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ARCHIVED -  Broadcasting Decision CRTC 2008-142

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Broadcasting Decision CRTC 2008-142

  Ottawa, 15 July 2008
  Rogers Broadcasting Limited, on behalf of 6878482 Canada Inc.
Toronto, Ontario
  Application 2007-1801-7, received 10 December 2007
Public Hearing in the National Capital Region
7 July 2008
 

Sportsnet 2 - Corporate reorganization (Assets)

  The Commission approves, subject to a condition, the application by Rogers Broadcasting Limited, on behalf of 6878482 Canada Inc., for a new licence to operate a national, English-language Category 2 specialty service to be known as Setanta Sports (Canada) under the same terms and conditions set out in Broadcasting Decision 2007-384.
 

Introduction

1.

In Broadcasting Decision 2007-384, the Commission authorized Rogers Broadcasting Limited (Rogers) to operate Sportsnet 2, a national, English-language Category 2 specialty programming undertaking. The undertaking is not yet in operation and the Commission has not issued the licence for this undertaking because the requirements for its issuance have not yet been met.

2.

Following the issuance of Broadcasting Decision 2007-384, the Commission received an application by Rogers Broadcasting Limited, on behalf of 6878482 Canada Inc., for a new licence to operate a national, English-language Category 2 specialty programming undertaking under the same terms and conditions set out in Broadcasting Decision 2007-384 as a result of a corporate reorganization.

3.

The corporate reorganization would be effected by the creation of two new corporations under Rogers' control. The new licensee would be 6878482 Canada Inc. (the licensee), a corporation to be owned by 6878458 Canada Inc. (Holdco) (80%) and by the Setanta Sports North America Limited (Setanta), a non-Canadian corporation (20%). Holdco, the controlling corporation, would be held by Rogers (66.67%) and by Setanta (33.33%).

4.

A Joint Venture Agreement (the agreement) providing for the governance of the service was entered into by Rogers and Setanta on 6 May 2008.

5.

The Commission did not receive any interventions in connection with this application.
 

Commission's analysis and determinations

6.

The Governor in Council has, by Order in Council P.C. 1997-486, Direction to the CRTC (Ineligibility of Non-Canadians), 8 April 1997 (the Direction), issued a direction to the Commission, pursuant to subsection 26(1) of the Broadcasting Act, respecting the classes of applicants to whom licences may not be issued or to whom amendments or renewals thereof may not be granted. Pursuant to the Direction, no broadcasting licence may be issued, and no amendment or renewals thereof may be granted, to an applicant that is a "non-Canadian" A "non-Canadian" is a person or entity that is not a "Canadian." A "Canadian" includes a "qualified corporation."

7.

The Direction also provides that, where the Commission determines that an applicant is controlled by a non-Canadian, whether on the basis of personal, financial, contractual or business relations or any other considerations relevant to determining control in fact, the applicant is deemed to be a non-Canadian. Therefore, where the Commission determines that a qualifying corporation that would otherwise be a "Canadian" for the purposes of the Direction is in fact controlled by a non-Canadian, the corporation shall be deemed to be a "non-Canadian."

8.

In the present case, the non-Canadian shareholder Setanta would have
  • a direct and indirect voting interest of 46.67% in the licensee;

  • a 20% representation level on the board of the licensee (1/5 directors) and a 33% representation level on the board of Holdco (2/6 directors);

  • veto rights over certain decisions of both Holdco and the licensee, which rights are consistent with those customarily provided to minority shareholders; and

  • a programming supply agreement and a trademark licence agreement whereby it would be compensated for certain services/activities.

9.

For its part, Rogers would
  • be responsible for the management of the service pursuant to a Management Agreement;

  • be responsible for the strategic direction;

  • prepare the annual business plans and capital and operating budgets;

  • have the majority of the board representation for both Holdco (4/6 directors) and the licensee (4/5 directors); and

  • ensure that it is represented by the majority of the directors present when quorum of the boards is sought (Holdco and the licensee).

10.

In addition to the above factors, the Commission has considered the applicant's commitment to file an amendment to the licensee's by-laws to establish an independent programming committee to ensure compliance with the Direction and to ensure specifically that Holdco or its directors do not exercise control or influence over any programming decisions of the licensee.

11.

The Commission notes that both Rogers and Setanta will also be parties to other agreements, including a Trademark License Agreement, a Programming Licensing Agreement and a Unanimous Shareholders Agreement. To properly assess the potential impact of these agreements on the control of the licensee, the Commission needs to carefully review each of them. Accordingly, as a condition of approval, the applicant must file executed copies of the following within 30 days of the date of this decision:
  • Amended & Restated Joint Venture Agreement;

  • Unanimous Shareholders Agreement;

  • Trademark Licence Agreement;

  • Programming Licensing Agreement;

  • Rogers Management Agreement; and

  • amendments to the licensee's by-laws to establish an independent programming committee and to reflect the new share structure of the proposed licensee.

12.

In light of the above, the Commission is satisfied that the licensee will be controlled by Rogers, a Canadian, at all times. Accordingly, the Commission approves, subject to the above condition, the application by Rogers Broadcasting Limited, on behalf of 6878482 Canada Inc., for a new licence to operate a national, English-language Category 2 specialty programming undertaking to be known as Setanta Sports (Canada) under the same terms and conditions set in Broadcasting Decision 2007-384.

13.

The Commission will issue a broadcasting licence to 6878482 Canada Inc. once the terms and conditions set out in Broadcasting Decision 2007-384 have been met.
  Secretary General
 

Related documents

 
  • Sportsnet 2 - Category 2 specialty service, Broadcasting Decision CRTC 2007-384, 18 October 2007
 
  • Direction to the CRTC (Ineligibility of Non-Canadians), P.C. 1997-486, 8 April 1997
  This decision is to be appended to the licence. It is available in alternative format upon request and may also be examined in PDF format or in HTML at the following Internet site: http://www.crtc.gc.ca.

Date Modified: 2008-07-15