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Decision CRTC 2001-219
Ottawa, 9 April 2001
By Fax: (416) 332 - 4281
Original to Follow to Bell Globemedia Inc.
Mr. Alain Gourd
Group Executive, Vice President, Corporate
Bell Globemedia Inc.
9 Channel Nine Court
Scarborough, Ontario M1S 4B5
Dear Mr. Gourd:
Re: Application No. 2001-0433-1 - Conditionally Approved
Request for Approval of Voting Trust Arrangements in respect of CTV Inc.'s (CTV) shares in CTV Sports Net Inc. (Sports Net)
Background
On 21 February 2001, the Commission denied a request from CTV to extend the timeframe for divestiture of its 40% voting interest in Sports Net, licensee of a national specialty programming undertaking (Decision letter CRTC 2001-111).
In its Decision, the Commission indicated that CTV had been granted a reasonable timeframe (twelve months) to divest of its interest in Sports Net (pursuant to Decision CRTC 2000-86). The Decision reminded the applicant that pursuant to Decision 2000-86 trust arrangements for CTV's interest in Sports Net must be in place, with prior Commission approval, by 24 March 2001 and CTV must confirm that it no longer manages Sports Net directly or indirectly, and no longer votes the shares of other shareholders through a voting trust agreement or otherwise.
On 20 March 2001, Bell Globemedia Inc. (Bell Globemedia) filed, on behalf of CTV, two alternate versions of their proposed voting trust arrangements. The Commission sought comment on the proposed voting trust arrangements from the other shareholders of Sports Net and from Sports Net itself . Comments were received during the week of 26 March 2001, including CTV's reply, dated 30 March 2001. With its reply, CTV filed a proposed Revised Voting Trust Agreement (the RVTA).
Conditional Approval
The Commission notes that divestiture of CTV's interest in Sports Net is a clear regulatory requirement arrived at after a full public process. While the Commission sought comments on the proposed trust arrangements from the other shareholders of Sports Net and the licensee, this is not to be interpreted as implying that the Commission's decision in this matter requires the consent of these parties.
The Commission, having carefully considered the record on this matter, grants conditional approval, until 29 June 2001, to the proposed trust arrangements, including the RVTA and the proposed trustee, Mr. R. Scott Colbran, subject to the following:
- The RVTA is not subject to the written consent of the remaining Sports Net shareholders or the licensee. Accordingly, the following phrase, commencing at the end of the second line of clause 7.1 of the RVTA, must be removed: "and the receipt by CTV of written consent to this Agreement from each of the other shareholders of Sports Net in the form attached hereto as Schedule "A"". In addition, Schedule A must be omitted;
- Inclusion of the following additional Recital in the RVTA (as proposed by CTV in reply): "AND WHEREAS all of the shares in Sports Net are subject to the provisions of a shareholders' agreement dated January 9, 1996 (the "Sports Net Shareholders' Agreement") made among CTV Television Network Ltd., The Molson Companies Limited, Rogers Programming Services Inc., LMC International, Inc. and 2952939 Canada Inc.";
- Inclusion of the following phrase at the end of the first sentence of clause 2.1 of the RVTA: "and with the relevant terms of the Sports Net Shareholders Agreement";
- Inclusion of the following phrase at the end of the first sentence of clause 2.3 of the RVTA (as proposed by CTV in reply): "and all applicable terms in the Sports Net Shareholders' Agreement";
- Modification of the first sentence of clause 2.4 of the RVTA to read as follows: "As requested in writing by CTV (but without becoming personally liable with respect thereto), the Trustee shall cause the granting of guarantees and security interests (subject to applicable regulatory requirements) in the CTV Sports Net Shares provided that such security is for the purpose of the continuing operation of Sports Net's business in the ordinary course or give acknowledgments of any existing guarantees or security interests referred to in paragraph 2.1 above in the CTV Sports Net Shares.";
- Modification of the phrase "any partner, officer, director, shareholder or subsidiary of CTV" in the third line of clause 4.1(b) of the RVTA to insert the term "affiliate", as follows: "any partner, officer, director, shareholder, subsidiary or affiliate of CTV";
- Modification of the last sentence of clause 4.1(b) of the RVTA to read as follows: "Moreover, the Trustee shall not knowingly nominate and elect or appoint a person as a director of Sports Net who is currently a CTV nominated director of Sports Net, a partner, officer, employee, director or controlling shareholder of CTV or Bell Globemedia Inc., BCE Inc., Thomson Canada Limited or any subsidiaries, affiliates or parent companies thereof; or who has any professional, business or familial relationship with CTV or any partner, officer, employee, director, controlling shareholder, affiliate or subsidiary of CTV, including Bell Globemedia Inc., BCE Inc., Thomson Canada Limited or any subsidiaries thereof (any such person so related being hereinafter referred to as a "Disqualified Person");";
- Addition of the word "affiliate" in the phrase contained in parentheses in clause 4.3 of the RVTA, as follows: "(who shall not be advisers to CTV; any partner, officer, director, shareholder, subsidiary or affiliate of CTV; or to Bell Globemedia Inc., BCE Inc. or Thomson Canada Limited)";
- Addition of the word "affiliate" in the tenth line of clause 4.4 of the RVTA, as follows: "who shall not be advisers to CTV; any partner, officer, director, shareholder, subsidiary or affiliate of CTV";
- Removal of the following phrase from the first line of clause 4.4 of the RVTA: "As soon as the Trustee considers the prevailing market conditions to be appropriate,", and replacement with the following words: "Taking into account the reasonable protection of the value of the asset";
- Inclusion of the following phrase in clauses 4.3, 4.4 and 5.5 of the RVTA (as proposed by CTV in reply): "and subject to all applicable terms in the Sports Net Shareholders' Agreement";
- Addition of the words "of CTV" in the second line of clause 4.6 after the word "right" (as proposed by CTV in reply);
- A new clause, numbered 4.7, is to be inserted as follows: "It is understood and agreed that, from and after the date of commencement of this Agreement neither CTV, Bell Globemedia Inc., BCE Inc., Thomson Canada Limited nor any partner, officer, director, employee or controlling shareholder thereof, or any of their subsidiaries or affiliates, shall take part, directly or indirectly, in the management of Sports Net. The foregoing does not preclude the ability of CTV to make available to the Trustee, or directly to Sports Net on behalf of the Trustee, programming and operational support services in the ordinary course of business pending the sale of the CTV-Sports Net Shares";
- Addition of the word "affiliate" in the phrase contained in parentheses in clause 5.3, as follows: "(except such counsel shall not be counsel to CTV; any partner, officer, director, shareholder, subsidiary or affiliate of CTV; or to Bell Globemedia Inc., BCE Inc. or Thomson Canada Limited)";
- Addition of the word "affiliate" in the phrase contained in parentheses in clause 5.4, as follows: "(except such advisors shall not be advisors to CTV; any partner, officer, director, shareholder, subsidiary or affiliate of CTV; or to Bell Globemedia Inc., BCE Inc. or Thomson Canada Limited)";
- Modification of clause 8.3 to read as follows: "Other than as provided in paragraphs 8.1 and 8.2, neither CTV, Bell Globemedia Inc., BCE Inc., Thomson Canada Limited nor any partners, officers, directors, employees, shareholders, subsidiaries or affiliates thereof shall communicate with the Trustee regarding the operation or management of Sports Net or its subsidiaries";
The Commission notes that these trust arrangements are an interim measure until an application for the ultimate change of ownership or control resulting from the sale of CTV's shares can be finalized and considered by the Commission. In this instance, the trustee is to step into the shoes of CTV. This is not to be interpreted as allowing other parties to exercise control without seeking the Commission's prior approval.
The Commission further notes that this authority expires on 29 June 2001. The Commission will consider at renewal (if any renewal is required) the possibility of the imposition of conditions to further expedite the sale, including, for example, a firm deadline.
The Commission directs Bell Globemedia/CTV to file an executed copy of the RVTA, amended as set out above, with the Commission within 10 days of the date of this decision. This filing must also include a revised affidavit from the trustee, in light of the amendments to the agreement.
All letters of approval issued by the Commission are made available for public examination at the Commission's central office. Reference to this letter will be made available at the Commission's web site at www.crtc.gc.ca. The Commission also requires you to append this letter to the Sports Net licence.
Finally, this authority is not to be interpreted in any way as an indication that the Commission is predisposed to authorize the subsequent application arising from the sale of CTV's shares in Sports Net.
Yours sincerely,
Ursula Menke
Secretary General
cc. Interested Parties
Distribution List
Rogers Broadcasting Limited
Anthony P. Viner
Fax (416) 935-8288
CTV SportsNet Inc.
Rosalind Morrow (Borden Ladner Gervais LLP)
Fax (416) 367-6749
Bell Globemedia Inc.
Alain Gourd
Fax (416) 332-4281
CTV Inc.
Kathy Robinson
Fax (416) 979-1234
Molson Inc.
Marie Giguère
Fax (514) 590-6332
Fox Sports Net Canada Holdings LLC
John F. Blakney (Fraser Milner Casgrain LLP)
(613) 783-9690
Date Modified: 2001-04-09
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