GATINEAU – “Is this really the best deal we can get from a public interest point of view?” asked Alain Pineau of the Canadian Conference for the Arts this afternoon when facing the CRTC during the hearing into the purchase of Alliance Atlantis Broadcasting by CanWest Global and Goldman Sachs.
Pineau wondered whether there was a better, Canadian option, for the sale of Alliance Atlantis. In his speech this morning, CanWest CEO Leonard Asper characterized the deal as the “best possible under the circumstances.”
The CCA, along with the Council of Canadians, ACTRA, the Directors Guild of Canada, and the Communications, Energy and Paperworkers Union appeared this afternoon to decry the “foreign takeover” of a Canadian broadcaster by an American company. They want the CRTC to halt the deal because Goldman Sachs, a U.S. investment banking firm, is putting up most of the money (two-thirds of the equity, or over $650 million) to buy it.
“(I)f the deal goes through, it will effectively allow a U.S. corporation to control to own and control two of Canada’s largest media companies,” said Garry Neil, a representative of the Council of Canadians.
However, the Commission had tough questions – and comments for the objectors. For example: “It strikes me there is a difference between an investor protecting his investments and one who is exercising control over the assets,” said chairman Konrad von Finckenstein, reflecting what Goldman Sachs had to say earlier in the day on how it does not want to operate the company.
Prior to the afternoon of interveners, however, the Commission grilled CanWest’s programmers on the proposed $137 million benefits package – specifically on how, and over what time frame, the money would be spent. Typically, benefits are 10% of the transaction’s value and while the whole of Alliance Atlantis was sold for $2.3 billion (which included its 50% stake in the CSI television series franchise and the Canadian movie distribution unit), the Canadian broadcast assets were valued at $1.369 billion.
Normally, such benefits must be spent within seven years of the deal’s approval, but CanWest wants to spread it out over a decade instead.
Commissioner Duncan asked a number of questions on debt and synergies and whether or not such things should be calculated into the overall value of the deal, thereby increasing the potential benefits package if such synergies can be identified and quantified. “We’re just trying to arrive at a reasonable value for the purpose of arriving at a level of tangible benefits,” said Duncan.
CanWest, on the other hand, opposed trying to build such a thing into the deal. “From a buyers’ perspective, it’s a bit circular,” said Asper. “We already propose to pay benefits on the purchase price… which (the level of benefits to be paid) are factored into (it).”
As for spending the money over 10 years instead of 5-to-7, the panel seemed suspect of such a time frame. While senior vice-president programming and production Barbara Williams said the additional time would allow the creative process to flourish and perhaps even see the piloting of some new shows. “You can’t manage the creative process on a nice, tidy finance chart,” she said.
(Creating pilots, or single episodes, of half-hour or 60-minute shows is standard operating procedure in the States when assessing whether a new show will work. In Canada, pilots are rarely, if ever done because they are not affordable.)
“We want to pilot (new shows) and take the time to see what really works and see where the project might go,” added Williams, “as opposed to meeting some deadline where we’ve got to rush the money out the door.”
“I welcome the 10-year range,” said Global Television’s vice-president of original programming Christine Shipton because when it comes to drama, “it actually hurts us when we rush the process.”
Williams also pointed out that with the recent purchase of CHUM by CTV and of Citytv by Rogers, there is already tens of millions of benefits dollars in the market and that the market is “overloaded” with potential production money for Canadian programming.
Von Finckenstein pointed out the obvious, though, that the actors, directors and so forth do not see a Canadian TV production market flush with cash. “We hear from the creative community that money is not available,” he said. “I find it somewhat difficult to accept that you can’t spend that money in seven years and that you need 10.”
Williams added later that she would be prepared to work within a seven year timeline.
Commissioners also quizzed the company on the direction of the benefits funds (such whether or not establishing more foreign news bureaus, or digitizing all of CanWest’s library of content) and whether the package of funds should or should not be self-directed – something CTV and Rogers both asked for with their own benefits packages.
***********
Of the 120 or so people in the room, spotted were Astral Media chairman Andre Bureau, Rogers Communications vice-chairman Phil Lind, Bell Canada regulatory head Mirko Bibic, Alliance Atlantis Broadcasting CEO Phyllis Yaffe and that company’s founder Michael MacMillan.
BTW – MacMillan was on our Monday morning flight to Ottawa from Toronto – in row #27. Now, if we had sold our business for $2.3 billion, we’d be in row #1 – of our own Gulfstream… But I guess we can see how keeping costs down might have helped build a small production company into a broadcasting powerhouse.
