ARCHIVED - Broadcasting Decision CRTC 2003-66

Broadcasting Decision CRTC 2003-66

Ottawa, 21 February 2003

Craig Broadcast Systems Inc.
Brandon, Foxwarren, Melita, McCreary and Portage La Prairie, Manitoba

Craig Broadcast Alberta Inc.
Calgary, Edmonton, Lethbridge and Red Deer, Alberta

Toronto One Inc.
Toronto, Ontario

Craig Wireless International Inc.
Brandon, Manitoba

Craig Wireless B.C. Inc.
Vancouver, British Columbia

3844161 Canada Ltd., 3850099 Canada Ltd. and TV Land Canada ULC
Across Canada

Applications 2002-0600-7, 2002-0601-2, 2002-0602-0, 2002-0603-8, 2002-0604-6, 2002-0605-4, 2002-0606-2, 2002-0607-0, 2002-0608-8, 2002-0609-6, 2002-0610-4, 2002-0611-1, 2002-0614-5, 2002-0615-3, 2002-0616-1, 2002-0617-9 and 2002-0618-7

Intracorporate reorganization of the Craig group of corporations

1.

The Commission received applications by Craig Broadcast Systems Inc. (Craig) to effect an intracorporate reorganization within the Craig group of corporations, which are owned by members of the Craig family.

2.

Craig is the licensee of CKX-TV Brandon and its transmitters across Manitoba as well as CHMI-TV Portage La Prairie. Craig holds 67.04% of the voting interests of Craig Broadcast Alberta Inc. (Craig Alberta), the licensee of CKAL-TV Calgary, CKEM-TV Edmonton, and their transmitters across Alberta. Craig also holds 67.04% of the voting interests of Toronto One Inc. (TorontoCo), a newly incorporated corporation that is the licensee of a television station in Toronto that has yet to be launched.

3.

Through separate subsidiaries, the Craig family also owns and controls the following national digital specialty television services: the Category 1 specialty television service Connect (known as MTV Canada), licensed to 3844161 Canada Ltd. (MTV Canada); the Category 2 specialty television service Music 5-Pop (known as MTV2), licensed to 3850099 Canada Ltd. (MTV2); and the Category 2 specialty television service TV Land, licensed to TV Land Canada ULC (TV Land Canada).

4.

The Craig family also has interests in other Category 2 specialty television services that have yet to be launched, including A-Channel News Now, Alberta; A-Channel News Now, Calgary; A-Channel News Now, Edmonton; A-Channel News Now, Manitoba; A-Channel News Now, West; Action Channel; Jazz Blues TV; PATV (Pets & Animals); The Met and The Western Channel.

5.

Furthermore, Craig currently owns more than 80% of the voting interests of Craig Wireless International Inc. (Craig Wireless International), the licensee of the multipoint distribution system (MDS) serving Brandon, Manitoba, with the remaining voting interests held by SaskTel Investments Inc. Craig Wireless International owns and controls Craig Wireless B.C. Inc. (Craig Wireless B.C.), the licensee of the MDS serving Vancouver, British Columbia.

6.

The proposed intracorporate reorganization will be implemented through the following transactions:

a) Incorporation of 4046358 Canada Ltd. (Craig 358), a new wholly owned subsidiary of Manalta Investment Company Ltd. (Manalta), the parent corporation of Craig.

b) Purchase, for cancellation, by Craig Alberta, TorontoCo, and 3844234 Canada Ltd. (Craig 234, a holding corporation in MTV Canada's ownership structure chain) of the shares held in these corporations by TD Capital Group Ltd. (TD) in exchange for a promissory note and a right to acquire up to 7.5% of the voting interests of Craig 358.

c) Transfer of the effective control of Manalta, composed of a 94.88% voting interest held by the Estate of Stuart A. Craig and of a 5.12% voting interest held by the Craig family, to John Drew Craig, Stuart Miles Craig and Thomas Boyd Craig, with a 33.33% voting interest each. This transaction will also indirectly affect the control of Craig [2002-0600-7], Craig Alberta [2002-0601-2], TorontoCo [2002-0602-0], Craig Wireless [2002-0603-8], and Craig Wireless B.C. [2002-0604-6].

d) Acquisition by Craig 358 of a 33.33% voting interest in each of Craig Alberta [2002-0605-4] and TorontoCo [2002-0606-2], and of a 32.96% voting interest in Craig 234 [2002-0616-1].

e) Amalgamation of Manalta and Craig under a new corporation to be named Craig Broadcast Systems Inc. (New CBSI).

f) Transfer of the effective control of Craig 512 from the three Craig brothers to New CBSI. This transaction will affect the indirect control of MTV Canada [2002-0607-0] and MTV2 [2002-0608-8].

g) Incorporation of Craig Wireless Systems Inc. (Craig Wireless Systems), a new subsidiary of New CBSI.

h) Transfer of the effective control of Craig Alberta and TorontoCo and, indirectly, the control of MTV Canada, MTV2 and TV Land Canada, from New CBSI to Craig 358. As a result, the following transfers would occur:

• transfer of 66.67% of the voting interests of Craig Alberta [2002-0610-4];

• transfer of 66.67% of the voting interests of TorontoCo [2002-0611-1]; and

• transfer of 100% of the voting interests of Craig 512 (MTV Canada and MTV2) and of 3888495 Canada Ltd. (Craig 495), the holding corporation of TV Land Canada [2002-0614-5, 2002-0615-3 and 2002-0609-6].

i) Transfer of the effective control of Craig Wireless International from New CBSI to Craig Wireless Systems. This transfer would result in the following transactions:

• transfer of more than 80% of the voting interests of Craig Wireless International [2002-0617-9]; and

• transfer of the indirect control of Craig Wireless B.C. to Craig Wireless Systems [2002-0618-7].

j) Amalgamation of Craig 358 and Craig Alberta to continue as New AlbertaCo.

7.

The result of the intracorporate reorganization will be as follows:

a) Craig's programming undertakings (conventional television and specialty television programming services) will be controlled by New AlbertaCo;

b) Craig's wireless (MDS) undertakings will be controlled by Craig Wireless Systems; and

c) TD will have the right to acquire up to 7.5% of the voting interests of New AlbertaCo rather than own interests in particular licensees (that is to say, Craig Alberta, TorontoCo and MTV Canada/MTV2 licensees), as is currently the case.

8.

The Commission notes that the ultimate control of the aforementioned licensees will remain in the hands of the Craig family (that is to say, the three brothers-John Drew Craig, Stuart Miles Craig and Thomas Boyd Craig).

9.

The aforementioned amalgamations, namely of New CBSI and New AlbertaCo, do not require prior Commission approval. The Commission reminds the applicant, however, that these amalgamations will not be effective and the licences affected by these amalgamations will not be amended until the Commission receives a copy of the executed amalgamation corporate documents and associated agreements. These documents should be filed no later than 60 days after the date of this decision.

10.

The applicant is also required to file with the Commission an executed copy of any other corporate document for which it has filed a draft only (that is to say, the By-laws for Craig Wireless Systems, TorontoCo, New AlbertaCo and Craig 358).

11.

The Commission notes that the proposed intracorporate reorganization also involves the transfer of the assets of the television undertakings currently licensed to Craig, namely CKX-TV Brandon, Manitoba and its rebroadcasting stations, and CHMI-TV Portage La Prairie, to New AlbertaCo. As the transfers of assets require the issuance of new licences for each of the aforementioned undertakings, these steps of the reorganization will need to be processed through a future public hearing.

12.

The Commission approves the applications to effect an intracorporate reorganization within the Craig group of corporations.

13.

The Commission will modify its ownership records accordingly.

Secretary General