Court decision closes the file on CRTC exception for Cogeco-Corus deal, for now

The Federal Court of Appeal’s decision Friday to turn down a request to appeal the CRTC’s regulatory exception for Cogeco Inc. has for now “closed the file” for competitor Astral Media Radio Inc., the company says. In a decision on Dec. 17, the CRTC granted Cogeco a regulatory exception to operate three French-language FM stations in the Montreal market. The decision for an exception came as part of Cogeco's acquisition of Corus Entertainment Inc.'s 11 Quebec radio stations. Under the commission's common ownership policy, a company cannot own or control more than two AM and two FM stations in the same language in a large radio market. But under the CRTC exception, Cogeco can now operate three French-language FM stations, CKOI-FM, CFGL-FM, and CHMP-FM, as well as CKAC-AM, in the Montreal market. Cogeco also operates English-language station CFQR-FM in the market. On Jan. 11, competitor Astral, which opposed the exception during the commission's proceeding, filed a motion with the Federal Court of Appeal seeking leave to appeal the CRTC decision. Astral argued the commission erred in law by not opening a review of its common ownership policy, and “acted in an arbitrary and unreasonable manner” by granting the exception. On Friday justices Marc Noël, Johanne Trudel and Robert M. Mainville rejected the motion to appeal. No reason was provided on the court notice. Hugues Mousseau, Astral's manager of corporate communications, said in a phone interview Tuesday that Astral has for now “closed the file” on the issue, but added that the company is not ruling out any future action. Mousseau said Astral is disappointed with the ruling, which also rejected a request to suspend the execution of the CRTC decision until a final judgement was reached. Mousseau said the commission needs to make it clear that it will apply its rules consistently so industry players can make their business plans accordingly. “Rules should be applied the way they are written, and if they need to change, then they should change uniformly for everyone,” he said. René Guimond, Cogeco's vice-president of public affairs and communications, said in a phone interview that the company is “very satisfied” and “not surprised” by the court's ruling. Guimond said the company does not expect the commission to open a hearing on its common ownership policy, describing the file as now closed. “The commission did a very elaborate review of the file and reached a conclusion that was very justified,” he said. “We're very happy with that decision, and the Court of Appeal's decision is also clear.” Guimond said Cogeco's acquisition of the stations was not affected by Astral's motion with the court. But Astral says the CRTC violated its own rules in granting the exception. “It's a sign that in this decision and in other files over the last months, the CRTC has flouted its own procedural rules and policies ... and this goes against two important criteria, foreseeability and transparency,” Mousseau said. “If rules need to evolve, we think that should be done as part of a hearing on the policy where all industry players are invited to share their positions and comments.” In its December decision to grant the exemption, the commission said the situation surrounding the acquisition of the French-language Montreal stations created a set of “inextricably linked” elements justifying the ruling. “The Commission considers that granting the requested exception is consistent with section 5(2) of the Broadcasting Act (the Act), which states that the Canadian broadcasting system should be regulated and supervised in a flexible manner that is readily adaptable to the different characteristics of English- and French-language broadcasting and to the different conditions under which broadcasting undertakings that provide English or French language programming operate, and takes into account regional needs and concerns,” the commission said. The CRTC addressed the possibility of reviewing its policy, but said a review during the proceeding would have delayed the transaction. “The Commission ... nonetheless considers that a review of the Policy at this time would put an end to the transaction or delay it for several months, even a year, without the certainty that the establishment of a revised Policy would have made it possible in the first place,” the CRTC said. CRTC commissioner Tim Denton wrote in a concurring opinion to the decision that he would have preferred to hold a hearing on a policy change prior to approving the transaction. He added that, given the ruling, the commission should review the relevance of its common ownership policy. The CRTC has not published any notices about a review of its common ownership policy. Decisions to open policy reviews are internal and would be communicated in a notice of a public hearing. Quebecor Media Inc.'s Argent news service reported in early February that Tietolman Tétrault Media, which also sought to acquire the Corus stations, filed a petition to the federal cabinet in late January seeking to reverse the CRTC ruling. The company complained Astral and Cogeco now control a “duopoly” in the Quebec radio market. On Feb. 1, Cogeco and Corus announced the closing of the transaction. Guimond said the company successfully launched its new local-oriented programming format in the Gatineau, Trois-Rivières and Sherbrooke markets on Monday. kfournier@thewirereport.ca

Court decision closes the file on CRTC exception for Cogeco-Corus deal, for now

News | 02/22/2011 9:35 pm EST

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