Cogeco surprised by Astral move to bring CRTC ruling on Corus deal to court

Cogeco Inc. says it will fight a motion filed by Astral Media Radio Inc. Tuesday with the Federal Court of Appeal that seeks leave to appeal the CRTC's decision to grant Cogeco an exception to its common ownership policy. “We're very surprised by Astral's undertaking, particularly considering Astral's dominant position in the Quebec radio market,” René Guimond, Cogeco's vice-president of public affairs and communications, said in an interview. “We think Astral's appeal is baseless, and we will vigorously contest it before the Federal Court of Appeal if necessary.” Astral said in a release Tuesday it intends to appeal the CRTC's decision to allow Cogeco to operate four FM stations in the Montreal market by granting it an exception to its common ownership policy. “With regard to the CRTC decision announced on December 17, Astral believes that the CRTC erred in allowing COGECO to own and operate three French-language FM radio stations (98,5 fm, CKOI, and Rythme FM) in the Montréal market, whereas all other broadcasters in similarly large markets, including Astral Radio, are limited to two FM stations of the same language in order to comply with the common ownership policy adopted by the CRTC in 1998, and reaffirmed three times since,” Astral said. On Dec. 17, the CRTC approved Cogeco's acquisition of Corus Entertainment Inc.'s 11 Quebec radio stations. In its decision the commission also granted Cogeco an exception to operate three FM stations in the Montreal market. “The Commission is of the view that Cogeco’s proposal, together with the arguments raised by the parties, forms a package of inextricably linked elements justifying the requested exception,” the commission said in a release following the approval. “The Commission also took into consideration the particularities of the Quebec radio market, including the marked preference of listeners for the FM band and the progressive abandonment of the AM band.” The commission also said in its decision that approving the overall transaction, which includes the creation of a news agency, will help ensure a diversity of information programming in Montreal and Quebec. Under the commission's common ownership policy, a company cannot own or control more than two AM and two FM stations in a large radio market. Now that the CRTC has granted Cogeco the exception, the company will operate Montreal stations CKOI-FM, CFQR-FM, CHMP-FM and CKAC-AM. During a CRTC hearing on the acquisition in September, Cogeco said it would abandon the deal if it wasn't granted the exception to operate French-language music station CKOI-FM, which represents about half of the transaction's total value. Following the commission's ruling in December, Cogeco said in a release it was “satisfied” and would abide by the decision. “We are very happy with the CRTC's decision, and more confident than ever that it will be highly fruitful for the radio broadcasting system in Quebec and diversity of voices in radio news. Promising for the future, the strategy proposed by Cogeco Diffusion represents a sustainable project that will restore competitive balance to Quebec's radio landscape,” Louis Audet, president and CEO of Cogeco, said. Although the commission granted Cogeco an exception for the Montreal market, it denied a request by the company to re-brand sports station CFOY-FM Sherbrooke into a rebroadcasting transmitter of CKAC-AM Montreal. Instead the CRTC ruling required Cogeco to sell the station, as well as CJEC-FM and CFEL-FM in the Lévis-Quebec City market, in order to comply with its common ownership policy. Astral described the CRTC ruling in its release Tuesday as a “prejudicial decision” that disrupts the radio sector's competitive equilibrium. “The sudden lack of predictability in the application of the CRTC policy penalizes all broadcasters which in the past decided not to pursue business opportunities in order to abide by the policy as formulated and as consistently applied,” Claude Laflamme, Astral Radio vice-president of corporate and regulatory affairs, said in the release. In its motion, Astral argues the CRTC erred in law by not opening a review of its common ownership policy, and “acted in an arbitrary and unreasonable manner” by granting the exception. Astral is also asking the court to suspend the execution of the CRTC's decision until it has given its final judgement on the appeal, which is expected in the coming months. But Guimond said Cogeco intends to fight the motion to ensure its operations aren't put on hold. Guimond said the CRTC's common ownership policy is not a law, and the commission has the right to grant exceptions. “The CRTC explained very well the reason why it decided to grant Cogeco the exception it requested in Montreal's francophone market,” he said. “The commission in looking at the Montreal market evaluated the situation and gave its decision to grant the exception. We have the right to ask for an exception and we got it.” The CRTC could not be reached for comment Tuesday evening. Astral Media Radio is a subsidiary of Astral Media inc. news@thewirereport.ca

Cogeco surprised by Astral move to bring CRTC ruling on Corus deal to court

Broadcast | January 12, 2011

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