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In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.










































HELD AT:                              TENUE À:


Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

Portage IV                            Portage IV

140 Promenade du Portage              140, promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)


May 2, 2007                           Le 2 mai 2007









In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of



However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.







Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.


Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission


            Conseil de la radiodiffusion et des

               télécommunications canadiennes



                 Transcript / Transcription













Konrad W. von Finckenstein        Chairperson / Président

Rita Cugini                       Commissioner / Conseillère

Helen del Val                     Commissioner / Conseillère

Stuart Langford                   Commissioner / Conseiller

Elizabeth Duncan                  Commissioner / Conseillère







Chantal Boulet                    Secretary / Secrétaire









HELD AT:                          TENUE À:


Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

Portage IV                        Portage IV

140 Promenade du Portage          140, promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)


May 2, 2007                       Le 2 mai 2007


- iv -





                                                 PAGE / PARA







Directors Guild of Canada                         600 / 3591

New Canada Institute                              619 / 3709









CTVglobemedia Inc. on behalf of CHUM Limited      632 / 3784









                  Gatineau Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday, May 2, 2007

    at 0900 / L'audience débute le mercredi

    2 mai 2007 à 0900

LISTNUM 1 \l 1 \s 35863586             THE CHAIRPERSON:  Madam Boulet...?

LISTNUM 1 \l 13587             THE SECRETARY:  Good morning, everyone.

LISTNUM 1 \l 13588             Thank you, Mr. Chairman.

LISTNUM 1 \l 13589             We will now proceed with the intervention of the Directors Guild of Canada.  Ms Monique Lafontaine will appear on behalf of the intervenor.

LISTNUM 1 \l 13590             Ms Lafontaine, you have 10 minutes for your presentation.  Go ahead.


LISTNUM 1 \l 13591             MS LAFONTAINE:  Merci.

LISTNUM 1 \l 13592             Good morning, Mr. Chair, Members of the Commission and staff.  My name is Monique Lafontaine and I am the General Counsel and Director of Regulatory Affairs at the Directors Guild of Canada.

LISTNUM 1 \l 13593             I am very pleased to be here today to provide you with our comments.

LISTNUM 1 \l 13594             The DGC is a national labour organization that represents key creative and logistical personnel in the film and television industries.

LISTNUM 1 \l 13595             Last month, DGC filed a detailed written intervention with the Commission which focused on the following key issues.

LISTNUM 1 \l 13596             One, the value of this transaction for benefits purposes must include the debt of $270 million.  To do otherwise will result in an unwarranted credit to the applicant, and a loss of that leaves $27 million to the Canadian broadcasting system.

LISTNUM 1 \l 13597             Two, as in previous transactions, there should be a premium or additional benefits paid in circumstances where an applicant is seeking the Commission to amend its policies in order to accommodate the applicant.  This will ensure that the applicant contributes benefits to the system that are commensurate with the size and nature of the transaction in accordance with the 1999 TV Policy.

LISTNUM 1 \l 13598             Three, if benefits are not incremental, they are not benefits.  DGC proposed that the benchmarking occur as against both CTV and CHUM stations.  The purpose is to avoid having CTV simply spend on the CHUM stations, which will be measured, while concurrently reducing spending on its CTV stations where the spending will not be measured.

LISTNUM 1 \l 13599             This is not only consistent with what was approved in the CHUM‑Craig transaction of 2004, it is such a giant loophole that it should be permanently closed by the Commission.  CTV has resisted this in reply and during its presentation on Monday.

LISTNUM 1 \l 13600             DGC also said in its written submission that CTF monies should not count as benefits.

LISTNUM 1 \l 13601             What kind of a system is that when a public benefit requirement can be satisfied in part by depleting the oversubscribed CTF?  The system needs new money and it should be an applicant's own money that is injected into the system.

LISTNUM 1 \l 13602             DGC does not understand why the Commission does not hire an expert valuator to conduct its own studies in these billion dollar deals where slight changes in percentage points could mean millions of dollars of benefits are at stake.  This would provide an essential crosscheck in an area which is obviously quite subjective.

LISTNUM 1 \l 13603             In our written submission, we cited the Québecor example where the Commission did exactly that and the system wound up with the next and $19 million in benefits.

LISTNUM 1 \l 13604             While it is indeed late in this proceeding, it is not too late.

LISTNUM 1 \l 13605             Next, obviously any benefits relating to this transaction will need to take into consideration any elements of the new TV Policy, if applicable.  By that we mean that if the Commission were to impose a drama spending requirement amounts spent under that policy should not be double counted as benefits in order to satisfy the requirements of this transaction.

LISTNUM 1 \l 13606             Finally, we do not understand why Citytv Toronto is not already airing eight hours of priority programming, given CHUM's previous pledge and the requirements of the 1999 TV Policy.  We find it appalling that it is not already there.  It is inexcusable that in a transaction of this importance the applicant has not stepped up with what seems like such an obvious benefit to the Canadian broadcasting system.  With or without CTV's agreement, the Commission should require CHUM to meet this regulatory requirement as soon as possible.

LISTNUM 1 \l 13607             Except with respect to a couple of issues, CTV ignored these points in its lengthy reply.  Its responses and its submission on Monday to the other matters raised by DGC were quite uncompelling.

LISTNUM 1 \l 13608             To the debt.

LISTNUM 1 \l 13609             The debt is the most important one financially.  The DGC was very disappointed, but not surprised, that in CTV's 45‑page reply they devoted only two paragraphs to this issue and just repeated the same excuse as they have advanced in previous filings.

LISTNUM 1 \l 13610             The applicant's position is that since the debt was incurred to buy Craig and CKVU they should not have to include it in the value of the CHUM transaction for benefits purposes.

LISTNUM 1 \l 13611             From this flows the unusual additional suggestion that if the Commission does make them include it, it will amount to double taxation and investors will flee from the Canadian broadcasting system.

LISTNUM 1 \l 13612             This makes no sense, for a variety of reasons.

LISTNUM 1 \l 13613             The value of a company includes debt and equity and it should not matter one iota what the capital structure is.  If it includes debt, it should also not matter one iota what the debt was used for.

LISTNUM 1 \l 13614             To oblige the Commission to start combing through the financial history of a company in order to determine such matters is ridiculous.

LISTNUM 1 \l 13615             We went through chapter and verse of why this was an inappropriate approach and how it was unworkable in any event in our written materials.

LISTNUM 1 \l 13616             For the record, DGC did indeed review CHUM's annual reports between 2000 and 2005.  The sections of those reports that relate to the debt are attached to our written intervention.

LISTNUM 1 \l 13617             Contrary to the applicant's suggestion on Monday, these documents show an inconclusive link between CHUM's debt of $270 million in the acquisition of CKVU in the Craig properties.

LISTNUM 1 \l 13618             The applicant also did not demonstrate on Monday, or in any written submission for that matter, that the debt was entirely attributable to broadcast acquisitions.

LISTNUM 1 \l 13619             Moreover, even if the applicant could somehow prove a direct link, this is an onerous task that the Commission should not have to wade into.  It simply should not matter.  The value of the transaction includes the debt no matter the reason for which it was incurred.

LISTNUM 1 \l 13620             With respect to the BCE‑CTV decision cited on Monday by the applicant, they say that the value of the transaction in that case did not include the debt.  Well, this is news to the DGC as none of, one, the Notice of Public Hearing announcing the deal; two, the applicant's supplementary brief; or three, the Commission's decision on the matter, make any mention of the debt, nor do any of the Commission's subsequent decisions relating to debt cite the BCE‑CTV decision as a precedent in this area.

LISTNUM 1 \l 13621             In any event, the Commission clearly articulated its policy the following year in 2001 in the CFCF and TVA decisions.  Never since then has the Commission, knowingly at least, allowed debt to be excluded from the value of the transaction.

LISTNUM 1 \l 13622             On the issue of the appropriate percentage of the value of the transaction, DGC and others alluded to the CanWest, WIC and CHUM CKVU precedents as being cases where applicants seeking approvals which required amendments to the one station to a market policy put extra benefits on the table.

LISTNUM 1 \l 13623             In its 1999 TV Policy, the Commission indicated that it would generally require benefits of 10 percent of the value of the transaction.

LISTNUM 1 \l 13624             We strongly recommend that for the five exceptions to the Commission's one station per market rule sought in this case, that an additional benefit to the system of 5 percent of the high value of the conventional stations, plus the debt, be paid.

LISTNUM 1 \l 13625             I now turn to the issue of incrementality.  Without it there is no public benefit, so benchmarking is critical.

LISTNUM 1 \l 13626             CTV's only written response to this key issue was to say that the programming initiatives are all going to air on CHUM and there is little overlap between the CTV and Citytv stations.

LISTNUM 1 \l 13627             With respect, that comment is irrelevant.  We are talking about expenditures, not exhibition.

LISTNUM 1 \l 13628             During its presentation on Monday, CTV affirmed its position that the benchmark should be set against the CHUM stations only.  This is unacceptable.

LISTNUM 1 \l 13629             With such a scenario, we could end up with no incremental benefits to the system and one of the main public policy objectives of this proceeding will be completely lost.

LISTNUM 1 \l 13630             As an example, assume that today CTV spends $100 on Canadian programming and CHUM spends $50.  Also assume the Commission requires an additional $10 to be spent on benefits.  So CHUM, which gets measured, spends $60, but if CTV simply reduces its spending by the same $10, there is no incrementality to the system.

LISTNUM 1 \l 13631             The Commission knows this and plugged that loophole back in 2004 in the CHUM‑Craig transaction.  It should do so again in this case.

LISTNUM 1 \l 13632             CTV did not respond to DGC's suggestion that CTF monies should not be permitted to count as benefit monies, nor did they respond to the suggestion that Citytv Toronto be required to go to the eight hour industry average for priority programming.

LISTNUM 1 \l 13633             We trust the Commission will take the DGC's uncontroverted comments into account.

LISTNUM 1 \l 13634             As a result of the foregoing, DGC identified an additional $48 million in public benefit spending that should be required of the applicant in this transaction.  DGC recommended that this money be spent in the number one area of concern in the English‑language market in this country, mainly Canadian drama.

LISTNUM 1 \l 13635             For the record, the DGC is not that impressed with the applicant's proposal for the zero program overlap in each broadcast year.  This should not be viewed as a substitute for payment of tangible benefits to the system.

LISTNUM 1 \l 13636             Also, an exhibition requirement of an additional half hour of Canadian priority programming each week will not compensate for a smaller than appropriate benefits package.

LISTNUM 1 \l 13637             If, however, the Commission is talking about original Canadian priority hours, that is a different story.

LISTNUM 1 \l 13638             It is the Commission's policy, and indeed the Commission's responsibility, to ensure that benefits are paid to the system in an amount that is commensurate with the size and nature of the transaction.  In light of this, and in light of the unprecedented strength that approval of this application will confer on CTV, we urge the Commission to increase the benefits package as proposed.

LISTNUM 1 \l 13639             You will find attached a one‑page chart to this oral presentation which allows the Commission to see what the size of the benefits package flowing from this transaction should be.

LISTNUM 1 \l 13640             Thank you for your attention and we would be pleased to respond to your questions.

LISTNUM 1 \l 13641             THE CHAIRPERSON:  Thank you very much.

LISTNUM 1 \l 13642             I gather from your comments you do not oppose the transaction per se, it is just the calculation of benefits and the contribution to the system that you take issue with?

LISTNUM 1 \l 13643             MS LAFONTAINE:  Yes, that is correct.

LISTNUM 1 \l 13644             THE CHAIRPERSON:  All right.

LISTNUM 1 \l 13645             Stuart, I believe you have a question.

LISTNUM 1 \l 13646             COMMISSIONER LANGFORD:  Yes.

LISTNUM 1 \l 13647             Actually, I have your written submission, it is really clear, and I have heard you today.  There is only one area that troubles me and it may just reflect my complete ignorance on the subject.  If it does, well, I might as well put it out there and let everybody have a look at it.

LISTNUM 1 \l 13648             This idea of setting the benchmark as both a combination of both CTV and CHUM's priority spending ‑‑ and I realize you make reference to the Craig‑CHUM decision and the decision of the CRTC on that.  I have read it and I understand it.  But I still have trouble with it, because I don't quite understand why their approach, which is ‑‑ first of all, they are not cutting back on the spending.

LISTNUM 1 \l 13649             Let's assume, to use your example, that the $10 they are going to spend ‑‑

LISTNUM 1 \l 13650             MS LAFONTAINE:  If I may, if we look at the most recent CRTC numbers on Canadian programming that came out on conventional broadcasters, we see that the spending on Canadian programming has gone down.

LISTNUM 1 \l 13651             COMMISSIONER LANGFORD:  Yes.

LISTNUM 1 \l 13652             MS LAFONTAINE:  We only get the aggregates.  So we need to be very concerned about, you know, the north or southward bound of the expenditures on Canadian programming.

LISTNUM 1 \l 13653             COMMISSIONER LANGFORD:  All right.  I understand.

LISTNUM 1 \l 13654             Can I finish my question?  I understand.  Look, I applaud your passion and that's what we want, we want people who care here and that's important, so I am not criticizing it at all.

LISTNUM 1 \l 13655             But I want to look at this in a kind of cold‑blooded way, because it seems to me the argument you just made in the last 30 seconds is an argument about a bigger issue, it is about expenditures on drama, it is about expenditures on priority spending, and we know your position on that because we had the over‑the‑air policy.  Though I wasn't on the Panel I have certainly read all the record on a proceeding so I know exactly where you stand, and you are not alone there.

LISTNUM 1 \l 13656             But in this matter, we are talking about a transaction and we have CTV ‑‑ let's just assume this deal goes through, just to make this easy.

LISTNUM 1 \l 13657             So CTV buys City.  That is really what we are looking at here in terms of conventional television spending.  If I understood Mr. Fecan's position correctly, it was that at this point City is spending around $4 million per year ‑‑ a little bit more but let's call it $4 million ‑‑ on priority programming, and when this package goes through they are going to be spending more than three times that amount.

LISTNUM 1 \l 13658             I don't understand the relevance of what CTV, a separate arm of this organization, is spending on its own priority programming to this calculation.  I understand the relevance in the bigger picture of let's all do more for drama and all of that, but I don't really understand it in the relevance to this.  I don't understand why we should be looking at a separate broadcasting service, which has its own burdens to carry financially from the old BCE deal ‑‑ they are not even gone yet, those benefits, but that is another matter ‑‑ why should we apply it to this City one?

LISTNUM 1 \l 13659             Isn't the test really the benchmark is the $4 million, we are going to add this to the $4 million, and you better be able to demonstrate in your year‑end summaries where the extra money is.

LISTNUM 1 \l 13660             Isn't that the test?

LISTNUM 1 \l 13661             MS LAFONTAINE:  No, with respect it's not.

LISTNUM 1 \l 13662             COMMISSIONER LANGFORD:  All right, good.  Tell me why not.

LISTNUM 1 \l 13663             MS LAFONTAINE:  Because if we are only measuring CHUM and we are saying that they are at $4 million, and we are not looking at what CTV is at ‑‑ let's just say they are at ‑‑ we don't know, but let's just say $6 million for them.  If that next year we look to see what CHUM has been doing and if, let's say, it is $4 million plus whatever, let's say $8 million, so we are up to $12 million, and we don't look at CTV, then CTV may well be at $5 million or $2 million.

LISTNUM 1 \l 13664             COMMISSIONER LANGFORD:  So what?  So what?

LISTNUM 1 \l 13665             MS LAFONTAINE:  Well, then we will have lost, in the aggregate, spending on Canadian programming.

LISTNUM 1 \l 13666             COMMISSIONER LANGFORD:  Though it may be a laudable goal ‑‑ so let's all agree it's a laudable goal ‑‑ but is that the job of the regulator when looking at this transaction?

LISTNUM 1 \l 13667             MS LAFONTAINE:  Absolutely.  The job of this regulator is to ensure that the benefits that are paid in this transaction are indeed incremental to the system.

LISTNUM 1 \l 13668             If it turns out that they are not incremental, if we have the hydraulics and CTV goes down to $1 million, let's say, and CHUM goes up to what we say they are going to do, then we will not have new money to the system.  We are not going to have the money to have those terrific stories that Brent Butt would like to put forward on television, and Linda Schuyler, and so on, but that is the role of this Commission within this transaction, to ensure that the monies that are spent, the 70, 80, 120, whatever it is, are new, additional monies to the system.  If they are not new, additional monies to the system, we will not have benefit, we will have cheated the Canadian broadcasting system and the Canadians.

LISTNUM 1 \l 13669             COMMISSIONER LANGFORD:  I think your language is over the top.  The "cheating", I think you have gone too far on the "cheating".

LISTNUM 1 \l 13670             I think it really is a question of how to look at it.  I understand how you look at it, I don't think it is necessarily right.

LISTNUM 1 \l 13671             I mean, I am going to give it a lot more thought, but I just don't know how long you can say to CTV ‑‑ unless there is a policy direction, but that is a separate process and we are in the middle of that.  The decision is coming soon, watch this space.  But unless we have a policy direction which covers that, essentially your statement could call for the proposition that never in eternity could CTV ever lower its spending on priority programming.

LISTNUM 1 \l 13672             Let me finish for just one second.

LISTNUM 1 \l 13673             Where is it written necessarily that money is the only answer in priority programming?

LISTNUM 1 \l 13674             I mean, we know that some years ago CBC put on a program called "This Hour Has 22 Minutes" and nobody had ever heard of those people before and all of a sudden it was fabulous.  I'm sure they are all making a good buck now, but I'm also sure that in the first few years they were almost on minimum wage.  They were doing it for the love of it.

LISTNUM 1 \l 13675             So where is it written that you have to spend more?  I understand it would be good to get more, but I don't understand why you feel that you can burden these people forever with that benchmark level.

LISTNUM 1 \l 13676             MS LAFONTAINE:  Well, it's not forever, it is for seven years, which would be, I suspect, the duration of the period of time that they will be spending ‑‑ making the benefit spending.  So it is not for eternity.

LISTNUM 1 \l 13677             We almost must sort of take a step back and look at why is it exactly that CTV is resisting this.  They have just said they want it to be CHUM, it should be CHUM, and it's just leave it at CHUM.  I mean, it is for the Commission to determine, but at the end of the day what we should have here is new money to the system.  Right?

LISTNUM 1 \l 13678             COMMISSIONER LANGFORD:  Yes.

LISTNUM 1 \l 13679             MS LAFONTAINE:  That is the policy.  The policy ‑‑

LISTNUM 1 \l 13680             COMMISSIONER LANGFORD:  This is new money to the system.

LISTNUM 1 \l 13681             MS LAFONTAINE:  Right.  But if it is new money that gets ‑‑ how shall I say ‑‑

LISTNUM 1 \l 13682             COMMISSIONER LANGFORD:  Transferred or something.

LISTNUM 1 \l 13683             MS LAFONTAINE:  If we get the new money here and we lose over here, then we don't have anything new to the system.

LISTNUM 1 \l 13684             COMMISSIONER LANGFORD:  But surely there comes a time where we have to assume that it is in CTV's best interest not to milk the budget of "Corner Gas", not to milk the budgets of their other winners simply to somehow come ahead on a benchmarking, because then they will destroy their audience for those shows.  So how can that be good for them?

LISTNUM 1 \l 13685             I mean, don't we have to in the end let go and let them make their own decisions on this sort of thing?

LISTNUM 1 \l 13686             MS LAFONTAINE:  No, I don't believe that. 

‑‑‑ Laughter / Rires

LISTNUM 1 \l 13687             MS LAFONTAINE:  I think that ‑‑ I mean, the Commission saw this loophole in 2004 ‑‑

LISTNUM 1 \l 13688             COMMISSIONER LANGFORD:  I know.

LISTNUM 1 \l 13689             MS LAFONTAINE:  ‑‑ and it blocked it.

LISTNUM 1 \l 13690             CTV suggested, or has asked that the Commission use BCE‑CTV approach, and the reason that the BCE‑CTV approach worked was because the acquirer was not a broadcaster.

LISTNUM 1 \l 13691             COMMISSIONER LANGFORD:  Yes.

LISTNUM 1 \l 13692             MS LAFONTAINE:  So there was no possibility of hydraulics.

LISTNUM 1 \l 13693             In this case, there is the possibility of hydraulics, and if the Commission wants to ensure that the money that they will be spending is indeed new to the system and not just hydrauliced or outweighed or that it gets substituted for what is already being spent, and what is already being spent is not very much, I think that we will be diminished, it will be a diminished broadcasting system and the public policy benefits will not be as fruitful.

LISTNUM 1 \l 13694             COMMISSIONER LANGFORD:  All right.  Well, I have heard you on it and you are clear and I thank you very much.

LISTNUM 1 \l 13695             THE CHAIRPERSON:  Coming back to the point I asked you at the outset:  You support this deal.  As you know, we have considerable problems with this deal because of our policy on diversity of voices.  I would have thought that this is something of concern to your organization too, so can you explain to me why in answer to my question you said you support the deal subject to there being richer benefits?

LISTNUM 1 \l 13696             MS LAFONTAINE:  Well, I can say that the DGC does find it a pity that we are losing a broadcaster within the system.  Me personally, I am a big fan of CHUM and so I do think that it is an unfortunate situation, but also the DGC believes that this is an inevitable situation.  The Waters family wants to sell, they are selling.

LISTNUM 1 \l 13697             CTV is an excellent broadcaster.  The Citytv stations will have a good home there.

LISTNUM 1 \l 13698             So we don't see that given the way the broadcasting system ‑‑ the direction in which the broadcasting system is headed, that ‑‑

LISTNUM 1 \l 13699             THE CHAIRPERSON:  You are being realistic, saying:  Under the circumstances this is the best option.

LISTNUM 1 \l 13700             MS LAFONTAINE:  Exactly.

LISTNUM 1 \l 13701             THE CHAIRPERSON:  All right.

LISTNUM 1 \l 13702             Any other questions?

LISTNUM 1 \l 13703             Thank you very much.

LISTNUM 1 \l 13704             MS LAFONTAINE:  Thank you very much.

LISTNUM 1 \l 13705             THE CHAIRPERSON:  Madam Boulet, who do we have next?

LISTNUM 1 \l 13706             THE SECRETARY:  Thank you, Mr. Chairman.

LISTNUM 1 \l 13707             I would now ask the last appearing intervenor, the New Canada Institute, to come forward.

LISTNUM 1 \l 13708             Ms Sharon Fernandez will be representing the intervenor.

‑‑‑ Pause


LISTNUM 1 \l 13709             MS FERNANDEZ:  Good morning, Mr. Chair, Commissioners.

LISTNUM 1 \l 13710             My name is Sharon Fernandez and I am a board member of the New Canada Institute.

LISTNUM 1 \l 13711             The New Canada Institute is a national think tank that focuses on addressing urban diversity and its social, cultural and policy challenges.

LISTNUM 1 \l 13712             I will speak to the submission sent by Andrew Cardozo, the chair of our institute who had to be in Vancouver today.

LISTNUM 1 \l 13713             I am pleased to have the opportunity to make comments on the acquisition of CHUM by CTVgm and to indicate our support for the application.  I want to start by urging the Commission to hold form on the cultural diversity policy and, in this case, to continue to require this potentially amalgamated broadcaster to continue to make progress.

LISTNUM 1 \l 13714             You are well aware that the diversity of Canadian society and, more to the point, the large and mid‑size urban centres are changing rapidly.  The visible minority population, according to the 2001 census, was around 14 percent and is forecasted to be around 23 percent by the year 2017, Canada's 150th birthday.

LISTNUM 1 \l 13715             Nationally, there will likely be some 8.5 million visible minority individuals out of some 36 million people, or 23.5 percent in 2017.  That is in just 10 years.

LISTNUM 1 \l 13716             These national figures do not tell the story about Canadian cities.  The majority of the television and radio stations in this acquisition are centred in urban Canada.  This deal is about urban Canada and urban Canada is changing fast and changing big time.

LISTNUM 1 \l 13717             It is in urban Canada that we see most action in financial and demographic terms and, therefore, need to see most responsiveness to the social and cultural reality.

LISTNUM 1 \l 13718             The changing nature of aboriginal peoples in urban centres is equally major.  Cities like Winnipeg, Regina, Saskatoon, Prince Albert, Calgary and Edmonton have the most rapidly growing aboriginal population and radio in these cities need to be doing a lot more, even more than some of the leading stations are currently doing in Saskatchewan.

LISTNUM 1 \l 13719             I want to draw to your attention a survey that was conducted by Andrew Cardozo in 2004 which found 189 non‑white on‑air personalities on mainstream English and French television, on news and current affairs programs.  I would suggest that this number may have grown just a bit since then.  The progress appears to have slowed down before we have reached a satisfactory level of inclusion, although commitment does seem to be present.

LISTNUM 1 \l 13720             Specific to this application, I will note our observation that broadcasters such as CHUM, CTV seem to be the most engaged with others such as CBC engaged but perhaps at a lesser pace.  While there has been some progress in the broadcasting system overall, it has not been enough and therefore a new push is needed.

LISTNUM 1 \l 13721             In my view, cultural diversity is both a business issue and a social issue.  Broadcasters have a social responsibility and this has always been clear in the Broadcasting Act.

LISTNUM 1 \l 13722             Likewise, the Commission also has a social responsibility to guide broadcasters along a path that contributes towards social harmony and social cohesion.

LISTNUM 1 \l 13723             Clearly, consolidation of this magnitude has both advantages and disadvantages.  I will focus on the aspects relating to cultural diversity and I see that the benefits outweigh the downsides.

LISTNUM 1 \l 13724             Ensuring that consolidation is in the public interest is something the Commission can and must ensure and this can be done by putting safeguards in place that maintain a healthy degree of separateness in the services, most importantly in programming and news departments.

LISTNUM 1 \l 13725             From the perspective of cultural diversity in programming, CHUM is the unrivalled leader going back to the early days of Citytv in Toronto, the cornerstone and flagship of the CHUM Corporation.

LISTNUM 1 \l 13726             For me, the key questions are:  Will the buyer honour the tradition of respecting and advancing cultural diversity within those properties that were in CHUM's possession?  And two, will that diversity boost ‑‑ have a positive effect in the buyer?  In other words, will CHUM's cultural diversity commitment have an influence on CTV?

LISTNUM 1 \l 13727             Knowing what we do of CTV and its efforts on cultural diversity, primarily in the past five years, suggests that they can be trusted and the answer to both questions are "yes".  The acquisition of CHUM will certainly allow CTV as a corporation to realize considerable progress in regard to cultural diversity.

LISTNUM 1 \l 13728             The review of minorities in news and current affairs conducted by Andrew Cardozo, which was attached to our written submission, suggests that CTV makes a close third behind CHUM and CBC, progress which largely has taken place in the last five years.

LISTNUM 1 \l 13729             In closing, I want to reiterate that diversity is happening around us all the time very fast and in a very complex manner.  Television must remain and become more engaged in matters relating to diversity.  Given the important role that television does play in our society and given that they use public airways, there is a greater obligation than ever before to take real action.

LISTNUM 1 \l 13730             So that it is clear and on the record, I want to inform the Commission that the New Canada Institute did submit two packages, two projects for support from CTVgm in relation to the benefits package which are being considered for support from the diversity envelope that the applicant has put forward.

LISTNUM 1 \l 13731             Again, thank you for this opportunity to appear before you.  Andrew would have been here but he is at a conference in Vancouver, and I would be happy to take any questions.

LISTNUM 1 \l 13732             THE CHAIRPERSON:  Thank you very much.

LISTNUM 1 \l 13733             I am somewhat surprised by your submission.  We have a deliberate policy for mandating diversity of voices.  We have here an application which, on the face of it, is not outside(ph) that application.

LISTNUM 1 \l 13734             CTV is asking us to make an exception and we may or may not depending on how we ‑‑ what we finally decide.  But you, an organization that has as its goal the promotion and advancement of diversity, wholeheartedly supports this transaction.

LISTNUM 1 \l 13735             Why do you feel that City in the hands of CTV will be better off than in the hands of another owner who ‑‑ let's say a new entrant who doesn't have an existing station and therefore there is no economic pressure of homogenizing, of economizing, of rationalizing and thereby undercutting the unique character of City?

LISTNUM 1 \l 13736             MS FERNANDEZ:  Well, I would imagine that any broadcaster that was acquiring CHUM/City would benefit from the track record and the involvement of cultural diversity that has been the history of City/CHUM.  So any broadcaster would benefit.

LISTNUM 1 \l 13737             I would imagine that we are, you know, very pragmatic in the 21st century.  The issues are very complex.  You have multiple pressures on the system that have been elucidated throughout the last three days.  So from a policy think tank point of view, we are supporting this application because we see as a matter of fact CTV has bought CHUM.  The deal is a done deal to some degree.  And we ‑‑

LISTNUM 1 \l 13738             THE CHAIRPERSON:  It has not ‑‑

LISTNUM 1 \l 13739             MS FERNANDEZ:  We ‑‑

LISTNUM 1 \l 13740             THE CHAIRPERSON:  Just for the record, it's not a done deal.  It doesn't own CHUM.  It is a trustee who holds CHUM and we are here to decide whether they are permitted to acquire it and if so under what conditions.

LISTNUM 1 \l 13741             MS FERNANDEZ:  Granted, Commissioner.

LISTNUM 1 \l 13742             I suppose that our approach is to try to reinforce the opportunities that such a deal may have in terms of implications for cultural diversity and the demographic inclusion of visible minorities in Canadian society.  So we are focusing on that aspect of this proposal and looking at the landscape.

LISTNUM 1 \l 13743             I am sure that it was Andrew's contention that this was an appropriate acquisition to support.

LISTNUM 1 \l 13744             THE CHAIRPERSON:  You essentially want to decide what position to advocate us, going through the same exercise that we are going through, you know.  It's clear what your goal is, to promote diversity, et cetera.  You are being realistic in the 21st century, you know, that a broadcaster is there to make money, et cetera.

LISTNUM 1 \l 13745             So you have got to balance.  You have to put yourself in the shoes of the broadcaster and saying will this broadcaster, to the extent that it makes good business for my goals and encourages diversity or will the economic pressures on him be so great that he only promotes those that are guaranteed but is not willing to sort of be adventurous or let's say the trendsetter because of the economic pressures on him.

LISTNUM 1 \l 13746             You have obviously come to the conclusion that CTV is a good purchaser, that all things being equal, et cetera, that is the best choice available.  And I am trying to figure out what it is really that drives you to that conclusion.

LISTNUM 1 \l 13747             MS FERNANDEZ:  Well, I think that you heard intervenors in the past couple of days that also reiterated their support.

LISTNUM 1 \l 13748             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 13749             MS FERNANDEZ:  Jully Black, Jean LaRose, people who have had a history of working with both CTV and CHUM that feel confident that they will not ‑‑ and as a matter of fact, the very demographic pressure of the changing nature of this country will ensure that all broadcasters start to respond to that demographic because they are the viewers.  They are the buyers.  They are the people who make choices around cultural content and we want to make sure that cultural content reflects that diversity.  So in that sense ‑‑

LISTNUM 1 \l 13750             THE CHAIRPERSON:  Just is that demographic pressure that great, then it really doesn't need CTV?  Then anybody would be doing it, would be continuing City's tradition.

LISTNUM 1 \l 13751             MS FERNANDEZ:  I am sorry ‑‑

LISTNUM 1 \l 13752             THE CHAIRPERSON:  I mean, if the demographic pressure is that great that it really makes good business sense to encourage diversity and produce diversity programs, then any owner will do and then you don't have to rely on City.  And as you know, we have certain ‑‑ there are certain submissions we have heard on the worry about over concentration in one broadcaster, et cetera.

LISTNUM 1 \l 13753             If you tell me the demographic pressure is so great that anybody in business will have to service this community and provide diversity programs, why then City ‑‑ why then CTV, sorry.

LISTNUM 1 \l 13754             MS FERNANDEZ:  Well, CTV as part of all the broadcasters that will have to respond, not CTV exclusively but CTV as part of the social reality, the cultural reality of the country.

LISTNUM 1 \l 13755             THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 13756             I mean, none of us have a crystal ball.  That's why I am pushing you.  I am sorry.  I don't mean to be aggressive.

LISTNUM 1 \l 13757             MS FERNANDEZ:  And Commissioner ‑‑

LISTNUM 1 \l 13758             THE CHAIRPERSON:  I am just trying to understand, you know, because you are an advocate for diversity and, yet, you are very firmly supporting it.

LISTNUM 1 \l 13759             MS FERNANDEZ:  I could suggest that there is a track record.

LISTNUM 1 \l 13760             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 13761             MS FERNANDEZ:  There is a track record of experience that communities have had with CHUM and City and, obviously, as you have heard the last three days, with CTV.  And it's based on those relationships and I want to emphasize that, because relationships are what build that confidence in communities.  So it's the strength of that, the observation of that experience, that track record, those relationships.

LISTNUM 1 \l 13762             THE CHAIRPERSON:  Okay, thank you.

LISTNUM 1 \l 13763             Any other questions?

LISTNUM 1 \l 13764             Helen.

LISTNUM 1 \l 13765             COMMISSIONER DEL VAL:  So just based on that argument, there really is no chance of any new blood or new players in the system if it's all based on the existing relationships that have been built?

LISTNUM 1 \l 13766             I mean, I think the reality is that with a consolidation as significant as this there really is ‑‑ the reality is that there is little chance for more entrants or little chance of new blood.  And if it's always ‑‑ if it's based on the established relationships, I guess you are saying, well, better the devil we know than the one we don't, and so be it because we have a good player now and we know they will do a good job.

LISTNUM 1 \l 13767             MS FERNANDEZ:  But Commissioner, can I ask you a question?  If CTV does not acquire CHUM, then another player will acquire CHUM and you have the same consolidation.  Is that not the case?  I mean, is the scenario not already set to some ‑‑ is not the milieu already converging in a particular way?

LISTNUM 1 \l 13768             I mean, I am not ‑‑ certainly not as someone who is an advocate for cultural diversity against new blood and new players.  And I see a real necessity for that, but within the context of you know the global realities it is a balancing act.  It is a complex approach.

LISTNUM 1 \l 13769             So I certainly do not want to suggest that there should not be new blood or new entrants into this arena.

LISTNUM 1 \l 13770             COMMISSIONER DEL VAL:  Okay.

LISTNUM 1 \l 13771             THE CHAIRPERSON:  No, but you have heard City ‑‑ CTV themselves saying they hope that the divestiture of the A‑Channel will be this genesis of a new network.  You could just as well say it was the divestiture of City rather than the A‑Channel that would be the genesis of a new network and it would be a network truly founded on diversity.  So I mean, you don't have to ‑‑ and thereby provide the new blood that Commissioner del Val is talking about.

LISTNUM 1 \l 13772             MS FERNANDEZ:  Granted.

LISTNUM 1 \l 13773             THE CHAIRPERSON:  Any other questions?

LISTNUM 1 \l 13774             Okay.  Thank you very much.

LISTNUM 1 \l 13775             Madam Boulet.

‑‑‑ Upon recessing at 0935 / Suspension à 0935

‑‑‑ Upon resuming at 0953 / Reprise à 0953

LISTNUM 1 \l 13776             THE SECRETARY:  Thank you, Mr. Chairman.

LISTNUM 1 \l 13777             We are now proceeding with the Phase III of the process, which is the reply by the applicant to all the interventions that were filed with respect to their application.

LISTNUM 1 \l 13778             I would just like to state for the record that CTVgm has filed a letter dated May 1st which they had undertaken to do during their questioning, which is a letter from the Canadian Music Week confirming that the headliner for Canadian Music Week musicfest initiative will be a Canadian artist.

LISTNUM 1 \l 13779             The letter will be added to the applicant's application, Mr. Chairman.

LISTNUM 1 \l 13780             THE CHAIRPERSON:  Did you want to make a ‑‑ Commissioner del Val?

LISTNUM 1 \l 13781             COMMISSIONER DEL VAL:  I just wish at this point to withdraw my request for the information regarding audience share and revenues isolated to attributables solely to specialties.

LISTNUM 1 \l 13782             Thank you.

LISTNUM 1 \l 13783             THE CHAIRPERSON:  Okay, Mr. Fecan.


LISTNUM 1 \l 13784             MR. FECAN:  Good morning.

LISTNUM 1 \l 13785             THE CHAIRPERSON:  Good morning.

LISTNUM 1 \l 13786             MR. FECAN:  I know time and clarity is of the essence here so I will attempt to be brief.

LISTNUM 1 \l 13787             I will begin my remarks by setting the reality of the media landscape that faces broadcasters in general and CTVgm in particular.

LISTNUM 1 \l 13788             You may have noticed that on Monday virtually the entire broadcasting community was present in the audience here.  When you look at the public file of interventions, roughly 2,100 but who is counting, you will see that they come from people in all walks of life and all regions of our country.  Yesterday, unions, guilds, producers, music entrepreneurs, professors, artists and writers made the trip to Ottawa/Gatineau to be part of this important hearing.

LISTNUM 1 \l 13789             What is even more interesting, who is not part of the dialogue?  Who is missing from the process?  Who is not here?  Where is Google, Yahoo, YouTube, Facebook, AOL or MSN?  Why aren't they here?

LISTNUM 1 \l 13790             They aren't here because they aren't required to be present.  Whatever is discussed or decided here in no way affects them.  They are not subject to regulatory guidelines or rules.  They are taking away our audiences and our revenues with their offerings using fixed line and wireless bandwidth, some of it public, but putting nothing back into our culture.  They can target our audiences right down to our postal code, income bracket and consumer preferences.

LISTNUM 1 \l 13791             So how do we compete?  We compete through scale, through consolidation.

LISTNUM 1 \l 13792             Does the regulatory framework need to evolve?  Probably, but I believe the media reality can currently be dealt with by the Commission on a case‑by‑case basis.

LISTNUM 1 \l 13793             To continue, media consolidation is necessary today and will become more commonplace in the future.  And make no mistake compared to the U.S. consolidated giants Viacom, News Corp, Disney, GE, Time Warner; this proposed merger is a speck.

LISTNUM 1 \l 13794             Now, to the interventions and then to our homework assignments:

LISTNUM 1 \l 13795             We would like to express our gratitude to all intervenors for taking an interest in this proposal, from Jully Black who told you that you shouldn't go to a dentist with no teeth, to Brent Butt on why chicken suits aren't funny.

LISTNUM 1 \l 13796             I was also impressed at virtually all of the intervenors who were in favour of the speciality and radio portions of the transaction.  And just about everyone was in favour of the Citytv portion, albeit with various conditions, and most understood that we were genuinely attempting to set new benchmarks in guaranteeing diversity of voices.

LISTNUM 1 \l 13797             Now, let me turn my attention to those few who opposed this transaction; first, with regard to advertising.

LISTNUM 1 \l 13798             The major ad agencies and many of the large advertisers themselves have consolidated to face the realities of their own markets.  I would point out three things:

LISTNUM 1 \l 13799             a) The Competition Bureau has looked at this thoroughly and issued a no action letter;

LISTNUM 1 \l 13800             b) Hit shows are always going to attract big advertising dollars.  It doesn't matter how many channels you own.  It is the shows not the channels that attract the big bucks.  Hits are cyclical.  A few years ago CanWest had them.  Now, we do them.  Now, they are on the comeback trail.

LISTNUM 1 \l 13801             And finally, advertisers are moving more and more of their money to new media.  The year over year increase in internet advertising spending in Canada was 80 percent in 2006 versus 2005 and last year reached over a billion dollars.  CHUM has recently lost a major broadcast advertising deal to a foreign internet competitor.  These competitors can specifically target any broadcaster's market audiences through geo‑gating.

LISTNUM 1 \l 13802             Next, I must deal with the CBC which was, to be polite, shockingly inaccurate and so I must set the record straight.

LISTNUM 1 \l 13803             Mr. Stursberg said that we claimed CHUM was an insolvent company.  We never said that.  We said that CHUM's conventional television stations are in serious trouble.

LISTNUM 1 \l 13804             The Commission is well aware of the plight of the A‑channels and on Monday we filed evidence that Citytv in Toronto is joining Citytv in Vancouver, Edmonton, Calgary and Winnipeg in a bleak financial picture.  In the vernacular, they are going broke.

LISTNUM 1 \l 13805             He talks about how there will only be two private broadcasters.  He forgot Rogers which will have a network of its own with your approval.  Add to those three the CBC, which sure sounded like a major private broadcaster yesterday.  So the total number of major conventional broadcasters who sell advertising in Canada will be four.  The U.S. market, a market far bigger than ours, can only support four and a half; ABC, NBC, FOX, CBS and the CW which is a new conventional network aimed at the 18‑49 demo.  Incidentally, the CW is co‑owned and totally managed by CBS.  CBS and CW, an older demo network and a younger demo network; sounds like our proposal.

LISTNUM 1 \l 13806             He said private broadcasters never put their Canadian shows in something he called "deep prime time" which he defined as Monday to Thursday, 8:00 p.m. to 10:00 p.m.  Well, Corner Gas, Degrassi, Instant Star, Canadian Idol and virtually all of our Canadian movies run in those exact time periods.  Doesn't he watch Canadian television?

LISTNUM 1 \l 13807             He implied that self‑directed benefits were only allowed by the Commission once.  In fact, since the BCE benefit it has been the standard.  It has been accepted some 14 times and we will happily file a list of precedents.

LISTNUM 1 \l 13808             But Mr. Stursberg did set up a very important point for us.  He said that the CTF had a new system, the broadcaster envelope.  It is relatively new.  But he forgot to mention that the producers and broadcasters are still bound by the CTF criteria.

LISTNUM 1 \l 13809             On Monday, when I was questioned about benefits criteria, I wasn't avoiding an answer I just really wanted to show a concrete example.  Brent Butt's intervention, and his show provided it, demonstrating why we administer our benefits in the way we do.

LISTNUM 1 \l 13810             Here is what I mean.  Corner Gas would have never happened if it was up to the CTF as its rules prevent the star from also being the producer.  In fact, last year the CTF came to us and begged us to let them in vest in Corner Gas because it was a sure thing and would help their profile.

LISTNUM 1 \l 13811             We didn't object until they told us that Brent Butt couldn't be the producer and paid as a star.  They wanted Brent, the man who is the show, to pay for himself partially out of his own pocket.  We told the CTF to keep their money.

LISTNUM 1 \l 13812             The moral here is that the CTF's criteria may make perfect bureaucratic sense but fails the all‑important creative litmus test.  Yes, the creative criteria process is messy and hard to measure.  In fact, it can only be measured after the fact by the project's success.  But we believe in the artist, the artist believes in us and somehow it works.

LISTNUM 1 \l 13813             I notice Mr. Stursberg didn't refer to Peter Herrndorf's intervention.  Mr. Herrndorf is a board member of the CBC, the distinguished head of the National Arts Centre and one of the finest former heads of English television, as such, he really is Mr. CBC.  Mr. Herrndorf strongly supported this application.

LISTNUM 1 \l 13814             On the issue of incrementality several interveners suggested that we weren't sure how this could be measured.  To be clear, on the CityTV stations it would be measured as incremental to the eight‑hour priority program commitment the CityTV Network currently has.  On the specialties, these programs would not count towards their CPEs and would therefore also be incremental.  This method of measurement has stood the test of time.

LISTNUM 1 \l 13815             Other interveners suggested the incrementality should be measured against both CityTV and CTV.  As we have committed to zero program overlap and as all of the onscreen benefits go to CHUM, this is simply not necessary and something which would hurt CTV's year to year financial flexibility.

LISTNUM 1 \l 13816             The DGC said that CityTV Toronto is not meeting the eight‑hour priority programming commitment.  It is and we would accept this as a COL.  Staying with programming, the CFTPA suggested that there be zero overlap between CTV and CHUM's specialty services.  The thesis was the less overlap the more original programming.  This presupposes unlimited money.  We can't accept this proposal.

LISTNUM 1 \l 13817             And on the matter of the terms of trades process between the producers' union and CTV we don't think it is advisable to disrupt the fair bargaining process with a regulatory order for us to settle.

LISTNUM 1 \l 13818             Now, let us turn our attention to the homework you gave us.  We listened carefully, we considered your issues and we really tried to be responsive to your concerns.  Let us start with whether benefits should be calculated on debt.  We accede to your request.  By our calculation, this adds another $20.4 million to our package of $103.5 million for a total of $123.9 million.  The $20.4 million is made up of $15 million to television and $5.4 million to radio.

LISTNUM 1 \l 13819             How would this money be allocated? We would propose the radio money be allocated pro rata.  And TV, we propose adding to the three priority program envelopes, Trendsetters and Risk‑takers, for an additional $8 million dollars, the film features for an additional $5 million dollars, Bravo! Centre Stage for an additional $1.5 million and then an additional $0.5 million for the third‑party promotion fund.

LISTNUM 1 \l 13820             You asked for a ballpark of numbers out self‑directed benefits would produce. We calculated that the $66.75 million of on‑screen production money will create at least 50 hours of incremental programming.

LISTNUM 1 \l 13821             Now, I know there was a desire for some criteria for the Risk‑takers projects.  As I have said, we have criteria but they are creative ones.  How many Brent Butts are there out there with great ideas but don't fit some third‑party arbitrary fund guidelines?  If the objective is to deliver results for Canadian audiences, we proved our method works.  Nonetheless, we will provide what we hope is a satisfactory definition of this drama envelope's objectives.

LISTNUM 1 \l 13822             We have been asked whether we would make the journalistic safeguards and the zero overlap between CityTV and CTV a condition of licence.  We will and we have provided written COLs on both.

LISTNUM 1 \l 13823             We were asked whether we would commit to an independent production minimum.  We will as a COL at 75 per cent.  We were asked whether we could tighten the deadline for achieving compliance on the five‑to‑one policy.  Instead of the five to seven years originally proposed, we will live with three years.

LISTNUM 1 \l 13824             We were asked whether we could provide some language about City's mission.  We have drafted a nature of service COL.

LISTNUM 1 \l 13825             And now we turn to the twin sticks.  As I reviewed every Commission decision since 1978 on twin sticks, I see that it has always been about financial challenges of one kind or another.  Either a station is about to go broke or a station needs a big financial backer to better contribute to the diversity of voices in a community and do more for Canadian programming, because it is too small to do so on its own otherwise.

LISTNUM 1 \l 13826             So it is difficult for me to understand why our proposal doesn't fit within Commission policy.  It seems to me that our proposal is not just within the policy, but in line with every precedent.  Nevertheless, we are prepared to put more into the system for the CityTV stations.

LISTNUM 1 \l 13827             Some interveners suggested that we should pay a 15 per cent benefit for the twin sticks.  We will agree to this.  But the 15 per cent should be calculated on the value of the CityTV stations.  This yields an additional $6.5 million.

LISTNUM 1 \l 13828             You also suggested that we provide additional local programming.  We will at 2.5 hours per week in Edmonton, Calgary and Winnipeg for new local reflection programming.  This is where we would spend the $6.5 million.  This programming would not just be incremental to City's COLs, it would be incremental to what City is actually doing.

LISTNUM 1 \l 13829             For instance, while the COL in Calgary is for 31.5 hours per week, they are actually doing 32.5.  With this proposal we would do 35 hours per week in Calgary.  We concentrated this benefit on the three markets that are the new proposed exceptions to the twin stick rule.

LISTNUM 1 \l 13830             It is our position that in the Toronto, Hamilton and Vancouver/Victoria markets we are not asking for new exemptions, but we are stepping in the shoes of existing exemptions.  The CHUM Toronto/Vancouver exemption has been in place since 1978 and the Vancouver/Victoria one since 2001.  The latter one was specifically cited in your decision as "counter balance to CanWest" and their degree of concentration of voices in both broadcasting and newspapers in the Vancouver/Victoria market.

LISTNUM 1 \l 13831             But in all cases we are increasing diversity through our commitment of zero overlap measured annually and journalistic safeguards.  So now, as the Chairman said, let us be practical and turn to the most important question here today.

LISTNUM 1 \l 13832             If you say to us too bad, divest the City stations, just who would buy them?  Could it be CanWest?  No, that would give them three stations in most of these markets.  Shaw?  They didn't bid on any of these assets and do not appear to want them.  Astral?  They did bid for CHUM and came within 5 per cent of our price.  What was the difference according to Mr. Greenberg?  Conventional TV.  He said he had no synergies with conventional, he couldn't bring American programming buying power to the equation.

LISTNUM 1 \l 13833             Rogers?  Although I have the utmost respect for Mr. Rogers and his company, I have not heard a single voice praising their skill of developing hit Canadian programs.  Québecor?  Again, I have a great deal of respect for Mr. Péladeau and Québecor, but they would also require a twin stick exemption in Toronto and have little programming experience in English Canada as exemplified by Sun TV.

LISTNUM 1 \l 13834             And where were all these bidders before?  CHUM was a public company and, as such, CTVgm made a public bid.  Anyone could have topped our bid if they were prepared to pay one cent more than the $40 million break‑up fee.  No one, I repeat no one came forward.

LISTNUM 1 \l 13835             So still the question is who is the best buyer for CityTV?  And again, as the Chairman said, let us be honest.  On Monday I said in my opening remarks, love it or hate it, in conventional TV American programming earns the money for Canadian programming.

LISTNUM 1 \l 13836             Ask yourself, who has more muscle buying the American programming that CityTV needs? The companies I just mentioned or CTV?  Answer, CTV.  As an aside, if it was that easy to buy the American, City by their own admission, could have done it themselves.

LISTNUM 1 \l 13837             Who has the best track record in Canadian programming?  Answer, CTV.  You heard the evidence.  Who will best understand and preserve and enhance City's distinct brand and diverse voice?  Answer, CTV.  Who does the creative community overwhelmingly prefer as owners as CityTV?  Answer, CTV.  Who do the people of CHUM prefer as the owner of CityTV?  Answer, CTV.

LISTNUM 1 \l 13838             It seems that almost everyone believes that CTV is the logical, the best buyer for CityTV.  And CTV is offering you certainty.  We are here today, who really knows whether there is a better deal for the Canadian broadcast landscape out there somewhere?  Who knows how much longer it would take to maybe find one or maybe not?  While the CHUM team has done an admirable job in keeping things going, the cracks are beginning to show.

LISTNUM 1 \l 13839             Will any other potential combination offer as much as we are putting forward?  Greater diversity of voices through zero overlap in programming measured annually, tough editorial safeguards, more local programming and $130.4 million in tangible benefits, the second largest benefits package in Canadian television history.

LISTNUM 1 \l 13840             And by the way, when you combine the benefits payable under divestitures of the A‑Channels, Access Alberta, Canadian Learning Television, SexTV and Music Plus, that adds and additional $18 million of tangible benefits which we are guaranteeing for a grand total of $148.4 million.  That is a lot of money.

LISTNUM 1 \l 13841             Most mergers fail, they fail because success in combining companies is not just about money.  Jully Black said it best, "Money without a vision is worthless."  Successful mergers are about compatible cultures, mutual respect and shared aspirations.  Without those values, mergers fail.  You see a team in front of you that wants to work together and it has come together.

LISTNUM 1 \l 13842             Who will speak for the heart, the soul and the passion of this creative enterprise? Surely this is valuable too in your consideration. The great opportunity you have is discretion and flexibility to judge each situation on its own merits, to adapt the rules as necessary, to do the right thing for the audience and for the Canadian broadcasting system.

LISTNUM 1 \l 13843             I think the answer here is clear and I respectfully urge you to approve our transaction as amended by these additional commitments.

LISTNUM 1 \l 13844             THE CHAIRPERSON:  Thank you very much for your very eloquent submission.

LISTNUM 1 \l 13845             A couple of points here.  When you say let us be practical and you go through the list of who could be a possible buyer and you basically say that none of them came forward.  I thought I understood on Monday that from Mr. Waters that it was a limited auction, that in effect only you and Astral were invited to bid.

LISTNUM 1 \l 13846             MR. FECAN:  The limited auction was with the family trust and then the family trust recommended the ‑‑ I might go to you for that ‑‑ but once the company accepted it and we negotiated a break fee we had to make a full bid to all shareholders.

LISTNUM 1 \l 13847             If somebody had come in more and was prepared to pay our break fee, they would have been under a fiduciary duty to look at that and accept it.  We would have had an opportunity to match it.  But there was an open bidding process in that last stage.

LISTNUM 1 \l 13848             THE CHAIRPERSON:  Presumably, there was an investment advisor.  Did he or whoever it was, Merrill Lynch, also send out a full package of solicitation to all available buyers?  I mean, was it actually shopped around?

LISTNUM 1 \l 13849             MR. FECAN:  Our bid was a full bid in the public market.  And as I under stand it ‑‑

LISTNUM 1 \l 13850             THE CHAIRPERSON:  But before you came on the scene.  I mean, I understand that there is three stages.  The Waters Family decides to sell.

LISTNUM 1 \l 13851             MR. FECAN:  Yes.

LISTNUM 1 \l 13852             THE CHAIRPERSON:  It goes to a trustee and the trustee then tries to get the best bid.

LISTNUM 1 \l 13853             MR. FECAN:  Let me go to our counsel.

LISTNUM 1 \l 13854             THE CHAIRPERSON:  But can you educate me how this was done?

LISTNUM 1 \l 13855             MR. FECAN:  André Serero.

LISTNUM 1 \l 13856             MR. SERERO:  Thank you, Ivan.

LISTNUM 1 \l 13857             The way this was done is there was a first ‑‑

LISTNUM 1 \l 13858             THE CHAIRPERSON:  Can you speak in the microphone please?

LISTNUM 1 \l 13859             MR. SERERO:  Oh, my apologies.  Can you hear me better?

LISTNUM 1 \l 13860             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 13861             MR. SERERO:  Okay.  The way this was done is there was a first stage negotiating process that the Waters Family Trust set‑up with two bidders, with us and with Astral.

LISTNUM 1 \l 13862             Is that better?

LISTNUM 1 \l 13863             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 13864             MR. SERERO:  Okay, sorry about that.

LISTNUM 1 \l 13865             So that process lead us to be the successful bidder to be able to way to the Waters Family we are now prepared to make a public bid for all of the shares.  That first stage negotiation only dealt with the shares that the Waters Family owned.

LISTNUM 1 \l 13866             On July 12 we announced with the Waters' family support that we would make a bid for the entirety of the CHUM stock, both the shares that the Waters Family owned and the shares that they did not own.  That deal went public very shortly thereafter and in that process of time, between I think it was July 26 and when the bid closed, there was ‑‑

LISTNUM 1 \l 13867             THE CHAIRPERSON:  When did it close?

LISTNUM 1 \l 13868             MR. SERERO:  It closed at August 31.

LISTNUM 1 \l 13869             There was written into the materials and it was part of what the Waters Family insisted on and the Board of CHUM insisted on, that they were entitled to have what is called a fiduciary out.  Which means if any superior proposal that came in, any proposal that was superior to our bid, had to be considered and, in fact, had to be accepted by CHUM provided that they gave us a right to match.  We have three business days, I believe, to make that right to match and provided that the company paid a break‑up fee equivalent to 3 per cent of the transaction, which was $41 million.

LISTNUM 1 \l 13870             THE CHAIRPERSON:  And there was a deal and if let us say Rogers or somebody wanted to they could have come and kicked the tires, gotten the exact details and have decided whether to make their own bid or not?

LISTNUM 1 \l 13871             MR. FECAN:  Mr. Chairman, that is correct.

LISTNUM 1 \l 13872             THE CHAIRPERSON:  So basically, the only advantage CTV had was the break‑up fee that you negotiated at that point in time?

LISTNUM 1 \l 13873             MR. FECAN:  That is correct.

LISTNUM 1 \l 13874             THE CHAIRPERSON:  Okay.  Secondly, you mention in your outset the Google, the Yahoo, the YouTube, Facebook, et cetera on here.  This is obviously the issue of the day for you, for us as regulator and not only for today, but forward, et cetera, and how we take that into the equation.

LISTNUM 1 \l 13875             What exactly are you saying here when you mention that they are not here?  How should we make their absence part of our analytical framework in order to determine whether to exceed to your request or not?

LISTNUM 1 \l 13876             MR. FECAN:  Well, that is the huge question of course, and I don't know that I or I am not aware of, in any country, the industry and the regulators have found a way to deal with this. In the U.S. you have seen companies like ours, our equivalents in the U.S. which of course are much bigger, the News Corps of the world, try and buy some of these companies, some try and buy into some of these companies.  I think FOX recently bought one.

LISTNUM 1 \l 13877             In other instances you hear rumours that some of these new media companies were looking to buy some of the existing media companies.  So on one level the marketplace is dealing with it that way.

LISTNUM 1 \l 13878             What I am saying to you here now at this hearing is let me compete with them, give me the tools I need to try and compete with them because I think with this combination, with the new media skills that both CTV and City has, and they have got very unique new media skills, and with the interest and the connection they have with youth audiences I think we might be able to compete on some basis for a while until we figure out where the next battle is.

LISTNUM 1 \l 13879             But I don't have a silver bullet, I am just looking at this day by day and trying to figure out how to move it forward.

LISTNUM 1 \l 13880             THE CHAIRPERSON:  It strikes ‑‑ you are saying in a very polite way, et cetera, your rules on diversity really don't make sense in the new age, that I have a competitor who is not even within your frame of reference, but who is coming on fast and who is producing, who is taking a lot of my business.  I have got to compete with them.  In order to compete with them I need size.  This is a good way to size.  I also need diversity so I can fight them at several levels.  So basically, that means we can't on other twin sticks policy.

LISTNUM 1 \l 13881             That is what it boils down to.  Because, I mean, we talked about this the other day.  My colleague mentioned that you are trying to do a tsunami, I think was the word he used, or a challenge by trying to overcome everything.  And I think I made it quite clear that I could see the way that if you bought the A‑Channel you could fit into the sort or of failing film or failing station exception that has evolved overtime.  You chose not to do it but, I mean, yes, the conventional stations of City are not in as healthy a state as one would expect.

LISTNUM 1 \l 13882             You know, while a firm is being sold it is very hard to keep it together, as you admit yourself, and I'm not surprised the profits are going south rather than north.  That is to be expected in situations like that.

LISTNUM 1 \l 13883             But let us come down to really what the nub of it is.

LISTNUM 1 \l 13884             It seems to me that you are saying is:  Because of this challenge of new media you have to interpret the twin sticks policy exception exceedingly liberal to allow me to close this deal and succeed.

LISTNUM 1 \l 13885             MR. FECAN:  What we are saying is I think it is one of the things you need to consider and I think you have the jurisdiction to make flexibility one of the options as you look at the decision.

LISTNUM 1 \l 13886             THE CHAIRPERSON:  If you go down that route for some reason, then of course diversity becomes ‑‑ there is a real guarantee that we have diversity (a) that is in your self‑interest.  That is probably the biggest guarantee.  So we have heard all of the talk about how markets ‑‑ diversity is increasing and you want to be able to respond to them and generate business from them so you have to do a diverse program.

LISTNUM 1 \l 13887             Second, we have the editorial policy, but which only goes to news management, it does not go to newsgathering.

LISTNUM 1 \l 13888             MR. FECAN:  It goes to news management and news presentation ‑‑

LISTNUM 1 \l 13889             THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 13890             MR. FECAN:  ‑‑ but not to newsgathering.

LISTNUM 1 \l 13891             THE CHAIRPERSON:  But not to newsgathering.

LISTNUM 1 \l 13892             MR. FECAN:  That's correct.

LISTNUM 1 \l 13893             THE CHAIRPERSON:  You had Mr. ‑‑ who was it ‑‑

LISTNUM 1 \l 13894             MR. FECAN:  I think it was Mr. Murdoch.

LISTNUM 1 \l 13895             THE CHAIRPERSON:  Mr. Murdoch, yes, thank you.

LISTNUM 1 \l 13896             MR. FECAN:  Who could only site examples from CanWest I have noticed.

LISTNUM 1 \l 13897             THE CHAIRPERSON:  Is there a trade‑off here?

LISTNUM 1 \l 13898             MR. FECAN:  Mr. Chairman, I would be so concerned about State, a semi‑judicial body or an owner telling a journalist who he or she cannot talk to.  I think the cure is far worse than the disease.  So on a matter of philosophic principle I just don't think it is the right thing to do.

LISTNUM 1 \l 13899             THE CHAIRPERSON:  You say that journalists can't talk to ‑‑ I thought we were talking about newsgathering.

LISTNUM 1 \l 13900             MR. FECAN:  That is a journalist.  Newsgathering is journalists sitting at that table over there.  It encompasses all of those things.

LISTNUM 1 \l 13901             THE CHAIRPERSON:  You are saying the prime sort of news is other journalists?

LISTNUM 1 \l 13902             MR. FECAN:  No, not the prime source, but ‑‑

LISTNUM 1 \l 13903             THE CHAIRPERSON:  A source is.

LISTNUM 1 \l 13904             MR. FECAN:  But, excuse me, who are you and I to tell somebody on the field, no matter how good our intentions are, who they can and cannot talk to.

LISTNUM 1 \l 13905             THE CHAIRPERSON:  No.  No, but if these are separate companies, as they are right now, they have their own news teams.

LISTNUM 1 \l 13906             MR. FECAN:  Yes, and they talk to each other.

LISTNUM 1 \l 13907             THE CHAIRPERSON:  Well, sure, they talk, but ‑‑

‑‑‑ Laughter / Rires

LISTNUM 1 \l 13908             MR. FECAN:  That's the problem.

LISTNUM 1 \l 13909             THE CHAIRPERSON:  We are now ‑‑

LISTNUM 1 \l 13910             MR. FECAN:  Now are saying don't talk to each other.

LISTNUM 1 \l 13911             THE CHAIRPERSON:  ‑‑ trying to recreate the same situation under your common ownership.

LISTNUM 1 \l 13912             MR. FECAN:  Well, that is what we are doing.  You are suggesting to create an artificial situation where they can talk to each other.  That's where the fault line is here.

LISTNUM 1 \l 13913             THE CHAIRPERSON:  Is that what the issue is with Québecor?  Is that when they find that policy so difficult?

LISTNUM 1 \l 13914             MR. FECAN:  I honestly haven't talked to Mr. Péladeau about it.  I'm not sure what his particular issue is.  I know what our journalistic issue would be.

LISTNUM 1 \l 13915             THE CHAIRPERSON:  All right.

LISTNUM 1 \l 13916             Do my colleagues have any questions?

LISTNUM 1 \l 13917             Stuart...?  Stuart, go ahead.

LISTNUM 1 \l 13918             COMMISSIONER LANGFORD:  All right.

LISTNUM 1 \l 13919             Well, you spelled it out and you have given us a decision to make, but it seems that even if we were to say yes there is another issue here, and it is an issue which was very, very big in your supplementary brief, got a little bit smaller in the reply, got a little bit smaller in your presentation, and now seems to be gone, completely disappeared.

LISTNUM 1 \l 13920             But that issue, just to refresh your memory, is you want to be on an equal and level playing field with some organization with CanWest Global.

LISTNUM 1 \l 13921             If we give you this, that will become their issue.  So help me with that.  Help me with the next step.

LISTNUM 1 \l 13922             If you were cloned and we sent number two over to work with CanWest Global, how would you structure an application from them?  I don't mean ‑‑ you don't have to do it in absolute detail, but what would be the big issues that they would come back to us now and say well "Whoa, wait a minute.  We don't really have twin sticks in the same city.  We have local programming things that handicap us.  We have ad sale problems that handicap us.  Now we are the people who are handicapped."

LISTNUM 1 \l 13923             So what do we do on the other side of the equation to bring back what at one point I thought was one of your favourite issues, it becomes your clone's issue over at CanWest.

LISTNUM 1 \l 13924             What is going to come through the door from CanWest and how would you react to it?

LISTNUM 1 \l 13925             MR. FECAN:  I couldn't possibly speak for CanWest, but we wouldn't object to them having equitable conditions.

LISTNUM 1 \l 13926             COMMISSIONER LANGFORD:  So if they put something together, you are going to be a supporting intervenor, or a quiet intervenor?

LISTNUM 1 \l 13927             MR. FECAN:  I would certainly do for them what they did for us here.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 13928             COMMISSIONER LANGFORD:  Yes.  That's a pretty fair approach.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 13929             COMMISSIONER LANGFORD:  Just I see no CanWest Global knife in your back is all I'm saying.

LISTNUM 1 \l 13930             MR. FECAN:  The night is young.

LISTNUM 1 \l 13931             COMMISSIONER del VAL:  I just want to walk through the process of the bidding and how you came to the buy.

LISTNUM 1 \l 13932             Just and very simplified terms this is the way I see it:  You issue an invitation to two parties to say "Bid" and these two parties then submit their bid to you and then you select the successful buyer after that, with whom you then negotiate your support agreement, your lockup agreement and cooperation in implementation agreement, and so on and so forth, with all of those negotiations.  After that, then you issue your Information Circular to your shareholders where you say here that CTV, whom we selected, is offering to buy all of the shares on these terms.  Then you deposit your shares and they buy it.

LISTNUM 1 \l 13933             So that is the point where the deal becomes sort of public and open season, is it?

LISTNUM 1 \l 13934             MR. WATERS:  Commissioner, if I may just say one thing, just to begin with since you have gone back and traced the history of it.

LISTNUM 1 \l 13935             Ron and I made the decision consciously to sell the company.  Between the two of us we said "Okay, what is the process we will do?"  We hired the investment firm to do a valuation for us and at that point is when we went through all of the players, all the possibilities, and we came down to CTV and to Astral.  Then Ron and I went directly to those two.

LISTNUM 1 \l 13936             And, remembering we are a public company, we didn't want everybody in the world, most especially the people that worked for CHUM, to know what was going on until we had something firm that we could tell them.

LISTNUM 1 \l 13937             So I think it is important that you hear that from me and that that is kind of how it began.

LISTNUM 1 \l 13938             I think you have the rest of it right, but I will let ‑‑

LISTNUM 1 \l 13939             COMMISSIONER del VAL:  Yes.  Let me just reply to Mr. Waters.

LISTNUM 1 \l 13940             I don't doubt that is what happened.  I'm not saying that anything untoward was done.  I just want to understand in a very simplified version, you know, when it became open for bidding.

LISTNUM 1 \l 13941             So I just want, in terms of the process, then is it after you have issued the Information Circular, that is when it became sort of open season again?

LISTNUM 1 \l 13942             MR. FECAN:  Yes, but it has even better.  We had a bid purely on public information.  We had no insider information.  There was no data room, it was whatever was on your database, whatever is on their stock circulars, that is what we had to use, as did Astral, to make our initial proposal.

LISTNUM 1 \l 13943             COMMISSIONER Del VAL:  All right.

LISTNUM 1 \l 13944             You and Astral had that.  You bid on the open information.

LISTNUM 1 \l 13945             MR. FECAN:  Everybody.  I mean, we had nothing special is the point.

LISTNUM 1 \l 13946             COMMISSIONER del VAL:  No.

LISTNUM 1 \l 13947             MR. FECAN:  It is whatever we could find in public domain.

LISTNUM 1 \l 13948             COMMISSIONER del VAL:  Yes, I know.  That's not the point.

LISTNUM 1 \l 13949             MR. FECAN:  All right.

LISTNUM 1 \l 13950             COMMISSIONER del VAL:  The point is that then you and Astral used whatever was available to make your bid, the two of you, right, and then ‑‑ can I have the answer to my question:  And then after the Information Circular, that was when it became open season for all to bid?

LISTNUM 1 \l 13951             MR. SERERO:  Yes.

LISTNUM 1 \l 13952             Let me try to give you some days, if I may, if that is helpful to you.

LISTNUM 1 \l 13953             COMMISSIONER del VAL:  Maybe if you just let me finish my line and you can make notes on what I have wrong just so you see where I'm going.

LISTNUM 1 \l 13954             Is that okay?

LISTNUM 1 \l 13955             MR. SERERO:  All right.  Yes.

LISTNUM 1 \l 13956             COMMISSIONER del VAL:  All right.  Thank you.

LISTNUM 1 \l 13957             So then the Information Circular goes out, then everybody now knows ‑‑ and any competitor or any interested buyer can then approach who?

LISTNUM 1 \l 13958             At this stage of the game if they wanted to buy who would they approach?

LISTNUM 1 \l 13959             MR. SERERO:  They approach ‑‑ they make a public bid.

LISTNUM 1 \l 13960             If I can just try to clarify.  In fact the world knows about our intention to make a bid on July 12th.  That is approximately two weeks earlier then when the actual Information Circular is circulated.

LISTNUM 1 \l 13961             On July 12th a public announcement was made of CTVglobemedia's intention to bid for all of the shares of CHUM.  In order for that public announcement to be made, and our intention to be made, the Waters family needed to take this bid to the CHUM public company Board.  There was a special independent committee of the Board of Directors of CHUM, with their own advisers, including financial advisers who had to get a fairness opinion, who had to say, before the public intention is made, that this was a fair bid, not just for the Waters family, indeed it was a fair bid for all of the shareholders.

LISTNUM 1 \l 13962             COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 13963             MR. SERERO:  That public intention press release was made on July 12th.

LISTNUM 1 \l 13964             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 13965             MR. SERERO:  On July 26th ‑‑ very precisely, on July 26th the Offering Circular was mailed to all of the shareholders, but indeed on July 12th everybody knew of our intention.

LISTNUM 1 \l 13966             By law a takeover bid of a public company has to stay open for a minimum of 35 days.  We kept ours open for approximately 42 days.

LISTNUM 1 \l 13967             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 13968             MR. SERERO:  During that period ‑‑ and there are examples where this happens, there are quite a few of them ‑‑ any bidder is perfectly free to make a superior proposal.  As part of the support agreement that we negotiated, which I know is on the public file, the CHUM Directors reserved ‑‑ and they had to as a matter of law reserve ‑‑ the ability to accept that superior proposal.

LISTNUM 1 \l 13969             So even though they felt and they had opinions, including fairness opinions, testifying that our bid was a fair bid, a significant premium to what the CHUM stock was trading at, that if a subsequent bid came in that was better than ours, they had to consider it, they agreed to give us ‑‑ I believe it is three business days but I can always confirm that, I just haven't triple checked today ‑‑ to match it and, if we didn't and they accepted that bid, our break‑up fee was $41 million.

LISTNUM 1 \l 13970             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 13971             So at this stage of the game, say come July 12th and you have done the release, anyone who wants to buy would be buying from ‑‑ would be sort of like a hostile buyer, wouldn't it become.  I mean, you basically would not really have a willing vendor that you can negotiate all of the, say, agreements that have already been in place.

LISTNUM 1 \l 13972             Is that overstating the case?

LISTNUM 1 \l 13973             MR. SERERO:  The vendor is ‑‑ at the end of the day all of the shareholders are the vendors.  Clearly the decision was made at the early part of the process by the Waters family to identify in their minds ‑‑ and I'm just building on what has been said ‑‑ but to identify, as has been said earlier ‑‑ who the two most appropriate buyers were.

LISTNUM 1 \l 13974             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 13975             MR. SERERO:  But quite clearly someone would have to come in on top of us to make that bid.

LISTNUM 1 \l 13976             COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 13977             But at this stage really, if I put it in very simple terms, CHUM is someone who was already declared "I want to marry this person."  So someone else who wants to marry CHUM is going to not really have a willing bride, in a way.

LISTNUM 1 \l 13978             In a way, I also ‑‑ I don't know whether this is over simplifying things.  If I want to sell my house I go to my two closest neighbours ‑‑ and I'm in a sort of close community, I go to my two closest neighbours and say "Do you want to buy my house?  Do you want to buy my house?"  One of them says, "Okay, I want to buy your house."

LISTNUM 1 \l 13979             At that stage, this being a small community, all of the other neighbours, even if they wanted to buy the house, would they still come to me and say "Okay, I will buy it", knowing that I really want to sell to someone else, and knowing also that they will have to continue to live in the same community with whoever wants to buy my house.

LISTNUM 1 \l 13980             I mean, it's a small community.

LISTNUM 1 \l 13981             MR. FECAN:  Commissioner del Val, once a company is in play, it is in play.  The Board management may prefer, for any number of reasons, a certain buyer.  I mean at that point, once it is in play, it's not personal, it's business.

LISTNUM 1 \l 13982             In order to get us to make an offer, they might give us a break‑up fee or the right to match, or any number of other kinds of things that you might have seen in there, but if somebody else wants it, it's business, it's not personal.

LISTNUM 1 \l 13983             They go in, they talk to the company, they talk to the Board, the company and the Board may choose to give them information or not ‑‑ they would have to give us the same insider information at that point ‑‑ and they can launch a bid.

LISTNUM 1 \l 13984             The extra hurdle ‑‑ they have two hurdles they have to cross.  One is they are going to have to ‑‑ if successful, the company would end up paying us a break‑up fee and we would have, for a number of days, a right to match.

LISTNUM 1 \l 13985             THE CHAIRPERSON:  He means the purchaser effectively has to pay a break‑up fee.

LISTNUM 1 \l 13986             MR. FECAN:  Ultimately.  Ultimately, and occasionally it goes back and forth in some celebrated things.

LISTNUM 1 \l 13987             But once it's in play, it's in play and that's where it isn't personal at that point.

LISTNUM 1 \l 13988             Now, it is still a public company at this point.  The trustee only gets involved when the shareholders vote and it actually goes into trust.  I think that date was early September or very late August, but it was after the bidding.

LISTNUM 1 \l 13989             COMMISSIONER del VAL:  All right.  By the time ‑‑ sorry.

LISTNUM 1 \l 13990             MR. SHERRATT:  Commissioner, I wonder if I might comment.

LISTNUM 1 \l 13991             I was a member of the independent committee and I was considered an independent director and there was a three‑man committee, well four‑person committee, set up to deal and get an independent valuation.  At that moment in time all of the reasons the Jim and all of our people have talked about, the synergies, the reason they wanted to be with CTV, they were gone.  It became a fiduciary responsibility of this independent group of directors to seek the best possible arrangement for all shareholders.

LISTNUM 1 \l 13992             We first had to determine ‑‑ and had professionals do it ‑‑ was it a fair valuation and was it fair to all shareholders.  Yes, it was.

LISTNUM 1 \l 13993             At that moment in time, if any other bidder had come along there was no emotion involved, there could not be any emotion involved, it was a fiduciary responsibility of that committee to go to the Board and say "We have a better offer, we must accept it if it's not matched."

LISTNUM 1 \l 13994             COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 13995             Those are my questions, Mr. Chairman.

LISTNUM 1 \l 13996             THE CHAIRPERSON:  Elizabeth...?

LISTNUM 1 \l 13997             COMMISSIONER DUNCAN:  I just have a quick question.

LISTNUM 1 \l 13998             I think it would be helpful, to me at least, would you mind submitting your calculations for those increases in relation to the debt and relation to the 15 percent premium?

LISTNUM 1 \l 13999             MR. FECAN:  I'm sorry, I believe it has been filed.

LISTNUM 1 \l 14000             COMMISSIONER DUNCAN:  Great.  Thank you.

LISTNUM 1 \l 14001             THE CHAIRPERSON:  I have had a little bit of time to think about it, what happened to Winnipeg?  On Monday you were refreshingly frank and said that the case of Winnipeg is the weakest of the lot and an exception to the twin stick policy?

LISTNUM 1 \l 14002             MR. FECAN:  I, I think, conceded that it was the weakest of the cases.

LISTNUM 1 \l 14003             Did I say more than that?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 14004             THE CHAIRPERSON:  No.  No, no.  I'm not trying to put any more ‑‑ okay.

LISTNUM 1 \l 14005             Second, what happens ‑‑ let's be honest here, this hearing has been very useful in order to clarify the issues and put a stark choice for you and for us.  You put one to me, I put one to you.

LISTNUM 1 \l 14006             What if we say yes, you can have the deal, with one condition:  You have to divest City stations.  You can buy the whole shooting match, you would divest ‑‑ obviously readjust the numbers, but that is basically ‑‑

LISTNUM 1 \l 14007             I cannot jump over the twin stick policy.  I just don't see that you have made out your argument.

LISTNUM 1 \l 14008             Where do we go from there?

LISTNUM 1 \l 14009             MR. FECAN:  All or nothing black‑and‑white choices are horrible choices.

LISTNUM 1 \l 14010             THE CHAIRPERSON:  I know, but you are putting one to me and I'm putting one to you.

LISTNUM 1 \l 14011             MR. FECAN:  They are horrible choices to make.

LISTNUM 1 \l 14012             THEY CHAIRPERSON:  I'm not doing this to try and decide ‑‑ I mean, I have to see what does the world look like for you if you are put into that position.

LISTNUM 1 \l 14013             MR. FECAN:  I would have to first of all say, I don't know how it is in the public interest to take a national icon like City, weaken it and tear the heart out of CHUM.

LISTNUM 1 \l 14014             What are you trading this for?  You are trading this for some concept of diversity.  What's going to happen if it doesn't work?  How are you going to feel about it then?

LISTNUM 1 \l 14015             Because you are asking me if that stark choice was put to you how would you react?  I have to look at this team, and we have gotten very close over the last few weeks and months as we have been doing this process and preparing for this hearing, and lots of nervousness at the beginning, you know, two families joining and all of that and how is it going to work out, and now there is his excitement.

LISTNUM 1 \l 14016             You take City of CHUM, you tear the heart out of it, you do, and for what good?  What have you achieved?  Is anybody going to do better than that symbiotic combination that's there?

LISTNUM 1 \l 14017             I just really, really get worried about it because they are so symbiotically matched.

LISTNUM 1 \l 14018             You know, I'm a business person, you are asking me to choose among the children but, you know, I have to point out to you ‑‑

LISTNUM 1 \l 14019             THE CHAIRPERSON:  Let's not get over emotional here.

LISTNUM 1 \l 14020             MR. FECAN:  No, no.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 14021             THE CHAIRPERSON:  You are a businessman.  I am asking you to ‑‑ I am putting a business proposition to you.

LISTNUM 1 \l 14022             MR. FECAN:  Look at their faces.  Look at your faces.  You tell me that.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 14023             COMMISSIONER LANGFORD:  We will be changing your name to Sophie if you keep this up.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 14024             COMMISSIONER del VAL:  You just told me that this is a business.

LISTNUM 1 \l 14025             MR. FECAN:  It is a business, and I would point out to you that I am fascinated ‑‑ fascinated that the last two and a half days we have spent about something that is worth 10 percent of the deal.

LISTNUM 1 \l 14026             THE CHAIRPERSON:  That's your view.

LISTNUM 1 \l 14027             MR. WATERS:  Commissioner del Val, if I might say one thing.

LISTNUM 1 \l 14028             You said "It's a business deal".  Yes, it is, but do you know that we all held our breath for 42 days that no one else would come forward because we wanted to deal to be done with CTV period.

LISTNUM 1 \l 14029             Even if it was more money, we wanted CTV.  I know that may not sound like good business or very smart, but we wanted CTV because they are the best partner.

LISTNUM 1 \l 14030             THE CHAIRPERSON:  I don't think I have received an answer from you, Mr. Fecan, to my question.

LISTNUM 1 \l 14031             MR. FECAN:  I think you did.

LISTNUM 1 \l 14032             THE CHAIRPERSON:  All right.

LISTNUM 1 \l 14033             I guess, then, that basically concludes it.  I have no more questions for you.

LISTNUM 1 \l 14034             I will have to go and decide how to deal with this as it is not an easy case.

LISTNUM 1 \l 14035             I thank you very much for the very straightforward, frank and open manner in which you have presented things and we discussed them.  I think we have a clear view of what the alternatives are and we have to decide how to do the right thing in terms of our mandate.

LISTNUM 1 \l 14036             Thank you

LISTNUM 1 \l 14037             Madam Boulet, you have certain announcements to make?

LISTNUM 1 \l 14038             THE SECRETARY:  Thank you, Mr. Chairman.

LISTNUM 1 \l 14039             I would just like to indicate for the record that any outstanding undertakings by CTV are to be filed with the Commission by Tuesday, May 8, 2007, and CBC's undertaking will be filed by Friday this week, May 3rd.

LISTNUM 1 \l 14040             Mr. Chairman, this concludes the agenda of this public hearing.

LISTNUM 1 \l 14041             Thank you.

LISTNUM 1 \l 14042             THE CHAIRPERSON:  Thank you.

‑‑‑ Whereupon the hearing concluded at 1045 /

    L'audience se termine à 1045






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Kristin Johansson         Monique Mahoney




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Jean Desaulniers          Jennifer Cheslock

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