ARCHIVED -  Decision CRTC 94-224

Decision

Ottawa, 29 April 1994

Decision CRTC 94-224

CanWest Maritime Television Inc.

Halifax, Truro, Wolfville, Bridgewater, Sydney, New Glasgow, Shelburne and Yarmouth, Nova Scotia; Saint John, Fredericton and Moncton, New Brunswick - 931293500 - 931294300

Acquisition of assets

Following a Public Hearing in Fredericton beginning on 7 December 1993, the Commission approves the applications by CanWest Maritime Television Inc. (CanWest Maritime) for authority to acquire the assets of CIHF-TV Halifax, CIHF-TV-4 Truro, CIHF-TV-5 Wolfville, CIHF-TV-6 Bridgewater, CIHF-TV-7 Sydney, CIHF-TV-8 New Glasgow, CIHF-TV-9 Shelburne and CIHF-TV-10 Yarmouth, Nova Scotia; and CIHF-TV-2 Saint John, CIHF-TV-1 Fredericton and CIHF-TV-3 Moncton, New Brunswick from New Brunswick Broadcasting Co. Limited (NBB), and for broadcasting licences to continue the operation of these undertakings.

The Commission will issue licences to the applicant, expiring 31 August 2000, upon surrender of the current licences. The licences will be subject to the same conditions as those in effect under the current licences, as well as to any other condition specified in this decision and in the licences to be issued.

In related Decision CRTC 94-223 published today, the Commission has also approved an application by the CBC to acquire from NBB the assets of television programming undertaking CHSJ-TV Saint John and its transmitters. The CBC and CanWest Maritime applications are linked financially and were thus considered in tandem at the Fredericton hearing. As a result of the approval granted to the CBC application, the Corporation will be able to establish an owned-and-operated television undertaking in New Brunswick much earlier than had been expected.

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 undertakings being acquired by CanWest Maritime, which is known as the Maritime Independent Television Service (MITV), NBB is the licensee of AM radio station CHSJ Saint John. NBB also 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.

The purchaser, CanWest Maritime, is indirectly controlled by Mr. I. H. Asper of Winnipeg, through Global Ventures Western Ltd. Mr. Asper also holds a direct or indirect controlling interest in television licensee companies operating stations in Toronto, Winnipeg, Regina, Saskatoon
and Vancouver.

The purchase price relating to this transaction is $11,000,000. 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 BENEFITS PACKAGE

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, taking into account the Commission's general concerns with respect to transactions of this nature. As a first test, the applicant must demonstrate that the proposed transfer will yield significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system as a whole, and that it is in the public interest.

In particular, the Commission must be satisfied 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.

At the hearing, the applicant presented a list of tangible and intangible benefits it claimed would flow from the Commission's approval of this transaction. Among other things, CanWest Maritime stressed that approval would ensure the continued operation and financial viability of the MITV stations.

According to CanWest Maritime, the tangible benefits associated with the current applications represent expenditures of $7,226,000 over a five-year period, including $5,476,000 earmarked for a variety of programming initiatives, and $1,750,000 for capital improvements.

As part of the programming initiatives package, the Commission notes in particular CanWest Maritime's commitment of $750,000 over five years to produce a minimum of two half-hour dramatic productions each year (co-operatively with the new CBC undertaking in New Brunswick). The Commission encourages the applicant to exceed this commitment. The applicant also committed to produce a minimum of two and possibly three Maritime-produced specials annually, and to broadcast all Maritime-produced dramas on the full CanWest/ Global system.

The applicant explained at the hearing that a major barrier to MITV's future financial health is the current relationship between total air-time revenues and CRTC expectations relating to Canadian programming expenditures. CanWest Maritime proposed that an appropriate level of Canadian programming expenditure for MITV would be 25% of its annual air-time revenues. CanWest Maritime stated that, according to its research, a 25% expenditure level represented approximately the industry norm. Accordingly, the applicant claimed as part of the benefits package $4,156,000 in Canadian programming expenditures. The Commission notes that this amount would represent approximately all of the applicant's projected Canadian programming expenditures over the licence term in excess of 25% of the amount it has projected to earn as air-time revenues over the same period.

The Commission is not satisfied that the 25% benchmark proposed by the applicant is in line with industry averages and therefore rejects the amount of $4,156,000 claimed as a benefit. Consequently, the Commission expects the applicant to expend on Canadian programming (as defined in Public Notices CRTC 1993-93 and 1993-174) in the first year of the licence term, an amount representing not less than 30% of its projected air-time revenues for the fiscal year 1994/95. In each subsequent year of the licence term, the Commission expects the applicant to expend on Canadian programming an amount not less than 30% of the air-time revenues of the previous fiscal year. These expectations are to be applied to CIHF-TV and CIHF-TV-2 separately. The foregoing expenditures do not include those other expenditures on Canadian programming proposed by the applicant as benefits of this transaction, and accepted as such by the Commission.

CanWest Maritime claimed as a tangible benefit of these applications, an amount of $1,500,000 in respect of new transmitters in Sydney, New Glasgow, Yarmouth and Shelburne for the extension of the MITV service approved in Decision CRTC 93-212 dated 22 June 1993. Following a discussion of this matter with CanWest Maritime during the Public Hearing, the Commission recognizes this project as a legitimate one; however, given the fact that the expenditure will be used for a previously-approved project which MITV was required to implement, the Commission has decided to disqualify it as a tangible benefit associated with these applications. Nevertheless, the Commission expects the applicant to ensure that these expenditures, together with all others that have been accepted by the Commission as benefits, are made in accordance with the timetable outlined by CanWest Maritime.

The significant intangible benefits that the applicant claims will result from these applications include the continued operation of the acquired undertaking, and indirectly, through the approval given to the related CBC application noted above, the long-awaited establishment of a CBC owned-and-operated television undertaking to serve New Brunswick.

The Commission has assessed these and other projects and initiatives put forward by the applicant as being the benefits associated with this transaction. In general, the Commission is satisfied that the benefits package is clear and unequivocal, and that approval of these applications is in the public interest.

EMPLOYMENT EQUITY

In Public Notice CRTC 1992-59 the Commission announced implementation of its employment equity policy. It advised licensees that, at the time of licence renewal or upon consideration of applications for authority to transfer ownership or control, it would review with applicants their practices and plans to ensure equitable employment.

The Commission notes the commitments with respect to employment equity filed by the applicant during the Public Hearing. The Commission advises the applicant that it will monitor CanWest Maritime's progress in the implementation of those commitments during the new licence term.

INTERVENTIONS

A number of interventions were submitted to these applications, either in opposition to the
proposals or expressing concern with certain aspects of the applications. A majority of these interventions expressed concern with the possibility that the amount of local programming in both Halifax and Saint John would be reduced.

During discussions at the Public Hearing, the applicant responded to concerns related to levels of local production in Halifax and Saint John by stating that the staff in Nova Scotia and New Brunswick together "will produce 21 hours and 15 minutes a week of original material in either news, sports information or general community information." The applicant went on to state that staff in both Halifax and Saint John, per week "will present 9 hours and 10 minutes of fresh first-run news, 2 hours and 5 minutes of first-run sports information, and 3 hours and 45 minutes of the community and regional features that are part of Maritime Today."

In light of the concerns expressed by interveners, and consistent with Commission policy regarding such matters, the Commission expects CanWest Maritime to maintain the current level of community reflection in news and information programming. The applicant is further encouraged to increase its community reflection through programming material featuring the communities served by the Halifax and Saint John undertakings.

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

It is a condition of each licence that the licensee adhere to the guidelines on gender 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.

It is also a condition of each licence that the licensee adhere to the provisions of the CAB's "Broadcast Code for Advertising to Children", as amended from time to time and approved by the Commission.

It is a further condition of each licence that the licensee adhere to the guidelines on the depiction of violence in television programming set out in the CAB's Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council.

Allan J. Darling
Secretary General