The ctv board of directors has given the thumbs-up to the crtc, which approved the broadcaster’s buyout of NetStar Communications on the condition that it divests itself of its 40% controlling interest in Sportsnet within a year.

Although ctv refuses to comment any further than saying it will comply with all conditions of the approval, the regulator’s call should come as good news to the broadcaster as industry insiders expected that either Sportsnet or The Sports Network, of which ctv gains ownership through the NetStar deal, would have to go to avoid giving ctv an unfair, competitive advantage in the sports programming market – one of the major themes highlighted at the Dec. 6, 1999 crtc hearing.

While it’s difficult to put a price tag on Sportsnet as it is a two-year-old start-up and is still losing money, says media and entertainment analyst Karen Fisman of Thomson Kernaghan, tsn is clearly a much larger asset. ‘On a revenue basis, [tsn] is the best performing specialty in the country… certainly the most dominant.’

Nonetheless, Fisman has no doubt that Sportsnet will be sold at ‘a very rich price,’ especially now that the market is in a frenzy to pick up specialty assets.

First, someone needs to figure out what can be generated out of Sportsnet, then calculate what it’s worth. This was the scenario with the acquisition of Headline Sports in 1999 by Alliance Atlantis Communications, which bought a 48% interest in hs for more than $16 million, a price many media watchers believed was well beyond its value.

In addition to the cbc, which has already expressed an interest in the regional sports specialty service, potential buyers include the usual suspects: CanWest Global, aac, Corus Entertainment and Astral Communications.

Rogers Communications, which already owns a 20% interest in Sportsnet, is a less likely candidate because the crtc would not allow a cableco to have controlling interest in a specialty – one of the reasons Shaw Communications was forced to sell Headline Sports last year.

Likewise, Fox, which also owns a 20% stake in Sportsnet, is out of the question because American ownership is capped at 33%.

The last 20% is owned by Molson, which remains a possible buyer, says Fisman.

Whatever the case, ctv must file an application with the commission for approval to divest its interest in Sportsnet by March 24, 2001. At the same time, it must also confirm that it no longer manages the asset directly or indirectly.

Under the approved deal, ctv gains an 80% voting interest in NetStar, which owns 100% of tsn and Reseau des Sports, 80% of the Discovery Channel and a 25% interest in Viewer’s Choice Canada, for $394 million, which doesn’t include the $321 million debt it incurs from NetStar.

ctv is also committed to a benefits package worth $35 million, $11.7 million of which the crtc is requiring the broadcaster to reallocate, as this money was designated to the broadcast of the Canada Games and Les Jeux du Quebec, which the commission has not qualified as a tangible benefit. It does, however, still expect ctv to broadcast the two events.

Other conditions of the deal include the removal of a provision that gives espn, which holds 32% equity interest and 20% voting interest in NetStar, the power to suspend any offer made by a Canadian to purchase the shares of NetStar shareholders for three months, so espn can find an alternative offer. As such, ctv must file a revised Amended Shareholder Agreement for crtc approval within 90 days of the decision.

It also must submit the final version of the Trademark Licence Agreement between ctv, NetStar and espn for crtc approval within 90 days. The agreement must be amended so that it provides terms under which the parties can terminate the agreement, including that the right to terminate without cause does not come into effect until well after three years.

bce, which entered into a $2.32-billion buyout agreement with ctv in mid-March contingent on the outcome of the NetStar deal, says it is satisfied with the crtc decision and does not intend to amend its offer.

The bce offer expires April 5.