ARCHIVED - Decision CRTC 2001-621

Decision CRTC 2001-621

Ottawa, 1 October 2001

M. Anthony P. Viner
President & CEO
Rogers Broadcasting Limited
777 Javis Street
Toronto, Ontario
M4Y 3B7

Dear M. Viner:

Re:  Applications Nos. 2001-0720-3; 2001-0802-8 - Approved with the redirection of certain tangible benefits
Request to acquire control and ownership of CTV SportsNet Inc.
Licensee of SportsNet, a national specialty service

The Commission has completed its examination of the above-noted applications from Rogers Broadcasting Limited (Rogers) seeking authority to acquire the effective control of CTV SportsNet Inc. (CTV SportsNet), licensee of SportsNet, an English-language national specialty sport service. The Commission approves the proposed transactions conditional on the redirection of the disallowed tangible benefits

The first application consists of transferring the 10.001% voting interest in CTV SportsNet held by The Molson Companies Limited (Molson). The second application consists of transferring the 40% voting interest in CTV SportsNet held in trust pursuant to the Commission's decision (Decision CRTC 2000-86). Rogers currently owns 29.999% of the voting interest in CTV SportsNet.

In the context of the 10.001% voting interest's transfer, the Commission notes that this transaction results from a prior transaction whereby part of the Molson's interest in CTV SportsNet (9.999%) was transferred to Rogers pursuant to an agreement, the Rogers / Molson Settlement Agreement, increasing its 20% ownership interest to 29.999%. Following this transaction, Molson retained 10.001% in CTV SportsNet. At the time, concerns were raised as to whether the Rogers/Molson Settlement Agreement constituted an acquisition by Rogers of the entire 20% thus, triggering a regulatory approval under subparagraph 10(4) c) of the Specialty Services Regulations, 1990.

In the context of the current proceeding, the Commission remains uncertain and will not stipulate on the nature of this transaction. However, the Commission reminds Rogers and the licensee that any similar subsequent transaction will be thoroughly examined, with the view of compliance with the Specialty Services Regulations, 1990

The Commission notes Rogers' commitment to contribute $14.45 millions in tangible benefits, which represent more than 10% of the purchase price ($137,000,000), to be implemented over a 7-year period. Among the proposed initiatives, the Commission approves the following:

$1 million to develop programs for young Canadians, and in particular, those who are members of an underrepresented group (aboriginal peoples, visible minorities, women and persons with disabilities), to pursue careers in sports broadcasting;

$0.25 million for the NBRS (Voice Print).

The Commission does not accept the following initiatives:

$5.5 million to upgrade and operate, for three years, a mobile production facility that will made available to all broadcasters to that they will have the means to broadcast sports events in a high definition format;

$5.25 million to upgrade SportsNet's production facility in Toronto so that it will be able to process HDTV programs and to lease transponder capacity to enable CTV SportsNet to provide a HDTV feed to BDUs; and,

$2.45 million to develop interactive programming for sports programming services.

In the context of the current transaction, the Commission considers such benefits as being part of the normal course of business and, consequently, finds them unacceptable. The Commission acknowledges that certain iTV initiatives have been accepted in past decisions but only when such initiatives were directly related to priority programming.

In this regard, the Commission notes that Rogers committed in their application to redirect any disallowed tangible benefits to the Rogers Telefund. The Commission expects Rogers to adhere to this undertaking and the funds will be reasonably allocated over the 7- year period.

Our records will be modified to reflect the attached ownership structure. All letters of approval issued by the Commission are made available for public examination at the Commission's central office. The Commission also requires you to append this letter to your licence.

Yours sincerely,

Secretary General

Appendix A

OWNERSHIP STRUCTURE

CTV SportsNet Inc.

Rogers Broadcasting Limited

Rogers Media Inc.

Rogers Communications Inc.

Date Modified: 2001-10-05