Regulator pointed to importance of news
By Ahmad Hathout
The CRTC approved Thursday the transfer of Corus’s broadcasting licences to a new parent company, NewCo, that will be held by its debtholders, who will forgive $500 million in debt hanging over the media company.
Quebecor, which wanted to buy Corus and did not respond to a request for comment, was the big opposition to the transfer, alleging the media company did not follow-up on its offer to buy and NewCo shareholders will not have the expertise to operate such a business. Corus, which pushed back against these claims, already received Ontario Superior Court approval after it failed to get the required shareholder support, with the holdout class asking the CRTC to reject the transfer out of what it said was concern that the new group of unidentified financial investors would have control over a huge media footprint.
“The Commission has carefully considered the concerns raised by interveners regarding local news, Canadian programming, accessibility, employment levels and service to communities,” the CRTC said Thursday. “While the Commission acknowledges those concerns, the record does not establish that the transaction itself would result in the adverse outcomes identified, including the closure of individual services. Furthermore, approval of the application would not relieve Corus of its obligations under the Act, the Commission’s regulations, or its existing conditions of service. In this regard, the Commission notes that Corus has not requested any amendments to its conditions of service or expectations and has not requested the revocation of any of its licences.”
In approving the transaction, the regulator pointing to Corus, a company holding a billion dollars of debt, as an important institution in Canada – the largest independent broadcaster – and its Global News product as an significant source of information.
“Losing Corus’s investments in news and other programming content would have a significant impact on the Canadian broadcasting system, including on audiences and creators,” the CRTC said Thursday. “In the Commission’s view, those findings remain relevant today as the Canadian broadcasting system undergoes rapid transformation driven by technological change, the growth of online streaming services, and evolving consumer behaviour.”
The decision noted that funding for news remains uncertain, so it will not impose new obligations on Corus, which has laid off staff at Global News in recent weeks.
“The Recapitalization Transaction is expected to strengthen Corus’ financial position and provide a long-term solution that supports a sustainable business strategy by materially reducing existing debt and maintaining secured lending facility and liquidity access,” Corus said in a press release.
“The Recapitalization Transaction is expected to close in the coming weeks, upon satisfaction of various closing conditions and the receipt of customary securities laws and stock exchange approvals,” the release continued. “Business is expected to continue as usual until and following transaction closing, with no anticipated impact to Corus’ obligations to clients, producers, suppliers or employees. Upon closing, shares issued pursuant to the transaction will trade publicly [on TSX] and the Company will provide further details upon closing.”
The CRTC determined that NewCo’s dispersed ownership structure will ensure that no single shareholder will hold a majority voting interest, allaying fears that one entity will administer control over Corus. Despite Canso Investment Counsel Ltd. being the largest shareholder in NewCo, at 44 per cent of the voting interest, that ownership stake does not translate to effective control, the CRTC ruled.
“While they [rights] permit Canso to influence certain decisions relating to the implementation of the transaction, they do not provide Canso with the ongoing ability to determine the corporation’s affairs,” the CRTC said. “Responsibility for directing the corporation, including its day-to-day operations and strategic decision-making activities, will rest with NewCo’s board of directors.
“The Commission further notes that the record does not demonstrate the existence of shareholder agreements, contractual arrangements or other mechanisms that would permit Canso, or any other shareholder, to direct NewCo’s strategic decision-making activities on an ongoing basis.”
Because of that foundation, the CRTC said it does not need to force disclosure of the shareholders and the initial board of directors. Canso’s controlling shareholder is Canadian John Carswell; the rest of the shareholders are broadly dispersed with none holding a significant interest; and the structure of the transaction ensures compliance with the rules, the CRTC reasoned.
That said, the CRTC will require that NewCo submit to it the names of the individuals appointed to the board and confirm whether they are Canadian within 30 days of the appointments.
The CRTC labeled as premature requests to impose additional obligations on Corus as a condition of approval because the transaction, number one, will not affect Corus’s existing conditions of service and, number two, additional burdens will undermine the purpose of the deal, which is financial relief.
However, it said a “broader review of Corus’s regulator obligations would be more appropriately addressed in a future proceeding.”
The regulator also rejected pleas to ensure that Corus pays tangible benefits – money set aside for content funds as a result of broadcasting transactions.
“It is not a conventional acquisition being undertaken to expand a broadcaster’s portfolio, increase market share, realize synergies, or generate new economic value,” the CRTC ruled. “Rather, the present transaction is a debt-for-equity recapitalization intended to address Corus’s significant financial pressures, including its substantial debt burden and liquidity constraints. It aims to avoid an insolvency scenario and stabilize Corus’s financial position.
“In the Commission’s view, given the circumstances, the public interest would not be served by adding to Corus’s financial burden through a requirement for it to pay tangible benefits as part of this transaction. The public benefit of this transaction would be a more financially stable operator that could direct greater funding to programming and news, rather than servicing debt. Requiring Corus to pay tangible benefits would undermine that public policy goal.”
Some have argued that the commission should have, at the very least, tailored the exception to the benefits policy.
“The WGC is disappointed the CRTC decided to depart from its Tangible Benefits Policy in this application,” Neal McDougall, the Writers Guild of Canada’s assistant executive director and director of policy, said in a statement. “We’re also disappointed the Commission chose not to pursue a potential middle path by only applying the Tangible Benefits Policy exception to the specific undertakings under the Corus umbrella that have clearly suffered significant losses over an extended period of time.
“Meanwhile, if the CRTC is correct there is a real risk that Corus will become a failing operator, then this should be another alarm bell about the state of the Canadian broadcasting system,” McDougall added. “The federal government must take immediate steps to implement the Online Streaming Act, while we still have a Canadian system to save.”
The regulator noted that the revenues generated from Corus’s discretionary services, a main line of business, declined annually by an average of 10.3 per cent between 2023 and 2025 – more than three times the industry average. It noted that Corus’s debt stands at multiples more than its operating income.
Corus’s financial issues date back years. In 2024, the CRTC temporarily reduced its financial obligations to the broadcasting system on an extraordinary basis out of concern for its viability as a business.
And that was just before the blockbuster deal that summer that saw Rogers scoop the rights to content from Warner Bros. Discovery and NBCUniversal that Corus once held, which pushed the cable giant to seek removal of several Corus channels and forced a rebranding of channels. The Federal Court of Appeal ruled earlier this year that the cable giant is required to maintain the channels in their place during their carry dispute.
