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Ottawa, 30 January 1992
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Decision CRTC 92-27
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Western World Communications Corp.
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Langley and Vancouver, British Columbia - 910853100
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Following a Public Hearing in Vancouver beginning on 29 October 1991, the Commission approves the application by Western World Communications Corp. (Western World), licensee of CKST Langley, for authority to acquire the assets of CIMA Vancouver from Monarch Broadcasting Limited (Monarch).
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The Commission also approves Western World's request for authority to make use of the existing assets and the technical parameters now employed by CIMA, in effect to change the facilities of CKST Langley by:
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- increasing the transmitter power from 25,000 watts to 50,000 watts;
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- changing the transmitter site from 62nd Avenue and 248th Street in Aldergrove to 104th Street in Delta;
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- changing the frequency from 800 kHz to 1040 kHz; and
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- relocating the studios from 201, 20627 Fraser Highway in Langley to 1199 Pender Street West in Vancouver. The approvals granted herein shall take effect upon surrender by Monarch of its licence for CIMA. The licence of CKST will be then amended accordingly.
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Western World, the purchaser, is indirectly controlled by Clint C. Forster of Saskatoon and is currently the licensee of six radio stations, including AM and FM operations at Winnipeg and Regina, and stand-alone AM stations at Saskatoon and Langley. In addition, Western World owns 90% of Balsa Broadcasting Corp., the licensee of CHMG St. Albert, Alberta, and 100% of Newco CJCA Limited, the licensee of CJCA and CIRK-FM Edmonton.
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Monarch, the vendor, is the licensee of radio and television stations in Alberta and British Columbia. It is a wholly-owned subsidiary of Monarch Communications Inc., which is a holding company owned and controlled by W.H. Yuill.
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The purchase price relating to this transaction is $3,040,002. Based on the evidence filed with the application, the Commission has no concerns with respect to the availability or the adequacy of the required financing.
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The Commission notes that the ownership of the assets of CIMA will change hands as a consequence of this approval. Accordingly, the applicant was required 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. As a first test, the applicant was called upon to demonstrate that approval of its proposal would be in the public interest and that the benefits, both those that can be quantified in monetary terms and others that may not easily be measured in terms of dollar value, are commensurate with the size of the transaction and 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.
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According to Western World, approval of this transaction will yield significant intangible benefits, not the least of which will be the survival of one of the two stations as a strengthened stand-alone AM service in the Vancouver radio market.
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The Commission notes in this regard that the Vancouver radio market, as a whole, suffered its first pre-tax loss in 1990; of the fifteen stations in the market, eight experienced losses before deductions for taxes and interest expense. Currently, CKST and CIMA, both stand-alone AM stations, are the two weakest financial performers in this very competitive market. At the hearing, Mr. Yuill confirmed CIMA's financial difficulties, stating that Monarch has "funded operating losses from the station which have far exceeded the market value of the station". Mr. Yuill also indicated that if this application was not approved, Monarch would seek another buyer or partnership, and failing that solution, would look at other options, one of which would be "closing the operation down".
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Speaking for Western World, Mr. Forster confirmed that "as at October 12, 1991 we had invested $9.2 million in CKST in operating losses and technical improvements". At the hearing, Mr. Forster explained that, although CKST's listeners found its new alternative music-based format attractive, the station needed the stronger signal afforded by the 1040 kHz frequency to reach adequately all of the most heavily-populated portions of British Columbia's lower mainland. Mr. Forster also advised the Commission that, since it could not improve the Langley signal, Western World would be forced to cease operation of CKST if this proposal were not approved.
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The Commission is satisfied that both Western World and Monarch have provided adequate resources and time in their efforts to improve their respective station's profitability and that this proposal represents a reasonable resolution of the two stations' longstanding financial problems.
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In particular, the Commission considers that approval of this transaction offers an enhanced opportunity for CKST to improve its financial situation, and to continue to provide service.
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The Commission has also assessed the various Canadian talent development projects and initiatives put forward by Western World as being tangible and quantifiable benefits associated with this transaction. Western World proposed a quantifiable benefits package of $259,300 over five years. However, in accordance with its policy relating to such matters as set out in Public Notice CRTC 1989-109 dated 28 September 1989, the Commission has rejected the $2,500 allocated for the production of a commercial associated with the Westex Exposition. Furthermore, the Commission notes that, after taking into account CIMA's existing commitment of $187,000 over five years for Canadian talent development, the incremental benefits associated with this transaction are $69,800.
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The Commission notes that because of its chronic, financial loss position, CKST Langley has recently had no direct cost budget for the development of Canadian talent.
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On balance, taking into account the particular circumstances of this case, the Commission is satisfied that the intangible and tangible benefits are adequate and that approval of this application is in the public interest.
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The Commission expects Western World to ensure that all of the $259,300 in proposed expenditures included in the benefits package are made in accordance with the schedule outlined in the application.
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In granting these approvals, the Commission has taken into account the fact that there were only two opposing interventions received, one of which was submitted by the City of Langley requesting that the application not be approved unless the 800 kHz frequency is protected for future use at Langley. The Commission notes that, as a result of this decision, the 800 kHz frequency, when vacated by CKST, will become available to future use at Langley.
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The Commission also notes the comments submitted by CFCP Radio Ltd., licensee of a number of radio stations and transmitters in British Columbia, regarding this application and is satisfied with Western World's reply thereto. The Commission also acknowledges the more than 155 interventions submitted in support of this application.
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Allan J. Darling
Secretary General
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