|
Broadcasting Decision CRTC 2003-41
|
|
Ottawa, 10 February 2003
|
|
CHUM Limited
Vancouver, British Columbia
|
|
Application 2002-0320-9
Public Hearing at Kitchener, Ontario
28 October 2002
|
|
CKST Vancouver - Acquisition of assets
|
|
The Commission approves an application by CHUM Limited to acquire the assets of the radio station CKST Vancouver.
|
|
The application
|
|
1.
|
The Commission received an application from CHUM Limited (CHUM), for authority to acquire the assets of the radio programming undertaking CKST Vancouver from Grand Slam Radio Inc. (Grand Slam), and for a broadcasting licence to continue the operation of the undertaking.
|
|
2.
|
Grand Slam currently operates CKST as an all-sports radio station, and CHUM proposed to continue in that format.
|
|
3.
|
The Commission received one intervention in support of this application.
|
|
Introduction
|
|
4.
|
In considering this application, the Commission examined three issues that raised concerns. In making its determination, the Commission sought to ensure that no negative effects related to concentration of ownership would result from such a transaction, that the proposed sale of assets did not constitute licence trafficking, and that any previously approved benefits packages would be fulfilled.
|
|
Concentration of ownership
|
|
5.
|
CHUM currently owns and operates two radio stations in the Vancouver market, namely CHQM-FM, an adult contemporary music station and CFUN, an all-talk station.
|
|
6.
|
Given CHUM's presence in the Vancouver market, the Commission wished to explore whether the acquisition of a third station would affect the balance of competition in the Vancouver market.
|
|
7.
|
CHUM stated that, although approval of this application would allow it to operate three stations in the Vancouver market, CHUM would not be "the only company holding three licences in Vancouver", referring to Corus Radio Company and Rogers Broadcasting Limited, each of which operates four stations in Vancouver. According to CHUM, approval of this transaction would not alter the competitive balance in the Vancouver radio market, nor would it negatively affect any radio market incumbents. CHUM stated that, as it proposed to operate the market's only all-sports station, CKST would attract new advertisers and listeners, and would thereby broaden the reach of Vancouver radio.
|
|
8.
|
CHUM also indicated that, rather than any negative impact, CHUM's acquisition of CKST would bring stability to the operation of an unprofitable station and would promote programming diversity in Vancouver, through the maintenance of the station's unique all-sports format.
|
|
Potential for licence trafficking
|
|
9.
|
In Assets transfer - CKST Vancouver, Decision CRTC 2000-766, 21 December 2000 (Decision 2000-766), the Commission approved an application by Grand Slam to acquire the assets of CKST from Radio One Broadcasting Corporation. When parties acquire broadcasting undertakings and sell them shortly thereafter, in this case after slightly more than two years, the Commission examines such acquisitions carefully in order to ensure that they do not compromise the integrity of the licensing process.
|
|
10.
|
The value of the transaction approved in Decision 2000-766 was $1.1 million, and in the current transaction, the value is estimated to be $1.6 million. CHUM argued that, at the time of Grand Slam's purchase of the station, the undertaking was operating in a music format, but not performing well, and Grand Slam intended to move CKST fully into sports programming. CHUM stated that Grand Slam soon realized that a significant investment would be required to improve programming and stabilize the operations of the station, and that it was not prepared to sustain such an investment for a stand-alone AM station in one of Canada's most competitive radio markets.
|
|
11.
|
CHUM owns existing all-sports radio stations in Montréal and Ottawa, and wished to place such a station in Vancouver. At the same time, CHUM's Vancouver AM station CFUN performs well in its all-talk format. The applicant stated that, rather than converting CFUN to all-sports, it considered that it would be more desirable to acquire CKST, allowing CHUM to take advantage of operational and marketing efficiencies not possible for a stand-alone AM station.
|
|
Previously approved tangible benefits
|
|
12.
|
CKST has operated at a loss over the three years preceding the filing of this application. In such circumstances, as set out in Commercial Radio Policy 1998, Public Notice CRTC 1998-41, 30 April 1998, the Commission generally will forgo benefits requirements at the time of ownership change.
|
|
13.
|
Given the unprofitable position of CKST, CHUM has not proposed a tangible benefits package for this transaction. CHUM confirmed, however, that any conditions of licence regarding Canadian talent development (CTD) flowing from the transaction approved in Decision 2000-766 would be fulfilled, and that it would accept a condition of licence to this effect.
|
|
The Commission's analysis and determination
|
|
14.
|
The Commission has assessed the three issues discussed above. It is of the view that the diversity of voices and media choices in the Vancouver market will not be significantly reduced as a result of approving this application, considering the number of broadcasters in this highly competitive market and the existing diversity of media currently available. The Commission is satisfied that the addition of a third CHUM station will have little, if any, impact on either the level of competition in the Vancouver market, or the existing stations in the market.
|
|
15.
|
The Commission has considered all of the circumstances surrounding this application, and is satisfied that any increase in the purchase price of CKST since its sale in 2000 is a result of negotiations between a vendor seeking to exit an unprofitable venture and recoup some of its losses, and a willing buyer. The Commission therefore determines that the vendor will not unduly benefit from an unreasonable profit and that this transaction does not constitute licence trafficking.
|
|
16.
|
Accordingly, the Commission approves the application by CHUM for authority to acquire the assets of CKST Vancouver, and for a broadcasting licence to continue the operation of this station.
|
|
17.
|
The Commission notes the applicant's commitment to fulfil the conditions of licence regarding CTD flowing from the transaction approved in Decision 2000-766. The applicant's licence will therefore be subject to the condition that, in addition to annual expenditures of $11,500 on bursaries and scholarships, the licensee make further direct contributions to CTD each year of at least $13,500. The Commission requires the licensee to ensure that the full minimum amount of $25,000 to be expended each year meets the Commission's criteria for generally accepted direct CTD expenditures as set out in Appendix I of An FM policy for the nineties, Public Notice CRTC 1990-111, 17 December 1990 (Public Notice 1990-111). A condition of licence to this effect is set out below.
|
|
Issuance of the licence
|
|
18.
|
The Commission will issue the licence once the vendor has surrendered the current licence to the Commission.
|
|
19.
|
The licence will expire on 31 August 2003, the current expiry date and will be subject to the conditions of licence set out in New licence form for commercial radio stations, Public Notice CRTC 1999-137, 24 August 1999.
|
|
20.
|
The licence will also be subject to a condition of licence that the licensee expend a minimum of $25,000 during each broadcast year for generally accepted direct CTD initiatives, as set out in Appendix I of Public Notice 1990-111.
|
|
Employment equity
|
|
21.
|
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.
|
|
Secretary General
|
|
This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: http://www.crtc.gc.ca
|
Date Modified: 2003-02-10