CRTC likely to approve CTV/CHUM deal

by GRANT ROBERTSON, Globe and Mail

Canada's broadcast regulator signalled yesterday that the $1.4-billion takeover of CHUM Ltd. is likely headed for approval, even as Canada's public broadcaster called for the purchase by CTVglobemedia Inc. to be halted.

Speaking at regulatory hearings into the takeover of Toronto-based CHUM, Konrad von Finckenstein, chairman of the Canadian Radio-television and Telecommunications Commission, told opponents of the sale the CRTC is "not in the business of killing deals." Instead, he said the CRTC must ensure that consolidation within the television and radio sectors doesn't give any one company too much ownership of broadcasting markets.

CRTC commissioner Stuart Langford said the deal is no "slam dunk" for CTV, but trying to stop the sale of CHUM "is a mug's game, because it's just going to go to someone else if we deny it. What we have to wrestle over now is what conditions we can put on it, to try to achieve some of the same sort of goals."

His comments came as Richard Stursburg, CBC's vice-president of English Television, told the CRTC the deal should be cancelled, or CTV should be forced to liquidate CHUM'S CITY-TV network, otherwise it will hold too much of the Canadian TV market.

But the potential for the regulator to put strict restrictions on the sale, including a potential requirement that those key TV assets be sold, may threaten the deal if the terms prove too onerous for CTV's liking.

Executives with Toronto-based CTVglobemedia, which owns CTV and The Globe and Mail, were asked detailed questions at the hearings about how they would feel if a variety of scenarios unfolded, including if the company were forced to sell off CHUM's CITY-TV assets, which include stations in Toronto, Calgary, Edmonton, Vancouver and Winnipeg.

Executives also faced a long line of questions Monday about why CTV is holding on to the CITY-TV assets in the deal, while selling off CHUM's A-Channel network in smaller cities to Toronto-based Rogers Communications Inc.

Regulators told CTV the deal is difficult to approve with the CITY-TV assets, as it would give the company two local stations in five major cities, contravening CRTC policy. But if CTV owned the smaller A-Channel stations instead, the deal would face very few regulatory hurdles. The biggest opponent of the deal, CBC, called upon the regulator to either cancel the takeover, or force CTV to sell the CITY-TV network. Mr. Stursburg argued the takeover will give CTV a dominant position in the Canadian advertising market, allowing it to charge premiums and squeeze out other broadcasters. Another option the CRTC has indicated it could pursue is to impose stricter licence requirements on CTV - such as Canadian content and production spending - after the merger. However, that would likely not be enough to satisfy critics and rival broadcasters.

Mr. Langford said the regulator is contemplating what will happen to the various pieces of CHUM. Several people at the hearing took that to mean the CRTC is thinking about asking for another asset sale.

"That's what we're discussing, what will happen - and what will happen to the pieces," Mr. Langford said. "As the chairman [Mr. von Finckenstein] just said, this company is going to be sold, it's just to whom?"

When asked if the CRTC considers CTV to be the ideal buyer for CHUM, he responded: "We're not going to say that. I'd hate to see [CTVglobemedia CEO Ivan] Fecan up and dancing this early in the proceeding - So we'll keep the dancing till later."

In the event CTV doesn't like the CRTC's ruling, it can walk away from the deal, while a trustee administering the assets would be in charge of selling them off. A similar scenario would unfold if the CRTC does not approve the takeover and the trustee would run an auction.

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