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| CRTC approves CanWest’s purchase of Alliance Atlantis broadcasting companies |
| Posted
on Thursday, December 20, 2007 - 09:05 PM |
The Canadian Radio-television and Telecommunications Commission (CRTC) today approved CanWest MediaWorks Inc.’s (CanWest) acquisition of the broadcasting channels owned by Alliance Atlantis Broadcasting Inc. (Alliance Assets).
"We are satisfied that this transaction meets the requirements for Canadian control both in law and fact," said Konrad von Finckenstein, Q.C., Chairman of the CRTC. "In examining the application, we wanted to be certain that this transaction is consistent with the policies set out in the Broadcasting Act and beneficial to the Canadian broadcasting system as a whole."
Before it can approve any transaction, the Commission must determine whether a broadcasting company will be owned and controlled by Canadians. The deal under consideration is a two-step transaction. First, CanWest, through a subsidiary called CanWest Investments Co. (CanWest Investments), will acquire the Alliance Assets. CanWest has confirmed that it will hold 35 per cent of the total equity investment and 66 2/3 per cent of the voting shares of CanWest Investments, with Goldman Sachs Capital Partners holding the balance of both equity and voting shares.
Secondly, CanWest is contractually committed to merge its existing broadcasting properties into CanWest Investments by 2011, thereby easily increasing its investment to over 50 per cent. In the interim, CanWest will manage both the Alliance Assets and its existing broadcasting properties in tandem. Thus, taking into account the entire transaction, CanWest’s share of the overall equity and voting shares does not cause concern to the Commission.
The Commission also expressed concern over whether CanWest would have control in fact of CanWest Investments given the corporate governance arrangements. In response, CanWest made several changes to the proposed governance structure, notably to the quorum requirements, veto rights and liquidity rights. Moreover, programming decisions will remain under CanWest’s control. The Commission is satisfied that these changes ensure the broadcasting companies will remain under Canadian control at all times.
In its decision, the Commission upheld the well-established policy that tangible benefits stemming from a transaction must be fulfilled within seven years in approximately equal increments. CanWest will allocate $136.6 million to programming initiatives, including Canadian drama, documentary productions, and news and public affairs. Many of the programs flowing from these initiatives will be produced by independent production companies.
In addition, CanWest has committed $14.6 million toward social and industry initiatives, including mentorship and internship programs, and support for arts and diversity festivals.
Today’s decision follows a public process that included a public hearing, which began on November 19, 2007.
Broadcasting Decision CRTC 2007-429
The CRTC
The CRTC is an independent, public authority that regulates and supervises broadcasting and telecommunications in Canada.
Reference document: Broadcasting Notice of Public Hearing CRTC 2007-11
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