CTV told to sell Citytv stations
Jun 08, 2007 02:01 PM
Julian Beltrame
Canadian Press
OTTAWA – The federal broadcast regulator is allowing CTVglobemedia to buy broadcaster CHUM Ltd. but only if the broadcaster sells five Citytv stations, including its flagship operation in Toronto.
In a decision Friday, the Canadian Radio-television and Telecommunications Commission gave CTVglobemedia 30 days to present a plan for selling the Citytv stations.
CTVglobemedia’s CTV division already operates 21 conventional television stations across Canada and has interests in 15 specialty channels.
CTVglobemedia had originally planned to buy CHUM Ltd. in a $1.7-billion deal and keep the Citytv television stations, specialty television channels and radio stations.
Later, it agreed to sell CHUM’s A-Channels to Rogers Communications (TSX: RCI.B), but that deal was contingent on CTVglobemedia getting CRTC approval of the larger deal to buy CHUM.
In its announcement, the CRTC said the purchase would be “inconsistent” with the regulator’s policy for CTVglobemedia to operate more than one conventional television station in one language in a given market.
“The purpose of this policy is to maintain diversity of voices within the Canadian broadcasting system,” CRTC chairman Konrad von Finckenstein said in a statement.
“Some exceptions to the policy were granted in the past for failing stations in secondary markets. CTVgm asked for the exception using arguments based upon competitive equality and the impact of new media. However, the commission was not convinced by CTVgm’s arguments.”
In a separate statement, CTVglobemedia said the company “is carefully reviewing today’s CRTC decision and will only comment after its review is complete.”
The Citytv stations in Toronto, Vancouver, Edmonton, Calgary and Winnipeg are considered among the most important assets in the CHUM chain, which also include 33 radio stations, 21 specialty cable channels.
If the stations are put on the market, broadcasters such as Rogers, Quebecor Media (TSX: QBR.B), CanWest Global Communications (TSX: CGS) and perhaps others might be interested in bidding for them.
The CRTC’s decision pleased Friends of Canadian Broadcasting, a group that often weighs in on matters of public policy in the industry.
Friends had asked the regulator during the review process to make approval of the CHUM deal conditional on the sale of the Citytv stations.
“Today’s decision is good for viewers, advertisers and competition and diversity in the Canadian broadcasting system,” said Friends spokesperson Ian Morrison in a statement.
“Had the commission approved this transaction as proposed there is good reason to expect that it would have created a duopoly in private conventional English TV: a duopoly in which CTV, would have enjoyed a permanent structural advantage over the other, CanWest Global. Such an outcome would be a negative development for the broadcasting system: for markets, competition and viewers.”
In fact, it had become increasingly clear that the CRTC commissioners weren’t looking favourably on one company owning both Citytv and CTV stations in key markets.
During public hearings in April, one CRTC commissioner pointedly asked CTVglobemedia chief executive Ivan Fecan why he had not sold off the Citytv network and kept the A-Channels, most of which are not in cities with an existing CTV station.
Fecan had argued that the Citytv stations were “teetering at the financial edge” and needed CTVglobemedia’s deep pockets to have the resources to return to their original mission of providing provocative, innovative and edgy programming to a younger audience.
Other CTVglobemedia investments also include the Globe and Mail newspaper and an interest in Maple Leaf Sports and Entertainment, which owns the Toronto Maple Leafs, Toronto Raptors and the Air Canada Centre. The company also has a stake in Dome Productions, a mobile high-definition TV production company.
CTVglobemedia is owned by a group that includes the billionaire Thomson family’s private Woodbridge Co., Torstar Corp. (TSX: TS), owner of the Toronto Star, the Ontario Teachers’ Pension Plan and telecom giant BCE Inc. (TSX: BCE).
