ARCHIVED - Decision CRTC 2001-522

Decision CRTC 2001-522

Ottawa, 24 August 2001

Corus Entertainment Inc.
Across Canada 2000-2225-2

Application processed by
Public Notice CRTC 2001-9
dated 29 January 2001

Corus authorized to increase its minority ownership holdings in Teletoon

1.

The Commission approves the application by Corus Entertainment Inc. for authority to acquire a 20% voting interest in Teletoon Canada Inc., licensee of an English- and French-language specialty service dedicated to animated programming. Corus owns an existing 20% voting interest in Teletoon held indirectly through YTV Canada Inc. This transaction will thus give Corus a total voting interest in Teletoon of 40%. Astral Media Inc. and Cinar Films Inc. hold indirect ownership of the remaining voting shares (40% and 20%, respectively).

2.

The additional 20% voting interest in Teletoon now to be acquired by Corus represents shares in that specialty service licensee beneficially owned by Nelvana Broadcasting Limited, but which are held in trust under an arrangement approved by the Commission in October 2000. Earlier that year, Corus, either directly or indirectly through a number of holding companies, had purchased shares of Nelvana representing a voting interest of approximately 97% of the company.

3.

Corus has ownership interests in eight other specialty or pay television services, including YTV and Treehouse. Corus is also an affiliate of Shaw Communications Inc., Canada's second largest cable television distributor. In Public Notice 2001-9 announcing this application, the Commission noted the existing involvement of Corus in the production and broadcast of children's programming and its affiliation with Shaw. It called for comments on the application and the implications raised by these existing ownership interests and affiliations, including the potential for preferential treatment between affiliated companies.

4.

Eight parties filed interventions to the Corus application. All were in support of the application's approval, and none raised any concern about concentration of ownership or undue preference. Interveners did, however, highlight the applicant's strong commitment to the development of high-quality children's programming and its support of the production community. Interveners also described the application as pre-emptive of a potential acquisition of Nelvana by foreign interests and the possibility that this would create a conflicting vision for Teletoon. Certain interveners, noting that Nelvana's management team is to remain in place, suggested that the team's vision and experience would continue to benefit Teletoon.

5.

Until recently, the Commission's policy had been to restrict cable distribution undertakings from holding or increasing their ownership interests in analog discretionary programming undertakings. In Public Notice CRTC 2001-66 dated 7 June 2001, following a process of public consultation, the Commission announced that it had amended this policy, and would allow cable companies and their related entities to purchase interests, including controlling interests, in Canadian analog pay and specialty programming services. The Commission set forth the reasons for the policy change in Public Notice CRTC 2001-66-1 of today's date. Among other things, the Commission noted that licensed analog discretionary services have now found distribution on virtually all cable systems across Canada for which such distribution is required pursuant to the access rules. The Commission also expressed the view that the sections of the Broadcasting Distribution Regulations setting out the access rules, others dealing with undue preference or disadvantage, and the regulations' dispute resolution mechanisms, ".provide sufficient and effective tools to respond to such concerns as may, from time to time, arise with respect to the cable distribution of analog discretionary programming services."

6.

The Commission notes that approval of the present application is consistent with the new policy approach described above. The Commission also notes that the greater voting interest Corus will acquire in the licensee company will not increase significantly that company's overall share of pay and specialty market revenues. It can be expected, however, to alter the dynamics of the ownership and operation of Teletoon. In general, the Commission agrees with interveners that this should be to the benefit of the licensee, and considers that it should better enable Corus to provide the licensee with high-quality children's programming. For these reasons, the Commission considers that approval of the application is justified.

Secretary General