OTTAWA – The CRTC has taken the rare step of halting the sale of Vancouver radio station Shore 104 FM to Astral Media Radio, citing a violation of its licence trafficking policy.
Shore 104 FM is is the licensee of CHHR-FM, an English-language commercial radio programming undertaking in Vancouver. According to documents, the private company is owned by a group of broadcast and business veterans that include president Roy Hennessy, David Aisenstat, Sam Feldman, Bob Mackowycz and son Bob Mackowycz Jr., Sean Morrison and TSN’s Michael Landsberg. The station was also being represented in the field by Astral Media Radio Sales, as Cartt.ca reported.
The Commission’s policy on licence trafficking says that any transaction involving a licence during the first two years following the launch of a service will normally be denied, except where the applicant can demonstrate the necessity of the transaction as a result of a force majeure event. While this transaction met the two-year period criterion, the CRTC referenced the Put and Call Agreement and Loan Agreement, (the 2010 Agreements), struck between Astral Radio and Shore Media, noting that “the circumstances in which they were concluded and the provisions within left no reasonable doubt as to the intended result”.
“For example, the terms of the 2010 Agreements were drafted in such a manner that, regardless of the financial performance of the station, one of the parties to the 2010 Agreements would have exercised its rights to proceed with the transaction”, reads the CRTC’s letter to Astral Radio and Shore Media dated September 26, 2011. “Terms agreed to in 2010 included a pre-determined price with adjustments and safeguards to ensure Astral Radio’s eventual purchase of Shore Media, including an exclusivity clause that prevented Shore Media from negotiating with other parties the potential sale of the station. Further, according to the terms of the 2010 Agreements, any outstanding terms in the final purchase and sale agreement were to be negotiated on commercially reasonable grounds, leaving no reasonable doubt that the 2010 Agreements would lead to the signing of an agreement to transfer effective control.”
The Commission also rejected the applicants’ argument that the world economic crisis that began in 2008 could be considered a force majeure event, noting that Shore Media also faced challenges from competitors like CBC Radio 2 in the Vancouver market “that had multiple stations benefitting from sales and promotion synergies across those stations and multiple platforms”.
“By failing to have sufficient financial resources to operate, Shore Media is attempting to rely on a condition that it brought upon itself”, continues the CRTC’s letter. “Consequently, even if the Commission were to find that the economic crisis was a force majeure event, the economic crisis did not in and of itself force Shore Media to sell to Astral Radio.”
When contacted by Cartt.ca, Sean Morrison, who is listed as a director of Shore Media Group as well as managing partner and co-founder of Vancouver-based Maxam Capital Corporation seemed surprised that the CRTC rejected the proposed sale.
“We didn’t expect our application to be denied – the board is assessing it’s options”, reads his brief emailed reply. “That’s all I can say at the moment.”
An Astral Media spokesperson said that the company is "disappointed with the CRTC’s decision to deny the application to effect the transfer of shares and change of effective control of Shore Media Group Inc. to Astral".
"We are presently reviewing the Commission’s decision to explore our options or other possibilities", the spokesperson’s email continues.
– Lesley Hunter with files from Greg O’Brien
