TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

                      SUBJECT / SUJET:

CanWest MediaWorks Inc. (CanWest), on behalf of Alliance

Atlantis Communications Inc. (Alliance Atlantis) /

CanWest MediaWorks Inc. (CanWest), au nom d'Alliance Atlantis

Communications Inc. (Alliance Atlantis)

HELD AT:                              TENUE À:

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

140 Promenade du Portage              140, Promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

November 19, 2007                     Le 19 novembre 2007

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

                 Transcript / Transcription

CanWest MediaWorks Inc. (CanWest), on behalf of Alliance

Atlantis Communications Inc. (Alliance Atlantis) /

CanWest MediaWorks Inc. (CanWest), au nom d'Alliance Atlantis

Communications Inc. (Alliance Atlantis)

BEFORE / DEVANT:

Konrad von Finckenstein           Chairperson / Président

Elizabeth Duncan                  Commissioner / Conseillère

Len Katz                          Commissioner / Conseiller

Michel Arpin                      Commissioner / Conseiller

ALSO PRESENT / AUSSI PRÉSENTS:

Jade Roy                          Secretary / Secrétaire

Lyne Renaud                       Hearing Managers /

Rachel Marleau                    Gérantes de l'audience

James Wilson                      Legal Counsel /

Neil Campbell                     Conseillers juridiques

HELD AT:                          TENUE À:

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

140 Promenade du Portage          140, Promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

November 19, 2007                 Le 19 novembre 2007

- iv -

           TABLE DES MATIÈRES / TABLE OF CONTENTS

                                                 PAGE / PARA

PRESENTATION BY / PRÉSENTATION PAR:

CanWest MediaWorks                                  4 /   20

INTERVENTION BY / INTERVENTION PAR:

Council of Canadians                              176 / 1061

Canadian Conference of the Arts                   192 / 1144

Directors Guild of Canada                         219 / 1289

Communications, Energy and                        246 / 1433

  Paperworkers Union

- v -

              EXHIBITS / PIÈCES JUSTIFICATIVES

No.                                              PAGE / PARA

CRTC-1        Document entitled "Reference          3 /  17

              materials for the CRTC hearing

              regarding control and fact issues

              on CanWest, Goldman Sachs,

              Alliance Atlantis."

                  Gatineau, Quebec / Gatineau, Québec

‑‑‑ Upon commencing on Monday, November 19, 2007

    at 0930 / L'audience débute le lundi

    19 novembre 2007 à 0930

LISTNUM 1 \l 11                THE SECRETARY:  Please be seated.  We are about to start.

‑‑‑ Pause

LISTNUM 1 \l 12                THE CHAIRPERSON:  Good morning, ladies and gentlemen.

LISTNUM 1 \l 13                This is a hearing on CanWest's acquisition of Alliance Atlantis.

LISTNUM 1 \l 14                The panel today consists of my colleagues, Michel Arpin, Vice‑Chairman of Broadcasting; Len Katz, Vice‑Chairman of Telecommunications; Elizabeth Duncan, Commissioner of the Atlantic Region; and myself, Konrad von Finckenstein, as Chairman.

LISTNUM 1 \l 15                The Commission team assisting us today includes:  Hearing Managers Lyne Renaud, Director of Ownership, and Rachel Marleau, Senior Corporate Analyst; Legal Counsel, James Wilson and Neil Campbell; and Jade Roy, our Hearing Secretary.

LISTNUM 1 \l 16                I think you all know what it is about, so without further ado, let's get down to business.

LISTNUM 1 \l 17                Madame Roy.

LISTNUM 1 \l 18                THE SECRETARY:  Thank you, Mr. Chairman.  Bonjour à tous.

LISTNUM 1 \l 19                First, I would ask that when you are in the hearing room please turn off your cell phones, beepers and BlackBerrys.  We would appreciate your cooperation in this regard throughout the hearing.

LISTNUM 1 \l 110               Please note that the Commission members may ask questions in either English or French.  You can obtain an interpretation receiver from the commissionaire sitting at the entrance of the conference centre.

LISTNUM 1 \l 111               Le service d'interprétation simultanée est disponible durant cette audience.  L'interprétation anglaise se trouve au canal 7, et l'interprétation française au canal 8.

LISTNUM 1 \l 112               We expect the hearing to be completed within the next two to three days.  We will begin tomorrow morning at 8:30 a.m. and adjourn each afternoon at approximately 4:30 p.m.  We will take one hour for lunch and a break in the morning and in the afternoon.

LISTNUM 1 \l 113               There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table on my right.  If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.

LISTNUM 1 \l 114               Please note that the full transcript will be made available on the Commission's website shortly after the conclusion of the hearing.

LISTNUM 1 \l 115               Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public de cette audience dans la salle d'examen qui se trouve dans la salle Papineau, située à l'extérieur de cette salle, à votre droite.

LISTNUM 1 \l 116               During its questioning of the Applicant CanWest MediaWorks Inc., the panel will be referring to the document entitled "Reference materials for the CRTC hearing regarding control and fact issues on CanWest, Goldman Sachs, Alliance Atlantis."

LISTNUM 1 \l 117               The Commission will therefore enter this document into the record as Commission Exhibit CRTC‑1.  Copies are available in the examination room.

EXHIBIT NO. CRTC‑1:  Document entitled "Reference materials for the CRTC hearing regarding control and fact issues on CanWest, Goldman Sachs, Alliance Atlantis."

LISTNUM 1 \l 118               THE SECRETARY:  Now, Mr. Chairman, we will proceed with the presentation by the Applicant CanWest MediaWorks Inc.  Appearing for the Applicant is Leonard Asper.

LISTNUM 1 \l 119               Please introduce your colleagues and you will then have 20 minutes to make your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 120               MR. ASPER:  Thank you very much.

LISTNUM 1 \l 121               Good morning, Chairman, commissioners and Commission staff.

LISTNUM 1 \l 122               My name is Leonard Asper and I am President and CEO of CanWest Global Communications Corp.

LISTNUM 1 \l 123               We are pleased to appear before you today to discuss our acquisition of the Alliance Atlantis Specialty Services.

LISTNUM 1 \l 124               I would like to begin our presentation today by introducing the members of our panel and also acknowledging the presence of a number of important people who are with us in the audience today.

LISTNUM 1 \l 125               First and foremost, seated in the front row is Michael MacMillan ‑‑ that is the front row behind me ‑‑ the former Chairman and co‑founder of Alliance Atlantis Communications.  Next to him is Phyllis Yaffe, the CEO of Alliance Atlantis.

LISTNUM 1 \l 126               As you know, it is through the leadership and the vision of both Michael and Phyllis and the many people who worked alongside them over the years that Alliance Atlantis has become a true Canadian success story.

LISTNUM 1 \l 127               I would also like to acknowledge the presence of the Chairman of the Board of CanWest Global Communications, Derek Burney, who is there in the front row as well; Peter Viner, beside him, the former CEO of CanWest Global Communications and also a director on the CW Media board; as well as Jim Macdonald, the independent trustee of the Alliance Atlantis Services.

LISTNUM 1 \l 128               Also with us today is Tim Hodgson, the CEO of Goldman Sachs Canada.

LISTNUM 1 \l 129               Now in the front row of our panel, seated to my immediate left, is Tom Strike, who is the President of Strategy and Implementation for CanWest.

LISTNUM 1 \l 130               Next to him is Richard Leipsic, the Senior Vice‑President and General Counsel.

LISTNUM 1 \l 131               Next to him is John Maguire, Chief Financial Officer of CanWest Global.

LISTNUM 1 \l 132               To my immediate right is Charlotte Bell, the Vice‑President of Regulatory Affairs.

LISTNUM 1 \l 133               Seated next to her is Kathy Dore, President of Television, CanWest MediaWorks.

LISTNUM 1 \l 134               Next to Kathy is Barbara Williams, our Senior Vice‑President of Programming, as well as Christine Shipton, Vice‑President of Original Programming.

LISTNUM 1 \l 135               Next to Christine is Walter Levitt, Senior Vice‑President of Marketing.

LISTNUM 1 \l 136               In the row behind me, starting from the left is Marlene Lock, the Vice‑President of Finance of CanWest Global.

LISTNUM 1 \l 137               Next to her is Colin O'Leary, a partner in the Valuation Services Group of Ernst & Young LLP, our independent valuators.

LISTNUM 1 \l 138               Next to him is Grant Buchanan, General Counsel at McCarthy Tétrault, who is acting as General Counsel for Goldman Sachs.

LISTNUM 1 \l 139               Seated next to him is Gerry Cardinale, Managing Director at Goldman Sachs.

LISTNUM 1 \l 140               Seated next to him is Ante Vucic, who is also Counsel for Goldman Sachs.

LISTNUM 1 \l 141               Next to him is Christine Cook, the Vice‑President of Finance for CanWest MediaWorks.

LISTNUM 1 \l 142               Next to her is Kathy Gardner, Senior Vice‑President, Research and Promotions for CanWest Media Sales.

LISTNUM 1 \l 143               Finally, next to Kathy is Steve Wyatt, Senior Vice‑President of News Information for CanWest.

LISTNUM 1 \l 144               Commissioners, this transaction represents an exciting and important phase in the history of CanWest.  It is the culmination of more than 30 years of building a company and bringing it to the next logical stage of growth so we can move forward and compete effectively in a rapidly changing media world.

LISTNUM 1 \l 145               When my father founded CanWest three decades ago, he moved a small TV station from North Dakota cross the border to Winnipeg to establish CKND, the first private local television station in that market.  Well, we have come a long way since then.

LISTNUM 1 \l 146               Over the years, through a series of acquisitions and start‑ups, we have created two strong conventional television brands:  first, the Global Television Network which is now available in 95 percent of Canadian homes, and more recently, a newly rebranded network of stations now known as E.

LISTNUM 1 \l 147               In the last decade we also entered the specialty television world and now operate a number of digital specialty services as well as one analog specialty service, TVTropolis.

LISTNUM 1 \l 148               Our core business is conventional television, which has matured and now faces many challenges due to several structural and technological factors, and while conventional television remains the cornerstone of the broadcasting system, it now has to compete within a sea of viewing choices, including a number of content providers that are new, both foreign and domestic, some of which are less regulated and many of which are not regulated at all.

LISTNUM 1 \l 149               Today, more than 95 percent of our broadcast revenues come from advertising.  However, in recent years, the largest revenue stream in the Canadian broadcasting system has shifted to subscription and up to this point CanWest has been largely absent in that area.

LISTNUM 1 \l 150               Advertising dollars continue to migrate to the specialty sector and the internet at the expense of conventional television.  In fact, virtually all of the growth in television ad spending has been and will continue to be in the specialty sector.

LISTNUM 1 \l 151               For CanWest to be competitive in this changing world, we need to diversity our revenue sources and reaggregate some of that audience lost to specialty by having a more prominent presence in that arena.

LISTNUM 1 \l 152               Commissioners, this transaction will allow us to achieve both of these goals and represents a necessary next step for both CanWest and Alliance Atlantis.

LISTNUM 1 \l 153               Collectively, we have created a world‑class television station group and specialty networks providing high quality information and entertainment programming to Canadian audiences from coast to coast.  In an ever‑changing and increasingly competitive media environment, both CanWest and Alliance Atlantis knew that the status quo was no option.

LISTNUM 1 \l 154               Last December, the owners of Alliance Atlantis and a special committee of their board of directors announced their intention to explore strategic alternatives for the company.  Following this review, the board of directors determined that the best way to grow the business was to sell the company.

LISTNUM 1 \l 155               For CanWest, this represented an opportunity to meet our long‑term business and strategic goals by expanding our presence in the growing specialty sector.  However, the combined assets of Alliance Atlantis also included the highly successful CSI franchise as well as the motion picture distribution business.

LISTNUM 1 \l 156               Our challenge therefore was twofold.  We had to find someone who would be willing to support our investment in the broadcasting assets of Alliance Atlantis while at the same time being prepared to acquire the remaining non‑broadcasting assets of the company.

LISTNUM 1 \l 157               We approached a number of financial institutions and eventually found the right financial backer in Goldman Sachs.

LISTNUM 1 \l 158               I am pleased that Gerry Cardinale of Goldman Sachs is with us today and I would like to ask him now to tell you about his company and their role in this transaction.

LISTNUM 1 \l 159               MR. CARDINALE:  Thank you, Leonard.

LISTNUM 1 \l 160               Commissioners, I am here today representing Goldman Sachs and I would like to take a few minutes to tell you about our company and our investment philosophy.

LISTNUM 1 \l 161               Goldman Sachs is a global investment banking firm.  Since 1986, we have invested over $23 billion of equity in companies around the world representing a wide range of industries.

LISTNUM 1 \l 162               Unlike other investment firms, we do not specialize in any one sector.  In fact, our investments in media companies worldwide represent under 8 percent of our overall portfolio.

LISTNUM 1 \l 163               As such, we do not see ourselves as a strategic investor in these broadcast assets but rather a financial backer supporting CanWest.

LISTNUM 1 \l 164               This is consistent with our overall investment philosophy in which we invest capital to help support clients like CanWest achieve their corporate objectives.  We have no intention of changing our approach with this particular transaction.

LISTNUM 1 \l 165               Our flexibility and partnership approach make us an ideal investor for private or public companies seeking additional capital to fund further growth either through acquisition or expansion.  Typically, we invest in companies that have a proven track record, an experienced management team and attractive growth prospects and this is certainly the case here.

LISTNUM 1 \l 166               Our investments are designed to support the long‑term goals of the companies in which we invest and to build value.  We believe that management is most qualified to run the day‑to‑day business and we assist by participating on the board of directors of companies we invest in.  We are not television operators nor do we wish to be.

LISTNUM 1 \l 167               We recognize the talent and expertise of this team of executives under the leadership of Leonard Asper and Kathy Dore and we are confident that they will run this business in such a way as to meet their regulatory obligations as well as their financial goals and ours.

LISTNUM 1 \l 168               Now let me turn to the issue of Canadian control, which we know is of interest to the Commission.

LISTNUM 1 \l 169               I want to assure you that Goldman Sachs does not wish to control any Alliance Atlantis or CanWest broadcasting entity.  This transaction has been designed so that CanWest is in control.  CanWest has the skill and the resources to manage this business.

LISTNUM 1 \l 170               We understood the regulatory need for Canadian control and we fully accepted that when we entered into our agreement with CanWest.

LISTNUM 1 \l 171               I will be pleased to answer any questions you may have when we get to that portion of this proceeding.  Thank you.

LISTNUM 1 \l 172               MR. ASPER:  Thank you, Gerry.

LISTNUM 1 \l 173               Commissioners, Canada needs strong integrated media companies to assert a Canadian presence on an ever‑evolving media platform.

LISTNUM 1 \l 174               The CRTC has recognized and accommodated this need through a series of policies and decisions that over time have enabled broadcasters to grow through necessity.  These decisions have been wise in acknowledging the importance of consolidation to the ongoing health and strength of the Canadian broadcasting system.

LISTNUM 1 \l 175               We believe that this proposed transaction meets the test of being the best possible under the circumstances and will lead to a strengthened and conventional television business for CanWest.

LISTNUM 1 \l 176               I would now like to turn this over to Kathy Dore and members of our operating team to speak to the specifics of our application.

LISTNUM 1 \l 177               MS DORE:  Thank you, Leonard.

LISTNUM 1 \l 178               Commissioners, beyond the many ways in which this transaction will help strengthen our ability to contribute to the system, our proposed benefits package is significant and unequivocal.

LISTNUM 1 \l 179               In fact, it will inject almost $137 million of new investment into the Canadian broadcasting system.  Of this, 90 percent or $123 million of the total package will be committed to programming initiatives that will result in many new hours of original Canadian programming.

LISTNUM 1 \l 180               We set out to develop a holistic production strategy that would maximize the potential of those benefit dollars and ensure adequate funds for development, production, promotion and new media content.

LISTNUM 1 \l 181               This is why we have proposed a spending formula that would extend to 10 years for our primetime programming initiatives in order to allow for adequate time to properly develop and test programming before beginning production.

LISTNUM 1 \l 182               We are proposing that the remaining 10 percent of the benefits package be targeted towards two key priority areas for CanWest:  training and diversity initiatives.

LISTNUM 1 \l 183               Our training initiatives will give new emerging talent an opportunity to refine their skills and learn from the best and will meet the needs of an oversubscribed market.

LISTNUM 1 \l 184               Our diversity initiatives will target a number of organizations, including the Innoversity Creative Summit, the National Aboriginal Achievement Foundation and the Canadian Council for Aboriginal Business.

LISTNUM 1 \l 185               We will also establish two training programs that we will run in‑house, one for a broadcast diversity journalism training program and the other for a CanWest internship for persons with disabilities.

LISTNUM 1 \l 186               We propose to allocate just over $2 million to support a variety of festivals celebrating Canada's diversity and creative talent across Canada.

LISTNUM 1 \l 187               Finally, as media literacy is also an important priority for CanWest, we have set aside funding to support three organizations that stand out in their efforts to promote media literacy in Canada:  the Media Awareness Network, Learning Through the Arts as well as Concerned Children's Advertisers.

LISTNUM 1 \l 188               I would now like to ask Barb Williams to tell you more about the ways in which this transaction will help enhance Canadian programming.

LISTNUM 1 \l 189               MS WILLIAMS:  Thanks, Kathy.

LISTNUM 1 \l 190               Commissioners, this transaction represents for us an exciting opportunity to combine the well‑defined and powerful specialty brands of Alliance Atlantis with the wide reach and mass appeal of our Global and E conventional television networks.

LISTNUM 1 \l 191               Bringing together distinct yet complementary television services under one roof will allow us to maximize our ability to commission, acquire, promote and broadcast quality Canadian programming across multiple platforms, including our print and web assets, in order to increase audiences.  Simply put, it will help us to build hits.

LISTNUM 1 \l 192               Three key reasons underscore this opportunity.

LISTNUM 1 \l 193               First, we will be able to expose bigger audiences to shows that have mass audience potential but have lacked the wide access to be as successful as possible.

LISTNUM 1 \l 194               Second, we will bring together the combined expertise from two of the strongest and most experienced programming teams in the country to ensure that the best ideas are coming in the door and that we are helping to make them the best they can be.

LISTNUM 1 \l 195               Third, understanding the role that foreign programming plays in supporting the budgets of our Canadian programming, this transaction strengthens our position with our foreign program distribution partners, allowing us to maximize the value foreign acquisitions bring to the Canadian equation.

LISTNUM 1 \l 196               Frankly, it allows us to get the greatest impact possible out of the hundreds of millions of dollars spent on Canadian programming each year with both our viewers and our advertisers.

LISTNUM 1 \l 197               It allows us to combine the strengths and reach of both our companies in order to maximize the potential of our respective program schedules and at its very core enhances our capacity to continue to meet the important cultural and public policy objectives of the Broadcasting Act.

LISTNUM 1 \l 198               The combined power of conventional and specialty television has already been proven.  One of the most evident successes is "Corner Gas," which was actually developed at Comedy Network and then moved to CTV when it became clear there was mass hit potential.

LISTNUM 1 \l 199               That same potential can be envisioned when one looks at the properties of Alliance Atlantis.  For example, "Slings and Arrows", the biggest winner at this year's Gemini Awards.  Imagine giving all of Canada a chance to enjoy that show on Global's prime time.

LISTNUM 1 \l 1100              Or from History Television, the opportunity to share a few of their spectacular documentaries that have been produced to commemorate our country's history, be they about Vimy Ridge or Remembrance Day.

LISTNUM 1 \l 1101              And it can work both ways.  Remember that a huge hit on conventional television delivers upwards of about 3 million people, but that is only 10 per cent of Canadians.  So think of our new hit Canadian comedy "DA Kink In My Hair" having another chance to be enjoyed by even more people on Showcase.

LISTNUM 1 \l 1102              We are acquiring channels that have delivered a full spectrum of quality programming in a variety of genres and, when used as strategically and selectively by aligning our programming commitments and expertise, we can ensure that Canadian shows are seen by more people, thereby growing ratings, increasing the likelihood of renewals and, hence, the building of long‑term hits.  And long‑term hits built on ratings success drives revenue which goes directly back into the Canadian production community.  Everybody wins.

LISTNUM 1 \l 1103              Walter.

LISTNUM 1 \l 1104              MR. LEVITT:  Thanks, Barb.

LISTNUM 1 \l 1105              Commissioners, as you know, the role of marketing and promotion is to take programs we have produced or acquired and turn them into hits.

LISTNUM 1 \l 1106              At CanWest we are fortunate to have a unique and powerful mix of media assets that would be the envy of any marketer.  Whenever we set out to launch a new Canadian program we have the ability to tap into these media assets to ensure our shows become hits.

LISTNUM 1 \l 1107              For example, we run ads in our CanWest newspapers across the country; we promote our shows on our popular websites, including Canada.com generating over 4 million unique visitors each month; we work closely with our colleagues at Entertainment Tonight Canada who always support our original Canadian productions; and perhaps most importantly, we strategically use our own content platforms including Global and "E" to aggressively promote our new programs.

LISTNUM 1 \l 1108              Because of the reach of our two conventional networks we can ensure our program launch messages reach millions of Canadians from coast‑to‑coast.

LISTNUM 1 \l 1109              Commissioners, before joining CanWest two years ago I spent eight years leading the marketing team at Alliance Atlantis.  I was fortunate to have the opportunity to launch numerous successful Canadian programs, including "Trailer Park Boys" on Showcase, "Pioneer Quest" on History Television and "Holmes on Homes" on HGTV.

LISTNUM 1 \l 1110              During my years at Alliance Atlantis, I can remember sitting in numerous meetings with the marketing team brainstorming the most effective ways to market our original Canadian programming.  No matter what the campaign, we always seem to face the same challenge:  there never seemed to be quite enough money or quite enough reach on our own specialty networks to effectively promote our new shows.

LISTNUM 1 \l 1111              I remember that in almost every discussion one theme always seem to emerge:  If we only had access to conventional TV airtime or newspaper space we could really make an impact with all of our new Canadian program launches.

LISTNUM 1 \l 1112              This proposed transaction will finally provide Alliance Atlantis with the reach, resources and impact to ensure more of its Canadian programs are hits.  If the 13 Alliance Atlantis networks were to join the CanWest family, the value we would bring to the marketing of their original Canadian productions would be without compare anywhere in this country.  Simply put, CanWest is the only company that can bring this kind of weight and exposure to these programs and networks.

LISTNUM 1 \l 1113              As an example, last year Showcase launched a terrific Canadian drama, "Billable Hours".  The show is now in its second season and is garnering respectable ratings, but isn't yet they hit it deserves to be.  To some extent this is because it doesn't have access to the promotional strength it needs to draw larger audiences.

LISTNUM 1 \l 1114              So if a show like "Billable Hours" were launched in a world where CanWest and Alliance Atlantis were one company, in addition to the campaign it would receive on Showcase itself, we would also promote the program on Global and E! for its 10‑week run.

LISTNUM 1 \l 1115              We would also provide coverage on Entertainment Tonight Canada and promote it during our morning shows and during news breaks.  We would also run ads in CanWest newspapers nationally and across the CanWest websites.

LISTNUM 1 \l 1116              Based on fairly conservative media estimates, the additional value of marking "Billable Hours" across CanWest conventional networks, newspapers and websites would represent about $5 million, whereas currently we estimate that the promotional campaign for the show was in the $1.5 million range.

LISTNUM 1 \l 1117              There is no doubt that the ability to increase the promotional weight of "Billable Hours" more than three times its current value would help grow audiences and viewing to this quality Canadian program.

LISTNUM 1 \l 1118              As a marketer, when I think about the combined impact of the Alliance Atlantis and CanWest assets I see tremendous upside for the promotion of Canadian programming.  There is no doubt in my mind that CanWest is uniquely positioned as the best and most logical buyer of these 13 networks.

LISTNUM 1 \l 1119              MR. ASPER:  Commissioners, you have heard all the reasons why we believe this transaction represents the best possible proposal under the circumstances.  Over the last three decades CanWest has grown from a small regional broadcaster to one of the largest integrated media companies in Canada.

LISTNUM 1 \l 1120              Seven years ago the Commission approved our acquisition of the WIC television assets and as part of the transaction we committed to spend over $89 million in programming enhancements, training, education and social benefits for the Canadian broadcasting system.  We kept our word.  We spent every dollar, as we said we would, and then some.

LISTNUM 1 \l 1121              As a result of CanWest ownership of the WIC stations, we restored local programming in both Hamilton and Victoria and we launched a much needed third national news voice in this country.

LISTNUM 1 \l 1122              Global National has now become the most watched national newscast in the country and, I might add, Commissioners, that it was a benefit in the transaction.  It was only supposed to go for five years, but despite that we have continued the program and it will continue well into the foreseeable future.

LISTNUM 1 \l 1123              This was no small accomplishment, given the strength and historical stronghold of both CBC and CTV in this area, but we did it.

LISTNUM 1 \l 1124              Our local newscasts are strong in every market in which we operate, benefiting from the strength of the national news‑gathering capabilities that we have in our company and the Global National team as well.

LISTNUM 1 \l 1125              CanWest's interactive group provided the technological support to expand our news presence onto the web and mobile platforms.  We have made major investments in infrastructure and Canadian talent in order to compete in the national news game.  In fact, since we launched our spending has almost tripled from the original investment we made in 2001.

LISTNUM 1 \l 1126              But none of this would have been possible without Global consolidating with WIC in 2000, and the same opportunity for the system exists here.  By uniting our distinct yet complementary television services we will be creating a combined entity that will be much better positioned to compete in a highly fragmented and integrated media environment and, at the same time, continue to meet important cultural and social goals for the benefit of our Canadian audiences, the independent production sector in Canada, and the system overall.

LISTNUM 1 \l 1127              Commissioners, we thank you for your attention and we look forward to your questions.

LISTNUM 1 \l 1128              THE CHAIRPERSON:  Thank you, Mr. Asper.

LISTNUM 1 \l 1129              Attached to your presentation are some charts.

LISTNUM 1 \l 1130              Can you explain to us what these charts are, why they are here and what purpose they serve?

LISTNUM 1 \l 1131              MS BELL:  The charts that we have attached are representative of the puts and calls and we just attached them for guidance when you are asking your questions.  We just thought they might be helpful.

LISTNUM 1 \l 1132              THE CHAIRPERSON:  All right.  Thank you.

LISTNUM 1 \l 1133              I always appreciate a picture.  It is much easier.

LISTNUM 1 \l 1134              This is a very complicated transaction so we will ask you about control primarily, programming synergies, valuation and benefits.

LISTNUM 1 \l 1135              Let me start with control, assisted by my colleague Mr. Katz.

LISTNUM 1 \l 1136              You have in front of you CRTC Exhibit 1, which on the very first page sort of tries to capture in one picture the entire transaction.

LISTNUM 1 \l 1137              Do you have it in front of you?

LISTNUM 1 \l 1138              MR. ASPER:  I'm getting it in front of me.  Just a minute.

LISTNUM 1 \l 1139              THE CHAIRPERSON:  Sure.

‑‑‑ Pause

LISTNUM 1 \l 1140              MR. ASPER:  Okay, I have it now.  Thank you.

LISTNUM 1 \l 1141              THE CHAIRPERSON:  As you can see it shows CanWest and Goldman Sachs putting in their respective investments and then it shows the Shareholders Agreement which governs the relationship with 66.7 per cent resting in CanWest and 33 per cent in Goldman Sachs.  Then you have the regulated entities, which is basically what you are acquiring from Alliance Atlantis.  On the left‑hand side you have the contributed business, which is your existing regulatory business that you want to contribute in 2009.

LISTNUM 1 \l 1142              Now, if I look at this chart it is clear that the Shareholders Agreement will govern the relationship between the two key shareholders, CanWest and Goldman Sachs.

LISTNUM 1 \l 1143              The Management Agreement, having looked at it, basically suggests that CanWest is going to run the regulated entities as well as the contributed.

LISTNUM 1 \l 1144              What I don't see as an Executive Committee.  Where exactly are you going to meet, discuss and do things?

LISTNUM 1 \l 1145              It strikes me that what you call it euphemistically a Reporting Committee is de facto the Executive Committee.  It will have five members, three from CanWest, three from Goldman Sachs.  To the extent there are issues you have to discuss, et cetera, that is a forum where it is going to take place.

LISTNUM 1 \l 1146              Is that correct?

LISTNUM 1 \l 1147              MR. ASPER:  There is no Executive Committee, Mr. Chairman.

LISTNUM 1 \l 1148              The Reporting Committee doesn't have any decision‑making power, it is really simply a committee that receives information.

LISTNUM 1 \l 1149              There will be four Board meetings per year and that is where any substantive matters would be discussed.

LISTNUM 1 \l 1150              Typically the Reporting Committee will meet prior to or just after the Board meeting.  Effectively they may be part of the same meeting, but any Board decisions would be taken as part of a formal Board session.

LISTNUM 1 \l 1151              THE CHAIRPERSON:  So they will be coterminous, the meetings of the Reporting Committee and the Board?

LISTNUM 1 \l 1152              MR. ASPER:  Yes, most likely.  I would not foresee any separate meeting of a Reporting Committee that wasn't going to take place at the same time as a Board.

LISTNUM 1 \l 1153              THE CHAIRPERSON:  I understood the Reporting Committee was the idea to monitor, to make sure what's going on here, what's going on in the contributed business, what's going on in the regulated entity, making sure ‑‑ Goldman Sachs obviously wants to make sure that their investment is being applied in the proper manner, et cetera.

LISTNUM 1 \l 1154              So if that's not the purpose, what is the purpose of the Reporting Committee?

LISTNUM 1 \l 1155              MS MARTIN:  Well, as I say, it is simply to receive information.

LISTNUM 1 \l 1156              CanWest has five members of that committee and Goldman has two, as you know, and the Board has three CanWest members and two Goldman members.  To say they would be coterminous may not be entirely accurate.  They would be back‑to‑back potentially, just for ease of travel.

LISTNUM 1 \l 1157              THE CHAIRPERSON:  Or in between.  Right?

LISTNUM 1 \l 1158              MR. ASPER:  Pardon me?

LISTNUM 1 \l 1159              THE CHAIRPERSON:  Or in between Board meetings?

LISTNUM 1 \l 1160              MR. ASPER:  No.  I doubt that there would ever be a reporting committee between Board meetings.

LISTNUM 1 \l 1161              THE CHAIRPERSON:  Is there anything preventing them from meeting in between?

LISTNUM 1 \l 1162              MR. ASPER:  No.

LISTNUM 1 \l 1163              Maybe I'm not ‑‑

LISTNUM 1 \l 1164              THE CHAIRPERSON:  Mr. Asper, I am not trying to fence with you, I am trying to understand how you are doing this.

LISTNUM 1 \l 1165              If I was Goldman Sach, I would be very worried that my investments are being applied properly.

LISTNUM 1 \l 1166              Where is the forum?

LISTNUM 1 \l 1167              One forum, obviously, is a Board meeting, and you said it meets every three months.  That is a long time in between, et cetera, unless you want to call an extraordinary meeting.

LISTNUM 1 \l 1168              You are going to have this reporting committee, and if there are issues, they are going to be discussed there.  And then you are only going to say, "Len, I am not happy with what you are doing here," or, "I think this is great," or whatever the issue happens to be, "Explain this to me."

LISTNUM 1 \l 1169              Isn't that what the whole idea of the reporting committee is about?

LISTNUM 1 \l 1170              MR. ASPER:  No, I don't think so.  I think the reporting committee is simply to be ‑‑ it may be a vehicle.  If there is a problem, it could be used more frequently.

LISTNUM 1 \l 1171              But, as far as we intend ‑‑ and I can't recall exactly what the agreements say about times of meetings, but, practically speaking, the reporting committee will not meet ‑‑ is not intended to meet between Board meetings.

LISTNUM 1 \l 1172              It is certainly not expected to function as an executive committee, as you suggested at the outset.  An executive committee is usually something that is delegated authority by a Board, and that is certainly not the case here.

LISTNUM 1 \l 1173              THE CHAIRPERSON:  If I understand correctly, the reporting committee ‑‑ there are no records being kept for this, and there are no rules of procedure or anything.  It is just, as you say, a monitoring committee.

LISTNUM 1 \l 1174              MR. ASPER:  I might, for the technical operations of the committee, turn to my left and ask if Tom or Richard have any comments on that role.

LISTNUM 1 \l 1175              MR. LEIPSIC:  Mr. Chairman, if I might ‑‑ I am Richard Leipsic, general counsel.

LISTNUM 1 \l 1176              In fact, the reporting committee has already met on one occasion.  It does keep proceedings.  It does keep records.

LISTNUM 1 \l 1177              The primary purpose behind the reporting committee is to recognize that the level of investment is at the CW Investment Co. entity, of which there is a Board of Directors which will make all decisions that one would expect of a Board.

LISTNUM 1 \l 1178              There is, however, obviously, the obligation of CanWest to contribute to the contributed business in 2011.

LISTNUM 1 \l 1179              To the extent that Goldman Sach would like to have some perspective and visibility into that business, because they do not sit on the Board of CanWest in this diagram, we recognized the opportunity for them to receive information and to have some insight.  Hence we created the reporting committee.

LISTNUM 1 \l 1180              But the reporting committee is, really, simply to be able to have insight and to be able to obtain information with regards to the contributive business, per se, that it wouldn't normally, for fiduciary obligations and confidentiality reasons, have by virtue of its sitting on the Board of CW Investment Co.

LISTNUM 1 \l 1181              THE CHAIRPERSON:  You just made my point.  That is exactly what I am getting at.  This is the way that Goldman Sach finds out what is going on with the contributed business that it doesn't get by virtue of being on the Board.

LISTNUM 1 \l 1182              Therefore, I think there should be some transparency here and some record.

LISTNUM 1 \l 1183              I don't understand why the reporting committee's minutes are not being kept and why there aren't very clear rules as to how the reporting committee functions, because it is another way that Goldman Sach has access to what is going on in the contributed business.

LISTNUM 1 \l 1184              MR. LEIPSIC:  You are right, Mr. Chairman, access, but the decisions associated with the way in which the contributed business is operated reside, obviously, with CanWest.

LISTNUM 1 \l 1185              THE CHAIRPERSON:  I don't dispute that, but if you have access you can comment on it, et cetera, and CanWest, having its biggest investor being concerned on something, presumably, will take that into account.

LISTNUM 1 \l 1186              That is why I said that it's a de facto executive.  They may not make decisions, but this is where the big issues can be raised, can be aired, can be discussed.  The decision later on may be taken formally at the Board level, but this is sort of ‑‑ exactly as you mentioned.  Information will be available to them, but it will not necessarily be available at Board meetings.

LISTNUM 1 \l 1187              MR. LEIPSIC:  That's correct, Mr. Chairman.

LISTNUM 1 \l 1188              As I noted earlier, there are proceedings and there are minutes taken of the reporting committee.  We had a meeting, I think, earlier in October, for the very purpose, as you point out, to be able to have some visibility.

LISTNUM 1 \l 1189              THE CHAIRPERSON:  I don't think I have to beat a dead horse.  I think you got my point.  I think the reporting committee, the way it's set up here, and the key role, needs a little bit more structure and transparency.

LISTNUM 1 \l 1190              Let's move to the main thing, which is the Board itself.  Everything is governed by the Shareholders' Agreement, and the shareholders, not surprisingly ‑‑ it's a given that Goldman Sach, having a majority of the investment but a minority of the votes, gives them some special rights.  Some of them are veto rights, et cetera.

LISTNUM 1 \l 1191              I am looking particularly at Section 4.7 of the Shareholders' Agreement.

LISTNUM 1 \l 1192              First of all, 4.7(b) essentially sets out what are the veto rights of Goldman Sach, and they require the approval of each of the directors of Goldman Sach, i.e., both members have to agree.

LISTNUM 1 \l 1193              The Board normally works by majority, but if any of these issues come up, both Goldman Sach members have to agree.  Why both?

LISTNUM 1 \l 1194              This is more than a veto, this is sort of a special veto.

LISTNUM 1 \l 1195              If you have a majority of one ‑‑ let's say there is a division between the two Goldman Sach directors.  That's not good enough.  You need both of them to agree.

LISTNUM 1 \l 1196              Can somebody explain to me why that is required?

LISTNUM 1 \l 1197              MR. ASPER:  I think, first of all, it is probably not germane whether it is one or two Goldman Sach directors that have the ability to block something.

LISTNUM 1 \l 1198              I think the overall philosophy underlying this section is that, to some extent, Goldman Sach has the right to have some protection over the asset in which it has invested in terms of what it invested in.

LISTNUM 1 \l 1199              It invested in something, and I think it is fairly standard and expected that they would have the right to ensure that what they end up with over time is roughly the same thing.

LISTNUM 1 \l 1200              From our perspective, there is a significant degree of latitude for us to operate the business and manage the strategy with these, and we found these vetoes in this section to be very de minimis from our perspective.

LISTNUM 1 \l 1201              So, yes, there are a few things, but I think, as a lender, if you will ‑‑ whatever you want to call their stake ‑‑ these are very similar to things that are found in banking debt covenants as well.

LISTNUM 1 \l 1202              THE CHAIRPERSON:  I will get to that in a second.

LISTNUM 1 \l 1203              First of all, if it's not germane, why is it there?

LISTNUM 1 \l 1204              You say that it's not germane whether it's one or both.  In that case, why do you specify that it has to be both?

LISTNUM 1 \l 1205              MR. ASPER:  The principle there was simply one to provide Goldman Sach with a veto.

LISTNUM 1 \l 1206              THE CHAIRPERSON:  Okay.  Secondly, I agree with what you just said.  There are standards and such things as changes in the articles of the bylaws, changes in the authorized issued capital, et cetera, and issues of allotment on redemption of the purchase.

LISTNUM 1 \l 1207              I quite understand that.  But then you have something which is very strange to my mind.  You have, first of all, a general one, which basically says that the incurrence of any material liability, other than indebtedness, other than the ordinary course of business ‑‑ with material liability not being defined.

LISTNUM 1 \l 1208              Anything material requires ‑‑

LISTNUM 1 \l 1209              On top of that, you have special demands, that are $15 million pre‑merger, $25.5 million after merger, and then $10 million with regard to any channel.

LISTNUM 1 \l 1210              What is the difference between material undefined under Section 4.7(b)(vi) and those thresholds?

LISTNUM 1 \l 1211              Why don't we have one threshold for ‑‑

LISTNUM 1 \l 1212              Let me just put it the way I see it.

LISTNUM 1 \l 1213              Goldman Sach is betting on your business acumen.  You know how to run a television network.  You are now acquiring specialty channels.

LISTNUM 1 \l 1214              I can see that they want to say:  This is the business we are investing in.  Now, before you sell any of those channels, or buy a new one, or you sell part of your network, or buy a new one, I want to have a say, because that's what I am betting on.  That is the co‑asset.

LISTNUM 1 \l 1215              These co‑assets, if you sell them, I want to have a veto.

LISTNUM 1 \l 1216              That is perfectly understandable and reasonable, but that is not what we have here.

LISTNUM 1 \l 1217              First of all, anything material you can't do; and, on top of that, we have the special thresholds regarding indebtedness or purchases; and, on top of that, we have a third category dealing with channels, where we take the threshold down to $10 million.

LISTNUM 1 \l 1218              I don't understand the concept, the theory, or how all of this fits together.  Maybe you could help me.

LISTNUM 1 \l 1219              MR. ASPER:  I will turn to Tom and Richard in a second, but I think the general philosophy, again, comes back to the issue of ‑‑ there had to be some line drawn somewhere, in terms of where our unfettered discretion ended, and this was simply a negotiated item and, effectively, a compromise between what we might want and what Goldman Sach might want.

LISTNUM 1 \l 1220              But, from our perspective, as you negotiate an agreement, you decide what is important to you and what you must have, and you decide what is not that important.  From our perspective, these thresholds give us a very, very wide latitude to do pretty much anything that we think we would foreseeably want to do strategically and operationally going forward.

LISTNUM 1 \l 1221              THE CHAIRPERSON:  Let me stop you right there.  If that gives you latitude, et cetera, why do you then have, over and above, the requirement for material, which is undefined and which does not have a threshold?

LISTNUM 1 \l 1222              MR. ASPER:  I will ask Richard to answer that question.

LISTNUM 1 \l 1223              MR. LEIPSIC:  Mr. Chairman, as I think we noted in one of the answers to the deficiencies, we indicated where the level of the liability could actually be put into monetary terms.  We indicated that it would be the actual threshold amount.

LISTNUM 1 \l 1224              For instance, pre‑combination was going to be $15 million.

LISTNUM 1 \l 1225              We also noted, however, that in certain instances you cannot necessarily translate a liability into monetary terms.  There may be a contract that has very onerous terms which commit the company beyond economic terms; for instance, to enter into a long‑time supply agreement at something that is not on market terms.

LISTNUM 1 \l 1226              Therefore, it was appropriate to allow the issue of materiality to have definition in circumstances when it could not be put into pure monetary amounts.

LISTNUM 1 \l 1227              THE CHAIRPERSON:  I notice that you don't have a definition of materiality here along the lines of what you are suggesting.

LISTNUM 1 \l 1228              MR. LEIPSIC:  I think that was on purpose, Mr. Chairman.  I think people know what is material in the context of the business, and it is usually on the basis of the particular facts.

LISTNUM 1 \l 1229              Clearly, we tried, for both of our purposes, to avoid long definitions and have something that people could, in common sense, appreciate.

LISTNUM 1 \l 1230              I think we have a very appreciative understanding, as I think does Goldman Sachs, when something happens to be material, you will know it when it happens.

LISTNUM 1 \l 1231              THE CHAIRPERSON:  That is relatively little comfort to me.  As a regulator, I am supposed to determine who is in control here.

LISTNUM 1 \l 1232              Do you know what is material?  I don't know what is material, and you don't give me any help by not giving me a definition or description other than the one explanation.

LISTNUM 1 \l 1233              I appreciate that not everything can be converted into money terms, but surely saying material ‑‑

LISTNUM 1 \l 1234              MR. LEIPSIC:   I think the other thing that you probably should appreciate, Mr. Chairman, is material is noted in the context of being outside the normal course.  The provisions where materiality typically arise speak about circumstances other than in the ordinary course of the business.  So, there actually has to be a threshold event which occurs before we even get into the issue about what materiality is.

LISTNUM 1 \l 1235              And that is that the activity contemplated is outside the ordinary course of these businesses, which is programming, which is putting audiences and programming together.  So, it has to be something typically that wouldn't involve the business as Alliance Atlantis is today operating.

LISTNUM 1 \l 1236              I think there is some protection and some comfort that you might find in those words that don't necessarily allow material liability issues to arise on every instance.

LISTNUM 1 \l 1237              MR. ASPER:  Mr. Chairman, just to add very briefly to that, to the extent one tries to define material liability, it would likely end up constraining CanWest more than not because we are the ones who are in control of the business day to day.  If we took a position that something was not material and Goldman took the position that something was, by operation of the agreement we would still be able to do it and their recourse at that point would be to trigger an arbitration section, which is something one does very rarely and very deliberately only when it's a last resort.

LISTNUM 1 \l 1238              THE CHAIRPERSON:  I am not trying to be difficult here.  I want you to succeed.  But I want to make sure that you can exercise your judgment and Goldman Sachs don't say, hey, this is material, you didn't consult me, I have a veto here.

LISTNUM 1 \l 1239              I hear you explanation; I hear the explanation of your counsel.  It doesn't give me much comfort, as I said.

LISTNUM 1 \l 1240              On top of that, these threshold amounts, how did you come to pick these amounts?  The transaction is $1.4 billion, and you are saying a veto right $50 million pre‑merger, $22.5 million post‑merger.  That is less than 1 per cent.

LISTNUM 1 \l 1241              That is material?

LISTNUM 1 \l 1242              MR. ASPER:  I think again, Mr. Chairman, this was a function of a negotiated number.  The transaction may be large, but it is comprised of a number of relatively small assets that together create a much larger entity.

LISTNUM 1 \l 1243              So, there are, as you well know, a number of very small and growing specialty channels that are part of the television stations within the Global and E! groups.  Again, it comes back to the overriding philosophy and objective of Goldman to not run the business but to at least have the security package over which they have an investment relatively protected within certain parameters.

LISTNUM 1 \l 1244              Again, when we look at the channels individually, the assets individually in the group, we find these thresholds are very manageable for us, and they don't constrain us in any way that we think would be damaging to our objectives.

LISTNUM 1 \l 1245              THE CHAIRPERSON:  When you go and make your annual trip to Hollywood to buy programming rights, et cetera, you stay underneath these limits?

LISTNUM 1 \l 1246              MR. ASPER:  That wouldn't be part of it because that would be the ordinary course of business.

LISTNUM 1 \l 1247              THE CHAIRPERSON:  You are telling me you are spending more than $10 million to buy programming rights for one of your specialty channels that wouldn't be caught by this?

LISTNUM 1 \l 1248              MR. ASPER:  For one of the channels or from?  Sorry.

LISTNUM 1 \l 1249              MS BELL:  Chairman, the threshold limits only apply to things that are outside of the ordinary course of business, and programming would not fall in that category.  Programming would be within the ordinary course of business, so it wouldn't apply.

LISTNUM 1 \l 1250              MR. ASPER:  I think that goes for a whole raft of things, a whole array of things that the business does as part of its routine of being operated.

LISTNUM 1 \l 1251              THE CHAIRPERSON:  Can I hear from Goldman Sachs on that point?  Is that their interpretation too?

LISTNUM 1 \l 1252              MR. LEIPSIC:  Yes, it is.

LISTNUM 1 \l 1253              THE CHAIRPERSON:  Then how did you arrive to $10 million per individual channel and $15 million pre and $22.5 million post?  There must be some reference point that you picked to come to these numbers.

LISTNUM 1 \l 1254              I appreciate it was probably a heated negotiation, and I don't ask you to disclose business confidentiality.  I would just like to understand the parameters.

LISTNUM 1 \l 1255              MR. ASPER:  I will turn the microphone over to the person who was actually in the room at that time.

LISTNUM 1 \l 1256              MR. STRIKE:  Chairman, the threshold amounts were decided by a fairly active negotiation between the parties and in the context of the overall agreement, and they were, quite frankly, traded for a variety of other financial advantages in the agreement for us.

LISTNUM 1 \l 1257              The threshold amounts, in fact, that Goldman Sachs was originally seeking were considerably lower than the ones that we have agreed upon here.  Just to be precise, the threshold amounts deal with three particular matters.

LISTNUM 1 \l 1258              One is the incurrence of debt outside the ordinary course of business; the acquisition of or investment in businesses outside the ordinary course of business; and the disposal of certain assets.  To put these things in context, I don't recall us very frequently selling businesses.  We are in the business of operating and owning them.  Everything inside the ordinary course of business is excluded from these particular matters and, therefore, not subject to any thresholds.

LISTNUM 1 \l 1259              The acquisition of businesses in this particular sector tend to be more than $15 million or $20 million.  In fact, the one that we are before you with today is $1.5 billion and no threshold amount that we would set would actually have not had us consulting with Goldman Sachs on that.

LISTNUM 1 \l 1260              So, I think it is just important to contextualize these particular things.

LISTNUM 1 \l 1261              THE CHAIRPERSON:  I understand that, but I am starting off, and my starting point is control in effect means your actually majority shareholder but minority holding rights holder here, does he have the ability to exert the size of influence over the strategy, management or operation of the business or the entity?

LISTNUM 1 \l 1262              That was a test when the initial Transportation Agency were pronouncing Canadian Airlines and that has been applied ever since.  Obviously I think nobody has any problem with the test.  It is a question of how you apply it and looking at the specific facts.

LISTNUM 1 \l 1263              Here, if you want to trade one channel for another, for instance, et cetera, that is a strategic decision that you make because you think it makes your lineup better.  If I understand it, each time you need the consent of Goldman Sachs, both members of the board, unless it happens to be less than $10 million?

LISTNUM 1 \l 1264              MR. ASPER:  That's right.  In the case you referred, I think the words are important because, remember, they can't cause us to do anything.  The only thing we are talking about here is some constraints on our activity.  So, when we talk about control, I think it is important to point out there is nothing that Goldman can cause us to do that they wouldn't otherwise want to do.

LISTNUM 1 \l 1265              There are channels certainly that do sell for less than $15 million.  They are probably going to be digital channels.  Again, if we wanted to do a major transaction of a group of what are currently called analogue channels, yes, that would be something we would have to go to Goldman to seek their approval to do.  But I would just make the point, and I know you are going to get to this, but we would have to go to our banks at the CanWest level and the banks at the CW Media level to do anything like that as well.

LISTNUM 1 \l 1266              These constraints are typical, again, of a security holder, and so we, again, felt that they gave us sufficient latitude to make almost all of the foreseeable strategic moves we would want to make going forward anyway.

LISTNUM 1 \l 1267              We have essentially made our bet and our major move in to specialty here.  From going forward, I would foresee that small add ons, small changes may come to us, but our focus for the next number of years is going to be to ultimately acquire 100 per cent of this business, but also to simply operate the business as we have.

LISTNUM 1 \l 1268              THE CHAIRPERSON:  As I say, I see no problem with Goldman Sachs wanting to protect its core investments, but you made it, it seems to me, very complicated and very difficult to appreciate.  If it had been written along the lines of, say, you can't buy or sell a channel or a station without their consent, because that is the core of it, that is fine.  But these threshold levels, at these levels, as low as they are, do cause problems for me.

LISTNUM 1 \l 1269              Let me point out one more thing.  Without the prior written consent of Goldman from April 1 '10 through the combination, you cannot sell, lease or otherwise dispose of any property or assets of the contributed business with a value in excess of $15 million or that contribute in any way to the generation of combined EDITDA of the regulated industries.

LISTNUM 1 \l 1270              There is absolutely no limit here of contributing to the EDITDA of the regulated industry and the contributed business for such year other than the ordinary course of business.  Why is that there?  That seems to me to basically cover anything that generates money is going to be caught by this.

LISTNUM 1 \l 1271              MR. STRIKE:  Chairman, that particular section which you are looking at, 5.5(d) applies only for the 12 months prior to the combination date, and it is really a subset of (c), which precedes that.

LISTNUM 1 \l 1272              THE CHAIRPERSON:  No, I understand that.

LISTNUM 1 \l 1273              MR. STRIKE:  The reason for that particular more ‑‑ a tighter constraint during that period was to provide some comfort to Goldman Sachs that CanWest would not do something to damage the value of the investment in the year of the combination, because this is the year preceding the combination date and they wanted to ensure that we weren't going to unduly negatively affect the value of the business in that year.

LISTNUM 1 \l 1274              THE CHAIRPERSON:  I understand that.  My point is why is that section there?  Why on earth would CanWest want to do that prior to the year?  It seems to me it puts the direct finger of control on CanWest.  You can't do any of these things, et cetera, because they contributed to ‑‑ I just don't understand why it's there.

LISTNUM 1 \l 1275              Why do you have ‑‑ what is the sort of behaviour of CanWest that you are trying to prevent which could possibly be in the interest of CanWest?  I just don't understand the business rational behind this.

LISTNUM 1 \l 1276              MR. STRIKE:  I think, though, there is a lot of sections and agreements that are drafted for perhaps ‑‑ would be called belts‑and‑suspenders approaches to ensure that parties don't act irrationally.  I can't conceive of a situation where we would want to do what is being proposed we can't do.

LISTNUM 1 \l 1277              But notwithstanding that, minorities who aren't in control of businesses do, I believe, require some comfort that irrational behaviour won't prevail in those circumstances.

LISTNUM 1 \l 1278              MR. ASPER:  Mr. Chairman, I think Mr. Cardinale would like to add something to that.

LISTNUM 1 \l 1279              THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 1280              MR. CARDINALE:  Yes, Mr. Chairman, I think the purpose of it really was to ensure, as Mr. Strike was saying, that there is no gaming going on in terms of the ultimate ownership that would be realized in the combination.

LISTNUM 1 \l 1281              So it was really more to make sure that rational behaviour is prevailing in the ordinary course of business, that nothing outside of the ordinary course of operational activity would be going on in order to affect that ultimate ownership change ‑‑ ultimate ownership that's realized upon a combination.

LISTNUM 1 \l 1282              THE CHAIRPERSON:  Now, presumably you are investing in CanWest because you think it is being run by rational people.

LISTNUM 1 \l 1283              MR. CARDINALE:  Yes.

LISTNUM 1 \l 1284              THE CHAIRPERSON:  That is a rational business decision.

LISTNUM 1 \l 1285              MR. CARDINALE:  Right.

LISTNUM 1 \l 1286              THE CHAIRPERSON:  I mean I cannot conceive why you say a rational decision.  That's exactly what it would be.

LISTNUM 1 \l 1287              MR. CARDINALE:  Well, again, I think this aspect as well as your earlier question, I think, it just falls under the rubric from my perspective, from Goldman Sachs' perspective, of typical minority investor protections.

LISTNUM 1 \l 1288              And you know, as we have a fiduciary responsibility to our investors I think there needs to be just some codification of basic minority protections that certainly does not at all, you know, undermine our confidence in CanWest here being rational operator.  But it's more, I think, just a procedure from a minority investor protection standpoint.

LISTNUM 1 \l 1289              The thresholds that you talked about before, for example; yes, you know, this is a $1.4 billion transaction, as you point out, but I do think that if you look at the history here of CanWest's activity on a divestiture or on an acquisition basis, you know, they are really not tremendously in the business of acquiring or selling.

LISTNUM 1 \l 1290              And again, I think all we wanted to do outside of the ordinary course of their usual business activities is just ensure that, you know, we had some input if they were to get into things such as, you know, businesses, oil businesses, car businesses, anything else outside of their ordinary course of business.

LISTNUM 1 \l 1291              Again, more procedural in my view; more sort of minority investor protections but nevertheless something that I can in a straight face say to my investors that, you know, I have fulfilled my fiduciary responsibility.

LISTNUM 1 \l 1292              MR. ASPER:  If I can just ‑‑ sorry, Mr. Chairman, just to put a finer point on that; again, all of these clauses you are referring come back to Goldman saying, "We bargained to get this and we would like to get this with some" ‑‑ you know, not exactly this but something reasonably close to this, you know, what they bargained for.

‑‑‑ Pause

LISTNUM 1 \l 1293              THE CHAIRPERSON:  Mr. Cardinale said, and they underline it:

"...as such, do you not see yourself as strategic investors in the broadcast asset but rather as a financial backer supporting CanWest?"  (As read)

LISTNUM 1 \l 1294              THE CHAIRPERSON:  And that's what I am testing, you know, that he is truly a financial backer supporting CanWest.  He is not a strategic investor.  He is not trying to run the business.

LISTNUM 1 \l 1295              When you look at that clause you may say it's belts and suspenders but it basically says to me, let's say, that last year prior to merger they really have a major say in your business.

LISTNUM 1 \l 1296              But I made my point.  Let me come ‑‑ one other point I wanted to before I turn it over to Mr. Katz, is once the contributed business is contributed and it's together, if I understand it, the voting shares remain ‑‑ the voting powers remain the same.  You have 67 percent, Goldman has 33, but you at that point in time are a much larger equity partner than before because after all you have taken the contributed businesses and added it to the mix.

LISTNUM 1 \l 1297              Why doesn't that then trigger in a proportionate readjustment in the voting shares?  If Goldman Sachs can live with 66 ‑‑ 67 percent with you and 33 percent when you have a small investment, why when you now have a larger investment do they still need ‑‑ do you not get rewarded for that investment?

LISTNUM 1 \l 1298              MR. ASPER:  I think we would still be under the ‑‑ I don't think we would be at the 66 percent level anyway.

LISTNUM 1 \l 1299              THE CHAIRPERSON:  No.

LISTNUM 1 \l 1300              MR. ASPER:  We wouldn't even have the amount of equity even that matched our vote so we just saw no reason to change the voting.

LISTNUM 1 \l 1301              I mean, there would be no ‑‑ I'm not sure what the formula would be to how we increase our voting if we have that effectively absolute control to nil today.  It doesn't need to change from our perspective after the combination date.  We still vote more than our equity and we still vote the two‑thirds.

LISTNUM 1 \l 1302              THE CHAIRPERSON:  No, I understand that.

LISTNUM 1 \l 1303              Okay.  It doesn't answer my question but I understand.

LISTNUM 1 \l 1304              Okay, Mr. Katz.

LISTNUM 1 \l 1305              COMMISSIONER KATZ:  Thank you, Mr. Chairman.

LISTNUM 1 \l 1306              I am going to go back a bit before I go forward.

LISTNUM 1 \l 1307              With regard to the thresholds has the partnership, the relationship that you have with Goldman Sachs gone back the last, say, three to five years with Alliance Atlantis and seen how many times those $15 million or $22.5 million thresholds would have come up for review if you look back at Alliance Atlantis' business?

LISTNUM 1 \l 1308              MR. ASPER:  Well, their capital expenditures would be roughly in the $6 million per year range.  They might have jumped closer to eight or nine one year ‑‑ I think this last year or the year coming up for high definition conversion for some of their channels.  But remember, again, this comes back to the ordinary course of business question.

LISTNUM 1 \l 1309              I don't know of any time from any knowledge I have of Alliance Atlantis, and there may be others who have been from the operating side who can tell me where this would have been ‑‑ there would have been an expenditure outside the ordinary course of business that was this $15 million ‑‑ that the threshold can ‑‑ I turn to Barb or Walter or others who may know.

LISTNUM 1 \l 1310              COMMISSIONER KATZ:  It's always positive to go back and sort of see when this would have happened if it all.  If it wouldn't have ever happened at all that's one thing, but can I ask you guys to take an undertaking to find out whether this would have hit a situation where it would have come up for that threshold number, going back say five years?

LISTNUM 1 \l 1311              MR. ASPER:  Sure.  Yes, we will of course, Mr. Katz.

LISTNUM 1 \l 1312              Just as I think about it, the only thing I can think of might be an investment in a channel called "The Score" and I don't know what the amount of that investment was but it would be ‑‑ that may be the only ‑‑ that's the only one I can think of.

LISTNUM 1 \l 1313              Certainly from the operating perspective I can't think of anything, but we will undertake to answer that question.

LISTNUM 1 \l 1314              COMMISSIONER KATZ:  Thank you.

LISTNUM 1 \l 1315              Second question, just going back again, as I said the term "out of the ordinary course of business", have you folks taken a look as to what is in and what is out in terms of delineating those things?

LISTNUM 1 \l 1316              I heard oil and gas and banking, and I can appreciate that being out of the ordinary course of business, but as you start to bring it in on both sides is there something where you folks have sat down and said, "This is part of the ordinary course and this will be interpreted as being out of the ordinary course in case we have something in front of us?"

LISTNUM 1 \l 1317              MR. ASPER:  Yes, we have discussed it.  Certainly, what is within the ordinary course of business is anything that historically the business has been doing, which is the buying of program and the garnering of advertising contracts, the capital expenditures, the regular operating expenditures of the business and of course, you know, investments in specialty channels.  So that I think covers, you can tell, a very wide range of things.

LISTNUM 1 \l 1318              Again, businesses outside of specialty wouldn't be included.  Getting into the radio business, for example, may not be included.  That's about the extent of our discussions.

LISTNUM 1 \l 1319              And from our perspective again, that CanWest ‑‑ as I said earlier to a question, the less defined that is we think the more it favours CanWest because if you go back and look at jurisprudence on ordinary course of business it is a pretty wide definition and to try to constrain it into a specific set of activities does limit us because there could be things coming in the future that logically are part of the ordinary course of business that we wouldn't think of that might not be on that list.

LISTNUM 1 \l 1320              So I would describe it as things that historically the business has done and logically the business would do to continue its existing activities.

LISTNUM 1 \l 1321              COMMISSIONER KATZ:  Now, let me take that one step further and give you a for example.

LISTNUM 1 \l 1322              You touched upon radio, which I heard now is outside the ordinary course of business.  New media, brand new industry evolving.  We have no idea where it is going to be in 15, 10 years from now.

LISTNUM 1 \l 1323              Is new media and the things that CanWest would want to do in this face of new media come under the ordinary course of business or would it not?  Was it discussed at all?

LISTNUM 1 \l 1324              MR. ASPER:  Not to my recollection specifically, but I would ‑‑ certainly from our perspective it would be any new media that relate to the channels in the existing businesses that they have.  Websites for home and garden TV and any mobile or further applications of the extensions of these channels that we have would be certainly ‑‑ certainly within the ordinary course of business.

LISTNUM 1 \l 1325              Going and acquiring a totally unrelated website, for example, was not something we discussed and, again, it would depend ‑‑ it would depend on the characteristic of what that website is.  If it's a website that is, you know, one that gets audience, attracts audience and sells advertising or subscriptions I would think it would come very close to being, you know, within the ordinary course of business.  If it was trying to acquire a search engine it's a different business model and maybe that's not ‑‑ you know I have to confess we haven't gone as far as a discussion about every possible type of new media.

LISTNUM 1 \l 1326              COMMISSIONER KATZ:  Can I ask Mr. Cardinale if he feels the same way about new media and anything to do with vertical or horizontal relationships with linear broadcasting going out into new media space would equally be defined as being within the course of business?

LISTNUM 1 \l 1327              MR. CARDINALE:  Yes.  You know, I think picking up on something Mr. Leipsic said, you know it when you see it and I do think that ‑‑ you know, we are a financial backer to CanWest here.  Our interest really is aligned and not being obstructionist in any way.  It's to support.

LISTNUM 1 \l 1328              And, you know, I think Leonard makes a very good point which is something in a website associated with some of the channels, for example, defined as new media that is very supportive of branding and getting the ‑‑ helping these individual businesses, I think, is within the ordinary course.

LISTNUM 1 \l 1329              If it was an auction site, for example, a home lending site or something like that, it's not.

LISTNUM 1 \l 1330              So it's pretty easy to see what is in and what is out.  I certainly would think that, consistent with what they have said, I would agree with.

LISTNUM 1 \l 1331              COMMISSIONER KATZ:  It's always easy when you are first getting married ‑‑ my wife may not agree with me.  You always want to contemplate what happens if you have to get to the divorce stage as well when you get involved with another partner.

LISTNUM 1 \l 1332              So I think it's important to understand these issues beforehand as well.

LISTNUM 1 \l 1333              Grey areas sound great.  Two partners feel the same way about things as well until the rubber meets the road, and then sometimes you start misinterpreting or differently interpreting certain clauses.

LISTNUM 1 \l 1334              MR. LEIPSIC:  If I might, Mr. Katz, a marriage, as we all hope to be long and endearing ones, I think in the context of ordinary course too you have to put it into perspective in terms of where these businesses have been and where they are going to be, where we believe that there will be an exercise of a liquidity event, of which CanWest will then become 100 per cent owner.  That period of time is going to be between now and 2011 and 2012.  That's three or four years from now.

LISTNUM 1 \l 1335              I think the notion of huge changes that are going to make the definition of ordinary course difficult to comprehend or interpret in a span of three or four years are not going to be difficult ones.

LISTNUM 1 \l 1336              I would agree with you that ordinary course over the span of a marriage of 20 to 30 years might be more difficult.  But I don't think in this context, with all due regard, the analogy is necessarily completely appropriate.

LISTNUM 1 \l 1337              MR. ASPER:  I think, Mr. Katz, also if you look at the overall picture from CanWest's perspective, remember we are not fettered in that way with the CanWest assets, with the Global Television group.  We can acquire or get into other businesses freely until the combination date.

LISTNUM 1 \l 1338              Then whatever we do of course forms part of the contributed business.

LISTNUM 1 \l 1339              But again, because of the bifurcated structure of this transaction, we feel we again have enough latitude to pursue our strategic objectives.

LISTNUM 1 \l 1340              COMMISSIONER KATZ:  Thank you.

LISTNUM 1 \l 1341              I have one other question going back to Mr. Cardinale.

LISTNUM 1 \l 1342              Goldman Sachs talks about being a financial investor, not a strategic investor, yet I was directed to something called the GSEP Investment Philosophy.

LISTNUM 1 \l 1343              I will quote just one line from it.  I assume you know where it comes from, although I have a reference here off the Internet:

"We create value through meaningful involvement with the company's strategic decision‑making and operating philosophy."

LISTNUM 1 \l 1344              Can you comment on how that statement does or does not relate to your relationship with CanWest?

LISTNUM 1 \l 1345              MR. CARDINALE:  Yes, absolutely.

LISTNUM 1 \l 1346              We have been doing this for 25 years.  I personally have been doing it for 15 years.  I think our investment philosophy has been consistent from the very beginning.

LISTNUM 1 \l 1347              We are a very client‑oriented firm and we look to support our management teams and our partners.  If you go back and look at every investment we have made, it's been pretty clear that we do not hold ourselves out to be operators.

LISTNUM 1 \l 1348              Now just because we are not operators, my hope would be that Leonard and Kathy and the team would find me useful to them as a sounding board and as a financial backer in terms of a range of issues.  But it certainly doesn't mean that I'm directing in any way the strategy of the company.  I'm simply there to be a resource and that's the approach we have taken in all our company.

LISTNUM 1 \l 1349              We try to be as supportive as we can.  Obviously in this our whole approach here is to be more of a minority investor.  This was very much a strategy and a course of activity that Leonard and his team came up with and we were asked to try to help.

LISTNUM 1 \l 1350              And that's the spirit in which we are going to continue to be involved.

LISTNUM 1 \l 1351              The investment philosophy you have read I think is consistent with that.  We are just not operators.  We don't pretend to be managers.  We actually have a day job and we are there to support as much as we can.

LISTNUM 1 \l 1352              COMMISSIONER KATZ:  Thank you.

LISTNUM 1 \l 1353              Can I direct you all to one of your filings.  It is Schedule 3.1 of the Shareholders Agreement.

LISTNUM 1 \l 1354              There is a series of vertical companies listed on here, from C.W. Investments Co. to a numbered company, 4414624 Canada Inc., C.W. Media Holdings Inc., 4414641 Canada Inc. and ultimately C.W. Media Inc.

LISTNUM 1 \l 1355              Can you tell us what each of these companies do, how they differ from each other, and particularly how the board is composed?

LISTNUM 1 \l 1356              Are they exactly the same boards for each one of these and what are the roles of each one of those companies?

LISTNUM 1 \l 1357              MR. ASPER:  I will ask Mr. Leipsic to respond to that.

LISTNUM 1 \l 1358              MR. LEIPSIC:  Well, Mr. Katz, first of all, in regard to the issue associated with the board, the board, as you will know, is in regard to the Shareholders Agreement referring to C.W. Investment Co.  Its decisions are meant to be ones which are going to be binding on all the other subsidiaries below.

LISTNUM 1 \l 1359              I think the Shareholders Agreement specifically says that to the extent that boards have to be constituted in order to ensure that the decisions that will be made by the board, the C.W. Investments Co., they will be so constituted.

LISTNUM 1 \l 1360              So the idea is that all the decisions will flow down to the extent that they go down to C.W. Media Inc.

LISTNUM 1 \l 1361              For purposes of the reasons why the structure is there, there is really a combination.

LISTNUM 1 \l 1362              You will see, for instance, C.W. Media Holding Inc. is where the third party debt goes in there.  That entity is there in place to allow the debt holders to take a particular security position which is afforded to them.

LISTNUM 1 \l 1363              The other reasons for the various other companies were primarily tax driven because they came out of the reorganization and the arrangement.

LISTNUM 1 \l 1364              So there is nothing really beyond structuring the debt in the right entity for tax reasons and the overall structure for tax reasons for those entities to be interposed between C.W. Investment Co. and C.W. Media Inc.

LISTNUM 1 \l 1365              COMMISSIONER KATZ:  And the board of C.W. Investment Co. and C.W. Media Inc. are the same?

LISTNUM 1 \l 1366              MR. LEIPSIC:  Yes, they are.

LISTNUM 1 \l 1367              COMMISSIONER KATZ:  And they will continue to be throughout the entire term of this relationship?

LISTNUM 1 \l 1368              MR. LEIPSIC:  Well, certainly their entitlement to the nomination rights that are afforded CanWest and Goldman Sachs, as pursuant the agreement, will remain in place.

LISTNUM 1 \l 1369              I think there is a provision that indicates that if Goldman Sachs' position is decreased to below I believe 50 per cent, their two board seats will be reduced to one board seat.

LISTNUM 1 \l 1370              Other than through the terms of the agreement, the boards will have to remain in tact during the continuance of Goldman Sachs investment.

LISTNUM 1 \l 1371              COMMISSIONER KATZ:  And that reduction in board seats would apply to both companies at the same time?

LISTNUM 1 \l 1372              MR. LEIPSIC:  Yes, it would.  They are meant to be transparent in terms of their board positions.

LISTNUM 1 \l 1373              COMMISSIONER KATZ:  The other three boards, are there active boards there as well?

LISTNUM 1 \l 1374              MR. LEIPSIC:  They are not per se active boards but they are boards there that have all been created with the same constitution.

LISTNUM 1 \l 1375              COMMISSIONER KATZ:  And the same membership?

LISTNUM 1 \l 1376              MR. LEIPSIC:  And the same membership.

LISTNUM 1 \l 1377              COMMISSIONER KATZ:  And presumably they all meet at the same time as well?

LISTNUM 1 \l 1378              MR. LEIPSIC:  There is obviously some recognition that for practical reasons they will be combined in meeting, so those will have not seriatim meetings but they will be deemed, for purposes of convenience, to be holding their meetings concurrently.

LISTNUM 1 \l 1379              COMMISSIONER KATZ:  Can we go to Shareholder Agreement 5.2, subsection (e).  It is part of the covenance.

LISTNUM 1 \l 1380              The covenance here reads:

"From the date of this agreement through the combination date CanWest agrees that neither it nor any of its affiliates will enter into any new financing or refinance existing debt or capital if the terms of such financing or refinancing would restrict, prevent or otherwise materially adverse the effect, the ability of the parties to consummate the combination transaction..." (As read)

LISTNUM 1 \l 1381              And then it continues on.

LISTNUM 1 \l 1382              Does this limit CanWest's ability to pursue other business ventures, both in North America and internationally?

LISTNUM 1 \l 1383              MR. STRIKE:  I think the answer is no.  What this is meant to do is to say that if we do so and if we wish to finance a particular venture with indebtedness, we have to be cognizant of the fact that we do have an obligation to combine the contributed business in 2011 and therefore that any new financing arrangement has to take that into account and be effectively carved out from any other covenance that may be associated with that financing arrangement.

LISTNUM 1 \l 1384              COMMISSIONER KATZ:  If there was an opportunity for you to make some investment in some aligned business, not necessarily coming under the CRTC's broadcasting jurisdiction, there would be a need for you to speak with Goldman Sachs and get relief from them.

LISTNUM 1 \l 1385              MR. STRIKE:  No.  I don't think that's what that says.  It just says that we recognize that if we want to pursue a transaction of that nature and if we decide to finance that transaction in whole or in part using debt, in crafting that debt it is not unusual to have in debt agreements covenants that say that you can't dispose of assets without the lender's consent.

LISTNUM 1 \l 1386              In this case, what this particular section is saying is that if we do finance with debt, we have to seek from those lenders an exception to that particular restriction so that it's not an impediment to the combination of the contributed business with the C.W. Media business in 2011.

LISTNUM 1 \l 1387              It's no more than that.

LISTNUM 1 \l 1388              MR. ASPER:  I think, if I can just clarify a little bit, currently the CanWest parent level, for example, there are high yield notes in place which restrict the ability of CanWest to sell Global, for example, without their consent, because Global is part of the security package over which their debt lies.

LISTNUM 1 \l 1389              So that's what this clause is trying to do.

LISTNUM 1 \l 1390              And that debt expires or reaches maturity in 2012.  So by 2011 when the combination date comes, for example, there may be a tiny penalty that we would pay to terminate that debt early to be able to make the contribution.  In other words, we are free to make the contribution just with a small payment to buy out that debt one year early.

LISTNUM 1 \l 1391              So from our perspective, that is one of the reasons why we couldn't necessarily do this transaction now and contribute the business today because there was this constraint in the parent company of the debt that is at the parent company.

LISTNUM 1 \l 1392              So what this clause is trying to do is say you can't go out and do that again and do something that would prohibit you from doing what you have contracted to do which is contribute this business.  So you can't go raise a bunch of debt at CanWest that has some constraint in it that stops you from contributing this business.

LISTNUM 1 \l 1393              COMMISSIONER KATZ:  But this goes to the point of refinancing existing debt as well and if you become a stronger company and you want to refinance and you are able to call your debt and reissue debts at a lower interest rate, this also says you have got to sit down with the Goldman Sachs folks, presumably, if I read it correctly.  If I don't, then tell me.

LISTNUM 1 \l 1394              MR. STRIKE:  With respect, I don't think you are interpreting this section correctly, Mr. Katz.  This is saying that we have covenanted not to enter into a new financing arrangement unless it does not impede the combination.  So it is really an issue for us and potentially new lenders.

LISTNUM 1 \l 1395              As I said before, it is not unusual for lenders to require restrictions on disposition of assets because they are in fact making investments, whether they are secured or not, over a package of assets that support that debt.

LISTNUM 1 \l 1396              And in fact we have in the past sought these kinds of exemptions successfully from lenders because we were contemplating transactions, either a divestiture or in this case it would be the combination of this asset.

LISTNUM 1 \l 1397              Whereas perhaps on day one when we were making this new investment that lender was looking to 100 percent of the contributed business as part of its comfort or security package, that lender would have to explicitly recognize that on the combination date in 2011 they would no longer have rights to 100 percent of the contributed business but to whatever the equity percentage was of the combined business at that date.

LISTNUM 1 \l 1398              So in fact they would be relinquishing their rights over a certain equity percentage of the contributed business but at the same time be receiving a percentage of the CW Media business which they would not have today.

LISTNUM 1 \l 1399              So this is really a matter not for Goldman Sachs.  This is really a matter that we have to be mindful of in doing any refinancings of our corporate operations between now and 2011.

LISTNUM 1 \l 1400              THE CHAIRPERSON:  Is that interpretation shared by Goldman Sachs?

LISTNUM 1 \l 1401              MR. CARDINALE:  Yes, it is.

LISTNUM 1 \l 1402              THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 1403              COMMISSIONER KATZ:  I want to spend a few minutes talking about the credit facilities and the bridge loan.

LISTNUM 1 \l 1404              THE CHAIRPERSON:  Before you do that, I think it is time for a break.

LISTNUM 1 \l 1405              COMMISSIONER KATZ:  Certainly.  We will take a 15‑minute break.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1406              THE CHAIRPERSON:  Thanks.

‑‑‑ Upon recessing at 1051 / Suspension à 1051

‑‑‑ Upon resuming at 1110 / Reprise à 1110

LISTNUM 1 \l 1407              THE SECRETARY:  Please be seated.  The hearing will reconvene.

‑‑‑ Pause

LISTNUM 1 \l 1408              THE CHAIRPERSON:  Commissioner Katz, I interrupted you, so please go back to where you were.

LISTNUM 1 \l 1409              COMMISSIONER KATZ:  Thank you, Mr. Chair.

LISTNUM 1 \l 1410              I wanted to pursue the issue of the debt financing.  I know that during the last two months or so Goldman Sachs has been trying to syndicate their debt.

LISTNUM 1 \l 1411              Perhaps we can get an update as to where things stand and where the financial investment of Goldman Sachs stands as of now?

LISTNUM 1 \l 1412              MR. MAGUIRE:  Maybe I will speak to that.

LISTNUM 1 \l 1413              You are absolutely correct.  In the period subsequent to the close of the transaction in August Goldman has been involved in the syndication of both the senior debt and the bridge.  At this point all but $40 million of the bridge has been syndicated and that $40 million that remains in Goldman hands is with a variety of Goldman entities and it is not with the original leverage finance group.  So they would say that that debt has been syndicated.

LISTNUM 1 \l 1414              With respect to the bridge ‑‑ sorry, that was the senior I was speaking of.

LISTNUM 1 \l 1415              With respect to the bridge, Goldman and Lehman have sold down the bridge with the exception of $48 million U.S. which also remains in Goldman hands.

LISTNUM 1 \l 1416              That represents about 16 per cent of the bridge remains with Goldman.

LISTNUM 1 \l 1417              COMMISSIONER KATZ:  So when you add the bridge in with their equity investment, where are we at, just so I understand.

LISTNUM 1 \l 1418              MR. CARDINALE:  Commissioner Katz, we don't think about it as adding in, mingling the two.

LISTNUM 1 \l 1419              Just to be clear, the entities affiliated with Goldman Sachs that own the pieces that Mr. Maguire spoke about, the $40 million on the senior debt and the $48 million on the bridge, are entities that I have interaction with at Goldman Sachs.  These are debt investors.

LISTNUM 1 \l 1420              So we could add up our equity and those debt amounts to answer your question, but I think where you may be going is that there is no interaction at all between that.

LISTNUM 1 \l 1421              COMMISSIONER KATZ:  No, I understand that.  I just want to get a better sense for the total investment by Goldman Sachs in total.

LISTNUM 1 \l 1422              MR. CARDINALE:  Yes.  I have to add that up.  I don't know.

LISTNUM 1 \l 1423              COMMISSIONER KATZ:  Well, there would be another $88 million roughly.

LISTNUM 1 \l 1424              MR. CARDINALE:  Right.

LISTNUM 1 \l 1425              THE CHAIRPERSON:  Before we leave that point, Mr. Cardinale, what is your role in both the senior debt and the bridge debt?

LISTNUM 1 \l 1426              You were the lead syndicator.  Right?

LISTNUM 1 \l 1427              MR. CARDINALE:  Goldman Sachs?

LISTNUM 1 \l 1428              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1429              MR. CARDINALE:  In Goldman Sachs, yes, correct.

LISTNUM 1 \l 1430              THE CHAIRPERSON:  To the extent that anybody speaks for the syndicator, it will still be you if issues come up?  I mean, will you have any say vis‑à‑vis the operation not as shareholder but as lead syndicator?

LISTNUM 1 \l 1431              MR. CARDINALE:  One second, please.

LISTNUM 1 \l 1432              THE CHAIRPERSON:  Go ahead.

‑‑‑ Pause

LISTNUM 1 \l 1433              MR. CARDINALE:  Yes, from a representative basis on the syndication front I believe in the near term, in the ensuing 12 months I think, we will be the representative, Goldman Sachs will.

LISTNUM 1 \l 1434              THE CHAIRPERSON:  Your slice of the bridge is the largest single one?

LISTNUM 1 \l 1435              MR. CARDINALE:  I don't know.

LISTNUM 1 \l 1436              THE CHAIRPERSON:  I beg your pardon?

LISTNUM 1 \l 1437              MR. CARDINALE:  I do not know.

LISTNUM 1 \l 1438              THE CHAIRPERSON:  You don't know?

LISTNUM 1 \l 1439              MR. CARDINALE:  John, do you know?

LISTNUM 1 \l 1440              MR. MAGUIRE:  No, I don't know.  We don't have the breakdown.  All we know is that it has been sold down.

LISTNUM 1 \l 1441              THE CHAIRPERSON:  But surely you can let us have the breakdown?  Surely you can let us have the breakdown?

LISTNUM 1 \l 1442              MR. MAGUIRE:  We will undertake to obtain it.

LISTNUM 1 \l 1443              THE CHAIRPERSON:  What I'm trying to get at non too subtly here is whether you have any control ‑‑ not control, any way to exercise ‑‑

LISTNUM 1 \l 1444              MR. CARDINALE:  The answer to the question ‑‑

LISTNUM 1 \l 1445              THE CHAIRPERSON:  Any exercise or any power, leader on the bridge of the senior debt on the operation?

LISTNUM 1 \l 1446              MR. CARDINALE:  No.  I would think that the amount that Goldman holds is a minority percentage as you.  It is 9 per cent of the senior debt and it is 16 per cent of the bridge amount.

LISTNUM 1 \l 1447              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1448              MR. CARDINALE:  So there are two things I would say.

LISTNUM 1 \l 1449              Those are minority holdings and so they cannot dictate the full debt amounts, number one.

LISTNUM 1 \l 1450              Number two, I have no interaction at all.  The equity side has no interaction at all with this side.  So it is not looked at on an equity basis.

LISTNUM 1 \l 1451              THE CHAIRPERSON:  I appreciate it is a minority from the overall, but I don't know the size of the others.

LISTNUM 1 \l 1452              MR. CARDINALE:  Sure.

LISTNUM 1 \l 1453              THE CHAIRPERSON:  If you are the single largest one then it is different than if there are others who are larger.

LISTNUM 1 \l 1454              MR. CARDINALE:  We will get to that amount, yes.

LISTNUM 1 \l 1455              THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 1456              MR. MAGUIRE:  Maybe I could just add on.

LISTNUM 1 \l 1457              On the senior debt there are 57 institutions that are involved in that syndication and Goldman, through three entities, holds their $40 million.  So it is widely held.  This is debt that trades all the time and it does not provide any control provisions.

LISTNUM 1 \l 1458              COMMISSIONER KATZ:  Are they unique rights that a lead lender has over any other lender?

LISTNUM 1 \l 1459              MR. MAGUIRE:  No, I would say there are not.  There are certain provisions of a credit agreement which require unanimous consent of all the lenders and then there are certain other provisions that require majority, "majority" being 50.1 per cent.

LISTNUM 1 \l 1460              COMMISSIONER KATZ:  Could you file what those rights are for the lead lender with us?

LISTNUM 1 \l 1461              MR. MAGUIRE:  Yes, we can do that.

LISTNUM 1 \l 1462              COMMISSIONER KATZ:  All right.

LISTNUM 1 \l 1463              MR. LEIPSIC:  Mr. Katz, if I just might reiterate.

LISTNUM 1 \l 1464              I think Mr. Maguire indicated there were no rights provided to a lead lender, it was only a question of whether there were unanimous decisions of all the lenders or a majority.

LISTNUM 1 \l 1465              COMMISSIONER KATZ:  There must be a role that they play in bringing the parties together and whether it is constituting a vote or a resolution or something.

LISTNUM 1 \l 1466              MR. MAGUIRE:  Well, there is an administrative agent for both of the credits, both the senior and the bridge.  Goldman Sachs is not the administrative agent under either facility.

LISTNUM 1 \l 1467              So the admin agent is typically the bank that will ultimately take the lead in organizing any type of response to the lender or any action taken by the lenders.

LISTNUM 1 \l 1468              COMMISSIONER KATZ:  Goldman Sachs is not that lead?

LISTNUM 1 \l 1469              MR. MAGUIRE:  No.  For the senior credit General Electric is, GE Capital, and Lehman Brothers is the admin agent for the bridge.

LISTNUM 1 \l 1470              THE CHAIRPERSON:  So you are going to tell us how it is sliced up, because we want to see whether Goldman is sort of the largest single one in either the bridge or the senior debt.

LISTNUM 1 \l 1471              Whether Goldman basically could lead the pack or not, that's what we are trying to find out.

LISTNUM 1 \l 1472              MR. MAGUIRE:  We will undertake to provide that information.

LISTNUM 1 \l 1473              THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 1474              COMMISSIONER KATZ:  I'm going to change topics now and go to the Programming Committee and the composition of Programming Committee.

LISTNUM 1 \l 1475              I understand that not withstanding the fact that the Programming Committee is composed of three people, senior executives of CanWest, there is a requirement in the Shareholder Agreement somewhere ‑‑ and I haven't found it right in front of me here but I'm sure you are familiar with it ‑‑ that indicates that the Board has some degree of influence on a change in membership of the Programming Committee.

LISTNUM 1 \l 1476              Can you give us some insight on that?

LISTNUM 1 \l 1477              MR. ASPER:  Well, I'm certain it's ‑‑ again that is a decision that would be a majority decision, not one which requires any unanimous consent or provides Goldman with any veto.

LISTNUM 1 \l 1478              It is section 2.2 of the Management Services and Administrative Agreement.  I think that's the only reference to it and it says:

"Decisions of CanWest in respect of the programming by CW Media and its subsidiaries shall not be subject to any review or revision by the Reporting Committee."  (As read)

LISTNUM 1 \l 1479              COMMISSIONER KATZ:  But yet I read somewhere ‑‑ and I can find it if I have to ‑‑ to remove somebody off the Programming Committee requires approval from the Board.

LISTNUM 1 \l 1480              MR. LEIPSIC:  I don't think so.  Let me perhaps refer you ‑‑ I can't unfortunately indicate to you, Mr. Katz.

LISTNUM 1 \l 1481              I think it was in response to Question 13 in the deficiency letter of the CRTC dated June 8, our reply was June 13, we filed a proposed resolution creating the Programming Committee wherein it specifically provides, under subparagraph (d):

"The Programming Committee shall consist of at least three members, all of whom shall be appointed by CanWest and shall be senior programming executives of CanWest and CanWest Media Inc."  (As read)

LISTNUM 1 \l 1482              COMMISSIONER KATZ:  All right.  I have it in front of me here.

LISTNUM 1 \l 1483