Courtesy of Broadcaster Magazine
December 22, 2015
The CRTC has approved an application by Golden West Broadcasting Ltd. for authority to acquire from L.A. Radio Group Inc. the assets of the English-language commercial radio station CJUV-FM Lacombe, Alberta, and for a new broadcasting licence to continue the operation of the station.
Golden West Broadcasting Ltd. filed an application for authority to acquire from L.A. Radio Group Inc. the assets of the English-language commercial radio station CJUV-FM Lacombe, and for a broadcasting licence to continue the operation of the station under the same terms and conditions as those in effect under the current licence. The Commission received an intervention in support of this application. Golden West is a corporation controlled by Mr. Elmer Hildebrand.
The review of ownership transactions is an essential element of the Commission’s regulatory and supervisory mandate under the Broadcasting Act. Since the Commission does not solicit competitive applications for changes in effective control of broadcasting undertakings, the onus is on the applicant to demonstrate that approval is in the public interest, that the benefits associated with the transaction are commensurate with its size and nature, and that the application represents the best possible proposal under the circumstances.
The Commission must consider the merits of each application based on the circumstances specific to the application. In addition, the Commission must be assured that approval of a proposed ownership transaction furthers the public interest as expressed in the objectives set out in the Act.
The public interest is reflected in the numerous objectives of the Act, including the Canadian broadcasting policy set out in the Act. In the context of this transaction, the Commission has paid particular attention to the following objectives of the Canadian broadcasting policy set out in section 3(1)
the programming provided by the Canadian broadcasting system should
(i) be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes;
(ii) be drawn from local, regional, national and international sources; and
(iv) provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern.
CJUV-FM has been operated by L.A. Radio Group since the station’s launch in 2006, and is the only local radio station in Lacombe. By acquiring the assets of CJUV-FM, Golden West would be a new entrant in the Lacombe radio market. However, given that it operates multiple radio stations in Alberta, Saskatchewan, Manitoba and Ontario, most of which are in small communities, Golden West has significant experience serving radio markets similar in size to Lacombe.
In its application, Golden West stated that it would strengthen CJUV-FM’s local character by adding local leadership, additional resources and overall direction. It would achieve synergies by centralizing administrative functions, which would generate more opportunities to seek out and gather local content, thereby increasing the amount of news and information provided to Lacombe. In the Commission’s view, these contributions by Golden West would benefit that community. Moreover, the station’s long-term viability would be secured by being part of a large and experienced group of radio stations. Accordingly, the Commission finds that the proposed acquisition is in the public interest as it would benefit both Canadians and the broadcasting system and further the achievement of the objectives of the Act.
The Commission’s decision that the proposed transaction is in the public interest is based on an assessment of the transaction in light of the regulatory framework set out above. In examining the proposed transaction, the Commission also focused on the following issues:
the value of the transaction;
the proposed tangible benefits package; and
the length of the new licence term to be granted in light of apparent non-compliance by CJUV-FM regarding Canadian content development (CCD) contributions.
Under its tangible benefits policy set out and amended in Broadcasting Regulatory Policy, the Commission determines the value of the transaction for the purpose of calculating the tangible benefits by using the value of the transaction as a whole, including the value of any leases assumed by the purchaser for real property (buildings, studios and offices) and transmission facilities calculated over five years.
Pursuant to the Asset Purchase Agreement dated 9 March 2015, the purchase price for the assets is $4,000,000. Following a request for information, the applicant filed a letter dated 30 July 2015 in which it added $628,070 in leases for a building, transmission facilities and a vehicle, for a revised value of the transaction totaling $4,628,070. Given that Broadcasting Regulatory Policy2014-459 excludes leases for vehicles from the calculation of the value of the transaction, the Commission has not included the amount of $30,000 that was added by Golden West for a leased vehicle. Accordingly, and based on information provided by the applicant, the Commission has revised the value of the transaction to total $4,598,070.
Value of the transaction
Purchase price $4,000,000
Assumed leases $598,070
As set out in the Commission’s tangible benefits policy, tangible benefits must generally represent at least 6% of the value of the transaction. Golden West originally proposed a tangible benefits package of $240,000, which is equal to 6% of the initially proposed value of the transaction. However, based on its revised value of the transaction, the Commission calculates the tangible benefits package to be $275,884 (i.e., 6% of $4,598,070).
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