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Please note that the Official Languages Act requires that government publications be available in both official languages.

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.




















                      SUBJECT / SUJET:




To consider the broadcasting application by BCE Inc. (BCE), on

its behalf and on behalf of certain of its affiliates, licensees

of broadcasting and distribution undertakings /

Afin d'étudier la demande en radiodiffusion présentée par

BCE Inc. (BCE), en son nom et au nom de certaines de ses filiales,

titulaires d'entreprises de radiodiffusion et de distribution













HELD AT:                              TENUE À:


Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)


March 11, 2008                        Le 11 mars 2008








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




To consider the broadcasting application by BCE Inc. (BCE), on

its behalf and on behalf of certain of its affiliates, licensees

of broadcasting and distribution undertakings /

Afin d'étudier la demande en radiodiffusion présentée par

BCE Inc. (BCE), en son nom et au nom de certaines de ses filiales,

titulaires d'entreprises de radiodiffusion et de distribution







Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Leonard Katz                      Commissioner / Conseiller







Cindy Ventura                     Secretary / Secretaire

Claude Rousseau                   Hearing Manager /

                                  Gérant de l'audience

Steve Millington                  Legal Counsel /

Anthony McIntyre                  Conseillers juridiques





HELD AT:                          TENUE À:


Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)


March 11, 2008                    Le 11 mars 2008


- iv -





                                                 PAGE / PARA




BCE Inc.                                          220 / 1322








Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Tuesday, March 11, 2008

    at 0930 / L'audience débute le mardi 11 mars 2008

    à 0930

1192             THE CHAIRPERSON:  Good morning.

1193             Len, can you hear me?

1194             COMMISSIONER KATZ:  Yes, I can.

1195             Yes, I can hear you, Konrad.

1196             THE CHAIRPERSON:  As you can see, we are having our colleague in Thailand.  It is probably midnight there now, but he has kindly gotten up for this hearing.

1197             COMMISSIONER KATZ:  I can hear you loud and clear, Konrad.

1198             THE CHAIRPERSON:  Wonderful.

1199             All right.  Madam Secretary, can you open the meeting?

1200             THE SECRETARY:  Thank you, Mr. Chairman.

1201             Bonjour, et bienvenue à tous.  My name is Cindy Ventura and I am today's Hearing Secretary.

1202             We are today resuming the public hearing to consider the application by BCE Inc. on its behalf and on behalf of certain of its affiliates, licensees of broadcasting and distribution undertakings, the applicant, seeking authority for the transfer of effective control of the applicant to a corporation to be incorporated, BCE Holdco.

1203             Chairing today's hearing is Chairman Konrad von Finckenstein.  Joining him are: Vice‑Chairman Broadcasting, Michel Arpin; and Vice‑Chairman Telecom, Leonard Katz, who is joining us via videoconference from Thailand.

1204             Please note that there is a small time delay via the videoconference and we would ask that you please keep this in mind when speaking to Mr. Katz.

1205             Before beginning, I would ask that when you are in the hearing room you please turn off your cell phones and blackberries, as they cause interference on the internal communication systems used by our translators.  We would appreciate your cooperation in this regard throughout the hearing.

1206             Please note that Commission Members may ask questions in English or French.  You can obtain an interpretation receiver from the technician sitting across the room from me and to the left.

1207             Le service d'interprétation simultanée est disponible durant cette audience.  L'interprétation anglaise se trouve au canal 5, et l'interprétation française au canal 6.  Vous pourrez consulter les documents qui font partie du dossier public à l'arrière de la salle d'audience.

1208             Please note that the full transcript of these proceedings will be made available on the Commission's website shortly after the conclusion of the hearing.

1209             Now, Mr. Chairman, we are ready to begin.

1210             THE CHAIRPERSON:  Okay.  Thank you.

1211             Good morning, Mr. Leech and company.

1212             MR. LEECH:  Good morning, sir.

1213             THE CHAIRPERSON:  Do you want to say anything by way of introduction?

1214             When we last resumed, we put this over so that you could address primarily the issue of the Ontario pension authorities and their pool of the Morcague arrangement.  You have also filed some other documents since then.

1215             So maybe you can put things into perspective for us.

1216             MR. LEECH:  Certainly, Mr. Chair and Commissioners.

1217             I don't have any formally prepared remarks.  But as you said, when we adjourned we were asked to provide documentary evidence from the Financial Services Commission of Ontario that the ownership structure we were employing to acquire BCE complies with certain provisions of the Pension Benefits Act.

1218             Second, we were asked to satisfy certain undertakings made during the course of the hearing and to respond to a number of questions, particularly surrounding valuations done by KPMG.

1219             Finally, we were asked to file amendments to our agreements to reflect the changes that we had advanced during the second day of hearings in response to the 12 governance issues raised by the Commission.

1220             With regard to the first matter, FSCO has provided us with a confidential letter, which we in turn have provided to the CRTC in confidence, that confirms that the structure to be employed complies with the relevant provisions of the Pension Benefits Act.

1221             I believe the Commissioners have a copy of that.

1222             Second, we have filed with staff the answers to the various undertakings, as well as responses to the questions, particularly responses from KPMG regarding valuation.

1223             Finally, we have provided the Commission staff with the amendments to the various governance agreements which indeed reflect the changes which we had advanced during the second day of hearing.

1224             We are here to respond to any questions that those documents might...

1225             THE CHAIRPERSON:  All right.  First, valuation questions.  Those were mainly posed by Mr. Katz.

1226             I believe you addressed all our concerns, but, Len, do you want to comment on that?

1227             COMMISSIONER KATZ:  Mr. Chairman, I believe we have received all the responses to questions sufficient to allow us to proceed with our analysis and deliberations.

1228             THE CHAIRPERSON:  All right.

1229             Then FSCO.  I have here the letter dated March 10th addressed to you, which you kindly provided to us.

1230             I must say I am astounded.  The interpretation that FSCO puts on these things is not the one that either I as a lawyer or former judge would put on that legislation and regulation.

1231             But, be that as it may, it is their position and we are here to judge whether you are in control are not.  We just wanted to make sure that what you are doing is in accordance with Ontario pension law, and clearly the Superintendent feels that it is.

1232             However, I have some issue as to the confidentiality of this.  This is a huge issue for you and for everyone.  We are talking about a large transaction.

1233             I notice that FSCO in its letter says that this is based on the understanding that Mr. Morgan McCague and McCague Corporation did not receive any consideration from you and that the price for the shares was paid for by him and not by Teachers'.

1234             Now, unfortunately Mr. McCague is not here, but I'm sure we can have an affidavit from Mr. McCague to that effect, so that in effect all the costs for this transaction, the acquisition of the shares and the costs of entering this arrangement, et cetera, are borne by him and not by Teachers'.

1235             MR. LEECH:  The acquisition of the shares are borne by him, sir.

1236             MR. LAMPE:  Correct.  There is a provision that is noted in the confirmation agreement and the term sheet that certain out‑of‑pocket expenses related to legal and accounting costs in particular he is going to be reimbursed for.

1237             But in terms of an affidavit confirming the understanding reflected in the fiscal letter, that he hasn't received anything for the shares, I'm sure we can get that.

1238             THE CHAIRPERSON:  So from that I understand that you paid the costs for him entering into this arrangement, his legal costs or accounting costs or whatever there is?

1239             MR. LAMPE:  There will be reimbursement for it.  He has not been paid at this point, as I understand it.

1240             THE CHAIRPERSON:  He will be.

1241             MR. LAMPE:  Yes.

1242             THE CHAIRPERSON:  All right.  Fine.

1243             Let's just clarify exactly in the affidavit from him what he is being reimbursed for and whatnot.

1244             MR. LAMPE:  Certainly.

1245             THE CHAIRPERSON:  Second, the second‑last paragraph says:

"I am providing this letter in confidence to Teachers' on the understanding it may be shared with the CRTC and Industry Canada and used or disclosed as those organizations require."

1246             Both our staff and we have read carefully through it, and as far as I know everything in that letter is on the public record except the nominal consideration that Mr. McCague paid for the shares.

1247             So why do you claim confidence?  What is it in this letter that is so essential and would amount to business confidential information that, if disclosed, would be of damage to Teachers'?

1248             It says here:

"The FSCO letter contains highly competitive, sensitive information regarding Teachers' analysis and approach with regard to the pension legislation."

1249             As I say, I don't understand this.  Maybe you can explain it to me.

1250             MR. LEECH:  I will endeavour to, Mr. Chair.

1251             I think first of all, as the letter points out, the Financial Services Commission of Ontario does not have the authority to issue rulings, advance rulings, et cetera, and they are not really set up to deal with public hearings, much the same as the CRTC is.

1252             Their analysis and the conclusion was provided to us in confidence, with the right to share it with the Commission, which we have.  And it is our belief that we should respect the request of that regulator.

1253             Second, I think much of the analysis is based on ‑‑ there is, as you point out, some parts of the analysis that indeed were provided to the Commission in other documents to be held in confidence and, in our view, it isn't so much the analysis that is relevant in this case, rather it is the conclusions that Teachers' is in compliance with the Pension Benefits Act.

1254             Third, the next point with regard to proprietary, we do live in a competitive world and there are a number of pension plans who employ structures similar to this and there are some that don't.  So it is not in our interest from a competitive perspective to actually have the reasoning in the analysis that is proprietary to us out in the public domain.

1255             I think an additional point is there has been a lot of publicity around this point and in some cases basically ‑‑ and I am speaking from a personal point of view ‑‑ when editors of newspapers say that Teachers' are raping people, using expressions like that, I think we have reached a new low in journalism, and quite frankly I believe that this could possibly fuel another round of such bad conduct.

1256             I think, finally, we do have ‑‑ "we" as Teachers' are caught in the middle between a federal regulator and a provincial regulator and, as I said, we believe that we should respect the wishes of the provincial regulator who has asked for it to be held in confidence.

1257             THE CHAIRPERSON:  I am all for protecting confidentiality for things that are truly confidential, and I certainly don't want to do any harm to Teachers' either in terms of material or in terms of reputation.  But the entire scheme that you ‑‑ I'm sorry, I don't mean to target ‑‑ the mechanism that you are employing in order to comply with the Ontario legislation, which of course incorporates the federal rules, it is open.  It's in materials filed in this hearing which are on the record.  It exactly sets this out and we discussed it, the share structure, who was holding what, et cetera.

1258             We went carefully through this letter, as I say.  The only thing I couldn't find out was the share price.

1259             I will gladly block out the share price because that is not relevant.  But the rest of it I think we as an agency which values transparency, we want to show that we did look at it and this is what ‑‑ this is after all the regulator of Ontario.  Even if he doesn't have the formal authority, he states quite unequivocally that in his view this confirms with ‑‑ what does it say here?

"I can confirm that in closing the share structure of the proposed acquisition by Teachers' of BCE as set out in the proposed position will comply with the requirement of section 11(1) of Schedule 3 of the Pension Interest Legislation."

(As read)

1260             I mean, there is no qualifier in there, nothing.  So I really don't think I have heard anything why we shouldn't disclose this.

1261             Unfortunately, you are quite right, the press may put some wrong interpretation on it, but they may do it on my words and your words, et cetera.  That is part of living in a free society.

1262             So I just want to put you on notice it is our intention to make that letter public, with the share price blacked out.

1263             Second, I have looked ‑‑ Michel, please.

1264             COMMISSIONER ARPIN:  I could emphasize that, I think, you said, Mr. Leech, that there has been a lot of talk in the media regarding the arrangement with Mr. McCague, but the very fact that we were ‑‑ this letter was to be held in confidence will make much more noise than if it is released.

1265             At least, that is my view.

1266             THE CHAIRPERSON:  All right.

1267             You filed all sorts of documents in response to our request to ensure that control is in the hands ‑‑ and I appreciate that, and I think by and large they have been resolved.

1268             There are a couple of items that I wanted to confirm with you, but I want to put them on the table and give you some time to reflect on it and then we will resume.

1269             Number one is the size of the Board.

1270             I understand right now it is 13.  What I want to know:  Is this frozen or is there a possibility of increasing it?

1271             I can tell you, the way everything is ‑‑ if it is frozen, it makes it a lot easier because then we know how things are working out, who has control, et cetera.

1272             Second the selection of the Chairman.

1273             Is the Chairman being selected from the Board Members or can he be a non‑Board Member?  The agreement is not clear on that.

1274             Third, you have very clearly answered the whole issue of who is a Canadian for counting, for voting, et cetera, and we accept what you have put forward.  But the agreement is not clear as to what happened when Teachers' reduces its share beneath the two thresholds that you suggested.

1275             Who gets the vote that Teachers' had there beforehand?

1276             What happens then to the Executive Committee?

1277             What happens to the Nominating Committee for independence when Teachers' reduces its shares or that they lose either one or two of the Directors?

1278             Last, I don't think the agreement is clear as to what happens to the CEO.  You have right now suggested that the CEO be Mr. Cope.  If, for argument's sake, Mr. Cope gets a wonderful offer from down south and leaves, then as far as I know you have this Board of 12 people, six and six.  There is a possibility of a tie.  How would such a tie be resolved?

1279             I presume the logical answer would be to give Teachers' a second vote, but I leave that to you.

1280             Last, most importantly there is this whole concept of the second independent director being subject to veto right by Teachers'.

1281             Frankly, to us that doesn't make sense.  We don't know what an independent subject to veto right is.  Thinking back and forth ‑‑ and that is one of the reasons I asked you to be here, Mr. Masiello ‑‑ it strikes us the logical thing is having one independent and having six Teachers' votes.  Then everything works and we can be assured at any point in time, under whatever scenario you make, that in effect Canadians are in control.

1282             On the other hand, you as the principal investor from the States, with your colleagues, the CEO and the independent, if you feel very strongly on one issue you can outvote Teachers' and therefore can protect your investment which presumably is your primary interest.

1283             So trying to balance the interests that we have to see that Canadians are in control against your very legitimate interest of ensuring that the investors' interest is protected strikes me that the Solomonic balance would be that way.

1284             So I wanted to put that on the table and wanted to hear your comments on it.

1285             Mr. Katz, I believe you had one more issue that you wanted to raise.

1286             COMMISSIONER KATZ:  I hope it's just a cosmetic one, but if I ask you to take a look at Appendix B, the first paragraph below section 1 where it reads "For greater certainty...", the next sentence:

"When financial advisory services are requested to be provided by the advisers pursuant to this agreement..."

1287             I am just wondering what the significance of the three words "requested to be" are, because my understanding is it is the advisers that are actually undertaking the financial advisory services.

1288             So I think it reads better if the words "requested to be" are removed from that sentence, unless there is some significance to those words, Mr. Leech.

1289             MR. LAMPE:  There is no difficulty taking out those words if that clarifies things.

1290             THE CHAIRPERSON:  One last point of clarification, more than a question, is for the veto events you have raised the ceiling to $110 million.  I think that is absolutely the right number for the broadcast assets.

1291             I think, as you know, you also need approval from Industry Canada and whether the $110 million is the right number for the overall transaction, i.e., for the non‑broadcast assets, obviously is something that Industry Canada has to decide.

1292             I just wanted to make sure that you understand that by us excepting the $110 million, that is for the broadcast assets.  It has nothing to do with the rest of the transaction.

1293             Those are really the issues that we wanted to clarify with you.

1294             If my questions are not clear, please ask me now and I will clarify, otherwise I would suggest that we break for however long you need and give you time to consider those.

‑‑‑ Pause

1295             MR. LEECH:  Mr. Chair, if we could ask for a little more clarification on the last point about the independent director?

1296             THE CHAIRPERSON:  Yes

1297             MR. LEECH:  As we have contemplated, there would be five directors appointed by Teachers'.  There is the CEO who is a Canadian, and then the mechanism we set up is that one of the independent directors would indeed require the approval of Teachers' to in fact be appointed.

1298             Our understanding was that the concern or the issue raised by the Commission was that a Teachers' representative could be outvoted on that in the appointment of that person.  So we have set it up so that Teachers' had to be deferred to on that matter.

1299             What we have been endeavouring to do is strike that balance between governance in a scenario that ensures that Canadians are in control as opposed to Teachers' in control because, as we have said, Teachers' may not end up always being the controlling shareholder.  So we wanted to make sure that the situation was such that the majority of the Board was, at all times, Canadian, and we believed that we had hit that balance appropriately.

1300             So if we could address the nuance.

1301             THE CHAIRPERSON:  I appreciate that.  Frankly, we looked at it and we tried to think.  I think it was the classical situation of trying to be half pregnant.

1302             I don't know what an independent is who is dependent on a veto right of Teachers', you know, and so that doesn't make sense.

1303             So let's be clear what we are doing.

1304             I understand Mr. Masiello's need to protect his investors and, as I pointed out, I think he can do that.  He has to sway the independent.  Let's assume he has a difference of view between Teachers'.  He persuades the CEO and the one independent, he can clearly outvote Teachers'.

1305             But other than that I think, you know, Teachers' as the Canadian owner, is an equity majority holder, is controlling the votes, which it does via McCague, should be the one that holds.  I think this halfway house frankly doesn't cut it for us.

1306             So I just wanted to leave that with you and let you comment on it and we will obviously see.  Maybe we missed something, and I wanted to give you the opportunity to put your views on the table.

1307             MR. LEECH:  All right.

1308             THE CHAIRPERSON:  So if that's the only one, it is now 10:00.  Why don't we resume at 11 o'clock.

1309             That is enough time for you?  If you want to, we can make it in the afternoon.  I leave it up to you.

1310             MR. LEECH:  I think 60 minutes should be sufficient for us to be able to respond, sir.

1311             THE CHAIRPERSON:  All right.

1312             Then let's resume at 11 o'clock.  Thank you very much.

1313             MR. LEECH:  Thank you.

‑‑‑ Upon recessing at 0953 / Suspension à 0953

‑‑‑ Upon resuming at 1100 / Reprise à 1100

1314             THE CHAIRPERSON:  They want more time to think about it, so we will have to wait a bit more.

1315             MR. KATZ:  Thank you.

‑‑‑ Upon recessing at 1102 / Suspension à 1102

‑‑‑ Upon resuming at 1104 / Reprise à 1104

1316             THE CHAIRPERSON:  Okay, Madam Secretary.

1317             THE SECRETARY:  Thank you, Mr. Chairman.

1318             Just a quick announcement.  For the record, we wish to inform you that an abridged version of the letters submitted by the Applicant from the Financial Services Commission of Ontario, dated March 10th, 2008, has been added to the public file of BCE's application.

1319             Copies are available at the public examination table at the back of the room.

1320             Thank you, Mr. Chairman.

1321             THE CHAIRPERSON:  Mr. Leech.


1322             MR. LEECH:  Thank you, Mr. Chairman.

1323             You asked us before the break to address five issues:  the size of the Board; the second being the Chairman of the Board; the third being mechanisms with regard to Board member selection as Teachers divests some of its positions in the future, possibly; the fourth being matters around the selection of the CEO; and the fifth being matters around the independent director.

1324             I will handle them in that order, sir.

1325             THE CHAIRPERSON:  Okay.

1326             MR. LEECH:  With regard to the size of the Board, it was always our intention ‑‑ and we will undertake to put it into the agreements ‑‑ that the Board be frozen at 13 until such time as the Company goes public.  At that time, I think, we may want to increase the Board for independents, or whatever, but we have no difficulty in making that change.

1327             With regard to the Chairman of the Board, we have always agreed that he or she would be Canadian, and not designated by Providence, Madison Dearborn or Merrill Lynch.

1328             And we will answer the question:  Yes, the Chairman will be somebody who will be selected from the 13 members of the Board.

1329             With regard to the mechanism with respect to Teachers reducing its investments, the mechanism right now, and which we propose, is that the designated directors, or the former designated directors' positions that Teachers held would become independent members of the Board, subject to Teachers' final approval.

1330             If you go through the mechanics, Teachers will always have two designees on the Board until such time as its investment is reduced below $225 million.  So from $4 billion all the way down to $225 million it will always have two members on the Board, that it is designating.

1331             That will give it sufficient membership to be able to man the Executive Committee, where there are two nominees, and also the Nominating Committee with its one nominee.

1332             THE CHAIRPERSON:  I'm sorry, I am not sure I understand.

1333             Teachers will always have two members, so the two Teachers' members will always be on the Executive Committee, if I understood it, and they also will be part of the Nominating Committee for independents.

1334             Is that what you said?

1335             MR. LEECH:  Correct, sir.

1336             THE CHAIRPERSON:  What about when Teachers goes ‑‑

1337             I guess you are going to come to it, are you?

1338             What happens to the Teachers' nominee that they will lose, because they will decrease the percentage over time?

1339             MR. LEECH:  We start with five, and as we reduce our interest, those nominees go into the ‑‑

1340             THE CHAIRPERSON:  Independent group.

1341             MR. LEECH:  Yes, they become independent directors, subject to Teachers' final approval.

1342             So that, at the end of the day, Teachers will always have two designees on the Board, until such time as its investment goes below $225 million.

1343             The practicality of that is that either Teachers has sold its position to somebody else, and it will likely be in front of the Commission, or it is in the situation of a public offering and Teachers has reduced its position in the company.

1344             With regard to the Chief Executive Officer, the mechanism is that the CEO is chosen by the Board.  He or she is not chosen by any one shareholder.

1345             Our belief is that the Board would always act ‑‑ and we believe in fostering consensus, et cetera, moving forward.  However, in the very unlikely eventuality that, due to the absence of the CEO, you have a tie vote so to speak ‑‑ and it could be a tie vote of Canadians versus non‑Canadians, or it could be just a tie vote of six versus six ‑‑ it doesn't matter whether they are Canadian or not ‑‑ in that rare circumstance, we would vest with the Chairman of the Board the right to cast a casting vote to break that, as I say, rare eventuality.

1346             THE CHAIRPERSON:  Just to cover all eventualities, what if the CEO and the Chairman are one and the same person, and they leave and you still have your tie?

1347             MR. LEECH:  Teachers fought that war in Canadian governance, sir, why the Chairman and the CEO should be very different people.

1348             That will not happen as long as we are there.

1349             THE CHAIRPERSON:  Still, I think you should have a prohibition.

1350             Are you going to put into the agreement that the CEO can't be the Chairman?

1351             MR. LEECH:  Yes.  We will put into the agreement that the office of the Chairman and the office of the CEO will be different people.

1352             We would like to put that in every bank board, as well as all other companies.

1353             With regard to the final matter, I would like to review where we came from, where we are, et cetera.

1354             When our governance structure, or the structure that we proposed was negotiated over the past 12 months, we believed, and we still believe that the original proposal in our original application in front of the Commission ensures that a majority of the Board is always Canadian, and that the Board is Canadian controlled.

1355             As I said, it was highly negotiated over the past 12 months and, in our view, it complies with the requirements of the directive, and, also, it struck the appropriate balance from a governance perspective amongst shareholders who are investing substantial sums of money.

1356             To review what that was, there was a Board of 13, and there were 10 directors who were "designated".  Fifty percent were designated by the Canadian shareholders, and 50 percent were designated by the non‑Canadian shareholders, which roughly equalled their proportionate equity investment.

1357             The 11th member was the Chief Executive Officer, who was Canadian.

1358             Then we provided for two independents, who would be selected by a committee of three, the majority of whom were ‑‑ are Canadian, and, as we testified at the time, we always intended that at least one of those independents would be Canadian.

1359             So the original structure we brought forward contemplated seven out of 13 always being Canadian.

1360             In response to questions and issues raised two weeks ago, we re‑caucused with our partners, and after extensive negotiations, which went through the night, and a careful examination of the impact that modifying any of the governance structures and rights would have on our agreements, we agreed that one of the independents would always be Canadian, and not only would they continue to be picked by a committee of three, two of whom would be Canadian, Teachers would have the final say on that individual.

1361             The effect of all of that is that, at most, only five out of 13 directors are in fact designated by non‑Canadians, and we believe that reinforces the Canadianness of the structure.

1362             So in Teachers' view, and in the Consortium's view, requiring that Teachers has a sixth designate, we believe, would destroy the governance balance which we have achieved and which was carefully constructed over the last 12 months.

1363             We also don't think it would stand the test of time, as Teachers took the opportunity to reduce its position in the future.

1364             In summary, we believe that we were in compliance with our original application, and we believe that we have modified it to reinforce the Canadianness, and that at all times seven out of 13 directors will be Canadian.

1365             THE CHAIRPERSON:  So, basically, you are not prepared to move on that point.

1366             MR. LEECH:  We believe, as I said, Mr. Chair, that the Consortium, and Teachers, on its own, have looked at it.  We looked at the construct that we came up with over the last 12 months, and we believe that we pushed it very hard and have landed where we are landed, yes.

1367             THE CHAIRPERSON:  Okay.  I presume you will furnish us with a written version of the four points that you mentioned just now.

1368             MR. LEECH:  Yes.

1369             THE CHAIRPERSON:  All right.

1370             I believe, Mr. Katz, that you had another question.

1371             We were speaking during the break.

1372             MR. KATZ:  No, I think it was answered, Mr. Chairman.

1373             THE CHAIRPERSON:  Okay.  Then we will have to look at the totality of what you have proposed, look at the valuation answers you have given us, and, as I mentioned to you earlier, we will endeavour to render a decision before the end of the month.

1374             MR. LEECH:  Thank you, sir.

1375             THE CHAIRPERSON:  Commissioner Arpin, is there anything you want to add?

1376             COMMISSIONER ARPIN:  Yes, Mr. Chairman.

1377             In the eventuality that the Commission were to deny your application, what would be the implication for BCE of a denial by the Commission?

1378             A denial will only touch the broadcasting assets, so what will be the implication?

1379             MR. LEECH:  It would basically mean that one of the conditions of the Consortium's agreement with BCE would not be achieved ‑‑ would not be met.

1380             COMMISSIONER ARPIN:  So, then, the transaction could not occur.

1381             MR. LEECH:  I think I will repeat the same thing.  One of the conditions of the agreement will not be met, sir.

1382             COMMISSIONER ARPIN:  Okay.

1383             THE CHAIRPERSON:  You appreciate, of course, that our approval can be subject to conditions, and that is one of the things that we have to take into consideration.

1384             I think we have covered everything that we needed to.  Thank you very much.

1385             Madam Secretary?

1386             MR. McINTYRE:  I would like to read into the record the undertakings.

1387             The first is an affidavit of Mr. McCague setting out any compensation received.

1388             The second is to make the change to the Advisory Services Agreement.

1389             And the third is to amend the agreements to provide that the Board will be frozen at 13, to provide a casting vote to the Chair, and to provide that the CEO cannot be the Chair.

1390             We would like those undertakings by Friday, March 14th, at noon.  That's all.

1391             THE SECRETARY:  This completes the agenda of this Public Hearing.

1392             Thank you, Mr. Chairman.

1393             THE CHAIRPERSON:  I see someone standing, Madam Secretary.

1394             MR. FULLARD:  (Speaking off microphone.)

1395             THE CHAIRPERSON:  Go to a microphone, identify yourself, and tell us what point you want to raise.

1396             MR. FULLARD:  My name is Brent Fullard, and I am with Catalyst Asset Management.  We intervened before the CRTC on the 25th, and we also intervened before the Financial Services Commission of Ontario by way of letter dated March 8th.

1397             I would like to raise two points.  One is your response, Mr. Chairman, that you were astounded by their approval.  I share that level of astoundment.

1398             Also, I would like to make a comment.  I don't want to unfairly quote him here, but Mr. Leech this morning said that the FSCO doesn't have the authority to grant these types of approvals.

1399             THE CHAIRPERSON:  But we are dealing here with approval under the Broadcasting Act.

1400             I have asked Teachers for the recommendation from the FSCO and they have given that.  So that issue, as far as I am concerned, is not my issue, it is their issue, and they have spoken.

1401             Are you making a submission on the Broadcasting Act?

1402             MR. FULLARD:  Yes, I am, insofar as the point is that you, as a regulatory body, are deferring to the FSCO on a critical issue, on which it is acknowledged that they don't have the authority to bind.

1403             I am simply saying that the letter that was submitted dated March 10th makes reference to the Catalyst submission to the FSCO, and given that the FSCO approval is a complete black box exercise, and the result is one that many find astounding, I am asking the CRTC to make our submission to the FSCO something which is on the public record, so that the contravening point can be made known to the broader public.

1404             THE CHAIRPERSON:  But that is not before me.  Before me is Teachers and whether Teachers will be in control of BCE.

1405             The point was raised that Teachers may or may not be in compliance with the Ontario legislation.  The Ontario pension authorities have spoken.  In their view, this is in compliance.  It is their call, not mine.

1406             So I am not going to second‑guess them.  I wanted to have assurance from them.  I pointed out to you that I found the assurance astounding, but I am not a pension expert and they are.  If they feel that it is in compliance with their legislation, it's their call.  If they feel that they should step ‑‑

1407             They are now aware of the issue.  It has been put to them, and they have spoken on it.  So, as far as I am concerned, that is not before me.  Before me is the control of BCE by Teachers.

1408             MR. FULLARD:  However, you are deferring to a body that, by their own acknowledgement, and by the Applicant's acknowledgement, doesn't have the authority to make these kinds of statements.

1409             THE CHAIRPERSON:  You can make your idea public.  That is up to you, but it is not going to be part of this record, because you didn't make it to me, and it isn't relevant to me.

1410             What I asked Teachers to do was to present evidence from the Ontario pension authority that they are aware of it and that they are in compliance, and they said that they are.

1411             MR. FULLARD:  Right, and the evidence they are submitting makes reference, by incorporation, to Catalyst, and I don't want the ‑‑

1412             THE CHAIRPERSON:  You are talking about a third party, and I don't know who the third party is.

1413             You are telling me that you are with Catalyst ‑‑

1414             MR. FULLARD:  Yes, I am.

1415             THE CHAIRPERSON:  Still, it is irrelevant to our proceedings.  I am sorry, I am not going to continue.

1416             Thank you.

‑‑‑ Whereupon the hearing concluded at 1122 /

    L'audience se termine à 1122






____________________      ____________________

Ada DeGeer-Simpson        Jean Desaulniers




____________________      ____________________

Fiona Potvin              Sue Villeneuve








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