ARCHIVED -  Decision CRTC 95-516

Decision

Ottawa, 9 August 1995

Decision CRTC 95-516

Celtic Broadcasting Limited

Sydney, Nova Scotia - 950171900 - 950170100

Acquisition of Assets of CHER Sydney and Subsequent Conversion of the Station from AM to FM - Denied

Following a Public Hearing in the National Capital Region beginning on 15 May 1995, the Commission denies the application by Celtic Broadcasting Limited (Celtic) for authority to acquire the assets of CHER Sydney from Peat, Marwick, Thorne Inc. (PMT), Receiver and Manager/Trustee of Radio Cape Breton Limited (RCBL), in bankruptcy, and for a broadcasting licence to continue the operation of this undertaking.

Conditional upon approval of the above-noted application, Celtic had proposed to convert CHER to an FM station. Specifically, Celtic had applied for a broadcasting licence for an English-language FM radio programming undertaking at Sydney, operating on a frequency of 102.3 MHz (channel 272 C), with an effective radiated power of 61,000 watts, upon surrender of the licence to be issued to CHER Sydney. In light of the Commission's denial of the proposed acquisition of assets, no further action is required with respect to the application to convert CHER to an FM station.

In 1990 RCBL, licensee of CHER, began experiencing significant financial difficulties, which persisted during each subsequent year of operation. PMT was appointed RCBL's Receiver and Manager/Trustee on 13 July 1994 pursuant to a demand debenture and bankruptcy petition filed by the Bank of Montreal. RCBL was judged bankrupt, effective 9 August 1994, and the company's assets were placed for sale through public tender, with PMT as trustee. Three parties submitted bids. PMT selected Celtic's bid to purchase, subject to approval by the Bank of Montreal and the Commission.

Celtic is a wholly-owned subsidiary of Fundy Cable Ltd./Ltée (Fundy). Fundy is ultimately controlled by Mr. C. William Stanley, through his ownership of shares held both directly and through controlled corporations. Celtic currently owns and operates Sydney's two other commercial radio stations, namely CKPE-FM and CJCB.

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.

According to Celtic, the major benefit that would be realized from this transaction would be the "preservation and continuance of a third local radio voice" in Sydney. The Commission generally recognizes the survival of a local radio service as a significant and unequivocal benefit. In this case, however, approval of Celtic's application to acquire CHER's assets would result in the applicant owning two AM stations of the same language in the same market, whereas approval of Celtic's proposal to subsequently convert CHER to an FM station would give the applicant two FM stations of the same language in the same market. Either outcome would reduce the number of broadcast voices in Sydney, and would be contrary to the Commission's long-standing policy which generally prohibits the common ownership of two broadcasting undertakings of the same class serving the same market in the same language. In Notice of Public Hearing CRTC 1995-4 dated 17 March 1995, the Commission advised the applicant that, at the hearing, it would be expected to convince the Commission that, in this case, an exception to the policy is justified.

At the hearing, Celtic claimed that the Sydney market is too weak to allow survival of CHER as a third, independent, commercial AM station. The applicant maintained that, with the cost savings that would be realized through the common management of Sydney's three commercial radio stations, it could ensure CHER's continued operation.

While the Commission recognizes that the Sydney radio market has experienced financial difficulties, it does not consider that granting Celtic ownership of all commercial radio services currently operating in that market is in the public interest. Specifically, the Commission is concerned that approval of Celtic's proposal would reduce the diversity of voices available in the Sydney radio market now, and could effectively eliminate the possibility of the introduction of other distinct voices in the future by creating a significant disincentive to any potential competitor considering entering that market.

The Commission is not satisfied that the benefit to be realized through approval of Celtic's application to acquire the assets of CHER outweighs the concerns noted above. Accordingly, the Commission has denied Celtic's application.

The Commission acknowledges the many interventions submitted both in support of and in opposition to Celtic's applications.

Allan J. Darling
Secretary General