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ARCHIVED - Notice of Public Hearing CRTC 2000-1

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Notice of Public Hearing CRTC 2000-1

Also See: 2000-1-1, 2000-1-2, 2000-1-3, 2000-1-4
Ottawa, 18 February 2000
ISSUE NO. 1
VANCOUVER, BRITISH COLUMBIA
25 APRIL 2000, 9 A.M.
The Commission will hold a public hearing commencing on 25 April 2000, at the Plaza 500 Hotel, 12th Avenue West, Vancouver, British Columbia, to consider the following:

ACROSS CANADA

1.

WIC WESTERN INTERNATIONAL COMMUNICATIONS LTD.
BACKGROUND
On 13 March 1998, the Griffiths family sold its interests in WIC Western International Communications Ltd. (WIC) to Shaw Communications Inc. (Shaw) and Cathton Holdings Ltd. (Cathton). As a result of this transaction, each of Shaw and Cathton hold just short of 50% of the class A voting shares.
The Commission points out that, pursuant to its regulations, prior approval is required for transactions involving a change in control. The Commission notes that the transactions leading to Shaw’s acquisition of the Class A voting shares were completed prior to obtaining approval from the Commission as required pursuant to its regulations. Further, Shaw did not seek Commission approval in advance of the transactions to put in place trust arrangements pending Commission approval.
The Commission approved, on 2 April 1998, a trust agreement for a portion of Shaw’s acquired shares in WIC (41.25% voting interest), in order to enable the continued operation of WIC and its subsidiaries independently from Shaw. The current trustee is Mr. Gowan T. Guest, Q.C.
Subsequently, Shaw and CanWest Global Communications Corp. (CanWest Global) made separate public offers in an attempt to acquire all the voting and non-voting shares of WIC. The offers resulted in Shaw holding, in addition to the 49.96% voting interest previously acquired, approximately 52% of the class B shares, and CanWest Global holding approximately 46% of the class B shares.
In August 1998, Shaw and CanWest Global made an announcement regarding a preliminary agreement with respect to the distribution of WIC’s assets. Under the terms of the preliminary agreement, Shaw was to assume control of WIC with the understanding that CanWest Global would obtain the WIC conventional television undertakings along with WIC’s interest in other undertakings such as ROBTv. Shaw would then seek authority to retain the radio, pay television, specialty television and the Canadian Satellite Communications Inc. (Cancom) undertakings.
The preliminary agreement was conditional upon a favorable tax ruling which, by the end of December of 1998, had not been received by the parties.
In January 1999, WIC filed a set of applications with the Commission for authority to effect a change in ownership whereby Shaw or an affiliate would be permitted to hold directly or indirectly: i) a 49.96% voting interest in WIC and, ii) a 52% (approximately) non-voting interest in WIC. These applications were first scheduled to be heard at a public hearing on May 3, 1999 (Notice of Public Hearing CRTC 1999-2, 5 March 1999) but were withdrawn in light of ongoing negotiations between Shaw and CanWest Global with respect to WIC and its assets (Notice of Public Hearing CRTC 1999-2-3, 1 April 1999). The applications were subsequently scheduled to be heard at the 26 October 1999 public hearing but were further adjourned pending the execution of a definitive agreement by the parties (Notice of Public Hearing CRTC 1999-10-5, 3 December 1999, further to its Notices of Public Hearing CRTC 1999-8, 9 September 1999; CRTC 1999-8-1, 25 October 1999; and CRTC 1999-10-4, 25 October 1999).
On 28 October 1999, CanWest Global, Shaw, Corus Entertainment Inc. (Corus) and Cathton jointly informed the Commission that they had entered into definitive agreements (the "Master Agreement" and the "Cathton Agreement") which on completion will result in the division of WIC’s various broadcasting undertakings and unregulated assets between CanWest Global, Shaw and Corus. A copy of the Master Agreement and the Cathton Agreement was submitted to the Commission on 9 November 1999.
As a preliminary step, the Master Agreement contemplates that WIC would execute a multi-step intracorporate reorganization which involves the creation of new subsidiaries and the transfer of regulated businesses into those subsidiaries. It is the Commission’s understanding that this is a pre-requisite for the closing of the Master Agreement currently scheduled for 29 February 2000. As a result, WIC filed with the Commission a set of applications that outline the multi-step intracorporate reorganization. These applications are being considered by the Commission pursuant to Notice of Public Hearing CRTC 1999-12, 26 November 1999, Item 28. The Commission expects to render its decision on the multi-step reorganization by the end of February 2000. In Notice of Public Hearing CRTC 1999-12, the Commission noted that approval of the proposed intracorporate reorganization would not prejudice its ability to decide on the applications related to the Master Agreement.
As the transactions between CanWest Global, Corus and Shaw are expected to close prior to the Commission's consideration of the applications, the parties requested the authority to create separate trust arrangements. The Commission approved, on 17 December 1999, three trust agreements: i) the CanWest Global Trust Agreement with Mr. L.R. Sherman as trustee, ii) the Corus Trust Agreement with Mr. John D. Hylton, Q.C. as trustee, and iii) the Shaw Trust Agreement with Mr. Gowan T. Guest Q.C. as trustee.
Under the proposed transactions, CanWest Global would acquire all of the shares of WIC held indirectly by Shaw and Corus. Shaw would acquire WIC’s shares in Cancom, which, together with other shares of Cancom already owned by Shaw, would result in Shaw holding more than 50% of the voting rights. Corus would acquire control of all of WIC’s radio broadcasting undertakings; control of certain of WIC’s pay and specialty television undertakings; WIC’s interest in its specialty television undertaking (The Family Channel Inc.); control of one of WIC’s video on demand (VOD) undertakings; and, WIC’s interest in certain unregulated assets. CanWest Global would then complete its acquisition of all of WIC’s shares, thus obtaining effective control of WIC. Following these transactions CanWest Global would be left with control of WIC’s conventional television broadcasting undertakings; WIC’s interest in ROBTv, a general partnership; WIC’s remaining VOD asset; and, certain of WIC’s unregulated assets.
APPLICATIONS
The following applications represent the various steps of the 13 March 1998 transaction as well as the Master Agreement and the Cathton Agreement dated 8 November 1999.
A. WIC applications - 13 March 1998 transaction:
1. Application (199900923) by WIC for authority to effect a change in ownership. If authority is granted, Shaw or an affiliate would be permitted to hold directly or indirectly 372,902.5 of WIC’s class A voting shares. These shares, together with the shares already acquired from Daphne Holdings Ltd. (approximately 8%), would represent 49.96% of WIC’s voting interest;
2. Application (199902250) by WIC for authority to effect a change in ownership. If authority is granted, Shaw or an affiliate would be permitted to hold directly or indirectly 9,877,840 of WIC’s class B non-voting shares. This would represent approximately 52% of these shares.
B. CanWest Global applications – 8 November 1999 agreement:
1. Application (200000654) by CanWest Global, on behalf of WIC, for authority to acquire, through a subsidiary (CanWest Newco, a wholly-owned subsidiary of CW Shareholdings Inc.), all of Shaw Acquireco's (an amalgamated entity comprised of Shaw Acquisitions Inc. and SC Interactive Video Inc.) issued and outstanding shares. Shaw Acquireco’s only assets will be the 49.96% voting shares and approximately 52% non-voting shares of WIC;
2. Application (200000670) by CanWest Global, on behalf of WIC, for authority to acquire the effective control of WIC, through the acquisition by a subsidiary (CanWest Newco) of all the outstanding shares of WIC held by 782639 Alberta Ltd., a wholly-owned subsidiary of Cathton Holdings Ltd., representing 49.99% of WIC’s voting shares;
3. Application (200002527) by CanWest Global, on behalf of WIC, for authority to acquire, through a subsidiary (CanWest Newco), WIC Television Ltd.’s 26% partnership interest in ROBTv, a specialty programming undertaking under a general partnership between Cancom, G and M Business News Limited and WIC Television Ltd. Approval of this transaction would require issuance of a new licence;
4. Application (200002535) by CanWest Global, on behalf of WIC, for authority to acquire, through a subsidiary (CanWest Newco), WIC Premium Television Ltd.'s VOD assets and to obtain a new licence on the same terms and conditions as the current licence.
The Commission notes that the above applications do not reflect the multi-step intracorporate reorganization that is presently under review (as described in Notice of Public Hearing CRTC 1999-12, 26 November 1999) and for which no decision has yet been rendered. Should the Commission approve the multi-step intracorporate reorganization (the New Corporate Structure) and should the parties close on the transactions contemplated in the Master Agreement according to the New Corporate Structure, the elements requiring the Commission’s approval, although the same in principle, would vary in form. Following are the applications that would result from the implementation of the New Corporate Structure, if approved:
a) Application (200000696) by CW Shareholdings Inc. (CW Shareholdings) for authority to acquire all of the issued and outstanding shares of 3669769 Canada Inc., licensee of BCTV (CHAN) Vancouver, (CIFG) Prince George, (CHKL) Kelowna and (CHKM) Kamloops (including any rebroadcasting facilities);
b) Application (199917168) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669777 Canada Inc., licensee of CHEK Victoria Vancouver (including any rebroadcasting facilities);
c) Application (199917176) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669785 Canada Inc., licensee of CHBC Kelowna (including any rebroadcasting facilities);
d) Application (199917192) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669793 Canada Inc., licensee of CICT Calgary (including any rebroadcasting facilities);
e) Application (199917200) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669807 Canada Inc., licensee of CISA Lethbridge (including any rebroadcasting facilities);
f) Application (199917184) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669815 Canada Inc., licensee of CITV Edmonton (including any rebroadcasting facilities);
g) Application (199917217) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of 3669823 Canada Inc., licensee of CKRD-TV Red Deer (including any rebroadcasting facilities);
h) Application (200002551) by CW Shareholdings for authority to acquire WIC’s 70% voting interest in CF Television Inc. (licensee of CFCF Montréal) which would result in effective control of the undertaking;
i) Application (199917837) by CW Shareholdings for authority to acquire all of the issued and outstanding shares of Ontv Limited (Ontv), licensee of CHCH Hamilton (including any rebroadcasting facilities); and,
j) Application (200002543) by CW Shareholdings for authority to acquire WIC’s 26% partnership interest in ROBTv. Approval of this application would require issuance of a new licence;
k) Application (200002569) by CW Shareholdings for authority to acquire the assets of the VOD undertaking, previously held by WIC Premium Television Ltd. (prior to the New Corporate Structure) and to obtain a new licence on the same terms and conditions as the current licence.
In addition to the above, the Commission notes that CanWest Global would, as a result of the Master Agreement, also have an ownership interest in TQS Inc. (which does not require Commission approval).
C. Corus applications – 8 November 1999 agreement:
1. Application (199917101) by Corus, on behalf of WIC, for authority to acquire all of the issued and outstanding shares of WIC Radio Ltd., licensee of various radio broadcasting undertakings in Western Canada and Ontario.
2. Application (200002080) by Corus, on behalf of WIC, for authority to acquire all of the issued and outstanding shares of WIC Premium Television Ltd., licensee of various pay and specialty television undertakings; and
3. Application (200002577) by Corus for authority to acquire WIC's 80% interest in Electronic Digital Delivery Inc. (licensee of a VOD programming undertaking).
The Commission notes that the above applications do not reflect the New Corporate Structure (discussed above). Following are the applications that would result from the implementation of the New Corporate Structure, if approved:
a) Application (200000662) by Corus for authority to acquire all of the issued and outstanding shares of Purchaser Amalco Co. (OBCI) (the amalgamated entity of WIC Radio Ltd. and WIC Premium Television Ltd.). Consequently, Corus would acquire control of WIC’s radio broadcasting undertakings; control of certain of WIC’s pay and specialty television undertakings; WIC’s interest in its specialty television undertaking (The Family Channel Inc.); and, control of one of WIC’s VOD undertakings.
D. Shaw application – 8 November 1999 agreement:
1. Application (199917118) by Shaw, on behalf of WIC, for a change of control of Cancom through the acquisition of WIC Television Ltd.’s 21.18% voting interest in Cancom. The completion of the proposed transaction, if approved, would result in the acquisition by Shaw of more than 50% of the voting interest and thereby acquiring effective control of the businesses carried on by Cancom and its subsidiaries.
The Commission notes that the above applications do not reflect the New Corporate Structure (discussed above). Following are the applications that would result from the implementation of the New Corporate Structure, if approved:
a) Application (200002585) by Shaw for a change of control of Cancom through the acquisition of WIC’s 21.18% voting interest in Cancom that will be held in trust. The completion of the proposed transaction, if approved, would result in the acquisition by Shaw of more than 50% of the voting interest and thereby acquiring effective control of the businesses carried on by Cancom and its subsidiaries.
ISSUES
The Commission notes that WIC, Shaw, Corus and CanWest Global are involved in many broadcasting sectors such as radio, conventional television, pay, and specialty services. In addition, they are involved in other media outlets. Shaw also operates the second largest broadcasting distribution undertaking in Canada.
The Commission intends to discuss the impact that the various applications, if approved, may have on the broadcasting industry as the parties concerned are already actively involved in the markets in question. The Commission intends to discuss, among other questions:
- The level of concentration of ownership in the television sector in terms of multiple ownership that could result from the transactions, in particular in Vancouver, Victoria, Ontario and Montréal;
- The level of concentration of ownership in the radio sector in terms of diversity of voices that could result from the transactions in specific markets such as Calgary, Edmonton and Southern Ontario.
- The level of cross-ownership between distribution, radio, specialty services and other media outlets that could result from the transactions; and,
- The vertical integration that could result from the transactions as Corus is affiliated with Shaw, a distributor and a television producer, and is involved in the pay and specialty sector.
In addition, the Commission intends to discuss the impact that the proposed transactions may have on the Canadian broadcasting system and its related benefits. The Commission will wish to explore whether the proposed transactions will be of benefit, from a programming perspective, to the markets in question as well as to the broadcasting system as a whole.
Further, the Commission may wish to discuss the appropriate valuation of the transactions as well as the specific proposals for unequivocal tangible benefits. The Commission may wish to discuss whether it would be appropriate, in the circumstances, for CanWest Global, Corus or Shaw to divest a part of their broadcasting undertakings in the event the applications are approved in whole or in par:
As noted earlier, Shaw’s acquisition of the 41.25% voting interest in WIC was completed prior to obtaining approval from the Commission. The Commission expects Shaw to address the manner in which this transaction came about, particularly the closing of the transaction without prior Commission approval and without Commission-approved trust arrangements in place.
Examination of applications:
WIC Western International Communica-
tions Ltd. & Electronic Digital Delivery Inc.
1960 - 505 Burrard Street
Vancouver, British Columbia
V7X 1M6
CHAN-TV
7850 Enterprise Street
Burnaby, British Columbia
CHBC-TV
342 Leon Avenue
Kelowna, British Columbia
Radio Stations CKNW/CFMI
2000 - 700 West Georgia Street
Vancouver, British Columbia
CHEK-TV
780 Kings Road
Victoria, British Columbia
CICT-TV
222 - 23rd Street North East
Calgary, Alberta
CITV-TV
5325 Allard Way
Edmonton, Alberta
WIC Premium Television Ltd.
200 - 5324 Calgary Trail Southbound
Edmonton, Alberta
CISA-TV
1401 - 28 Street Nord
Lethbridge, Alberta
RDTV (CKRD-TV)
2840 Bremner Avenue
Red Deer, Alberta
Radio Stations CJOB/CJKR
930 Portage Avenue
Winnipeg, Manitoba
ONTv (CHCH-TV)
163 Jackson Street West
Hamilton, Ontario
Canadian Satellite Communications Inc.
50 Burnhamthorpe Road West
10th Floor
Mississauga, Ontario
Family Channel and Teletoon
BCE Place
181 Bay Street
Toronto, Ontario
CFCF-TV
405 Ogilvy Avenue
Montréal, Quebec
Shaw Communications Inc.
630 - 3rd Avenue West
Suite 900
Calgary, Alberta
Global Television Network Inc.
81 Barber Greene Road
Toronto, Ontario
SPECIFIC INDIVIDUAL REQUIREMENTS
PERSONS REQUIRING COMMUNICA-TIONS SUPPORT SUCH AS ASSISTIVE LISTENING DEVICES AND SIGN LANGUAGE INTERPRETATION ARE REQUESTED TO INFORM THE COMMISSION AT LEAST TWENTY (20) DAYS BEFORE THE COMMENCEMENT OF THE PUBLIC HEARING SO THAT THE NECESSARY ARRANGEMENTS CAN BE MADE.

PUBLIC PARTICIPATION

Intervention

IN ORDER TO HAVE YOUR INTER-VENTION CONSIDERED BY THE COMMISSION AND PLACED ON THE PUBLIC FILE,
- submit your original written intervention to the Secretary General of the Commission (CRTC, Ottawa, K1A 0N2). A true copy MUST be sent to the applicant and proof that this has been done must accompany the original intervention sent to the Commission.
Please note that you may also file your interventions by Electronic Mail
- the intervention may be filed with the Commission by electronic mail at the following e-mail address: procedure@crtc.gc.ca and should indicate if a true copy has been sent to the applicant. Each paragraph of the document should be numbered. In addition, as an indication that the document has not been damaged during electronic transmission, the line ***End of document*** should be entered following the last paragraph of each document.
- please note, that only the documents (applications and interventions) electronically filed will be available on the Commission's web site. You will be able to access these documents by indicating the public notice or the notice of public hearing number;
- the intervention must be received by the CRTC and by the applicant ON OR BEFORE the deadline date indicated below. The Commission cannot be held responsible for postal delays;
- one may also communicate with the Commission:
- by telecopier: (819) 994-0218
- your intervention must clearly identify the application. It must also include clear indication of whether you support or oppose the application, or, if you propose changes to it, include the facts and grounds therefor. In the event that the subject application is brought to the oral phase of a hearing, and should you wish to appear, your intervention must include a request to do so, preferably in the first paragraph of your letter, together with reasons as to why your written submission is not sufficient and why your appearance is necessary. The Commission will inform interveners whether their requests to appear are granted. All written interventions are considered by the Commission when it makes its decisions.
To ensure the effective use of public hearing time, and consistent with the Commission’s practice in similar proceedings, it may group the appearance of various interveners to particular applications at the same time.

DEADLINE FOR INTERVENTION:

30 March 2000

EXAMINATION OF DOCUMENTS DURING NORMAL OFFICE HOURS
Documents are available at the local address provided in this notice and at the Commission offices and documentation centres directly involved with these applications or, upon request, within a 48 hour delay, at any other CRTC offices and documentation centres.
Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage
Ground Floor
Hull, Quebec K1A 0N2
Tels: (819) 997-2429 - TDD 994-0423
Telecopier: (819) 994-0218
Bank of Commerce Building
Suite 1007
1809 Barrington Street
Halifax, Nova Scotia B3J 3K8
Tels: (902) 426-7997 - TDD 426-6997
Telecopier: (902) 426-2721
Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tels: (204) 983-6306 - TDD 983-8274
Telecopier: (204) 983-6317
530 - 580 Hornby Street
Vancouver, British Columbia
V6C 3B6
Tels: (604) 666-2111 - TDD 666-0778
Telecopier: (604) 666-8322
C.R.T.C. Documentation Centre
405 DeMaisonneuve Boulevard East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tels: (514) 283-6607 - TDD 283-8316
Telecopier: (514) 283-3689
C.R.T.C. Documentation Centre
55 St. Clair Avenue East
Suite 624
Toronto, Ontario
M4T 1M2
Tel: (416) 952-9096
Telecopier: (416) 954-6343
C.R.T.C. Documentation Centre
Cornwall Professional Building
Room 103
2125 - 11th Avenue
Regina, Saskatchewan
S4P 3X3
Tel: (306) 780-3422
Telecopier: (306) 780-3319
C.R.T.C. Documentation Centre
Scotia Place Tower Two
19th Floor, Suite 1909
10060 Jasper Avenue
Edmonton, Alberta
T5J 3R8
Tel: (780) 495-3224
Telecopier: (780) 495-3214
This document is available in alternative format upon request, and may also be viewed at the following Internet site: www.crtc.gc.ca
Secretary General
Date modified: