CRTC postpones CanWest-Alliance hearings

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TORONTO -- The Canadian Radio-television and Telecommunications Commission on Wednesday postponed public hearings on CanWest Global's pending takeover of Alliance Atlantis Communications following the filing of key documents related to the CAN$2.3 billion ($1.99 billion) purchase.

The broadcast watchdog said that moving the hearings to Nov. 19 -- they originally were scheduled for last week -- is the result of CanWest's dropping 300 pages of material "with marked changes" on the regulator's desk late last week.

Winnipeg, Manitoba-based CanWest, which is partnering with Goldman Sachs to purchase AAC, said that a later-than-planned closing of the purchase prompted the delay in regulatory disclosures.

But the CRTC ruled that "the extent of new information" will require interested industry parties to have another chance to weigh in on the deal ahead of public hearings.

CanWest Global is seeking CRTC approval to combine its Global Television network with the 13 AAC cable channels that Goldman Sachs is acquiring as part of the mega-deal first unveiled last January.

Ben Mogil, an entertainment analyst with Toronto-based Westwind Partners, in a note to investors, said the regulatory postponement only adds to the clouds hanging over the AAC deal.

"A regulatory delay will only fuel concerns that the current deal may need to be reworked to gain approval, which may leave investors content to sit on the sidelines," Mogil said while lowering his target price for CanWest Global shares.

The AAC deal will test Canadian foreign-ownership rules because CanWest Global proposes handing Goldman Sachs a one-third voting stake and a 64% equity interest in a joint venture comprising the Global Television network and the 13 AAC cable channels.

Mogil said that Goldman Sachs has already allowed CanWest Global to increase its equity stake in the AAC takeover to CAN$262 million ($247 million), and may need to do even more to ease CRTC concerns over its participation.

"We do not view GSCP's (Goldman Sachs) increased allowance for CGS (CanWest Global) as a sign of altruism. It is, rather, to blunt regulatory concerns," he said.

Before green-lighting the AAC takeover, the CRTC will assess whether Goldman Sachs is in a position to exercise effective control over the broadcasting joint venture, including how the Alliance Atlantis cable channels are programd or how and when they are sold.

Current Canadian laws bar foreign interests from exercising effective control over domestic media assets.

A CRTC decision on the AAC takeover will not likely be handed down before the end of the year or early 2008.
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