on two fronts

Vancouver: The plot thickens. Once again the Allard family of Edmonton appears to have aspirations to gain control of WIC Western International Communications from the Griffiths family of Vancouver.

Last April, following several years of intense rivalry between the two family dynasties that are the major equity shareholders of wic, and shortly after the death of wic founder Frank Griffith Sr., Allard-owned Cathton Holdings launched a court action in b.c.

The action sought a declaration from the court that a rarely used ‘coattails’ provision in the wic bylaws had been triggered when Cathton offered to acquire class a voting shares from Western Broadcasting Company (the holding company owned by the Griffiths) and the offer was not accepted by Western.

The court action was withdrawn by Cathton last September when the two families appeared to reach an understanding and a surprising settlement was struck in which Western sold 157,159 class a voting shares to Cathton with an option for an additional 9,100 class a voting shares.

On Feb. 27, wic was advised that Cathton had exercised its option to purchase the 9,100 class a voting shares from Western subject to crtc approval.

This time, however, wic management, after consulting with outside legal counsel, advised its board of directors that the coattail provisions may in fact have been triggered. As a result, Cathton once again brought a petition before the Supreme Court in b.c. seeking a legal interpretation.

Should the court rule that the coattails provision has been triggered, the Allards class b non-voting shares could be converted into class a voting shares, in which case it is speculated the Allards will launch a takeover bid placing wic ‘in play.’ Anyone in a position to purchase 51% of the shares would own one of Canada’s largest communications companies.

On March 21, two former independent directors of wic, Peter Paul Saunders and Sydney Welsh (who jointly own 200,000 class b shares), added fuel to the ownership fire when they too filed a lawsuit, citing the coattails provisions, in the hope of resolving the ownership issue.

wic’s board of directors has formed a committee of its independent directors, Rhys Eyton, chairman of PWA Corporation and Canadian Airlines International, and Edmund King, deputy chairman of Wood Gundy, to deal with issues arising out of the litigation.

Meanwhile in a separate matter, the crtc slapped wic’s hands severely by issuing one-year licence renewals (instead of the usual seven) on two of its tv stations and accused the company of under-reporting profits of the two stations and overstating the amount it spends on Canadian programming.

In a statement, crtc chairman Keith Spicer said: ‘This one-year licence reflects the commission’s serious concerns regarding, most particularly, the practices followed by Westcom (TV Group, parent company of bctv Vancouver and chek-tv Victoria) in accounting of its Canadian programming expenditures.’

Roy Gardner, vice-president of programming for bctv, admits they were informed in 1993 that the crtc would not consider bctv’s equity investments in Canadian programming as eligible expenditures. But, he adds wic’s programming decisions were made back in 1988. ‘If we had these clarifications (from the crtc) earlier, we would have planned our production strategy quite differently.’

Gardner says, ‘We will be going back to the commission and try to get some reconciliation of all these numbers so that we can find out exactly where we stand. Naturally we want to settle this problem. We are not in the business of fighting over financial matters, we are in the business of television and producing programming.

‘The money we are spending on Canadian production is largely being spent through the Westcom Entertainment Group on big-ticket drama as equity investments,’ he adds.

That, say Western producers, is exactly where the problems lie.

One producer, who has worked with Westcom in the past but who declined to be named, says, ‘Westcom Entertainment is well known in the production industry for putting large sums of money into a limited number of projects that technically meet Cavco Canadian content requirements but are not true `independent’ Canadian programs.

‘Their money turns out to be little more than interim financing because they structure the deal to be totally secured. They make sure there is very little money at risk to acquire truly independent Canadian production.’ This, he says, is definitely not in the spirit of the crtc Canadian content requirements.

‘It’s sad,’ says another producer, ‘they’re sitting on this huge pot of money and not moving forward with anything to really help the indigenous production community.’