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Broadcasting Decision CRTC 2003-206
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Ottawa, 2 July 2003
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Astral Media inc., on behalf of Astral Radio Québec 2003 inc.
Montréal, Québec, Sherbrooke, Trois-Rivières, Saguenay and Gatineau, Quebec
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Applications 2002-0808-4, 2002-0809-2, 2002-0824-0
Public Hearing at Montréal, Quebec
3 February 2003
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Licence amendments pursuant to Broadcasting Decision
CRTC 2002-90
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The Commission approves the applications by Astral Media inc. (Astral Media), on behalf of Radiomedia inc. (Radiomedia) and Astral Radio Québec inc. (formerly 3903206 Canada Inc.) (Astral Quebec), now merged under the name Astral Radio Québec 2003 inc., to amend the licence of each AM and FM French-language radio station in Quebec held by Radiomedia and Astral Quebec and acquired pursuant to Transfer of control of 3903206 Canada Inc., of Telemedia Radio Atlantic Inc. and of 50% of Radiomedia Inc. to Astral Radio Inc., Broadcasting Decision CRTC 2002-90, 19 April 2002 (Decision 2002-90). The list of stations and the levels of local programming and weekly news required of each one by condition of licence is set out in the appendix to this decision.
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Given that in Acquisition of radio assets in Quebec, Broadcasting Decision CRTC 2003-205 of today's date, the Commission denies the transactions proposed by Astral Media on behalf of a corporation owned by TVA Group Inc. and Radio Nord Communications inc., the Commission finds that there is no need to review the amount of tangible benefits to which Astral Media committed as part of the transaction authorized in Decision 2002-90.
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1.
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In Transfer of control of 3903206 Canada Inc., of Telemedia Radio Atlantic Inc. and of 50% of Radiomedia Inc. to Astral Radio Inc., Broadcasting Decision CRTC 2002-90, 19 April 2002 (Decision 2002-90), the Commission approved applications to transfer the effective control of the broadcasting undertakings held directly or indirectly by Telemedia Radio Inc. (Telemedia) in Quebec, New Brunswick and Nova Scotia to Astral Radio inc., a subsidiary of Astral Media inc. (Astral Media). The Commission determined, among other things, that approval of the transaction would improve the competitive position of private French-language radio in Quebec and enhance the quality of programming, particularly news programs, by revitalizing the AM network. The Commission's approval was, however, subject to two conditions precedent and three conditions of approval.
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Conditions precedent
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2.
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To ensure that the benefits of the transaction were implemented and that the public interest was served, the Commission made its approval subject to two conditions precedent. The first required that an application be filed to transfer ownership of the CFOM-FM Lévis station to a third party not associated with Astral Media and that the station be placed in trust. The application in question was placed on the agenda for the 3 February 2003 public hearing in Montréal and is the subject of a decision published today and referred to in the section below entitled The Commission's determination.
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3.
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The second condition precedent required that applications be filed to add conditions of licence related to all the Quebec AM and FM radio stations acquired by Astral Media. Given the possible decrease in local programming hours and the related concerns raised by the interveners, the Commission determined that it was appropriate that Astral Media's commitments regarding the maintenance of local programming and news levels be incorporated as conditions of licence.
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4.
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The Commission hereby approves the applications by Astral Media, on behalf of Radiomedia inc. (Radiomedia) and Astral Radio Québec inc. (formerly 3903206 Canada Inc.) (Astral Quebec), now merged under the name Astral Radio Québec 2003 inc., to amend the licence of each AM and FM French-language radio station in Quebec held by Radiomedia and Astral Quebec and acquired pursuant to Decision 2002-90. The list of stations and the levels of local programming and weekly news required of each one by condition of licence is set out in the appendix to this decision.
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5.
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The Commission noted the explanations provided by Astral Media regarding its commitment to weekly news programming. Those levels match the total number of hours of local, regional, provincial, national and international news broadcast. The applicant added that, on average, on an annual basis, its stations outside Montréal devote 60% of news time to local and regional news. According to the applicant, local news generally originates from the central market served by a station, whereas regional news originates from the station's entire primary and secondary coverage area.
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Conditions of approval
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6.
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Decision 2002-90 was also subject to three conditions of approval. In a letter to Astral Media dated 25 October 2002, the Commission stated that it was satisfied that two of the three conditions of approval had been met, that is, the submission of a document developed through its consultations with the Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) and the Union des Artistes (UDA), and the submission of a report detailing how the financial support for Aboriginal Voices Radio Inc. will be allocated.
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7.
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The third condition of approval required the submission of confirmation by Astral Media that the amount of $1,675,000 allocated for Canadian talent development would be paid to the Fonds RadioStar, to MusicAction or to another existing eligible fund. In its letter dated 25 October 2002, the Commission accepted Astral Media's confirmation that the proposed amount would be paid to the Fonds RadioStar.
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Proposed reduction in the amount of tangible benefits
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8.
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When it filed its confirmation pertaining to Fonds RadioStar, Astral Media proposed reducing the total amount of tangible benefits that it proposed within the context of Decision 2002-90 and that are earmarked for French-language radio, that is, $13,620,000 over seven years. The applicant proposed reducing that amount by $1,320,000 over the seven-year period, or by approximately $190,000 per year.
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9.
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Astral Media stated that its request was the result of the application filed by the Commissioner of Competition before the Competition Tribunal in December 2001 contesting the Quebec portion of the transaction authorized in Decision 2002-90. It added that, under a consent agreement with the Commissioner of Competition registered with the Competition Tribunal on 3 September 2002, it had agreed to enter into a transaction subsequent to the initial transaction in which it transferred its Quebec AM radio assets to an unrelated third party (the subsequent transaction). That agreement thus terminated the application by the Commissioner of Competition to the Competition Tribunal. The applications relating to the subsequent transaction were placed on the agenda for the 3 February 2003 public hearing in Montréal, and are dealt with in a decision published today and referred to in the section below entitled The Commission's determination.
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10.
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Astral Media submitted that the subsequent transaction affected the valuation of the initial transaction because its original plan could no longer be implemented and the anticipated synergies between the AM and FM networks, specifically relating to news programming, could not develop. The applicant added that Telemedia had acknowledged this situation and agreed to renegotiate a lower amount for the overall transaction. Astral Media thus applied for authorization to adjust the amount of tangible benefits based on the effective valuation of the transaction, as renegotiated.
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Interventions
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11.
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The Commission received three interventions opposing Astral Media's proposal as well as one comment. The opposing interveners were ADISQ, UDA and the Association professionnelle des auteurs et des compositeurs du Québec. The three interveners asked the Commission to maintain the valuation of the transaction and the amount of tangible benefits set out in Decision 2002-90.
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12.
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In its comments, the Association des radiodiffuseurs communautaires du Québec (ARCQ) asked the Commission to develop solutions that would offset the competitive disadvantages facing community radio. ARCQ asked the Commission to explore the possibility of creating a community radio production support fund.
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The Commission's conclusion
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13.
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In Acquisition of radio assets in Quebec, Broadcasting Decision CRTC 2003-205, 2 July 2003 (Decision 2003-205), the Commission has denied the applications pertaining to the subsequent transaction by Astral Media, on behalf of 9122-8106 Québec inc., a corporation owned by TVA Group Inc. and Radio Nord Communications inc.,and an application to transfer the assets of radio station CFOM-FM. In the conclusion of Decision 2003-205, the Commission specifically states that:
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As a result of this decision, the assets of the AM stations and of CFOM-FM will continue to be held by a trustee. The Commission expects that Astral Media will take all necessary measures to find a permanent solution as quickly as possible regarding the ownership of these radio stations. With respect to CFOM-FM specifically, Astral Media must immediately forward a notice of sale to the trustee so that the trustee may submit to the Commission, within 90 days of the date of this decision, a new application for the transfer of the assets of CFOM-FM to a third party not associated with Astral Media.
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14.
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The Commission is of the view that the main effect of Decision 2003-205 is to return to the status quo ante concerning the completeness of the transaction authorized in Decision 2002-90. The Commission thus finds that, under the circumstances, there is no reason to reduce the amount of tangible benefits committed to by Astral Media within the context of Decision 2002-90.
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15.
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Astral Media made new news-related commitments, including the creation of a news service for its FM Rock Détente and Radio Énergie networks, in the event that the applications relating to the subsequent transaction were approved and Astral Media were required to divest itself of its AM radio stations. The applicant indicated that it would no longer obtain news programming from the Radiomedia network, as it had committed to doing, and still maintain the same level of service and the same quality of its newscasts throughout the markets served. Given that the applications pertaining to the subsequent transaction have been denied, the Commission believes that there is no reason to further explore these issues or those raised by the interveners.
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Secretary General
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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
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Date Modified: 2003-07-02