Public Notice CRTC 1998-131
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Ottawa, 17 December 1998
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Regulations Amending the Radio Regulations, 1986 – Acquisition by Radio Licensees of Equity in Other Stations in the same Market and Language
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Summary
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1. The Commission announces that it has adopted the amendments to the Radio Regulations, 1986 (the regulations) that are attached to this notice. The amendments, which were issued for public comment in Public Notice CRTC 1998-81, give effect to certain aspects of the Commission’s new policy for commercial radio set out in Public Notice CRTC 1998-41. They were registered with the Clerk of the Privy Council on 11 December 1998 and came into effect on that same date. They will be published in Part II of the Canada Gazette on 2 January 1999.
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2. In Public Notice CRTC 1998-80, the Commission proposed other amendments to the regulations for the purpose of implementing various aspects of its new commercial radio policy dealing with programming. The final regulations dealing with those matters come into effect on 3 January 1999, and are set out in Public Notice CRTC 1998-132 released today.
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3. Under the amendments that are the subject of this public notice, prior Commission approval is now required for transactions in which the licensee of a radio station, its associate, or both taken together, acquire 30% or more of the common shares of another radio station operating in the same market and in the same language.
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4. Prior approval is also required in circumstances where the licensee, its associate, or both taken together, acquire 40% or more of the common shares of another station operating in the same market and in the same language.
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5. Under these amendments, no prior approval will be required in respect of a transaction that would increase the ownership of common shares to any level less than 30%, from 30% or more to any level less than 40%, or from 40% or more to any level less than 50%.
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6. While the existing requirements specified in sections 11(4)(a) to (c) of the regulations remain in effect, the amendments replace the requirement contained in the former section 11(4)(d), by which the Commission’s prior approval had been required in respect of any transaction resulting in the acquisition of a voting interest in a second radio licensee operating in the same market and language.
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7. The amendments also include a revised definition of "common shares" to include the notion of a security convertible into common shares.
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Discussion
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8. The Commission received comments addressing the proposed amendments from the Canadian Association of Broadcasters and Rogers Broadcasting Limited. According to these parties, the prior approval thresholds of 30% and 40%, as they would apply to a company’s non-voting shares, will limit investment opportunities by, or in, many large Canadian communications companies. They also noted that, if acquisition of non-voting equity would result in the transfer of effective control of a licensed radio station, the Commission’s prior approval would be required, in any event, pursuant to section 11(4)(a) of the regulations.
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9. The Commission has considered the views expressed in the comments received, and is not persuaded that any change to the regulations, as proposed, is warranted. It notes that, under the former section 11(4)(d) of the regulations, the Commission’s prior approval was required in respect of a transaction (other than one involving shares publicly traded on a stock exchange) that would result in a radio licensee or its associate acquiring a voting interest in a second radio station operating in the same language and market. Removal of this provision will leave in place a single regime affecting all radio ownership transactions, wherein a person can acquire up to 30% of the voting interest in a radio licensee without triggering the prior approval requirement, regardless of the person’s holdings in other radio stations.
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10. Elevating the prior approval requirement to a threshold of 30% for such voting interests will thus simplify the rules affecting radio broadcasters wishing to invest in another radio station in the same market, and should facilitate and encourage communications companies to invest in other radio licensees.
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11. The Commission is also satisfied that the new regulatory requirements are essential to attaining the objectives underlying its revised common ownership policy for radio. In Public Notice CRTC 1998-41, the Commission stated that a strong and competitive radio industry is vital to the achievement of the delicate balance between various social and cultural objectives and the objective of ensuring an economically strong and competitive communications industry. In the interest of the latter objective, the Commission has relaxed its common ownership policy in order to allow for further consolidation of ownership within the radio industry.
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12. At the same time, the Commission will wish to ensure that implementation of the relaxed common ownership policy does not place large communications companies in positions of undue market dominance. The new thresholds provide a safeguard enabling the Commission to act in situations where it considers that an expansion of the equity position of a radio broadcaster in other radio stations operating in the same market and language may not be in the public interest.
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13. Related documents: Public Notices CRTC 1998-41, Commercial Radio Policy 1998; CRTC 1998-80, Proposed Regulations Amending the Radio Regulations, 1986 – Commercial Radio Programming; CRTC 1998-81, Proposed Regulations Amending the Radio Regulations, 1986 – Acquisition by Radio Licensees of Equity in Other Stations in the same Market and Language; and CRTC 1998-132, Regulations Amending the Radio Regulations, 1986 – Commercial Radio Programming.
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Secretary General
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This document is available in alternative format upon request, and may also be viewed at the following Internet site:
www.crtc.gc.ca
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