ARCHIVED -  Decision CRTC 95-431

Decision

Ottawa, 13 July 1995

Decision CRTC 95-431

Classic Communications Ltd.

Parts of Richmond Hill, King City, King Township, Markham, Vaughan, and Whitchurch-Stouffville, Ontario - 942457300

Transfer of control

Following a Public Hearing in the National Capital Region beginning on 15 May 1995, the Commission approves the application for authority to transfer effective control of Classic Communications Ltd. (Classic), licensee of the cable distribution undertaking serving the communities noted above, through the transfer of 100% of the issued and outstanding common shares from Classic to Shaw Communications Inc. (Shaw).

Shaw is controlled by James R. Shaw of Edmonton, by virtue of a voting trust agreement. Shaw currently operates cable undertakings in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Nova Scotia, serving approximately 18.8% of the total cable subscribers across Canada. Following the approval granted herein, Shaw's subscriber base will increase to approximately 20.1% of the national total, making it the second-largest cable distributor in Canada.

The purchase price for the shares is $275 million, which includes the assumption by Shaw of Classic's existing debt of $35 million. 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.

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.

The Commission has assessed the benefits package identified by the applicant as flowing from this transaction and, in general, is satisfied that it is significant and unequivocal, and that approval of this application is in the public interest.

Among the proposed tangible benefits, the Commission noted in particular $15 million to be spent over five years, for technical improvements to the system serving parts of Richmond Hill, King City, King Township, Markham, Vaughan and Whitchurch-Stouffville.

The Commission expects the applicant to ensure that all of the approximately $24 million in proposed expenditures included in the benefits package are made in accordance with the schedule outlined in the application. The Commission has also taken into account the applicant's statement that the cost of this transaction will not be passed along to subscribers.

The Commission considers Shaw's undertaking that the costs associated with the commitments outlined in this decision will not form part of any fee filing under subsections 18(6) and 18(8) of the Cable Television Regulations, 1986 to be an important element of this application.

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 considering applications for authority to transfer ownership or control, it would review with applicants their practices and plans to ensure equitable employment. In keeping with the Commission's policy, it encourages the applicant to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Interventions in opposition to this application were submitted by Mr. Joseph Agnoluzzi and family of Markham, and by Katherine Brodie and Arnold Schwisberg of Richmond Hill, and the Commission is satisfied with the licensee's responses to the concerns raised.

The Commission also acknowledges all of the interventions submitted in support of this application.

Allan J. Darling
Secretary General