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Decision CRTC 2001-384
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Ottawa, 5 July 2001
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Quebecor Média inc, on behalf of Groupe TVA inc.
Across Canada 2000-2309-4
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26 March 2001 Public Hearing
in Montréal
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Transfer of effective control of TVA to Quebecor Média inc.
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This decision covers approval in respect of the television
broadcasting segment of a larger transaction by which Quebecor inc.
(Quebecor) acquired all outstanding shares of Le Groupe Vidéotron
ltée (GVL) in a takeover bid by its subsidiary Quebecor Média inc.
(QMI), in the fall of 2000. In Decision CRTC 2001-283 issued on
23 May 2000, the Commission approved the other part of the
transaction, which involved the cable segments, by transferring
control of Vidéotron ltée to QMI. This approval with respect to
Groupe TVA inc. (TVA) is subject to a condition precedent
requiring QMI to transfer TQS inc. to a third party within a
specific timeframe (Appendix I).
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QMI proposed a financial package valued at $35 million as being
the tangible benefits of the transaction (Appendix II). Following a
review of all elements on file regarding the value of the
transaction involving TVA’s regulated activities, the Commission
has decided, by majority vote and as a condition of approval
that a financial package of $48.9 million would be commensurate with
the size of the transaction. The Commission also requires the
applicant, as a condition of approval to submit a proposal to
establish independent committees to evaluate proposals to receive
funding for priority and youth programming, as well as development
funds for interactive content (Appendix III). The Commission
further requires the applicant to file a detailed annual report
demonstrating that the benefits, especially those associated with
the creation of new priority programming and other on-screen
projects, are incremental to all existing TVA commitments (Appendix
IV).
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The transaction also raises important issues regarding media
cross-ownership and diversity of voices. The Commission has accepted
the safeguards that were proposed by the applicant and revised at
the public hearing, such as adherence to a code of professional
conduct applicable to TVA, LCN and LCN Affaires, and the
establishment of a monitoring committee to deal with possible
complaints. The various requirements specified in Appendix V with
respect to cross-ownership are also imposed as conditions of
licence in Decision CRTC 2001-385 published today, which renews
the licences held by the TVA network and CFTM-TV Montréal. The
Commission notes that it would be prepared to consider suspending
the application of the conditions of licence dealing with the code
of professional conduct and the monitoring committee if the Canadian
Broadcast Standards Council (CBSC) adopts a code of conduct
concerning cross-media ownership applicable to the industry as a
whole, and if the code is approved by the Commission. The CBSC code
of conduct would include an appropriate monitoring mechanism to be
administrated by the CBSC.
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As QMI pointed out at the hearing, TVA has made its mark by
exhibiting quality Canadian programs in both information and
entertainment categories. TVA has played a leading role in
instituting the "star system" that is a distinctive aspect
of Canadian French-language television programming and gives it its
vitality. QMI is counting on the leverage it will gain by
integrating TVA into its media family to develop and feature new and
attractive Canadian services that reflect the language and the
culture of viewers. The Commission is convinced that this approval
will ensure the ongoing growth and improvement of TVA's national
French-language television network and its other regulated
activities.
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1. |
The Commission approves the application filed by QMI on
behalf of Groupe TVA inc. (TVA) for authority to acquire all of the
shares of 9076-1883 Québec inc, TVA's parent company, and
consequently obtain control of TVA and its regulated subsidiaries.
However, in view of QMI's commitment to divest itself of TQS inc.
should this application be approved, this approval is subject to
a condition precedent, as set out in Appendix I of this
decision. In essence, under this condition precedent, this approval
shall only take effect when a third party not associated with
Quebecor or any of its affiliates files a complete application for
authority to acquire TQS inc., and TQS is placed in trust. The terms
of the condition precedent must be fulfilled in accordance with the
schedule set out in Appendix I and completed by 21 September
2001. The Commission notes that an approval that is subject to a
condition precedent becomes null and void if the terms of that
condition are not met.
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2. |
The Commission notes that, in Public Notice CRTC 2001-75
published today, it has announced that, as a matter of policy, it
intends henceforth to grant approvals subject to conditions
precedent in cases where it imposes requirements concerning the
transfer of assets or shares of other undertakings. The Commission’s
objective is to maintain a healthy and dynamic competitive
environment, and ensure that applications for transfer of ownership
are treated equitably and in a timely manner.
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Parties
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3. |
TVA is a leading Canadian company, whose activities include
television broadcasting, production and distribution of televisual
products and films, as well as publishing and marketing of related
products. TVA operates the general interest French-language
television network with the largest share of viewers in Quebec. In
addition to the network, TVA owns six television stations, including
CFTM-TV Montréal and CFCM-TV Québec. The distribution of the TVA
service, which has been licensed nationally since 1998, enables it
to reach Francophones and Francophiles across Canada.
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4. |
TVA also holds, directly and indirectly, majority and minority
interests in Category 1 and 2 specialty digital television services
and analog specialty services such as LCN and Canal Évasion, as
well as the Canal Indigo pay-per-view service. TVA also holds an
interest in a limited partnership that operates CKMI-TV Québec,
which is affiliated with the Global network and whose signal is
retransmitted to Montréal and Sherbrooke. TVA is sole owner of the
private production company JPL Production inc. and holds a 70%
interest in TVA International inc., a large distributor of
television programs in Canada and one of the principal Canadian
producers and distributors of television programs for the
international market. In the publishing sector, TVA is sole owner of
Les Publications TVA inc., which publishes French-language specialty
arts and entertainment magazines. TVA also holds an interest in the
Internet portals InfiniT and Netgraphe.
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5. |
Quebecor is an international company whose activities span three
continents (North America, Europe and Asia). With sales in excess of
$10 billion, Quebecor is one of Canada's largest media companies.
Quebecor is involved principally in printing, newspaper publishing
and distribution, book and magazine publishing, music distribution,
and new media.
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6. |
All of Quebecor's media assets are held through QMI. These
include, Vidéotron ltée, the largest operator of cable
distribution undertakings in Quebec, with approximately
1.5 million subscribers (Decision CRTC 2001-238, dated
23 May 2001); Sun Media Corporation, Canada's second largest
newspaper group, with eight major French-language and
English-language dailies and 181 local newspapers and other
publications; the Canoë Internet portal; a majority interest in the
Nurun web agency, as well as the 12 Archambault music stores.
Among the unregulated assets QMI has acquired under the current
transaction are the Netgraphe Internet portal and the 160 video
retail and rental outlets that make up the SuperClub Vidéotron
chain in Quebec. Quebecor also holds an 80% interest in the
French-language TQS television network, which is referred to in the
condition precedent mentioned at the beginning of this decision.
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Impact of the transaction
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7. |
This approval transforms QMI into the largest media group in
Quebec. In fact, QMI will control more than 40% of conventional
television revenues (excluding TQS) in Quebec, close to 40% of the
daily newspaper circulation and 4% of specialty television revenues.
In addition, further to Decision 2001-283, QMI now controls 79% of
Quebec cable distribution revenues. With its various portals, QMI is
now one of the main Canadian Internet players.
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8. |
In order to put the above figures into perspective, it should be
noted that CanWest Global Communications Corp. (CanWest Global)
leads Canada’s conventional television industry with a 30% market
share, followed by Bell Globemedia with 23% of the Canadian market.
Regionally, CanWest Global's share is 47% in Ontario, 45% in the
Prairies and 81% in British Columbia, whereas Bell Globemedia's
share is 57% in the Atlantic region. As for English-language
newspapers, CanWest Global also is the leader, with approximately
37% of the market, followed by Torstar with 17%.
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9. |
As stated in the Commission's 7 December 2000 Decision CRTC
2000-747 approving the transfer of control of CTV Inc. to BCE Inc.,
a number of major transactions in Canada have recently raised the
issue of a potential decrease in the diversity of editorial voices
as a result of media cross-ownership. In this context, the
Commission stated that, when it considered CTV’s, CanWest Global’s
and TVA’s licence renewals in the spring of 2001, it intended to
take advantage of this opportunity to impose in a coherent way any
safeguards it considered appropriate to ensure that diversity of
voices would be protected. In its Decision CRTC 2001-385, also
published today, the Commission renews the licences held by the TVA
network and CFTM-TV Montréal. To ensure that diversity of voices is
protected, the Commission has attached to the renewed licences a
number of conditions relating to safeguards that flow from the
commitments QMI made in the context of this transaction. QMI's
commitments to protect diversity of voices are discussed below.
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Diversity of voices
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10. |
The application to transfer control of TVA raised certain
concerns regarding ownership, especially media cross-ownership, and
its potential impact on TVA's editorial independence and the
diversity of voices in Quebec. In the context of complex
transactions with wide ramifications, such as in the current case,
the Commission must ensure that its regulation of broadcasting
undertakings complies with the Canadian broadcasting policy
objectives set out in section 3 of the Broadcasting Act (the Act),
most notably sections 3(1)(d)(i) , 3(1)(d)(ii) and 3(1)(i)(iv) which
deal with the strengthening of the Canadian fabric, development of
Canadian expression, as well as the broadcast of a wide diversity of
opinion.
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11. |
The Commission notes that, in the context of the 1997 transaction
transferring TQS to Quebecor, the applicant proposed a number of
safeguards in response to concerns related to media cross-ownership
raised by its application. In its Decision CRTC 97-482, the
Commission decided to impose some of the proposed safeguards as
conditions of licence. These included submission of a code of
professional conduct to ensure the independence and autonomy of TQS
newsrooms and setting up a monitoring committee to review any
complaints in this regard. In its recent decision renewing TQS's
licence (Decision CRTC 2000-418), the Commission required, as a
condition of licence, that TQS comply with a code of professional
conduct and retain the monitoring committee.
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12. |
With a view to maintaining diversity in the French-language
market, QMI submitted with its current application, for the
Commission's approval, a number of safeguards to ensure the
independence and autonomy of the TVA, LCN and LCN Affaires
newsrooms, as well as a code of professional conduct and a
commitment to set up a monitoring committee. Further to discussion
at the public hearing and in the light of concerns expressed by
certain interveners, the applicant submitted revised documents that
clarified the scope of the proposed safeguards and made their
implementation more efficient. More specifically, QMI proposed the
following safeguards it was prepared to accept as conditions of
licence:
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· TVA, LCN and LCN Affaires operations shall be independent of
the other QMI entities;
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· TVA management shall be separate and independent of the
management of QMI's newspapers and shall have the authority to
make independent decisions on day-to-day matters;
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· No more than 40% of TVA's Board of Directors shall consist
of individuals who are already members of the boards of directors
of Quebecor, QMI or any undertaking directly or indirectly
controlled by Quebecor or QMI;
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· QMI will respect the proposed code of professional conduct.
Any amendments to the code of professional conduct shall be
submitted to the Commission for approval;
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· A monitoring committee shall be established to review any
complaints concerning matters covered by the code of professional
conduct. Any changes to the mandate or the operating procedures of
this committee shall be submitted to the Commission for approval.
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Interveners' concerns
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13. |
The recent wave of acquisitions in the media world has generated
public debate about the possible repercussions of these transactions
on the diversity of information provided to the public. Journalism
is the focus of this debate and several representatives appeared at
the public hearing to share their concerns in this regard. Among
them were the Fédération nationale des communications (FNC), the
Fédération professionnelle des journalistes du Québec (FPJQ), the
Regroupement des syndicats SCFP of the TVA network and the Syndicat
des travailleurs de l’information du Journal de Montréal (STIJM),
who opposed the transaction.
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14. |
FNC, FPJQ and STIJM argued that the circumstances surrounding the
TQS and the TVA transactions are not the same. In their opinion,
media cross-ownership constitutes an exceptional measure that may
sometimes be acceptable in a particular situation, especially when
it is a question of ensuring survival in a market. STIJM argued that
media cross-ownership jeopardizes the diversity of information
sources and the free circulation of this information, especially
when it involves, as in this case, cross-ownership between the
leader in print media and the leader in television in a market of
Quebec’s size. According to the interveners, the code of
professional conduct and the monitoring committee proposed in QMI’s
application would not effectively ensure diversity of voices.
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15. |
The Commission is aware that safeguards such as a code of
professional conduct and a monitoring committee are a compromise
between the ownership rights of the licensees and their
responsibilities as operators of regulated broadcasting
undertakings. These safeguards will be effective only to the extent
that the parties concerned consider that applying them is crucial to
maintaining diversity of voices in the market.
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16. |
In the context of its application, QMI submitted an analysis of
media cross-ownership prepared by Mr. Pierre Trudel, professor and
member of the Public Law Research Centre of the University of
Montréal Law Faculty. In considering safeguards, such as the code
of professional conduct, Mr. Trudel stated, among other things:
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[TRANSLATION] When a single undertaking controls several
broadcasting undertakings as well as other media undertakings,
the issue of maintaining diversity arises in terms of
maintaining the editorial independence of the various
undertakings held by the same interests. Diversity, usually
presumed to result from a multiplicity of owners, must be
ensured by guaranteeing the editorial independence of the
undertakings, when ownership is concentrated. This would mean
dissociating property rights from control over the editorial
decisions made by the undertakings.
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17. |
At the hearing, in light of concerns raised and with a view to
reassuring journalists about its plans, QMI filed revisions to its
code of professional conduct and to the document setting out the
operating procedures of the monitoring committee. The applicant
stated that it intended to [TRANSLATION] "more or less maintain
status quo and create a situation or a framework where TVA’s
newsroom would continue to operate as it did before." On the
other hand, the Commission notes that the safeguards for ensuring
the independence and autonomy of the newsrooms of TVA, LCN and LCN
Affaires will enable the applicant to pursue projected synergies in
all other areas, such as in advertising and media management.
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18. |
After considering all the evidence on file, the Commission has
decided to accept the code of professional conduct and the operating
procedures for the monitoring committee, as revised by QMI.
Nevertheless, the Commission notes that it is not clear in the
revised code of professional conduct that the definition of
"QMI's newspapers" refers only to the newspapers in
Quebec. The Commission has thus accepted the revised code, with the
following amendment to section 1a):
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[TRANSLATION] The expression "QMI's newspapers"
used in the code signifies existing newspapers such as: Journal
de Montréal, Journal de Québec, The Record and the regional
weeklies operated by QMI, and any other newspaper that QMI may
operate in Quebec in the future;
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19. |
As indicated above, the safeguards relating to common ownership
proposed by the applicant and imposed as conditions of licence are
found in Decision 2001-385 of today’s date which renews the
licences of TVA and CFTM-TV. The Commission notes that it would be
prepared to consider suspending the application of the conditions of
licence dealing with the code of professional conduct and the
monitoring committee if the Canadian Broadcast Standards Council
(CBSC) adopts a code of conduct concerning cross-media ownership
applicable to the industry as a whole, and if the code is approved
by the Commission. The CBSC code of conduct would include an
appropriate monitoring mechanism to be administered by the CBSC. Any
application by the licensee to suspend these conditions of licence
should include confirmation that the licensee supports the CBSC code
of conduct, including the monitoring mechanism, and that the
licensee is a member in good standing of the CBSC.
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20. |
This approval will make QMI a major player in the French-language
television market in Canada. In permitting this degree of
concentration and media cross-ownership, the Commission also took
into account the balance that exists in broadcasting in this market
through the interaction of public and private sector forces (CBC,
TVA, TQS, Télé-Québec, specialty and pay services, and
independent production). For example, CBC's French-language
television network has always contributed in large measure to the
distinctiveness of this market, through its sizeable share of the
market – more than 25.6% in the evenings in 2000. CBC will
therefore continue to offer another significant viewing choice,
contributing through both its general interest network and its
specialty networks to diversity of content and to a balance between
the public sector (CBC and Télé-Québec), the private sector (TVA
and TQS) and the other specialty services serving the
French-language market, especially those of Astral Télé-Réseaux
inc.
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Value of the transaction
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21. |
When considering applications to transfer ownership or control of
a television broadcasting undertaking, the Commission generally
requires significant benefits to flow from the transaction, both to
the communities in question and to the Canadian broadcasting system
as a whole. Because the Commission does not solicit competing
applications, the onus is on the applicant to demonstrate that the
application filed is the best possible proposal under the
circumstances and that the benefits proposed are commensurate with
the size and nature of the transaction. In view of the absence of a
competitive process, the benefits test is an appropriate mechanism
for ensuring that the public interest is served. As indicated in its
television policy (Public Notice CRTC 1999-97), the Commission
generally expects applicants to make commitments to clear and
unequivocal benefits representing a financial contribution of 10% of
the value of the transaction, as accepted by the Commission.
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22. |
The applicant did not seek to obtain an exemption from the
Commission’s policy with respect to the required percentage of
tangible benefits. |
23. |
From the outset, it was evident that the Commission would have
difficulty establishing what, from its perspective, would be an
acceptable valuation of the TVA portion of the transaction. TVA was
acquired as part of a larger transaction that involved numerous
regulated and unregulated assets with an estimated value of more
than $6 billion. Among the regulated assets, only TVA's television
broadcasting assets are governed by the Commission's benefits
policy. According to QMI's estimates, the regulated cable
distribution assets of Vidéotron ltée would represent close to 75%
of the total value of the transaction, whereas TVA's assets would
represent less than 6% of this total value. The calculation also
takes into account the potential value of the premium paid to
acquire a controlling interest in the shares of TVA.
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24. |
There was significant discussion at the public hearing about the
methodology used in assessing the value of the transaction. QMI
filed with its application an analysis by Ernst & Young on the
evaluation issue. To determine the value of the transaction
associated with regulated activities, Ernst & Young primarily
used a multiple of the Earnings before Interest, Taxes, Depreciation
and Amortization (EBITDA) and corroborated its valuation of the
total value of TVA by comparing it to its stock market
capitalization. The Commission requested a further independent
evaluation from Mr. Jean-Marc Suret, professor of finance and
Director of the School of Accounting at Laval University in Québec.
Professor Suret used the EBITDA methodology, as well as several
other methods to determine the value of the transaction. The
applicant’s financial advisers, Ernst & Young and TD
Securities, filed comments with respect to the Suret report.
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25. |
QMI's proposal entailed calculating the amount of benefits in
relation to its share (36.1%) of TVA equity and not in relation to
the controlling shares it has acquired, which make up 99% of the
voting shares. Ernst & Young estimated the value of the
transaction associated with TVA's regulated activities at between
$600 and $660 million, the equivalent of an EBITDA multiple of
10-11. QMI estimated that, for calculating tangible benefits, the
value of its interest in TVA equity was in the range of $217 to $238
million. QMI also proposed, in its original application, a tangible
benefits package valued at $30 million. According to QMI, this would
represent approximately 13% of the estimated value of the
transaction. At the public hearing, however, QMI increased the
benefits package from $30 to $35 million.
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26. |
The Suret report established a total value for the TVA
transaction that was reasonably close to Ernst & Young's
valuation. At the same time, however, the Suret report found that
the multiples used by the applicant were on the low side for TVA’s
regulated activities.
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27. |
In previous decisions, the Commission has generally calculated
the value of a transaction, for the purpose of establishing tangible
benefits, on the basis of the percentage of equity held. In most of
the previous transactions, the value of the transaction was
equivalent to the purchase price or to the amount actually paid by
the buyer, and this amount usually included existing debt and any
acquisition premiums. The Commission made an exception in Decision
CRTC 2000-86 dated 24 March 2000 and permitted a purchase price that
excluded the long-term debt of NetStar Communications Inc., an
undertaking acquired by CTV Inc. In accepting the applicant's
arguments to this effect, the Commission stated, among other things:
"The Commission will expect applicants, in future transactions,
to demonstrate that the measure they have used to determine the
value of the transaction is the most appropriate under the
circumstances."
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28. |
At the public hearing, the Commission questioned the applicant
about factors that might serve to reconcile the various multiples
proposed. The multiples varied from the 10-11 proposed by QMI, to
the multiple of 23 noted in the Suret report for the BCE/CTV
transaction (Decision 2000-747). On this point, QMI declared at the
hearing that the multiple of 23 mentioned in the Suret report was
based on erroneous figures, and that the multiple should have been
in the order of 15-16, as explained in the Ernst & Young report.
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29. |
Among the factors justifying use of a multiple higher than 10-11
for establishing the value of the transaction is the strategic
importance of TVA. TVA controls some 52% of the advertising in the
French-language market, consistently achieves an audience share
above 30%, and offers a superior rate of return. At the same time,
the Commission also established that the valuation should take into
account the characteristics of the French-language market. It is, in
fact, a relatively restricted and a more mature market. As a result,
it offers a more limited growth potential than the English-language
market does.
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30. |
After considering all the evidence on file, the Commission has
concluded that the benefits proposed by QMI, even if increased in
value to $35 million, would be insufficient and would reflect
neither the value of TVA's regulated activities nor the size of the
transaction.
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31. |
In order to reflect TVA's strategic value in QMI's hands and the
potential synergies this represents, the Commission has decided, by
majority vote, that an EBITDA multiple of 15 would be more
appropriate for the purposes of determining the value of the
transaction for TVA’s regulated activities. In its calculation,
the Commission used the $60 million EBITDA calculated by the
applicant for TVA’s regulated activities and an implicit 40%
control premium, also confirmed by QMI. This control premium, which
is $257 million, is calculated by multiplying the $900 million value
of the transaction by 40% and dividing it by 140%. In contrast with
the applicant’s approach, the Commission has attributed all of the
40% control premium to the buyer. The Commission attributes to QMI
36.1% of the remaining $643 million, or $232 million. By adding the
above $232 million with the premium of $257 million, the Commission
has arrived at a value of $489 million in respect of TVA’s
regulated activities. This would result in an increased tangible
benefits package of $48.9 million, or 10% of the value of the
transaction, as called for by the Commission’s policy.
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32. |
Commissioner Andrée Noël, however, considers that, in light of
the maturity of the company and the restricted nature of the Quebec
market, an EBITDA multiple of 15 is too high, and a multiple of no
more than 13 would be more appropriate in this case. The use of this
multiple would result in tangible benefits in the order of
$42.4 million over a seven-year licence term.
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33. |
QMI has requested the privilege of using the public airways. The
onus is thus on the applicant to demonstrate that the application
filed is the best possible proposal under the circumstances, and
that its approval is in the public interest. In this context, the
Commission is convinced that an increased benefits package of
$48.9 million is commensurate with the size and nature of the
transaction and will contribute significantly to achieving the
objectives of the broadcasting policy for Canada, as set out in
section 3 of the Broadcasting Act. Considering the vast resources at
QMI's disposal, the Canadian broadcasting system stands to benefit,
particularly with respect to French-language broadcasting.
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Benefits package
|
34. |
As indicated above, the value of the benefits proposed by QMI,
and increased at the hearing, was to be $35 million over a licence
term of seven years. The applicant proposed to allocate more than
90% of the amount to on-screen benefits, with more than 80%
committed to priority programming and programming directed to youth,
and with the balance committed to training, research and support
projects. The Commission has decided to require the applicant, as a condition
of approval (see Appendix III), to implement a tangible benefits
package of $48.9 million over a seven-year period. The Commission
also requires that the total amount be split between on-screen
benefits and other benefits in the same ratios as the original
benefits set out in Appendix II, which gives a summary of eligible
benefits based on the sum of $35 million QMI proposed at the
hearing. However, should the applicant propose a different
distribution of the benefits, the Commission requires that the
proposal be submitted for approval within 30 days of the date of
this decision.
|
35. |
Commissioner Andrée Noël would have stipulated that the amount
of $42.4 million be distributed in the same manner and in the same
proportions as set out above.
|
36. |
As a benefit, QMI proposed to set up a unit specializing in
investigative journalism and feature stories at TVA and to allocate
$3 million to this project. The Commission is of the opinion that
this is not acceptable as an eligible benefit flowing from the
transaction. The applicant did not adequately demonstrate how this
unit would be different from TVA's regular news reporting function,
nor did the applicant take into account the fact that feature
stories should be covered in the course of regular news reports
already in TVA's schedule. The Commission notes that QMI made a
commitment at the hearing to reallocate the $3 million to priority
programming, should the Commission not consider this proposal an
eligible benefit. The Commission consequently expects this amount to
be reflected proportionately in a new distribution of the benefits,
either as set out in Appendix II, or in accordance with such other
distribution plan as may be proposed by the applicant and approved
by the Commission.
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Priority programming
|
37. |
To enable the Commission to verify that the required expenditures
for priority programming are over and above those to which TVA has
committed in respect of its existing obligation to broadcast eight
hours per week of priority programming, an appropriate baseline or
reference point must be established. At the hearing, QMI set $8.5
million as the reference point, based on fiscal year 1999-2000
figures. However, the applicant's 2001-2002 priority program list
shows that priority programming expenditures will total $8.7
million. On the basis of financial projections filed by QMI, the
Commission has decided that the annual reference amounts applicable
to TVA for determining what constitutes incremental expenditures in
respect of on-screen priority programming benefits should be
calculated according to the following annual baselines:
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Year |
$ (million)
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2001/2002 |
8.7 |
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2002/2003 |
8.9 |
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2003/2004 |
9.0 |
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2004/2005 |
9.1 |
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2005/2006 |
9.3 |
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2006/2007 |
9.4 |
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2007/2008 |
9.5
|
38. |
Regarding funds to be devoted to priority and youth programming,
the Commission notes the following commitments by QMI:
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· 95% of incremental priority and youth programming
expenditures shall be directed to companies that are not
affiliated to QMI, meaning companies in which QMI or any
undertaking affiliated to QMI holds less than a 30% interest;
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· 10% of the funds shall be directed to French-language
creators and production companies located outside Quebec;
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· No administrative costs shall be paid out of this fund;
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· Expenditures shall, unequivocally, be incremental
expenditures the licensee would not have incurred without this
transaction;
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· Contributions such as licence fees and investments shall
exceed the trigger rates required by public and private funding
agencies, and the excess shall be considered an increment;
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· Revenues from these programs shall be reinvested in new
priority programming produced by the independent sector.
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39. |
As far as the concept, screen-play and interactive content
development fund is concerned, the Commission notes the following
commitments: |
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· The new programs shall be produced by an independent
producer, in the priority programming categories, for exhibition
on TVA;
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· 20% of the funds shall be directed to Francophones outside
Quebec;
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· No administrative costs shall be paid from this fund;
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· Interactive content elements shall not be exclusively
Internet-based, or of predominant benefit to the Canoë and
InfiniT portals;
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· Any development expenditures recovered from programs
produced in this context shall be reinvested in priority
programming development.
|
40. |
During discussions at the hearing concerning the interactive
content development fund, the applicant referred to the possible
creation of [Translation] "an independent committee composed of
a majority of third parties not related" to QMI's undertakings
for the purpose of evaluating these projects. The Commission is of
the opinion that such a committee would also be desirable for
priority and youth programming. It therefore requires as a condition
of approval (see Appendix III) that the applicant submit, for
approval, a proposal to establish committees that would evaluate
projects QMI intends to finance from the priority and youth
programming fund, and from the interactive content development fund.
The Commission also requires that each committee have
representatives of regional independent producers and independent
producers from outside Quebec. In addition, the Commission expects
these funds to be used to finance new projects that are submitted
after they have been approved by the evaluation committees proposed
by QMI. The Commission also expects variety programs that have
access to the funds to be distinct from the types of program
currently in TVA's schedule and that they promote Canadian
French-language music.
|
41. |
In addition, the Commission requires the filing of a detailed
audited report, concurrently with the annual return for TVA, setting
out the actual expenditures on the base level amount of eight hours
per week of priority programming in each of the next seven years.
Such spending may exceed but shall not be less than the baseline
amounts given above for each year. As part of this report, TVA shall
file a detailed breakdown of its expenditures each year on the
priority programming and related initiatives accepted as benefits of
this transaction. This reporting must demonstrate, over the
seven-year period, the allocation of a minimum of $39.8 million
(this being 81.4% of the benefits package of $48.9 million noted in
paragraph 31 and in Appendix III of this decision) to on-screen
initiatives relating to new priority programming, incremental to
expenditures on the eight hours per week of such programming
referred to above, and irrespective of any spending in excess of the
aforementioned base level amounts.
|
42. |
As discussed at the hearing and accepted by QMI, the Commission
has established in Appendix IV to this decision a list of various
reporting requirements. Their purpose is to verify that the benefits
package QMI is required to implement is clearly incremental to
expenditures that TVA would have made in any case during this
period. These requirements are appended, as conditions of licence,
to Decision 2001-385, which renews the licences for TVA and CFTM-TV.
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|
Interventions
|
43. |
The Commission wishes to thank all those who participated in the
public process leading to this decision, either through their
written interventions or through their presentations at the public
hearing.
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|
Secretary General
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|
This decision is to be appended to the licence. It is available
in alternative format upon request, and may also be examined at the
following Internet site: http://www.crtc.gc.ca/
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Appendix I to Decision CRTC 2001-384
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Condition Precedent
|
|
Approval of Quebecor Média inc.'s application on behalf of
Groupe TVA inc. (TVA) for authority to transfer effective control of
TVA and its regulated subsidiaries will only be effective provided a
third party not associated with Quebecor inc. or any of its
affiliates files an application for authority to acquire TQS inc.,
the Commission deems said application to be complete, and TQS inc.
is placed in trust to the satisfaction of the Commission.
|
|
Unless the Commission otherwise directs, the following timetable
must be respected in order to fulfil the terms of this condition
precedent:
|
|
7 September 2001: Submission of a proposed trust agreement
for approval by the Commission. Once the trust agreement is accepted
by the Commission, the Commission must receive confirmation, by
21 September 2001, that the trust has been established and TQS
inc. has been effectively transferred.
|
|
21 September 2001: Submission of a complete application for
authority to acquire TQS inc.
|
|
Appendix II to Decision CRTC 2001-384
|
|
SUMMARY OF ELIGIBLE BENEFITS PROPOSED BY QMI*
|
|
ON-SCREEN BENEFITS |
$ |
% |
|
Priority programming and youth programming |
28,500,000 |
81.4% |
|
Concept and screen-play development |
1,500,000 |
4.3% |
|
Interactive content development |
1,500,000 |
4.3% |
|
Closed captioning for the hearing impaired |
500,000 |
1.4% |
|
SUBTOTAL |
32,000,000 |
91.4% |
|
TRAINING, RESEARCH AND SUPPORT |
|
|
Educational TV - Institut national de l’image et du son (INIS) |
150,000 |
0.4% |
|
Developmental workshops - INIS |
125,000 |
0.4% |
|
QUEBECOR scholarship fund via INIS |
50,000 |
0.1% |
|
Audiovisual management training program (HEC) |
1,025,000 |
2.9% |
|
Support to BANFF program |
200,000 |
0.6% |
|
Education Francophones outside Quebec with partners |
275,000 |
0.8% |
|
Education cultural communities (Youth eMage) |
200,000 |
0.6% |
|
Concordia / UQAM research consortium |
250,000 |
0.7% |
|
Public Law Research Centre -University of Montréal |
200,000 |
0.6% |
|
Research program – new media copyright issues |
200,000 |
0.6% |
|
Support to Press Council |
100,000 |
0.3% |
|
Film Bank-digital conservation program |
225,000 |
0.6% |
|
SUBTOTAL |
3,000,000 |
8.6% |
|
GRAND TOTAL |
35,000,000** |
100%
|
|
*Given that the Commission has decided that the $3 million
proposed for the creation of an investigative journalism unit and
for feature stories is not an eligible benefit, the Commission has
included this amount under the heading "Priority and youth
programming," as agreed to by the applicant at the public
hearing.
|
|
** The benefits package has been increased to
$48.9 million, as required by this decision. This amount must be
allocated in accordance with the requirements specified in paragraph
34 of the decision.
|
|
Appendix III to Decision CRTC 2001-384
|
|
Conditions of approval |
1. |
QMI must establish a tangible benefits package related to this
transaction with a value of $48.9 million over a seven-year period
|
2. |
QMI must submit, for the Commission's approval, within 30 days of
this decision, a proposal to establish independent committees to
evaluate proposals submitted to receive funding for priority and
youth programming as well as development funds for interactive
content. |
|
Appendix IV to Decision CRTC 2001-384
|
|
Reporting Requirements
|
|
The following outlines the various items upon which Quebecor
Média inc.(QMI) shall file an audited annual report. The purpose of
this report is to permit the Commission to verify the incremental
nature of proposed benefits expenditures totalling $48.9 million
over seven years. This reporting requirement shall thus remain in
effect for a seven-year period.
|
|
QMI shall submit an audited report, concurrently with the filing
of the annual return for TVA, providing the following:
|
|
i) the original and repeat priority programs broadcast over
the course of the reporting year in fulfilment of the network's
base level requirement of eight hours per week of priority
programming. The information provided shall include, in the case
of each program, the program title, program category, date of
broadcast and the duration of the broadcast;
|
|
ii) the actual expenditures related to the base level
requirement of eight hours per week of priority programming
referred to above, exclusive of any benefit spending related to
benefits;
|
|
iii) each hour of incremental original priority programming
broadcast during the reporting year, identifying, in the case of
each program, the program title, program category, date of
broadcast and the duration of the program;
|
|
iv) all programs, including interactive programs, produced as
a consequence of incremental expenditures accepted as benefits
of the transaction, and for which a licence fee was paid by any
specialty service operated by TVA or any company related to it.
The list shall include the amount paid by the specialty service
for the broadcast rights for each program;
|
|
v) a detailed audited report, setting out the actual
expenditures on the base level amount of 8 hours per week
of priority programming. Such additional spending must exceed
the amounts set out below :
|
|
Year |
(million $)
|
|
2001/2002 |
8.7 |
|
2002/2003 |
8.9 |
|
2003/2004 |
9.0 |
|
2004/2005 |
9.1 |
|
2005/2006 |
9.3 |
|
2006/2007 |
9.4 |
|
2007/2008 |
9.5
|
|
vi) a list of all programs produced as a consequence of
incremental expenditures accepted as benefits of the
transaction, and for which a consideration for their sale or
distribution was paid to TVA or to any company related to it.
The list shall include an indication of the amount paid for each
program excluding reasonable sales expenses actually incurred in
respect of the distribution of such programs to unaffiliated
companies, and an indication of how all such revenues will be
reinvested in TVA's priority programming;
|
|
vii) a list of projects that were financed from the
independent fund for concept and screen-play development for
priority programming, as well as programs produced and
development expenses recovered for reinvestment in the funds;
|
|
viii) a list of all programs in which TVA, or any company
related to it, has taken an equity investment using funds
allocated to incremental benefits expenditures under this
transaction. QMI shall also report on any profits earned from
this equity investment and demonstrate that such profits are
being reinvested in additional, incremental TVA priority
programming;
|
|
ix) an indication of all expenditures by TVA, or by any
company related to it, on third party promotion in the 2000/2001
broadcast year, together with evidence demonstrating that the
proposed benefits relating to third party promotion are
incremental to this 2000/2001 base level; and
|
|
x) a description of the television initiatives undertaken in
fulfilment of benefits commitments, and a list of expenditures
associated with each. In addition, the Commission expects the
annual report to indicate QMI's expenditures on all of the other
benefits accepted by the Commission and set out on page 42 of
TVA's Supplementary Brief, but not otherwise covered under the
reporting requirements listed above.
|
|
Appendix V to Decision CRTC 2001-384
|
|
Requirements with regard to cross-ownership
|
|
1. The licensee shall limit to no more than forty percent
(40%) the number of those serving on its board of directors who
are persons who are now or have been a member of the board of
directors of Quebecor inc., Quebecor Média inc. (QMI), or any
corporation or business undertaking controlled directly or
indirectly by Quebecor inc. or QMI.
|
|
2. The licensee shall adhere to the code of professional
conduct it has established, and which the Commission approved in
this decision, to ensure the independence and separation of the
newsrooms. Any amendment to the code must be approved by the
Commission.
|
|
3. The licensee shall maintain a monitoring committee to
review any complaints relating to the independence and
separation of the newsrooms. Any amendment to the mandate or
operation of this committee must be approved by the Commission.
|
|
4. TVA, LCN and LCN Affaires operations shall be independent
of the other QMI entities.
|
|
5. TVA management shall be separate and independent of the
managements of QMI's newspapers and shall have the authority to
make independent decisions on day-to-day matters.
|
|
If the Canadian Broadcast Standards Council (CBSC) adopts a code
of conduct concerning cross-media ownership applicable to the
industry as a whole, and if the code is approved by the Commission,
the Commission would be prepared to consider suspending the
application of conditions 2 and 3 above. The CBSC code of conduct
would include an appropriate monitoring mechanism to be administered
by the CBSC. Any application by the licensee to suspend these
conditions should include confirmation that the licensee supports
the CBSC code of conduct, including the monitoring mechanism, and
that the licensee is a member in good standing of the CBSC. |
Date Modified: 2001-07-05
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