The CRTC’s senior broadcasting commissioner says that while ‘it’s not a foregone conclusion’ that the regulator will approve the transfer of the Independent Film Channel Canada licence to Alliance Atlantis Communications, a ruling against that transfer would be ‘a severe judgment.’

Andree Wylie, commission vice-chair of broadcasting, said she could not speak to many of the specifics of AAC’s active application to take control of the coveted IFCC licence from Salter Street Films, which AAC bought earlier this year. But she did discuss logistics, some past practice, previous change-of-control cases and the trends in entertainment convergence.

The commission has set an Aug. 30 deadline for commentary on AAC’s transfer application. Some industry discussion has focused on the integrity and significance of the licensing process. Meanwhile, earlier this month, a spokesman for the broadcast regulator told Playback the CRTC will ask AAC to answer for the timing of its move to take over SSF, which was awarded the Category 1 – guaranteed carriage – digital specialty licence last November. AAC CEO Michael MacMillan said his company began negotiations to buy the entire company in December.

Said CRTC spokesman Denis Carmel: ‘You’re not supposed to get a licence and sell it right away. It doesn’t work that way. We’re not in the licence trafficking business.’

But Phyllis Yaffe, CEO of Alliance Atlantis Broadcasting, says while the CRTC should reflect on transfer applications in light of the licensing process, the IFCC case does not represent trafficking.

‘We know what trafficking is and we understand it,’ says Yaffe. She adds that, ‘The typical trafficking accusation is where someone [applies for] the licence with no intention of launching it’ or ‘getting a licence and then flipping it for a huge profit.’

Yaffe goes on to say, ‘Salter Street applied for the licences with every expectation of launching their licences if they got several Category 1s with guaranteed carriage. They didn’t get all that – they got one Category 1 and a lot of Category 2s.’

With its licences in hand and a building ready to serve as a broadcast centre in Halifax, Salter went looking for service suppliers for master control and ad sales, among other things. But then, Yaffe says, MacMillan proposed to Salter CEO Michael Donovan that rather than be a seller of services, AAC should instead buy SSF outright.

Since the buyout, ‘the production side [of SSF] is alive and well and thriving in Halifax and we intend to grow it,’ continues Yaffe. ‘It’s a good business. All parts of the company are valuable to us.’

Wylie says while she can’t recall the CRTC rejecting any large transfers, the IFCC case is not large. She also emphasizes that the commission recognizes the proliferation of media convergence. She says 2001 is not like the mid-’90s when the regulator rejected Rogers’ attempt to buy Telelatino.

‘It’s another era. Now that we’ve just given 260-some Category 2 licences, and with an era of mergers and convergence and a lot of movement in the market, we’ll probably see more [transfers].

‘It’s up to licensees to try to sort this out in a manner that best shows an attempt to fit within the [regulatory] policies and to make it as easy as possible for the commission to accept the transfers. It’s very difficult to penalize – we don’t have a policy of returning the licence [to the seller]. I guess it’s not an impossibility. It’s more likely that an attempt will be made to accommodate and do what’s fair and alleviate any allegations of trafficking….’

‘I’m sure that the licensees will put their best case forward to say that this [convergence] occurs,’ says Wylie.

There is at least one precedent similar to the AAC/SSF case. In 1999, Radiomutuel won a licence for Canal Z; shortly after, Astral announced it was buying Radiomutuel, which was to launch the new channel the following year. The commission approved the transfer of the new licence to Astral with the support of Quebec producers who were onside, according to a Playback report, ‘because of the broadcaster’s promise to continue to buy all programming from independent prodcos.’

Still, the IFCC transfer is ‘not a foregone conclusion,’ Wylie says. ‘If some commissioners are not sure this is acceptable, certainly they can say ‘no.’ Which then leads to the service [having] to be sold to someone else, separately from the other assets. But nothing is impossible. And the commission certainly has jurisdiction to say ‘In this case we believe that the regulatory negatives in this are more serious than the financial aspects.’ It would be kind of a severe judgement which would have to be well explained, because as you can imagine, every time the commission does this type of thing it becomes examined as a precedent.

‘And in this case as well, …[the buyers] may well have argued that the chances of it being a success are increased, which is good for digital penetration, and because of the strength of Alliance Atlantis in that area. And that has to be weighed, for us, against the desire, which appears to be transparent in the decision, that the commission wanted some different [ownership] blood in the sector….And few people actually weigh the consumer, in the end in the process.’

Wylie suggests a decision could come about 60 days after the intervention deadline, or perhaps sooner. All the CRTC commissioners can vote on the matter.

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