OTTAWA-GATINEAU: The CRTC gave CanWest Global Communications an early Christmas present Dec. 20, finding no problems with the foreign investment at play in approving the broadcaster’s $2.3-billion acquisition of Alliance Atlantis Communications. But less than an hour after the CRTC released its decision, the unions were talking appeal.

While the CRTC made several modifications to CanWest’s proposed benefits package connected to the sale, the broadcast regulator determined U.S. investment bank Goldman Sachs & Co., which is financially backing the deal, would not have legal or de facto control of the 13 specialty TV channels under the Alliance Atlantis umbrella.

Goldman Sachs is putting up about 65% of the money, but while CanWest will only have the remaining 35% equity interest at the time of the sale, it will indirectly hold 67% of the voting shares. Under the deal, CanWest must merge its existing broadcast properties into CanWest Investments by 2011, making it the majority owner of Alliance Atlantis.

‘Taking into account the entire transaction, CanWest’s share of the overall equity and voting shares does not cause concern to the commission,’ the CRTC noted in a media release issued alongside the decision.

Meanwhile, Peter Murdoch, VP of media at the Energy and Paperworkers Union, said his organization ‘was not going to let this decision sit.’

With its counsel, the CEP is examining possible appeal routes, such as directly to Cabinet or even through the judicial courts.

‘This is an outrageous decision, particularly because of the ability of the CRTC to turn 35% equity into more than 50%,’ noted Murdoch. ‘Why are they considering 2011 accounts now? Why not the year 3000? Why not never-never?’

Canadian control of domestic broadcast companies is required by the Broadcasting Act.

‘I was surprised by the lack of concern the CRTC had with the structure of the deal,’ stated Ben Mogil, a media and entertainment equity analyst at Westwind Partners.

In its decision, the CRTC noted its concerns over a Goldman Sachs reporting committee, and the investment bank’s veto powers were addressed during public hearings held in November.

At that time, CanWest agreed to set out procedures for record keeping, quorum and a meetings schedule for the reporting committee. It also proposed that the reporting committee have no authority or right to make decisions about Alliance Atlantis’ companies. CanWest also amended its proposed shareholders’ agreement to allow the Goldman Sachs veto rights to be waived by one, rather than both, Goldman Sachs-nominated directors on the board.

‘The decision is overwhelmingly positive for CanWest, with the only downside being the slightly higher benefits package,’ noted Mogil.

The CRTC estimated the cost of the value of the regulated assets at $143.5 million higher than the $1.369-billion figure CanWest used. With benefits packages traditionally worth 10% of the value of the regulated assets, the CRTC thus asked for an additional $14.35 million to be added to CanWest’s proposed $136.9-million package.

The regulator also disallowed several aspects of the proposed benefits package, telling CanWest to add the $5 million it wanted for digitizing archival news footage and the $700,000 it had earmarked for a broadcast diversity journalism program to go instead to its scripted drama initiative.

These requests, along with the increased value of the benefits package, up the amount of money for programming to $136.615 million from the $123 million CanWest had proposed.

The commission also ruled that a minimum of 60% of the scripted drama production initiative had to go toward 10-point Canadian drama, while up to 40% could be spent on eight-point Canadian drama.

The CRTC also turned down CanWest’s request to pay out the benefits over 10 years, rather than the traditional seven years.

Along with the programming money, the benefits package, with the CRTC revisions, includes $14.615 million for social benefits for training, mentorship and internship programs, arts and diversity festivals and media literacy.

CanWest president and CEO Leonard Asper said the conditions imposed by the CRTC in the decision ‘will have no material impact on our business.’

He added, ‘Today is a great day for both CanWest and Alliance Atlantis. I would like to thank the CRTC for rendering this decision so expeditiously. It now allows us to all move forward and create a new, vibrant, Canadian broadcast company.’

The decision came only about a month after the CRTC’s public hearing into the acquisition.