Unions fear U.S. control in CanWest deal for Alliance Atlantis

CanWest Global Communications Corp.'s deal with U.S.-based Goldman Sachs to take over Alliance Atlantis is an attempt to introduce foreign ownership of Canadian media interests by a back door, says a group of unions representing media workers.

About 40 representatives of CEP, ACTRA, CWA-Canada and CUPE picketed outside a hearing in Gatineau, Que., Monday morning, as the Canadian Radio-television and Telecommunications Commission began public consultations into the CanWest takeover of Alliance Atlantis Communications Inc.

'The result is loss of jobs, loss of local programming, loss of Canadian culture and identity.'—Peter Murdoch, Communications, Energy and Paperworkers Union

"CanWest has been gutting newsrooms across the country, feeding its unfettered desire for acquisitions, and now it is putting the critical issue of Canadian ownership of our media on the table," Peter Murdoch of the Communications, Energy and Paperworkers Union said in a statement.

The Global TV network, owned by CanWest, recently announced 200 layoffs and a reduction of local programming. Murdoch blamed the layoffs on the company's need for cash because of the Alliance purchase.

"The result is loss of jobs, loss of local programming, loss of Canadian culture and identity," Murdoch said.

The CRTC has said the issue of whether Canadian broadcast interests are falling under U.S. control is of paramount interest in the hearings.

CanWest president Leonard Asper told the CRTC the deal has been structured so that CanWest will have full control of Canadian broadcasting.

In early presentations, CanWest president Leonard Asper told the CRTC the deal has been structured so that CanWest will have full control of Canadian broadcasting assets.

Sachs only gets a third of voting shares

New York investment house Goldman Sachs is putting up a majority of the financing in the $2.3-billion deal, but will get only one-third of voting shares.

"I want to assure you that Goldman Sachs does not wish to control any Alliance Atlantis or CanWest broadcasting entity," said Gerry Cardinale, managing director of Goldman Sachs.

"This transaction has been designed so that CanWest is in control.... We are not television operators, nor do we wish to be."

Under the deal struck in January, CanWest is taking over a group of specialty channels, including the Food Network and Showcase, from Alliance Atlantis.

By 2011, CanWest will create a new broadcasting arm that will hold the Alliance Atlantis channels and its own existing Canadian TV networks, Global and E!. Ownership of that combined entity between Goldman Sachs and CanWest will be worked out at a later date.

Goldman Sachs will get control of the Alliance Atlantis film division, including its stake in the valuable CSI franchise. It will also hold 64 per cent of the equity in the division.

Asper told the CRTC that Goldman Sachs wouldn't have a key role in strategic broadcasting decisions, emphasizing that its role is to provide financing.

But CRTC chair Konrad von Finckenstein questioned him on how the firm would make decisions independent of its majority shareholder.

"If you want to trade one channel for another, that is a strategic decision and you would need approval from Goldman Sachs," he said.

CanWest also was questioned about a "reporting committee" that will meet between board meetings and will have representation from Goldman Sachs.

CanWest officials said the long-term goal for the firm is to increase its stake in the joint company.

The deal is vigorously opposed by the unions protesting outside the hearings and by public interest groups expected to make presentations to the federal regulator.

ACTRA has concerns

One of Canada's actors unions, the Alliance of Canadian Cinema, Television and Radio Artists, has expressed concern over the Goldman Sachs takeover of the Alliance Atlantis film rights.

The company has amassed a catalogue of films and TV shows with funding from Canadian taxpayers through Telefilm, film incentives and the Canadian Television Fund, according to ACTRA president Richard Hardacre.

Goldman Sachs would gain full digital rights to those programs.
 
The deal gives a U.S. company de facto control over a Canadian broadcaster, contrary to Canadian public policy, said Hardacre, who will present to the hearing on Tuesday.

"If 64 per cent of the equity will be held by non-Canadians, we consider that to be against the Broadcasting Act," he said.

This is a concern when CanWest is already underinvesting in Canadian drama and has made deep cuts to newsrooms and local programming, he said.

"No amount of tinkering, layering or manoeuvring will resolve the fundamental problem of the de facto control of CanWest and Alliance Atlantis by Goldman Sachs in this deal," Hardacre said.

With files from the Canadian Press