ARCHIVED - Broadcasting Decision CRTC 2002-93

Broadcasting Decision CRTC 2002-93

Ottawa, 19 April 2002

3937844 Canada Inc., a subsidiary of Newcap Inc.
Athabasca, Blairmore, Brooks, Calgary, Cold Lake (Grand Centre), Drumheller, Edson, High Prairie, Hinton, St. Paul, Slave Lake, Stettler, Wainwright, Westlock, and Wetaskiwin, Alberta

Application Numbers: see appendix
Public Hearing at Montréal, Quebec
19 November 2001

3937844 Canada Inc., a subsidiary of Newcap Inc., acquires the assets of radio stations in Alberta

1.

The Commission approves the applications by 3937844 Canada Inc. (3937844), a subsidary of Newcap Inc. (Newcap), to acquire from Standard Radio Inc. (Standard) the assets of the broadcasting undertakings set out in the appendix to this decision. These undertakings, which serve communities in Alberta, include 15 radio stations and related transmitters. The Commission notes that 3937844 will be owned by Newcap who will hold 76.34% of the voting rights and by Standard who will hold the remaining 23.66%. The effective control of the licensee will be exercised by Newcap.

2.

The Commission will issue licences to 3937844 that will expire on the dates set out in the appendix to this decision. The expiry dates are the same as the expiry dates of the current licences, with three exceptions. The current licences for CIBQ Brooks, CKDQ Drumheller and CKSQ Stettler expire on 31 August 2002. The new licences will expire on 31 August 2003 so that 3937844 will have adequate time to prepare and file applications for licence renewal. The new licences will be subject to the same conditions as those in effect under the current licences.

3.

This decision is one of three issued today that approve a series of transactions under which the broadcasting assets in Ontario, Alberta and British Columbia that were formerly held by Telemedia Radio Inc. and Telemedia Radio (West) Inc. (collectively referred to in this decision as "Telemedia") are ultimately tranferred to one of three parties: Standard, Rogers Broadcasting Limited (RBL), and 3937844. The decisions may be summarized as follows:

. In Standard acquires the assets of radio stations, radio networks and television stations in Ontario, Alberta and British Columbia, Decision CRTC 2002-91, 18 April 2002, the Commission approves applications by Standard to acquire all of the broadcasting assets formerly held by Telemedia in Ontario, Alberta and British Columbia.

. In Rogers acquires the assets of radio stations and a radio network in Ontario, Decision CRTC 2002-92, 18 April 2002, the Commission approves applications by RBL to acquire the assets of 14 radio stations, including one transitional digital radio station, as well as one radio network that Standard acquired from Telemedia, as approved in Decision CRTC 2002-91. All of the stations that RBL has acquired are located in Ontario.

. In the current decision, the Commission approves applications by 3937844 to acquire the assets of 15 radio stations and related transmitters that Standard acquired from Telemedia, as approved in Decision CRTC 2002-91. All of the stations that 3937844 has acquired are located in Alberta.

4.

A description of the cumulative impact of today's decisions is set out in Introductory statement to Decisions CRTC 2002-91 to 2002-93: Transfer of the assets of radio, television and network undertakings in Ontario, Alberta and British Columbia formerly held by Telemedia, Public Notice CRTC 2002-19 , 18 April 2002 (Public Notice 2002-19). The public notice also includes a discussion of matters related to the value of the transactions, financial gains that could be generated from selling broadcasting undertakings within a relatively short period after they are acquired, and possible concerns related to the sale of the Calgary FM station licensed to Telemedia in 2001.

5.

The Commission notes that, upon completion of the transactions noted above, 3937844 will remain in compliance with the Commission's radio ownership policy set out in Commercial Radio Policy 1998, Public Notice CRTC 1998-41, 30 April 1998 (the Commercial Radio Policy) specifying that:

. in markets with less than eight commercial stations operating in a given language, a single licensee may own or control as many as three stations operating in that language, with a maximum of two stations on either the AM or FM band;

. in markets with eight commercial stations or more operating in a given language, a single licensee may be permitted to own or control as many as two AM and two FM stations in that language.

Benefits

6.

In the Commercial Radio Policy, the Commission established its policy with respect to the benefits required at the time of the change of ownership or control of radio undertakings. It determined that an applicant must make commitments to a tangible benefits package related to the development of Canadian musical and other artistic talent representing a minimum of 6% of the value of the transaction. According to the policy, benefits are to be allocated as follows:

. 3% to the Radio Starmaker Fund/Fonds RadioStar;

. 2% to FACTOR or MusicAction;

. 1% to either of the above initiatives, or to other initiatives relating to the development of Canadian talent.

7.

The value of the current transaction is $39.3 million. 3937844 will therefore implement a benefits package with a value of $2,358,000 (6% of $39.3 million) payable over seven years. 3937844 will allocate $1,179,000 (3% of $39.5 million) of this amount to the Radio Starmaker Fund/Fonds Radiostar and $786,000 (2% of $39.3 million) to FACTOR. Since all of the stations that 3937844 is acquiring are in Alberta, the Commission encourages the applicant to ask FACTOR to earmark these funds for Alberta artists. One opposing intervention was received that expressed concern about the applicant concentrating its Canadian talent development efforts in Alberta to the detriment of other areas of the country. However, given the location of the stations being acquired, the Commission considers that the approach set out above is appropriate. The remaining $393,000 of the benefits package will be allocated to Aboriginal Voices Radio (AVR).

8.

The Commission notes that the purpose of the benefits requirements, as they relate to commercial radio stations, is to promote and support Canadian music and artistic talent. In this regard, the Commission notes that 3937844 has confirmed that all of the funds paid to AVR will be used to further the development of Aboriginal or Canadian artists. The Commission therefore considers that the proposed support for AVR is an acceptable benefit. The Commission further notes Newcap's longstanding support of AVR and encourages the applicant to also provide non-financial support in areas such as mentoring and providing advice to AVR as it establishes a new station in Calgary.

9.

The Commission notes that all of the commitments that 3937844 has proposed as benefits are over and above the existing commitments and conditions of licence currently in effect for the broadcasting undertakings that Newcap is acquiring. 3937844 is to fulfil any outstanding benefits commitments for the stations that it is acquiring, and to file a report concurrently with its annual return related to the fulfilment of such commitments.

The New FM station in Calgary

10.

In Public Notice CRTC 2002-19, the Commission addressed the acquisition, first by Standard and then by 3937844, of the new FM station in Calgary that was licensed to Telemedia in Three new radio stations to serve Calgary, Decision CRTC 2001-172, 12 March 2001.

11.

The Commission notes that 3937844 will assume all commitments made by Telemedia in the licence application for the new Calgary station, including the commitment, imposed as a condition of licence, to operate the station in a smooth jazz format. The Commission therefore considers that the new station, even under different ownership, will provide Calgarians with a new programming format, and that the community and the broadcasting system will benefit from the Canadian talent development initiatives proposed in Telemedia's application for a new licence.

Interventions

12.

Earlier in this decision, an intervention opposing the current applications was addressed. The Commission also acknowledges the interventions received in support of these applications.

Other matters

13.

Because this licensee is subject to the Employment Equity Act and files reports with Human Resources Development Canada, its employment equity practices are not examined by the Commission.

Conclusion

14.

The transactions approved in this decision result from a decision by Telemedia to divest of all of its broadcasting assets across Canada. The Commission considers that the acquisition of radio assets formerly held by Telemedia will enhance Newcap's position as a strong player in the radio broadcasting industry. Newcap is the parent company of 3937844. Acquisition of the FM station in Calgary will provide 3937844 with an urban station to support the other Alberta stations it is acquiring, all of which are located in small communities. The Commission further notes that, following the acquisition of these assets, 3937844 will remain in compliance with the Commission's policy with respect to ownership of radio undertakings in particular markets. 3937844 has also fulfilled the provisions of the Commission's policy with respect to the benefits package that must be presented at the time of the transfer of control of radio undertakings.

Secretary General

This decision is to be appended to each licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca

Appendix to Broadcasting Decision CRTC 2002-93

Broadcasting undertakings acquired by 3937884 Canada Inc., a subsidiary of Newcap Inc.

Application Number

Location

Call Sign

Licence expiry

date

2001-0956-3

Athabaska

CKBA

2003-08-31

2001-0969-6

Blairmore

CJPR

2003-08-31

2001-0966-2

Brooks

CIBQ

2003-08-31

2001-0970-4

Calgary

new FM

2007-08-31

2001-0967-0

Cold Lake/Grand Centre

CJCM

2003-08-31

2001-0956-3

Drumheller

CKDQ

2003-08-31

2001-0958-9

Edson

CJYR

2003-08-31

2001-0963-8

High Prairie

CKVH

2003-08-31

2001-0965-4

Hinton

CIYR

2003-08-31

2001-0959-7

Saint Paul

CHLW

2003-08-31

2001-0964-6

Slave Lake

CKWA

2003-08-31

2001-0968-8

Stettler

CKSQ

2003-08-31

2001-0957-1

Wainright

CKKY

2003-08-31

2001-0960-5

Westlock

CFOK

2003-08-31

2001-0961-2

Wetaskiwin

CKJR

2003-08-31