TORONTO – The CRTC will wade into the choppy waters of a dispute between The Fight Network and its former owners, despite its earlier reluctance to do so.
As Cartt.ca reported in May, the Commission originally decided not to undertake a review of an application made by current owners, Fight Media, to effect a corporate reorganization so that the new company could acquire the category two digital specialty channel The Fight Network from its previous owners, The Fight Network Inc.
At that time, the Commission noted the existence of an ongoing civil proceeding in the Ontario Superior Court and wanted more information. While that lawsuit has yet to be resolved, the CRTC has decided to consider the application after all at a public hearing in Saskatoon on Wednesday (this application is a non-appearing one, however).
And it’s this decision by the Regulator that has The Fight Network’s founder, Mike Garrow, one of the lawsuit’s claimaints, scratching his head.
“I don’t know why (the Commission) said they wouldn’t hear it (prior to resolution of the lawsuit), and now they’re hearing it again," Garrow told Cartt.ca. “My concern is that should this go through, it could potentially set a dangerous precedent for the future of other broadcast groups, especially in this day and age of consolidation. I’m hoping that the Commission chooses to not wade in to this until all of the civil proceedings are done.”
After being let go in August 2008 by the company he founded, Garrow and some other shareholders filed a lawsuit against TFN Global Inc., the owner of the current licensee of The Fight Network channel. While the lawsuit centres around a dispute over the ownership of the voting shares in the company, Garrow said that he is equally concerned about Fight Media’s request for a new category B license. According to the application filed with the CRTC, the new channel will “continue the operation of the undertakings under the same terms and conditions as those in effect under the current licenses”.
“I’m not opposed to (the issuances of) new licenses in the same genre”, Garrow continued. “But what I’m worried about is that (the owners) are claiming that they want a new license because the company behind this one is insolvent. Well, that has yet to be proven in court. If it’s insolvent, why does it continue to function and still collect subscriber fees? It’s very easy for someone to say ‘that thing’s not profitable’ when it is. And if they’re allowed to do it, what’s to prevent someone else from doing it, down the road?”
The Commission explains the backstory of the dispute thusly: Back on November 2, 2007, it approved a change in the effective control of TFN Inc., from Garrow to Mayhem Media (which is an entity controlled by Edwin Nordholm and Loudon Owen, the current Fight Network license holders).
Following that approval, “Mayhem advanced loans to TFN Global and obtained security interest in all the assets of TFN Global and TFN Inc. Mayhem has sold participation interests in the Loans to various parties,” reads the Commission’s notice.
“The loans are in default and Mayhem has demanded repayment. In accordance with section 65 of the Ontario Personal Property Security Act (PPSA), Mayhem intends to foreclose on the collateral.” And so, “(u)nder the PPSA procedure, all related property of TFN Inc. becomes the property of Mayhem. After such foreclosure is effected, Mayhem would become the owner of all the assets of TFN Inc. However, TFN Inc. will continue to exist and will continue to be the licensee and to be responsible for all regulatory obligations until such time as the Commission would approve the application for a new licence to be issued to Fight Media.”
The owners then intend to reorganize and recapitalize Fight Media, which will become the new licensee of The Fight Network and Le Réseau des Combats, and will assume responsibility for current trade payables and regulatory obligations, according to the application.
Nordholm and Owen would continue to control The Fight Network under the plan, and from the subscriber point of view, nothing would change.
According to a letter on the Commission file from Fight Media’s legal counsel, Goodmans LLP, the Ontario court case brought by Garrow and the past shareholders has no bearing on the Commission’s determinations and it should proceed.
“The interventions that have been filed do not raise any objections that relate to the Commission’s jurisdiction under the Broadcasting Act. Rather, the interveners are attempting to use the Commission’s process to gain an advantage in the litigation they have commenced. This is an improper use of the Commission’s process and the Commission should recognize it for what it is: a transparent attempt to obtain a de facto injunction via the regulatory process. As such, it constitutes an abuse of process", reads the letter from Goodmans’ lawyer Rob Malcolmson.
“The Application before the CRTC is compliant with the Broadcasting Act and all CRTC rules and regulations", it continues. "The CRTC is the master of its own jurisdiction. Simply because an application is before the Court does not prevent the CRTC from issuing its determination in the current Application.”
– Lesley Hunter
