ARCHIVED -  Decision CRTC 95-788

Decision

Ottawa, 27 October 1995

Decision CRTC 95-788

John L. Bragg and Family

Atlantic Region

Transfer of control

Following Public Notice CRTC 1995-135 dated 10 August 1995, the Commission considered the applications by John L. Bragg and Family (Bragg) for authority to transfer beneficial control of various companies operating twenty-one cable distribution undertakings in Nova Scotia and one in New Brunswick.

The Commission notes that these applications involve several transfers of securities that are set out in four separate parts in this decision. Part A deals with the transfer of beneficial control of Eastern Cablevision Limited (Eastern) to Bragg. Bragg currently holds a minority position in Eastern. Eastern holds ownership interests in other cable distribution companies, therefore, changes in control or ownership of those companies will also occur.

Parts B and C deal with the transfer of beneficial control to Bragg of two licensee companies in which Eastern has an ownership interest, through the transfer of those shares owned by other parties. Lastly, Part D deals with a transfer of beneficial control of Colchester Cable Services Limited to Bragg.

Part A

Truro, Parrsboro, Halifax, Liverpool, Caledonia, Greenfield and Chelsea, Eastport Medway, Shelburne, Clark Harbour, Lockerport, Thomasville, Yarmouth, Dartmouth, Digby, Freeport, Sandy Cove, Tiverton, Westport, Sussex, Oxford, Bass River, Great Village, Maitland and Selma, Marstown, Upper North River, Middle Stewiacke, Pugwash, River John, Tatamagouche, Wallace, Wentworth Centre, Westchester Station and River Hebert, Nova Scotia; Port Elgin, New Brunswick - 950683300

The Commission approves the application for authority to change effective control through the transfer of 73.33% of the voting securities of Eastern from D.P. Subco Ltd. (6.66%) and Rath Holdings Ltd. (66.67%) which are beneficially owned by Stuart P. Rath and Family to Bragg Communications Incorporated (BCI). BCI is beneficially owned by Bragg. Bragg currently beneficially owns 26.67% of the voting securities of Eastern and therefore Eastern would become wholly owned by Bragg.

The Commission notes that as a result of this transaction several other ownership changes will occur. BCI will acquire indirect ownership of the 19.65% of the voting securities of Halifax Cablevision Limited (Halifax), held by Eastern. Bragg currently beneficially owns 34.35%, therefore, a change in control (54%) will result. Halifax in turn owns 100% of the voting securities of Able Cablevision Limited, Seabreeze Cablevision Limited, and Viking Cable T.V. Limited.

The Commission also notes that BCI will acquire indirect ownership of the 36.32% of the voting securities of E & O Cable Holdings Limited (E & O) held by Eastern. Bragg currently beneficially owns 63.68%, therefore, following this transaction Bragg will own 100% of the shares of E & O, a company which in turn owns 25% of the voting securities of Access Cable Television Limited.

In addition, BCI will acquire the 50% of the voting securities of Oxford Cable Services Limited (Oxford) held by Eastern. Oxford in turn holds 30% of the voting securities of Bass River Cable Services Limited (Bass River), 25% of North Nova Cable Limited (North Nova) and 51% of Scotia Cablevision Limited (Scotia). Bragg currently beneficially owns the other 49% of the voting securities of Scotia.

Part B

Oxford, Nova Scotia - 950423400

The Commission approves the application for authority to change the effective control of Oxford by transferring 50% of the voting securities from James Geldart (20%) and Norman Crosby (30%) to BCI. The Commission notes that as a result of this transaction and that set out in Part A, Oxford and consequently Scotia will be beneficially wholly owned by Bragg.

Part C

Bass River, Great Village, Maitland and Selma, Marstown, Upper North River and Middle Stewiacke, Nova Scotia - 950424200

The Commission approves the application to change effective control by transferring 70% of the voting securities of Bass River from James Geldart (40%), Garth Gates (15%) and Fraser Bowser (15%) to BCI. The Commission notes that as a result of this transaction and that set out in Part A, Bass River will be beneficially wholly owned by Bragg.

Part D

Debert, Nova Scotia - 950422600

The Commission approves the application to change the effective control of Colchester Cable Services Limited by transferring 100% of the voting securities from Irene Rath (50%) and Norman Crosby (50%) to BCI.

The Commission notes that following the aforementioned transactions, Eastern, Oxford, Scotia, Bass River and Colchester will be transfered, as part of an intracorporate reoganization, from BCI to a new company to be incorporated "Newsub", will be included in an amalgamation and will continue as "Eastern Cable". The new amalgamated company would become a wholly owned
subsidiary of BCI.

The cost of purchasing control of the aforementioned cable interests is approximately $20 million. Based on the evidence filed with the applications, 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 these transactions and, in general, is satisfied that it is significant and unequivocal, and that approval of these applications is in the public interest.

The Commission expects the applicant to fulfill its commitments of $1,967,500 in tangible benefits according to the schedule submitted in its applications.

The Commission reminds the purchaser of its longstanding policy that subscribers should not be required to pay higher fees merely because the ownership or control of a cable system has changed hands.

Furthermore, the Commission considers Bragg'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 these applications.

The Commission acknowledges the intervention received in support of these applications.

Allan J. Darling
Secretary General