ARCHIVED - Decision CRTC 2001-111

Decision CRTC 2001-111

Ottawa, 21 February 2001

Mr. R.A. Fillingham, B.A., C.A.
Executive Vice President,
Chief Financial Officer and Secretary
CTV Inc.
P.O. Box 9, Station O
Toronto, Ontario
M1S 4B5

Dear Mr. Fillingham:

Re:  Application No. 200102236 - Denied by Majority Decision

Request from CTV Inc. for an extension of the sale of its 40% voting interest in CTV SportsNet Inc., a national service

This is in reference to your letter of 18 January 2001 in which you seek Commission authority for an extension in respect of the sale of CTV Inc. (CTV)'s voting interest in CTV SportsNet Inc. (SportsNet).

The Commission notes that CTV was granted, in Decision CRTC 2000-86, a period of twelve months to file an application for the divestiture of its voting interest in SportsNet. In the Commission's view, this is a reasonable timeframe for the divestiture requirement. Furthermore, the Commission is aware that potential purchasers are interested in purchasing CTV's interest in SportsNet.

The Commission acknowledges your argument regarding the public process initiatied by Public Notice CRTC 2000-165 but is of the view that the sale of CTV's voting interest in SportsNet should not be delayed because of the pending policy review. With respect to evaluating the acceptability of any prospective purchaser, the Commission reminds CTV that it will do so in due course pursuant to any policy that may exist at the time.

Consequently, by majority vote, the Commission denies your request to extend the time frame for divestiture of your interest in SportsNet. The Commission reminds CTV of its obligation to adhere to the condition of approval set out in Decision CRTC 2000-86. Considering the denial of the extension, the Commission reminds CTV that trust arrangements for CTV's interest in SportsNet must be in place, with prior Commission approval, by 24 March 2001. Finally, the Commission reminds CTV that it must confirm by 24 March 2001 that it no longer manages SportsNet directly or indirectly, and no longer votes the shares of other shareholders through a voting trust agreement or otherwise.

All letters of approval issued by the Commission are made available for public examination at the Commission's central office and the regional office. The Commission also requires you to append this letter to the SportsNet licence.

Finally, this letter is not to be interpreted in any way as an indication that the Commission is predisposed to authorize the subsequent applications relating to the transaction.

Yours sincerely,

Ursula Menke
Secretary General

Dissenting opinion of Commissioners Andrée Noël and Andrew Cardozo

With all due respect for the opinion expressed by the majority, we believe that, in this case, it would have been appropriate to grant a further period to CTV to divest itself of its 40% interest in Sportsnet. It is important to keep in mind that on 8 December 2000, the Commission issued Public Notice CRTC 2000-165 announcing a review of its position regarding ownership of discretionary programming undertakings by cable distribution undertakings.

The current policy on ownership of discretionary programming undertakings, and on the vertical integration of such undertakings with cable distributors, could be substantially or even radically changed as a consequence of this process.

Sportsnet's shareholder agreement obliges CTV to offer its shares ultimately to Rogers. If Rogers should exercise its rights under the shareholder agreement, and submit an application to have the 40% of Sportsnet's shares currently held by CTV transferred to itself, it is unlikely under the current policy that the application would be approved. It therefore seems both logical and desirable that the deadline for CTV to divest itself of its interest in Sportsnet be extended. This would allow the parties concerned to enter the divestiture process with a full understanding of the new rules of the game, and not in an atmosphere of policy indecision.

Accordingly, we would grant CTV a further period to sell its holdings in Sportsnet, extending the deadline to 45 days following publication of the Commission's policy determinations pursuant to Public Notice CRTC 2000-165. We feel the requested period of 120 days is too long, and that 45 days would be sufficient to enable the applicant to begin the process in question.

If the applicant is unable to file a share transfer application within the period mentioned above, it would have to place the shares in the hands of a trustee approved by the Commission, and in accordance with terms and conditions that the Commission would deem appropriate under the circumstances.

We wish to draw attention to the fact that CTV applied to the Commission two months before the deadline set in Decision CRTC 2000-86, and barely more than a month after publication of Public Notice CRTC 2000-165. We do not believe, particularly given these circumstances, that this application constitutes a delaying tactic.