ARCHIVED - Broadcasting Decision CRTC 2002-336

Broadcasting Decision CRTC 2002-336

Ottawa, 24 October 2002

Corus Entertainment Inc., on behalf of 3899071 Canada Inc.
Across Canada

Application 2002-0647-6

Transfer of effective control of 3899071 Canada Inc.

1.

The Commission has received an application by Corus Entertainment Inc. (Corus), submitted on behalf of 3899071 Canada Inc. (3899071, the licensee), to effect a transfer of effective control of 3899071.

2.

3899071 is the licensee of the Category 1 national digital specialty television programming service known as Country Canada, which is in operation since September 2001.

3.

The proposed transaction would be implemented through the transfer of all of the shares held by Corus in 3899071, 70 common voting shares representing 70% of the licensee's voting interests, to the Canadian Broadcasting Corporation (the CBC, the Corporation).

4.

As a result of this transaction, the CBC, which currently holds the remaining 30% of the voting interests of 3899071, would own and control the licensee.

5.

Based on the Purchase and Sale Agreement, the purchase price for the shares held by Corus would be $1,200,000.

6.

The Corporation proposed tangible benefits consisting of new programming initiatives for the Country Canada service. The proposed benefits package is estimated at a total cost of $425,000, and would include the following:

• bringing CBC Radio One's highly popular radio call-in program Cross-Country Check-Up to television and broadcasting it live on Country Canada on a weekly basis (estimated at $125,000);

• introducing the new weekly program Your Town as a regular Country Canada feature (portraying life in small-town Canada) (estimated at $100,000); and

• introducing two new daily call-in programs (estimated at $200,000).

7.

Pursuant to the Commission's benefits policy outlined in Building on success - A policy framework for Canadian television, Public Notice CRTC 1999-97, 11 June 1999, the dollar value of tangible benefits generally required of applicants in transactions involving the transfer of control oftelevision undertakings is set at 10% of the value of the transaction, as accepted by the Commission. In this case, the Corporation has proposed, as tangible benefits, programming initiatives that are above and beyond existing Country Canada services and which are valued at $425,000.

8.

The Corporation's proposed intangible benefits would be comprised of the following:

• under the Corporation's ownership, Country Canada would be maintained as a viable national Category 1 specialty service;

• substantial foreign entertainment program content would be replaced by Canadian programs, including new programs unique to Country Canada that would be tailored to its rural and regional audiences; and

• Country Canada's Canadian content would increase from its current authorized level of 60% to not less than 80% by the end of the seven-year licence period. In this respect, the Commission acknowledges the application filed by the Corporation to amend the service's conditions of licence pertaining to the broadcast of Canadian programs in accordance with its commitment. The Commission will process this application in a separate public notice to be issued today.

The Commission's determination

9.

The Commission considers the value of the proposed transaction to be reasonable and a fair representation of the 70% voting interest in Country Canada. The Commission is satisfied that the proposed tangible benefits are appropriate and commensurate with the size and nature of the transaction. Moreover, considering the proposed intangible benefits, the Commission finds that the proposed transfer of effective control of the Country Canada service to the Corporation is in the public interest.

10.

The Commission notes that the Corporation has agreed to conditions of licence being imposed on the Country Canada service, requiring it to maintain accounts for this service separate from its television networks, and to file an annual statement of accounts relating to its specific revenues and expenditures. The addition of these conditions of licence is included in the public notice being issued today.

11.

In view of the particular circumstances of this transaction, the Commission approves the transfer of effective control of Country Canada to the CBC and it will modify its ownership records accordingly.

Secretary General