TORONTO, Oct. 2 /CNW Telbec/ - Media circles are abuzz over the potential
regulatory hurdles that CanWest Global Communications Corp. may face in its
takeover of Alliance Atlantis Communications Inc. With US investment giant
Goldman Sachs putting up more than 80% of the equity to fund the purchase, the
deal may challenge foreign-ownership rules.
"This case is far more 'grey' than cases where there are specific 'bright
line' tests banning certain transactions, such as owning too many TV stations
in one market," says Stephen Zolf, a partner with Heenan Blaikie LLP who
specializes in broadcasting law and regulation. "The broadcasting foreign
ownership rules do not expressly prohibit a foreign company from bankrolling a
takeover. We cannot presume this type of deal is offside the rules."
The CanWest deal appears to respect "to the letter" the current
restrictions in the ownership rules on the number of voting shares and the
seats on the board that a foreign company can acquire. The only potential
obstacle facing the parties is the provision that grants discretion to the
CRTC to conclude that a broadcaster is in fact controlled by a foreigner,
based on "any considerations relevant to determining control." The "control"
test is aimed at ensuring a uniquely Canadian perspective is brought to
decisions about the production and distribution of content to Canadian
"CanWest and Goldman Sachs will likely argue vociferously that their
arrangements to oversee Alliance's day-to-day broadcasting operations are well
within the parameters of previous transactions involving foreigners that have
already been blessed by the CRTC," says Zolf. "I'd be surprised if the CRTC
denies this deal outright. Instead, the CRTC will probably require them to
build in more protections to ensure Goldman Sachs, the foreign investor,
doesn't have undue influence over Alliance's broadcast operations."
For further information:
For further information: Stephen Zolf, Heenan Blaikie, (416) 643-6811,