ARCHIVED - Broadcasting Decision CRTC 2002-449

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Broadcasting Decision CRTC 2002-449

Ottawa, 16 December 2002

Bell Globemedia Inc., on behalf of a corporation
to be incorporated and on behalf of The Sports Network Inc.

Across Canada

Applications 2002-0635-1, 2002-0636-9,
2002-0637-7 and 2002-0638-5
Public Hearing at Kitchener, Ontario
28 October 2002

Intracorporate reorganization

1.

The Commission received applications by Bell Globemedia Inc., on behalf of a corporation to be incorporated (New RDS, OBCI), which would be a wholly-owned subsidiary of Le Réseau des sports (RDS) inc. (RDS inc.), and on behalf of The Sports Network Inc. (TSN Inc.) to effect an intra-corporate reorganization with respect to RDS inc. and TSN Inc.

2.

The Commission did not receive any interventions in connection with these applications.

The parties

3.

RDS inc. is currently owned and controlled by CTV Specialty Television Enterprises Inc. (CTV Enterprises), which holds 99.96% of the voting interest. In turn, CTV Enterprises is a wholly-owned subsidiary of CTV Specialty Television Inc. (CTV Specialty)1. CTV Specialty is indirectly owned by CTV Inc., a wholly-owned subsidiary of Bell Globemedia Inc.

4.

RDS inc. is the licensee of the national French-language specialty television service Réseau des sports (the RDS service). It is also authorized to operate a national French-language Category 1 specialty television service to be known as Réseau Info Sports and a national French-language Category 2 specialty television service to be known as Le Réseau grand air.

5.

TSN Inc. is currently owned and controlled by CTV Specialty.

6.

TSN Inc. is the licensee of the national English-language specialty television service, The Sports Network (the TSN service), of the Category 1 national specialty television service known as Women's Sports Network and of the Category 2 national specialty television service known as ESPN Classic Sports. It also holds 21.42% of the voting rights of the national Category 2 specialty television service known as The NHL Network Inc.

7.

TSN Inc. has also been authorized to operate, on its own or in partnership, other national English-language Category 2 services, which are not yet operational.

The proposed transactions

8.

The applicant proposed to carry out the intra-corporate reorganization in two stages.

9.

In the first stage, the applicant would transfer the assets of the RDS service, Réseau Info Sports and Le Réseau grand air from RDS inc. to New RDS, OBCI.

10.

The applicant also requested a broadcasting licence to continue the operation of the RDS service under the same terms and conditions, upon surrender of the current licence issued to RDS inc.

11.

The Commission has not yet issued licences for Réseau Info Sports and Le Réseau grand air because they have not implemented operations. Accordingly, the applicant proposed to transfer the assets of these services under the same terms and conditions as the current authority granted for each service in its respective licensing decision2. The applicant stated that the incorporated company of the New RDS, OBCI, would become the licensee of these services upon fulfilment of the general conditions pertaining to Category 1 and Category 2 specialty television services set out in Introductory statement - Licensing of new digital pay and specialty services, Public Notice CRTC 2000-171-1, 6 March 2001 (Public Notice 2000-171-1) and Ownership and launch requirements for Category 1 and Category 2 specialty services, Public Notice CRTC 2001-98, 30 August 2001.

12.

In the second stage, the applicant proposed to change the effective control of TSN Inc. through the transfer of all of its issued and voting shares (1,000 common shares) from CTV Specialty to RDS inc. The applicant stated that this transaction would also result in a change in the authorized ownership of any unlaunched Category 2 specialty television service in which TSN Inc. is authorized to hold interest.

13.

Following the proposed intra-corporate reorganization, New RDS, OBCI and TSN Inc. would remain sister companies. Each would be wholly-owned subsidiaries of RDS inc., which would continue to be owned by CTV Specialty (.04%) and CTV Enterprises (99.96%). Although the applicant has not yet determined a name, RDS inc.'s name would change following the reorganization, and New RDS, OBCI's name would change to Le Réseau des sports (RDS) inc.

14.

The applicant confirmed that the control of the corporations affected by the proposed transactions would remain the same. Legal control of both RDS inc. and TSN Inc. would remain with BCE Inc.

The Commission's determination

15.

The Commission notes that the proposed transactions represent an intracorporate reorganization that does not alter the control of RDS inc. or TSN Inc. In the circumstances, the Commission considers that the proposed transactions are reasonable. Accordingly, the Commission approves the applications by Bell Globemedia Inc., on behalf of New RDS, OBCI and on behalf of TSN Inc. to effect an intracorporate reorganization with respect to RDS inc. and TSN Inc.

Issuance of the licences

16.

The new licences will expire 31 August 2008 for the RDS service, and 31 August 2007 for Réseau Info Sports and Le Réseau grand air, respectively. These dates correspond with the expiry date of the current licence issued for the RDS service and of the authorities granted to operate Réseau Info Sports and Le Réseau grand air. The new licences will be subject to the same terms and conditions as are currently in effect.3

17.

Each licence will be issued once the licensee has fulfilled the following requirements.

18.

The licensee must submit to the Commission:

  • the current licence issued for the RDS service;
  • the executed corporate documents related to New RDS, OBCI, including the certificate and articles of incorporation, by-laws and any related document and agreement to confirm that an eligible Canadian corporation has been incorporated in accordance with the applications in all material respects;
  • the certificate and articles of amendment of RDS inc. reflecting the proposed change in the authorized capital of RDS inc.;
  • the executed copy of the share transfer agreement referred to in the draft articles of amendment of RDS inc., covering the exchanges of shares for CTV Specialty between TSN Inc. and RDS inc., as well as the actual number of non-voting shares to be held by CTV Specialty in RDS inc.; and
  • the certificate and articles of amendment reflecting the proposed name change for RDS inc.

19.

With regard to Réseau Info Sports and Le Réseau grand air, the licensee must also satisfy the Commission, with supporting documentation, that:

  • the licensee has entered into a distribution agreement with at least one licensed distributor for each service; and
  • the licensee is prepared to commence operations of the service. Each undertaking must be operational at the earliest possible date and in any event no later than 30 September 2003 for Réseau Info Sports4 and 24 November 2003 for Le Réseau grand air, unless a request for an extension of time is approved by the Commission before that date. In order to ensure that such a request is processed in a timely manner, it should be submitted at least 60 days before this date.

Secretary General

This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca
1 CTV Enterprises was formerly known as NetStar Enterprises Inc., and CTV Specialty was formerly known as NetStar Communications Inc.

2 The Commission authorized the operation of these services in two separate decisions: Réseau Info Sports - a new specialty service, Decision CRTC 2000-465, 24 November and 14 December 2000 (Decision 2000-465) and Le Réseau grand air, Decision CRTC 2000-613, 24 November and 14 December 2000 (Decision 2000-613).

3 The terms and conditions that apply to Le Réseau des sports are set out in Licence renewal for Le Réseau des sports, Decision CRTC 2001-735, 29 November 2001.
The terms and conditions that apply to Réseau Info Sports are set out in Decision 2000-465 and Public Notice 2000-171-1.
The terms and conditions that apply to Le Réseau grand air are set out in Decision 2000-613 and Public
Notice 2000-171-1.

4 In Second deadline to commence operations, Broadcasting Decision CRTC 2002-414, 9 December 2002, the Commission approved an application to extend the implementation date for Réseau Info Sports to 30 September 2003.

Date Modified: 2002-12-16

Date modified: