CTV-Chum deal OK'd, with caveat

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OTTAWA -- Canada's broadcast regulator on Friday signed off on CTVglobemedia's CAN$1.4 billion ($1.33 billion) takeover of broadcaster Chum Ltd. but ruled that five free, over-the-air Citytv stations must be excluded from the final deal on monopoly grounds.

In its surprise verdict, the Canadian Radio-television and Telecommunications Commission said that allowing CTVglobemedia to hold on to Chum's Citytv-branded stations in Toronto, Winnipeg, Edmonton, Calgary and Vancouver would "be inconsistent" with its rule that disallows a domestic broadcaster from owning more than one over-the-air TV station in a market.

"The purpose of this policy is to maintain diversity of voices within the Canadian broadcasting system," CRTC chair Konrad von Finckenstein said as part of his ruling.

Von Finckestein said that while the CRTC has made exceptions to the so-called twin-sticks rule in the past, the regulator was "unconvinced" by CTVglobemedia arguments that a further exception should be made for the Citytv stations based on competitive equality and the impact of new media.

The CRTC's demand that CTVglobemedia sell off the five Citytv stations is expected to set off a string of media deals here, including cable giants Rogers Communications and Quebecor Media likely bidding for the Citytv stations.

The CRTC also approved CTVglobemedia's takeover of Chum's A-Channel-branded TV stations, even though CTVglobemedia earlier proposed selling the A-Channel stations to Rogers Communications for CAN $137.5 million.

Rogers executives told shareholders two weeks ago that no deal was in place with CTVglobemedia that would allow the cablecaster to automatically purchase the Citytv stations, rather than the A-Channels, should they come up for sale.

CTVglobemedia, which operates the CTV national TV network and hoped to use the five Citytv stations to launch a parallel network aimed at young viewers, said little Friday after the CRTC's decision was revealed, only that it "is carefully reviewing today's CRTC decision and will only comment after its review is complete."

The Communications, Energy and Paperworkers Union, which represents Canadian TV journalists and technicians, applauded the decision to deny CTVglobemedia the Citytv stations. But vp media Peter Murdoch said the union still has "concerns" about allowing CTV to come away with Chum's 34 radio and 20 specialty TV channels.

The CRTC decision was not unanimous. In a dissenting opinion, CRTC commissioner Elizabeth Duncan said that CTV has been forced to buy more U.S. programming than it has shelf space for and that being able to schedule surplus U.S. shows on the Citytv stations "would allow CTV globemedia to better spend its programming dollars."
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