Ivan Fecan’s multimedia clan will have to wait a while for the arrival of CHUM, the latest addition to its fast-growing family, as the CRTC and the Competition Bureau analyze their way through two regulatory processes geared around media concentration that might be the most complex broadcast deal either has yet faced.

While last summer’s acquisition of CHUM by Bell Globemedia may have struck some as impulsive, the timing had more to do with a course of events that sometimes follows the passing of a patriarch.

The estate for CHUM founder and majority shareholder Allan Waters had the fiduciary responsibility to evaluate assets, leading executors to rely on independent financial advisors and legal counsel, whose advice eventually led to an all-out bidding war for CHUM between BGM and Astral Media.

CHUM management was let into the loop a couple of weeks before the July 12 announcement to sell their 33 radio stations, 12 television properties and 21 specialties to BGM, as plans were kept close to the vest. The Waters family had the option to either sell their own shares or the company itself, and it came as no surprise that they opted for the package that would fetch the highest price.

Some believe there was an emotional element to the sale for the Waters family, in that they preferred the assets go to a media company that would appreciate the integrity of the brands and the people. A company like Bell Globemedia and president and CEO Fecan. Of course, the $1.4-billion bid helped close the deal.

‘Nothing is for sale when you want it,’ Fecan says. ‘So you start dreaming. What would be great if it ever came up? You do the list and say, ‘That family won’t sell, and this family won’t sell.’ When we did that kind of blue-skying, CHUM was always at or near the top of our list.’

When the call did come, the only question for Fecan was, ‘Are you going for it or not?’

‘If we’d lost the bid, that would have been fine,’ he says in retrospect, ‘because we were at the end of our road in terms of what we could pay. It was a big risk, because we effectively were buying it on behalf of a company that hadn’t yet existed.’

The anxiety at BGM stemmed from the pending CRTC approval of the ownership restructuring at the media company, which came on Aug. 30. Fecan recently told Playback for the first time what brought him to the altar.

‘[CHUM has] a great respect for content – especially original content,’ he says. ‘We don’t have radio in common, but we thought that was an exciting addition to the company because there isn’t a lot of radio out there to buy with that kind of scale.’

While satellite radio provides listeners with more choice, traditional terrestrial radio might be a jewel of the deal. As one CHUM insider points out, ‘People forget that we’re a radio company. The radio assets may be smaller from a revenue standpoint than some television, but we’re number one or two in all the markets that we’re in. Our radio stations experience very high ratios with advertisers. We’re industry leaders as far as profitability is concerned.’

Fecan also stresses that CHUM’s specialty dramas are complementary to those of BGM’s CTV.

‘We’re largely in information, sports and youth,’ he notes. ‘They’re largely in youth as well, but have the ability to do dramatic stuff which we don’t have in our specialty.’

His appreciation for CHUM also extends to the conventional side. ‘I love the City brand,’ Fecan says, recalling his days at City when he helped start CityPulse News. ‘I understand that part of the company.’

According to a CHUM insider, specialties Bravo!, Space and MuchMusic have been compensating for weak performance in conventional television properties, something that didn’t escape Fecan’s sharp eye.

‘We thought a lot of strain was put on the City brand because the company was growing so much,’ Fecan says. ‘We might be able to add something to it by letting it be City more often. I love all [the energy and personality], but I think they can use more resources. And we’re hoping we can help them with that.’

CHUM will certainly benefit from CTV’s programming savvy and cross-promotional ability, but will the acquisition affect the City brand – and specifically, will CTV bring its largely American content over to CHUM?

‘I think what they do is the right fit for them,’ says Fecan. ‘I don’t know that you’re going see CTV stuff on City or vice versa. They’re very different brands.’

While the CRTC is hoping to receive BGM’s application by year-end to begin what it calls its ‘completion of information’ stage, the Competition Bureau is already off and running. It’s currently consulting its ‘illustrious list of factors’ (there are 93), which include barriers to entry, competition after the deal, whether the party being acquired is a vigorous and active competitor, market share, et cetera.

‘Typically, when we look at a media merger, we tend to look at advertising markets,’ says Bob Lancop, an assistant-deputy commissioner of the Competition Bureau. ‘For example, if we talk about national markets, we have to determine whether television is a standalone or whether it competes with newspapers for national advertising.’

At the moment, the bureau has retained industry experts and is conducting in-depth callbacks with industry folks. Unlike the CRTC process, which includes a public hearing likely in the spring and a decision in the summer, the ongoing results are confidential.

‘We’re in the throes of [the process],’ says Lancop, who also observes that the industry is in the middle of its third major merger boom. ‘We’ve had regular communication with the parties and been in contact with many people in the industry at various levels. That process will be continuing over the next while so that we can try to do our analysis as comprehensively as possible.’

Lancop is optimistic that a decision will be forthcoming early in the new year, which will prove useful to the CRTC. CTV has stated it will offer up CHUM’s six A-Channel stations, one in Victoria/Vancouver and the rest in Ontario, but the bureau will be the first to weigh in on that proposal.

‘We’ll see what the Competition Bureau comes up with,’ says CRTC spokesperson Denis Carmel. ‘They might require divestitures that will change the nature of the application, but it’s hard to know at this point. I remember one instance in an Astral transaction where it radically changed the whole outcome. They run their own process and we run ours. In the end, CTV has to comply with both.’

Carmel says that in addition to divestitures, the CRTC will be looking at diversity of voices in news and information, and tangible benefits.

‘When BCE bought CTV [in 2000] they were required to do eight hours a week of priority programming and they proposed nine hours,’ he notes, recalling the $140 million earmarked for priority Cancon over seven years. ‘We put a value on it and they accepted it.’

He adds that CTV will this time provide a suggested contribution amount to the system as well as a list of possible recipients. It’s also expected that CTV will once again exceed the minimum on-air requirement for Cancon.

While an ideal model would have the CRTC and Competition Bureau working in sync, Carmel insists they have independent functions.

‘They look at mostly advertising and the markets,’ he says. ‘We have a different objective in terms of newsgathering, news outlets, diversity of voices and Canadian content.’

The CRTC’s spring hearing should last a few days, depending on how many interventions there are to the deal, which has divided the industry. The early buzz is that it will have a negative effect on advertisers and media buyers.

Says one media buyer who preferred to remain anonymous: ‘CHUM always used to price themselves a little bit under the market. So you could use them to drive down prices from both Global and CTV. Without CHUM there, less flexibility means higher prices for advertisers.’

Given market forces, the buyer adds that since media inflation with three players was in the 5% range, 10% is in the realm of possibility with a market of two.

‘It’s really important that Canada has some big [media] companies,’ contends former CTV president Trina McQueen. ‘If you just look at Canada, Bell Globemedia looks like a big company. If you look at it compared to Viacom or BBC or any of the truly big media companies, we are dwarfed. I don’t think that’s good for us in an environment which is becoming a little more borderless and a lot more competitive.

‘In order to have some bets on all the things that are going on in television, broadcasting and screen-based media, you’ve got to have enough money. I worry that Canadian companies don’t.’

What Bell Globemedia gets in the CHUM purchase

6 conventional TV stations, including Citytv channels in Calgary, Edmonton, Toronto, Vancouver and Winnipeg and CKX Television, a CBC affiliate serving western Manitoba and eastern Saskatchewan

20 specialty channels, including Bravo!, Space, the seven English-language music stations and 50% of MusiMAX and MusiquePlus in Quebec

33 radio stations from Halifax to Victoria – in a time when, despite competition from satellite radio, the market is robust – as well as the CHUM Radio Network, which supplies programming to private Canadian stations

What it is offering to sell off

6 conventional A-Channel TV stations, including five in Ontario: Barrie/Toronto, London, Ottawa, Windsor and Wingham, as well as the outlet in Victoria/Vancouver

1 specialty channel: ACCESS, an Alberta-based education station