ARCHIVED -  Decision CRTC 94-223

Decision

Ottawa, 29 April 1994

Decision CRTC 94-223

Canadian Broadcasting Corporation

Saint John, Bon Accord, Moncton, Chatham/Newcastle, Campbellton, Doaktown, Boiestown and Parker Ridge, New Brunswick - 931295000

Acquisition of assets

Following a Public Hearing in Fredericton beginning on 7 December 1993, the Commission approves the application by the Canadian Broadcasting Corporation (the CBC; the Corporation) for authority to acquire the assets of CHSJ-TV Saint John, CHSJ-TV-1 Bon Accord, CHMT-TV Moncton, CHCN-TV Chatham/Newcastle, CHCR-TV Campbellton, CHSJ-TV-2 Doaktown and CHSJ-TV-3 Boisetown from New Brunswick Broadcasting Co. Limited (NBB), and for a broadcasting licence to continue the operation of these undertakings, with the exception of the transmitter at Parker Ridge, the use of which will no longer be required. As a part of this application, the applicant also proposed to use its existing facility in Fredericton as the main studio. This proposal is also approved.

The Commission will issue a licence to the applicant, expiring 31 August 2000, upon surrender of the current licences. The licence will be subject to the conditions specified in this decision.

In related Decision CRTC 94-224 published today, the Commission has also approved an application by CanWest Maritime Television Inc. (CanWest Maritime) to acquire from NBB the assets of television programming undertaking CIHF-TV Halifax and its retransmitters in Truro, Wolfville, Bridgewater, Sydney, New Glasgow, Shelburne and Yarmouth, Nova Scotia, as well as of CIHF-TV-2 Saint John and its retransmitters in Fredericton and Moncton, New Brunswick. The CanWest Maritime and CBC applications are linked financially and were thus considered in tandem at the Fredericton hearing.

PARTIES TO THE TRANSACTION

The vendor of the television stations involved in this transaction, NBB, is ultimately controlled by the Irving family of Saint John. In addition to the stations noted above, NBB is also the licensee of AM radio station CHSJ Saint John, New Brunswick. In addition, NBB controls Acadia Broadcasting Company Limited, licensee of CKBW Bridgewater, CKBW-1-FM Liverpool, and CKBW-2-FM Shelburne, Nova Scotia. The Irving family also owns several newspapers in New Brunswick.

In Decision CRTC 87-59, dated 22 January 1987, and on a number of earlier occasions, the Commission expressed concern regarding the fact that New Brunswick is the only province in which the CBC does not own and operate an English-language television programming undertaking. At the same time, the Commission has acknowledged that the CBC's budgetary constraints have delayed attainment of this goal. The Commission notes that, as a result of this approval, the CBC will now be able to establish an owned-and-operated television programming undertaking in New Brunswick much earlier than had been expected, bringing forward the availability of the full CBC programming schedule to New Brunswick.

In order to facilitate the CBC acquisition approved herein, an agreement was entered into between the CBC and CanWest Maritime, whereby all but $1,000,000 of the $10,500,000 purchase price would be advanced to the CBC by a CanWest Maritime affiliate.

In exchange for $9,500,000, the CBC will turn over to CanWest Maritime all of the selective advertising inventory of the new undertaking for a period of 12.5 years. CanWest Maritime will sell that air-time and retain the revenues generated. The Commission notes that all network advertising time is excluded from this agreement. CanWest Maritime will pay an annual administration fee to the CBC to cover the expenses required to air the selective advertising. The Commission further notes that the above-mentioned agreement may be terminated after three years by CanWest Maritime or after six years by the CBC.

The CBC has built a contingency plan into its capital budget to enable it to pay CanWest Maritime the amount owed, as per the agreement, in the event the agreement is terminated after three years.

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.

THE PUBLIC INTEREST

Because the Commission does not solicit competing applications for authority to transfer effective control of broadcasting undertakings, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, and in the public interest taking into account the Commission's general concerns with respect to transactions of this nature.

In particular, the Commission must be satisfied that the plans submitted, 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 undertaking in question, and the scale of the programming, management, financial and technical resources which the purchaser can bring to the undertaking being acquired.

The Commission has assessed the plans that the applicant stated it would implement following this transaction and is satisfied that approval of the transaction is in the public interest.

According to the CBC, the intangible advantages to result from this application include the availability in New Brunswick of the full CBC English-language network schedule and the resultant increase in Canadian programming on the station, the continuation of the CBC supper-hour news broadcast, as well as training programs to be undertaken for both CBC New Brunswick staff and for independent producers.

Among the proposed tangible advantages, the Commission notes in particular the capital expenditures related to the improvements to the CBC's existing facilities in Fredericton and co-funding by the CBC (with CanWest Maritime) of regional independent dramatic productions.

With respect to the $750,000 commitment over five years for independent dramatic productions from New Brunswick, the Commission notes the commitment of the CBC to broadcast all Maritime-produced dramatic productions on the national network. The Commission further notes the fact that the CBC's commitment to co-fund (with CanWest Maritime) two 30-minute dramas annually is a minimum commitment, and encourages the Corporation to exceed this minimum. The Commission also notes a commitment made by the applicant at the hearing to produce and to broadcast in New Brunswick a minimum of three specials annually in under-represented categories, including music and variety programming.

Other plans associated with this transaction include improvements in news programming in New Brunswick through the addition of seven new producer/reporter positions, including a senior producer to be responsible for an increased New Brunswick presence on the network.

The Commission also notes the enhancement of the CBC's role in regional programming through an increase of $50,000 per year in funding for regional program development available through the Corporation's program development fund and through increased contributions to existing CBC regional Maritime productions.

The Commission expects the applicant to ensure that all of the approximately $13.5 million in proposed expenditures included in this transaction are made in accordance with the schedule outlined in the application.

EMPLOYMENT EQUITY

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled "Implementation of an Employment Equity Policy", the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In the case of the Corporation, the Commission will address these matters in the context of the pending decision on the CBC's applications for the renewal of its television network licences.

INTERVENTIONS

The level of service expected of a public broadcaster is greater than that expected of private undertakings. This is a matter of priority for the Commission, equal in importance to the Commission's concern that programming undertakings be reflective of the communities they are privileged to serve.

A number of interventions were submitted to this application, a majority of them expressing concerns related to the potential loss of locally-originated programming, and a net loss of jobs in the affected communities.

In light of the concerns regarding local reflection, and consistent with its policy regarding reflection of local communities, the Commission expects the Corporation, using its mobile equipment and a multi-access fibre-optic system offering live programming opportunities for various New Brunswick communities, to reflect the local concerns of those New Brunswick communities located outside of the larger centres on a regular basis.

Further, the Commission encourages the Corporation to expand production facilities in Saint John in order to better reflect the Saint John region, with a view to increasing local programming originating from that area. The Commission also requires the CBC to maintain the existing level of service established by CHSJ-TV for com-
munities in north-eastern New Brunswick.

In response to the concerns related to job losses, NBB noted at the hearing that it was facing a difficult financial situation which was having an impact on the viability of CHSJ-TV. NBB further noted that it "would have been forced to make the staff and cost reductions similar to those resulting from the CBC and CanWest applications".

In this regard, the Commission notes the applicant's statement at the hearing that it expects that the establishment of the new CBC undertaking "will result in sixteen openings which we will offer to qualified [NBB] employees". The Commission also notes the addition of several new positions, included as part of this transaction.

The Commission also acknowledges the numerous interventions submitted in support of these applications.

It is a condition of licence that the licensee shall adhere to the revised CBC Guidelines on Sex-Role Portrayal, dated 12 August 1991, as amended from time to time and approved by the Commission.

It is a condition of licence that the licensee shall adhere to the standards for children's advertising set out in the Corporation's Advertising Standards Policy C-5 dated 4 June 1986 and entitled Advertising Directed to Children Under 12 Years of Age, as amended from time to time and approved by the Commission, provided that the policy meets as a minimum the standards set out in the CAB's Code on Broadcast Advertising to Children, as amended from time to time and approved by the Commission.

Allan J. Darling
Secretary General