made a commitment to contribute to FACTOR 3% of the post-depreciation, post-interest pre-tax profits of CIRK-FM, up to a maximum of $25,000 for each of the next five years. The applicant estimated this commitment to represent a potential contribution to FACTOR of $22,500 in year 1, rising to the $25,000 maximum in year 5. At the hearing, the Commission questioned the applicant as to whether it would accept a requirement that the 3% calculation of CIRK-FM's annual pre-tax profits be made before the deduction of interest and the amortization of goodwill. Given the applicant's affirmative response, the Commission expects Western World to contribute annually to FACTOR, 3% of its operating income, up to a maximum of $25,000 per year. For the purpose of this expectation, operating income is to be calculated after deduction for depreciation, and before deduction for interest, amortization of goodwill and income taxes.
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The Commission has assessed the various projects and initiatives put forward by Western World and MHL as being the benefits associated with this transaction and is satisfied that, in general, the benefits package is clear and unequivocal, commensurate with the size and nature of the transaction, and takes into account the responsibilities to be assumed by the purchaser, the characteristics and the viability of the broadcasting undertakings concerned, and the scale of the programming, management, financial and technical resources available to the parties involved. Moreover, the Commission considers that approval of these applications is in the public interest.
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The Commission, however, has rejected as a benefit of this transaction the applicant's proposal to use its recently-acquired Desk-Top Publishing facility to provide lay-out and printing support for charitable and non-profit organizations in the Edmonton area. The applicant estimated that this initiative will represent direct expenditures of $6,000 in each of the next five years.
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Although the Commission acknowledges the potential value of this proposal, it is not broadcast-related and, as such, falls within the categories of proposed benefits that have generally been rejected by the Commission for the reasons outlined in Public Notice CRTC 1989-109 dated 28 September 1989. Nevertheless, the Commission expects Western World to ensure that this, and all of the other proposed expenditures included in the benefits package, are made in accordance with the schedule outlined in the applications.
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With respect to each of the licences to be issued to Western World for CJCA and CIRK-FM, it is a condition of licence that the licensee adhere to the guidelines on sex-role portrayal set out in the Canadian Association of Broadcasters' (CAB) Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission.
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Similarly, it is a condition of each licence that Western World adhere to the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
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Allan J. Darling
Secretary General
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