GATINEAU – After months of waiting (it took CTV until almost Christmas to submit its application to the Commission to purchase CHUM Ltd.) the CRTC will hear the request at a public hearing beginning April 30th.
In July, Bell Globemedia (now CTVglobemedia) announced a $1.4 billion purchase of CHUM Ltd. from the Waters family ($1.7 billion if assumed debt is included). If approved, CTV will take ownership of the Citytv broadcast stations across the country, numerous popular specialty channels like MuchMusic, Space and Star! as well as 33 radio stations.
As for the secondary market A-Channels, CTVgm will sell those. Its application says TD Securities is flogging the stations (in Ottawa/Pembroke, London, Wheatley, Wingham, and Barrie Ont., and Victoria, B.C.) to prospective buyers. (And, persistent industry rumors have placed former Citytv supremo Moses Znaimer as an interested suitor.)
Other possible buyers include Quebecor Media, Rogers Media and Corus Entertainment, among others.
CTV’s application also says it will sell off CBC affiliate CKX-TV in Brandon, Man., Alberta’s ACCESS: The Education Station, analog specialty service Canadian Learning Television and category two digi-net SexTV.
It will retain the radio division.
As well, "CTVglobemedia is currently in discussions with certain parties with respect to the sale of CHUM’s 50% interest in MusiquePlus Inc., licensee of the MusiquePlus and MusiMax French-language music video analog specialty services," says the application.
CHUM owns half of the French stations with Astral Media, which is likely to take 100% control.
CTV also wants to sell its 33.3% interest in the analog specialty service, Outdoor Life Network, which it runs out of 9 Channel Nine. Currently, Rogers Media and Comcast own the other two-thirds.
The proposed tangible benefits package for the CHUM broadcasting undertakings involved in the current transaction amounts to $103.5 million. Of these benefits, approximately 74% would be allocated to television and 26% to radio.
CTVgm has proposed that 85% of the television benefits would be allocated to new incremental priority programming initiatives and the remaining 15% to incremental grants for social and industry initiatives. CTVgm is also proposing to allocate the programming benefits to creators as a ‘one-stop shopping’ opportunity for financing, development support and a direct pipeline to screens, rather than having the funds dispensed by a third party fund.
The company also proposed that 50% of its total radio benefits be allocated to the Radio Starmaker Fund and 33% to FACTOR. The remaining amount would be divided between Aboriginal Voices Radio, the Canadian Academy of Recording Arts and Sciences and a proposed "CHUM Music Fest" to be held at Canadian Music Week. CTVgm stated that its proposed radio benefits contributions is in line with the Commission’s established policy as detailed in Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006.
Considering the size and nature of the two companies, not to mention the TV Policy Review that happened in November and is currently being noodled about inside the CRTC, the Commission said Thursday it plans to talk about a lot more than just the purchase and said it may discuss the following:
* A review of the Commission’s common ownership policy
"In light of this proposed transaction, the Commission considers that this is the appropriate time to seek public comment on the effectiveness of the current policy. In addition to comments relating to the existing policy, the Commission is prepared to consider alternative mechanisms, including appropriate safeguards, which will better fulfill the Commission’s objectives of ensuring that Canadians receive a diversity of editorial voices within a healthy and competitive market," says the release today.
In its application, CTVgm addresses this a bit, saying: "Consistent with the distinct philosophy of the two brands, CTVglobemedia commits to ensure that, on a weekly basis, the priority programming to be aired on the Citytv Stations will be wholly separate and distinct from the priority programming to be broadcast on CTV stations. CTVglobemedia will also commit that no more than 10% of the overall programming aired on the Citytv Stations in any broadcast week shall duplicate that aired on CTV stations… CTVglobemedia will commit to maintain separate and independent news management and presentation structures as between Citytv and CTV in order to ensure continued diversity in news coverage."
* Ownership consolidation
"The Commission may also wish to discuss the potential impact of the proposed consolidation of two major broadcasters on the television market (i.e. market power that CTVgm could enjoy and the potential to adopt anti-competitive behaviour), and, examine various related ownership issues such as concentration of ownership, cross-media ownership (horizontal integration), vertical integration, license trafficking and tangible benefits," it said.
"(S)ize, in and of itself, is neither good nor bad – rather it is how it is used that determines whether it is in the public interest," reads the CTVgm application.
* Value of the transaction and its proposed benefits package
"The Commission may wish to discuss the value of the transaction (i.e. methodology, allocation between regulated and unregulated undertakings, divestiture of assets, proper allocation between radio and TV).
"Finally, the Commission may wish to discuss the proposed benefits package in terms of incrementality, acceptability, and proposals in respect of any benefits that may be found to be unacceptable," it continues. "The Commission, in applying its benefits test, has been consistent and rigorous in requiring that expenditures proposed as tangible benefits be: (1) truly incremental; (2) directed to projects and initiatives that would not be undertaken or realized in the absence of the transaction; and (3) generally required applicants to demonstrate that expenditures proposed as tangible benefits flow predominantly to third parties, such as independent producers.
"The Commission may also want to explore further whether the approach taken by CTVgm to its proposed television benefits package to be allocated over seven years is more beneficial to the broadcasting system than a proposal which would invest the equivalent total amount in capital funds to provide ongoing funding to Canadian programming."
