Case Documents

-··--w•- ...... ~- .,· · ,-, •- •··•. -· ---·, :·-.--:·:~; --~~--~ #-~ 'j ,. . ,f.fl ;.•1 \,, 1 l \ ('.;:/.~·(Ji\.•.·-' .-... ~~.·:.,;~")~}!" ? ~. !1· 1 1 ,",v' \ 1 ''-·f", ".. '} . l)!; ....... '-'-'•"'-''' •• ~.. '(·. Ci I r- r> I . . U AMENDED CONSENT AGREEMENT \ ~ ·oc1 23 20Ql . \ \ IN RELATION TO THE TRANSACTION BETWE)EN .. w. < _ uGi~u1-if£ . . ASTRAL MEDIA INC. AND TELEMEDIA RADIO INC _ . . --·- w.: · - -· - ;zD(/j 1f I c'n f\ w :-., o~n. ~ .. .2:;:)..~--~ _:__....._...-----.. ·-· ' WHEREAS Astral Media Inc. ("Astral") has entered into an (lgreement to acquire certain radio businesses, including radio businesses in the Province of Quebec, ofTelemedia Radio Inc. (''Telemedia") (the acquisition of the aforementioned Quebec radio businesses hereinafter referred to as the "Transaction", as more particularly defined in clause 1( tt) hereof);

AND WHEREAS the Commissioner of Competition has competitive concerns and has filed an application before the Competition Tribunal under section 92 oft he Competition Act for an order prohibiting Astral and Telemedia from proceeding with the Transaction;

AND WHEREAS the CRTC has granted licences for new French-language radio broadcasting undertakings in Gatineau/Ottawa and Quebec City and has called for and received applications for new French-language radio broadcasting undertakings to serve Montreal, Sherbrooke, Trois-Rivieres and Chicoutimi/Jonquiere;

AND WHEREAS the Commissioner declares himself satisfied that the Agreement set out herein will be sufficient to avoid any substantial lessening or prevention of competition in the relevant market(s) which may result from the completion of the Transaction;

AND WHEREAS in order to resolve the above-mentioned section 92 application, Astral, Telemedia and the Commissioner hereby agree as follows:

Definitions 1. For the purposes of this Agreement, the following definitions shall apply: (a) "Agreement" means this consent agreement entered into by Astral, Telemedia and the Commissioner;

(b) "AM Divestiture Trust Agreement" has the meaning set forth in clause 15; (c) "AM Divestiture Trustee" has the meaning set forth in clause 15; (d) "AM Purchaser(s)" means the purchaser(s) of any or all AM Stations as a result of the Divestiture(s) of these stations under this Agreement;

(e) "AM Stations" means CKAC (Montreal), CHRC (Quebec City), CJRC (Gatineau), CHLT (Sherbrooke), CHLN (Trois-Rivieres) and CKRS (Chicoutimi/Jonquiere) including all licences that have been issued by the CRT C for these stations;

(f) "AM Trust Agreement" has the meaning set forth in clause 4; (g) "AM Trustee" has the meaning set forth in clause 3; PUBLIC VERSION

- 2 -(h) "Astral" means Astral Media Inc.; (i) "Astral FM Stations" means CKMF-FM (Montreal), CHIK-FM (Quebec City), CKTF(Gatineau/Ottawa),CIMO-FM(Sherbrooke),CIGB-FM(Trois-Rivieres) and CJAB-FM (Chicoutimi/Jonquiere), including all licences that have been issued by the CRTC for these stations other than network licences;

(j) "Backstop Divestiture Trustee" has the meaning set forth in clause 17; (k) "Backstop Divestiture Trust Agreement" has the meaning set forth in clause 17; (I) "Backstop Purchaser(s)" means the purchaser(s) of certain FM Stations and/or certain AM Stations as a result of divestiture(s) pursuant to clause 17 of this Agreement;

(m) "Business Day" means any day oft he year, other than a Saturday, Sunday or any day on which banks are required or authorized to close in Montreal, Quebec;

(n) "CFOM-FM" means the Quebec City FM radio station of this name owned by Astral;

(o) "Code of Conduct" means the Code of Conduct referenced in clause 33 of this Agreement;

(p) "Commissioner" means the Commissioner of Competition appointed pursuant to section 7 of the Competition Act;

( q) "Competitively Sensitive AM Activities" means, in respect ofL ocal Advertising on AM Stations or in respect of any advertising sold directly by the AM Trustee, pricing, price quotations, customer solicitation and advertising sales promotions;

(r) "Competitively Sensitive FM Activities" means, in respect ofL ocal Advertising on FM Stations, pricing, price quotations, customer solicitation and advertising sales promotions;

( s) "Confidential Information" means any information pertaining to Competitively Sensitive AM or Competitively Sensitive FM Activities and includes information about customers, prices, revenues, advertising inventories and marketing methods and other competitively sensitive pricing or marketing information that, if disclosed to Astral, would cause prejudice to the ability of AM Stations or FM Stations to compete in the sale of Local Advertising in their respective Subject Markets;

(t) "CRTC" means the Canadian Radio-television and Telecommunications Commission established under the Telecommunications Commission Act;

PUBLIC VERSION

Canadian Radio-television and

- 3 -(u) "Designated Astral Personnel" means Persons identified on the list specified in clause 43;

(v) "Divest" and words of similar import, mean to implement a Divestiture; (w) "Divested Business" means each of the AM Stations and CFOM-FM; (x) "Divestiture" means, in respect of any particular Divested Business, the sale, transfer, assignment or other disposition necessary to ensure that, by completion of such Divestiture, Astral has, directly or indirectly, no remaining ownership interest in such Divested Business;

(y) "divestiture" means, in respect of any particular business, the sale, transfer, assignment or other disposition necessary to ensure that, by completion of such divestiture, Astral has, directly or indirectly, no remaining ownership interest in such business;

(z) "Effective Date" means the date on which the Transaction closes; (aa) "FM Markets" means Gatineau/Ottawa, Sherbrooke, Trois-Rivieres and Chicoutimi/Jonquiere;

(bb) "FM Stations" means CITE-FM (Sherbrooke), CHEY-FM (Trois-Rivieres), CFIX-FM (Chicoutimi/Jonquiere) and CIMF-FM (Gatineau), including all licences issued by the CRTC for these stations, other than network licences;

(cc) "FM Trust Agreement" has the meaning set forth in clause 23; (dd) "FM Trustee" has the meaning set forth in clause 22; (ee) [repealed] (ft) [repealed] (gg) [repealed] (hh) "Local Advertising" means advertising purchased directly from a Subject Station by an advertiser, advertising agency or media buying agency;

(ii) "Local Sales Representatives" means, with respect to any Subject Station, sales representatives of such Subject Station who sell Local Advertising on the Subject Station;

(jj) "Other Rep Houses" means rep houses, other than RadioPlus, representing Astral with respect to the sale of advertising on the Subject Stations;

(kk) "Person" means any natural person, corporation, association, firm, partnership or other business legal entity;

PUBLIC VERSION

- 4 -(11) "Promotional Advertising" means advertising for one-time or seasonal events, such as festivals, shows, galas, concerts and openings, but does not include advertising in respect of retail sales promotions;

(mm) "Radiomedia" means Radiomedia Inc.; (nn) "RadioPlus" means the integrated radio sales force currently owned by Astral and Telemedia through their respective 50% ownership interests inRadiomedia and which will be owned 100% by Astral after the Effective Date. For greater certainty, RadioPlus does not form part of the AM Stations or the Divested Businesses;

(o o) "Regional Advertising" means advertising on the Subject Stations the sale of which is assigned to Regional Sales Representatives;

(pp) "Regional Sales Representatives" means sales representatives who sell advertising, other than Local Advertising, on the Subject Stations and, for greater certainty, does not include Local Sales Representatives;

(q q) "Subject Markets" means Montreal, Quebec City, Gatineau/Ottawa, Sherbrooke, Trois-Rivieres and Chicoutimi/ Jonquiere;

(rr) "Subject Stations" means the AM Stations, the FM Stations and the Astral FM Stations;

(ss) "Telemedia" means Telemedia Radio Inc. and any of its successors and assigns, including more particularly Maxbeau Company;

(tt) "Transaction" means the acquisition by Astral from Telemedia of certain radio businesses, including French-language radio businesses in the Province of Quebec, namely the FM Stations, CHLN-AM (Trois-Rivieres), CHLT-AM (Sherbrooke) and Telemedia's 50% interest in Radiomedia;

(uu) "Tribunal" means the Competition Tribunal established by the Competition Tribunal Act;

(vv) "Trustees" means the AM Trustee and the FM Trustee. Applications 2. The provisions of this Agreement apply to: (a) Astral, including each division, subsidiary or other Person controlled by Astral and each officer, director, employee, agent or other Person acting for or on behalf of Astral with respect to any of the matters referred to in this Agreement, and any successors and assigns of Astral, and all other Persons acting in concert or participating with any such successor(s) or assign(s) with respect to the

PUBLIC VERSION

- 5 ­matters referred to in this Agreement who shall have received actual notice of this Agreement;

(b) Telemedia, including each division, subsidiary or other Person controlled by Telemedia and each officer, director, employee, agent or other Person acting for or on behalf ofTelemedia with respect to any of the matters referred to in this Agreement, and any successors and assigns ofTelemedia, and all other Persons acting in concert or participating with any such successor(s) or assign(s) with respect to the matters referred to in this Agreement who shall have received actual notice of this Agreement;

( c) the Commissioner; ( d) the AM Trustee, or any substitute appointed pursuant to the AM Trust Agreement, and each employee, agent, or other Person acting for or on behalf of the AM Trustee;

( e) the AM Divestiture Trustee, or any substitute appointed pursuant to this Agreement, and each employee, agent, or other Person acting for or on behalf of the AM Divestiture Trustee;

(f) [repealed] (g) the FM Trustee, or any substitute appointed pursuant to the FM Trust Agreement, and each employee, agent, or other Person acting for or on behalf of the FM Trustee;

(h) the Backstop Divestiture Trustee, or any substitute appointed pursuant to this Agreement, and each employee, agent, or other Person acting for or on behalf of the Backstop Divestiture Trustee.

Operation of AM Stations Following Closing of Transaction 3. Upon the Effective Date, all AM Stations will be put under the control of a trustee (the "AM Trustee") selected by Astral and approved by the Commissioner and the CRTC.

4. The rights and obligations of the AM Trustee shall be set out in a trust agreement (the "AM Trust Agreement") in conformity with applicable CRTC rules and approved by the Commissioner and the CRTC.

5. The AM Trustee shall take all necessary steps and give all necessary instructions to cause the AM Stations under his/her management, and any servants or agents of such AM Stations or of the AM Trustee, to:

(a) operate the businesses independently of Astral in a manner consistent with clause ll(b) of this Agreement;

PUBLIC VERSION

- 6 -(b) operate the businesses in compliance with all applicable laws, this Agreement and the AM Trust Agreement;

(c ) maintain all material permits, licences and approvals necessary for the operation of the businesses;

( d) use commercially reasonable efforts to maintain and enhance the competitiveness and the customer base of the businesses;

( e) maintain and hold the businesses in good condition and repair, including maintenance of the current AM Station formats, normal wear and tear excepted, and to standards equal to those maintained by Astral, Telemedia or Radiomedia, as the case may be, prior to the Effective Date;

( f) not communicate any Confidential Information related to the businesses to Astral, including each division, subsidiary or other Person controlled by Astral, or any other Person, save the Commissioner or the CRTC, except as permitted in this Agreement or in the AM Trust Agreement;

(g) not knowingly take or allow to be taken any action that materially and adversely affects the competitiveness, assets, operations, financial status or value of the businesses;

(h) subject to clause 13, not relocate, destroy or dismantle any fixed assets of the businesses;

(i) not, to any material extent, enter into any agreement to lease or otherwise encumber any assets of the businesses, or real property occupied by the businesses to or in favour of any other Person save as required by prudent management of the businesses;

(j) not, to any material extent, alter, or cause to be altered, the management of the businesses as it existed prior to the Effective Date, except as may be necessary to comply with the terms of this Agreement or the AM Trust Agreement or to replace employees that may resign or otherwise cease to be employed by the AM Stations, and save as required by prudent management of the businesses;

(k) not terminate or alter any current employment, salary or benefit agreements for any employees working in the businesses, to any material extent, save as required by prudent management of the businesses; and

(1) advise Astral of any breach of the confidentiality obligations by an employee of Astral and the AM Trustee may refuse to use the services of such employee until Astral has taken appropriate action.

6. All reasonable costs engaged by the AM Trustee in the performance of his/her obligations under the AM Trust Agreement shall be paid by Astral.

PUBLIC VERSION

- 7 -7. Astral shall, if necessary, contribute cash with respect to the AM Stations to permit the applicable business( es) to continue to operate as a group at standards equal to those existing at the Effective Date and may, at its option, contribute funds for significant capital expenditures in consultation with the AM Trustee. For greater certainty, Astral shall not be obliged to contribute cash in amounts beyond those contemplated in budgets already approved by the Boards of Directors of Astral, Telemedia and Radiomedia, as the case may be, for the AM Stations as a group for the 2003 fiscal year nor, in subsequent fiscal years, in amounts exceeding such budgeted expenditures plus CPI.

8. Notwithstanding any other provision ofthis Agreement or the AM Trust Agreement, the AM Trustee shall be required to use the managerial, administrative and operational (including maintenance) resources ofA stral for the following services at a fee to be paid to Astral (representing full cost recovery for the particular service or group of services) as already included in the budgets approved by the Boards of Directors of Astral, Telemedia and Radiomedia, as the case may be, for the AM Stations as a group for the 2003 fiscal year and, in subsequent fiscal years, such budgeted amounts plus CPI:

(a) public affairs/media relations services; (b) legal and regulatory services, including in respect of industry and trade activities;

( c) information systems services, including construction, maintenance and support of all information technology systems;

( d) maintenance, in accordance with Canadian generally accepted accounting principles (as applicable), of separate and adequate financial ledger books and records of material financial information with respect to the AM Stations;

( e) preparation of tax returns and other audit services; (f) human resources, including but not limited to labour relations, and payroll services;

(g) processing of accounts receivable and payable; (h) security services; (i) technical support; (j) occupational health and safety, including medical services such as drug testing; (k) environmental permitting and liability, and any other regulatory compliance services;

(1) insurance, including notification of claims for which coverage is sought; (m) financial accounting services, including cash management, banking and billing; PUBLIC VERSION

- 8 -(n) engineering services, including engineering, technical and broadcasting services; ( o) real estate services, including the identification and development of new sites; (p) procurement of goods and services utilized in the ordinary course ofb usiness by the business( es); and

(q ) transportation and other logistics services. 9. With respect to the AM Stations: (a) Astral shall not in any way influence any Competitively Sensitive AM Activities;

(b) Astral shall not intervene in the selection of on-air personalities or solicit employees of the AM Stations, other than joint employees of AM Stations and any FM Stations and/or Astral FM Stations;

( c) Astral shall take reasonable measures to restrict access to Confidential Information of the AM Stations to Designated Astral Personnel involved in providing such services and to ensure that such personnel retain and maintain all Confidential Information of the AM Stations received for purposes of providing the above services on a confidential basis. Except as is permitted by this Agreement or the AM Trust Agreement, such personnel shall be prohibited from providing, discussing, exchanging, circulating, or otherwise furnishing any such information to or with any Person other than the AM Trustee, the AM Divestiture Trustee, the Backstop Divestiture Trustee, an employee under the supervision of the AM Trustee who is already in possession of the information or is permitted by the AM Trustee to obtain the information or other Designated Astral Personnel and only on a "need to know" basis. Nothing in this Agreement, however, shall require Astral or the AM Trustee to hold separate the operations, assets or personnel used to provide such services;

( d) In the event that, notwithstanding the foregoing, Astral personnel other than Designated Astral Personnel should come into possession of Confidential Information of the AM Stations, such Astral personnel will be required to sign a confidentiality agreement in respect of such information and Astral shall not use such information in a manner that would cause prejudice to the ability of the AM Stations to compete in the sale of advertising in their respective Subject Markets; and

( e) The Designated Astral Personnel shall not use any Confidential Information in a manner that would cause prejudice to the ability of the AM Stations to compete in the sale of advertising in their respective Subject Markets.

10. The AM Trustee shall not communicate any Confidential Information acquired in the performance of his/her duties under this Agreement or the AM Trust Agreement to any

PUBLIC VERSION

- 9 -Person except to the extent required or permitted by this Agreement or the AM Trust Agreement. The AM Trustee will execute a confidentiality agreement to said effect.

11. Astral shall: (a) subject to clause 8 of this Agreement, take all reasonable steps to ensure that the AM Stations are independent ofA stral, including transferring to the AM Trustee all rights, powers and authorities necessary for the AM Trustee to perform his/her duties and responsibilities under this Agreement and the AM Trust Agreement; and

(b) not exercise any direction or control, direct or indirect, over the management or operations of the AM Stations or influence the marketing of the AM Stations except as provided in this Agreement or the AM Trust Agreement.

12. In addition to his/her obligations as set out in the AM Trust Agreement, the AM Trustee shall report, on a monthly basis to the Commissioner, Astral and, if necessary, the CRTC with respect to financial performance of the AM Stations in sufficient detail as to allow Astral to determine financial performance of the AM Stations as a group and the net financial position of each AM Station. In furnishing such a report, notwithstanding any other provision of this Agreement, the AM Trustee may furnish to Astral the revenue figures of the AM Stations as a group and may furnish to a bona fide bidder or purchaser, any information on a station by station basis, subject to that bidder or purchaser entering into an appropriate confidentiality agreement.

13. The AM Trustee shall not relocate the AM Stations to other premises without the prior written consent of Astral. Astral reserves the right, however, on reasonable notice in writing to the AM Trustee and with his/her consent, or to the AM Purchaser(s) or the Backstop Purchaser( s ), as the case may be, in Astral' s sole discretion, to terminate any existing arrangements with Astral respecting the business premises of the AM Stations or services provided pursuant to clause 8 of this Agreement.

Divestiture of AM Stations 14. Within [CONFIDENTIAL] from the Effective Date, Astral shall use commercially reasonable efforts to effect the Divestiture of the AM Stations (as a network of stations to the same buyer or to a group of buyers acceptable to the CRTC and the Commissioner) with no ownership interest in Astral in excess of I 0% and no ownership interest in Telemedia and who intends to operate the AM Stations as a network of French-language radio stations.

15. If, by the time provided for in clause 14 or such earlier date as Astral may choose, Astral has not Divested all oft he AM Stations in accordance with clause 14, Astral will appoint a trustee (the "AM Divestiture Trustee") approved by the Commissioner and the CRTC, who will then be responsible for Divesting the AM Stations on behalf of Astral. The rights and obligations of the AM Divestiture Trustee shall be set out in a trust agreement

PUBLIC VERSION

- 10 -(the "AM Divestiture Trust Agreement") approved by the Commissioner and, if necessary, the CRTC. The Divestiture(s) by the AM Divestiture Trustee, or his/her substitute appointed pursuant to the AM Divestiture Trust Agreement, shall be subject to the following conditions:

(a) the AM Divestiture Trustee shall have all the powers necessary to realize the Divestiture(s) and must make all commercially reasonable efforts required to realize the Divestiture(s), provided however that the AM Divestiture Trustee shall have no powers with respect to the management or operation of the AM Stations;

(b) subject to clause (c), the AM Divestiture Trustee shall proceed with the Divestiture(s) oft hese stations, subject to the Broadcasting Act, at the best price and conditions that, in his/her discretion, can be obtained;

(c ) the AM Divestiture Trustee, subject to clause 16, shall offer the AM Stations for sale as a network for a period of at least [CONFIDENTIAL] from his/her appointment ("the Network Period") and shall Divest the AM Stations to the Person(s) offering to purchase them at the best price and conditions that, in his/her discretion, can be obtained. If, after such time, the AM Divestiture Trustee has received no binding offer(s) to purchase the AM Stations as a network ("the Remaining Period"), the AM Divestiture Trustee may Divest five of the AM Stations as a network to a buyer or group of buyers at the best price and conditions that, in his/her discretion can be obtained, provided that included in the five AM Stations so Divested are the AM Stations in Chicoutimi/Jonquiere, Trois-Rivieres and Sherbrooke. If the network is so Divested, a sixth and remaining station will be Divested by the AM Divestiture Trustee on a stand alone basis and at the best price and conditions that, in his/her discretion, can be obtained within the same time period as set out in clause 15(e);

(d) For the purposes of clauses 14 and 15(c), it is understood that if a buyer(s) already owns and operates an AM or FM Station in Montreal or Quebec City and intends to operate that Station as a network with the remaining five AM Stations being divested by Astral, the obligation to divest the AM Stations as a network will be met. In that event, the remaining AM Station in Montreal or Quebec City will be sold by Astral or the AM Divestiture Trustee on a stand alone basis and within the same time periods set out in clauses 14 and 15, unless the Commissioner agrees to another time period;