Montreal: While there is overwhelming support for CTV’s licence renewal application for Montreal affiliate CFCF-TV, heavyweight industry intervenors are asking the CRTC to oblige CTV to pick up the tab for unfulfilled past benefits promises made by former station owners – notably WIC Television, which promised $7 million in benefits over five years back in 1997.

CTV says any imposed obligation to fulfill WIC promises made five years ago is unfair, both in terms of procedure and in view of the current incremental CTV acquisition benefits of $14.15 million over five years. Various parties including the Directors Guild of Canada and the CFTPA claim CTV should be held accountable for unfulfilled past benefits promises.

The APFTQ, CFTPA, the Canadian Association of Broadcasters and others have asked the CRTC to convene a public hearing on the issue. Commission spokesman Denis Carmel says a request for a hearing has been filed and a decision is pending.

It’s unclear what portion of WIC’s tangible benefits package – a $4-million fund for the acquisition of English-language programs in underrepresented programming categories from Quebec independent producers and the purchase and equipping of a $3-million digital mobile production truck – was actually fulfilled.

‘Flipped’ twice

The issue is made more complex because CFCF was basically in limbo from 1997 to late 1991, during which time ownership ‘flipped’ twice.

CTV acquired the Montreal station from CanWest Global Communications (70%) and Capital Communications CDPQ in July 2001 for $141 million. The deal and related benefits package was approved last September.

WIC (70%) and CDPQ bought the station from Groupe Videotron for $70 million in August 1997. The station was ultimately placed under trusteeship following the approved sell-off of some WIC broadcast assets to CanWest Global in July 2000. At that point, CanWest already held a Quebec market licence for Global station CKMI-TV.

In a July 26 letter to the CRTC, DGC president Alan Goluboff says a ‘$7 million promise to the Canadian broadcasting system, and more specifically, primarily to the independent producers of the Province of Quebec’ is at stake.

Goluboff says CTV ‘had adequate notice during the due diligence process that the monies [promised by WIC] had not been spent, yet they apparently did not take the standard steps necessary to ensure that either the vendor [CanWest] reduced the purchase price or that the monies were expended according to the Commission’s decision.’

In an intervention on behalf of the CFTPA, president and CEO Elizabeth McDonald says it is essential the commission maintains the fundamental principle of benefits in ownership transactions.

‘CTV has argued that it should not be held responsible for meeting benefit commitments promised by a previous owner of CFCF-TV. This contradicts the CRTC’s policy, which clearly states that such commitments are part of a licensee’s obligations and ‘should be implemented regardless of any subsequent ownership change,” says McDonald, adding, ‘CFTPA believes that unless CTV is required to meet any outstanding obligations, the entire benefits policy will be at risk. While we are not in a position to place a dollar value on such obligation, we recommend that the CRTC determine this with the applicant at the public hearing.’

CTV replies

In a letter of reply from Alain Gourd, group EVP corporate, CTV, says the network has brought stability to CFCF, and made a significant premium investment in acquiring the top-rated station.

CTV says it would be unfair to require ‘double payment’ of benefits.

The issue of WIC benefits was raised for the first time in February 2002, six months after the closing of CTV’s acquisition of CFCF, says the broadcaster.

‘CTV’s legitimate expectation that the WIC benefits would normally have been expended at the time of the transaction was further reinforced by the fact that the previous owners of CFCF were not required to fulfill the WIC benefits. In its intervention, the APFTQ seeks an explanation, which merits consideration, as to why neither WIC, nor Global fulfilled the WIC benefits. Requiring CTV to fulfill the unpaid WIC benefits would be unfair, given that the previous owners were not required to do so,’ says Gould.

In buying CFCF, CTV agreed to a benefits package representing incremental expenditures of $14.15 million (increased from $12.15 million when the debt portion of the deal was added) over five years and includes more than $3.8 million for the production of dramatic and documentary programs by Quebec independent producers through the CTV Signature Presentation Series, and the establishment of a program development office in Montreal, which will offer funding for script and concept development.

According to CTV, $3 million of the WIC benefits package relating to a digital mobile production truck has been satisfied. ‘Accordingly, we understand that the maximum amount of unfulfilled WIC benefits in question in the present case would be $4 million.’

The DGC claims qualifying benefits expenditures made by WIC did not exceed $423,430. According to CTV, the benefits expenditures reported by WIC were ‘as much as $1,036,467.’

Other intervenors include ADISQ, BCP, Channel 1 Productions, Cinegroupe Images, Cirque du Soleil, Galafilm Productions, Groupe Cossette Communication, Heenan Blaikie SRL, Molson Centre, Optimedia Canada’s Sunni Boot, Productions 10e Ave, Publicis Canada, PubZone, RDA Productions, Sony Music Canada, Syndicat canadien des communications, de l’energie et du papier/ Communications, Energy and Paperworkers Union of Canada, The Italian Chamber of Commerce, TQS Inc. and Verseau International.

-www.crtc.gc.ca/Broadcast/eng/NOTICES/2002/2002-33/int.htm