CTV RAISES ANTE TO GAIN APPROVAL FOR CHUM DEAL Grant Robertson – Globe and Mail The owners of CTV Inc. put an additional $27-million on the table yesterday in a last-minute effort to have their proposed takeover of rival broadcaster CHUM Ltd. approved by federal regulators without any major changes to the deal.
CTVglobemedia Inc. agreed to a pair of key demands made by takeover critics this week, offering to increase payments to support Canadian programming initiatives by 26 per cent.
That decision, announced yesterday during CTVglobemedia's closing arguments at hearings into the CHUM deal, would boost the payments to more than $130-million, from an earlier proposal of $103.5-million. The funds, which are used to support Canadian TV and radio programming, are required any time a broadcaster changes hands in Canada to ensure that consolidation doesn't cause undue harm to the production industry.
Until yesterday, CTV was valuing the CHUM deal at $1.4-billion, excluding debt, however the Canadian Radio-television and Telecommunications Commission told the network to account for roughly $300-million worth of CHUM debt. That prompted an increase in the payments, which are set at a percentage of the acquisition price.
In making the overture, Ivan Fecan, CTVglobemedia's chief executive, called the increase "a lot of money" and urged the CRTC to approve its takeover of CHUM - without forcing it to sell off any major assets.
CTVglobemedia, which also owns The Globe and Mail, bought CHUM's collection of 33 radio stations, 21 cable specialty channels and two conventional networks - A Channel and CITY-TV - last summer.
In a bid to ease concerns about concentration of TV ownership, CTV is selling 10 stations, including the six-station A Channel network to Rogers Communications Inc. for $137.5-million.
But the company wants to keep the five-station CITY-TV network, which has outlets in Vancouver, Calgary, Edmonton, Winnipeg and Toronto. To do that, it will need to be exempted from CRTC rules that state broadcasters can only own one station in any given language in a single market.
If the regulator isn't comfortable with the deal, it can order CTV to sell the CITY-TV assets.
The regulator has granted such exemptions before, although not for five cities at once. Broadcasters can get permission to acquire a second station by arguing that the business is under financial stress without their help.
Mr. Fecan said CITY-TV's stations "are going broke" and need CTV's financial backing. His comments came after critics of the CHUM deal called on the regulator to force CTVglobemedia to pay higher benefits on those stations, if it is allowed to retain them.
"We agree to this," Mr. Fecan told the CRTC yesterday, noting that a boost in the payments to 15 per cent of the value of the CITY-TV stations, instead of 10 per cent, will add another $6.5-million to the total package.
Mr. Fecan told the CRTC Canadian media companies must get bigger to compete with unregulated global players, such as Internet giants Google and Yahoo, which are attracting a big share of advertising dollars.
The impact of such Internet players on Canadian advertising markets is something the regulator must deal with, CRTC chairman Konrad von Finckenstein acknowledged. "This is obviously the issue of the day - for you, for us as regulator, and not only for today," he said. |