TORONTO – Law firm Heenan Blaikie LLP has issued a media release stating that CanWest Global Communications Corp.’s takeover of Alliance Atlantis Communications Inc. shouldn’t necessarily be barred because American investment firm Goldman Sachs is putting up more than 80% of the equity to fund the purchase.
The deal doesn’t necessarily challenge foreign-ownership rules, according to a lawyer at the firm, who calls the case “far more gray” than transactions where there have been specific tests banning transactions, such as owning too many TV stations in one market.
“The broadcasting foreign ownership rules do not expressly prohibit a foreign company from bankrolling a takeover. We cannot presume this type of deal is offside the rules,” said Heenan Blaikie LLP partner Stephen Zolf in the media release.
The law firm notes the CanWest deal appears “to respect to the letter the current restrictions in the ownership rules on the number of voting shares and the seats on the board that a foreign company can acquire.”
It added the only potential obstacle is “the provision that grants discretion to the CRTC to conclude that a broadcaster is in fact controlled by a foreigner, based on ‘any considerations relevant to determining control.’ The control test is aimed at ensuring a uniquely Canadian perspective is brought to decisions about the production and distribution of content to Canadian viewers.”
“I’d be surprised if the CRTC denies this deal outright. Instead, the CRTC will probably require them to build in more protections to ensure Goldman Sachs, the foreign investor, doesn’t have undue influence over Alliance’s broadcast operations,” said Zolf.
