Canadian cable TV and broadcasting companies are hungrily eyeing U.S. equity markets following the federal government’s move recently to ease foreign-ownership restrictions.
Ottawa has raised the limit on foreign ownership in Canadian broadcast-related holding companies to one-third from 20% and has eliminated the so-called foreign equity test.
Previously, the rules stipulated that Canadians must own 80% of the total equity of a broadcasting or cable holding company. Under the revised regulations, Canadians need own only two-thirds of the voting shares and foreign investors can own an unlimited number of non-voting shares.
“By allowing for new infusions of investment capital along with new partnerships and alliances, we will help keep the system strong,” says Michel Dupuy, minister of Canadian Heritage.
Industry players say they were delighted with the regulatory changes and suggested they’ll be quick to use their newfound financial flexibility.
Can West Global Communications Corp., one of Canada’s biggest broadcasting concerns, was first off the block, saying it will soon seek to list its nonvoting shares on a suitable U.S. exchange.
Rogers Communications Inc., the nation’s largest cable operator, also is expected to seek a listing. It withdrew from U.S. equity markets in 1987 to live up to the spirit of the rules then in place, buying back shares of its publicly held U.S. subsidiary and delisting the stock.
“People will want to take advantage of these new financing possibilities,” says Richard Stursberg, president of the Canadian Cable Television Assn.
“Our people have been pushing for this because it gives greater potential for making some strategic alliances with broadcasters in other countries and gives us an opportunity to bring new money into the business to help us compete with other players,” says Michael McCabe, president of the Canadian Assn. of Broadcasters.
The changes bring parts of the Broadcasting Act into line with certain provisions in the Telecommunications Act, putting cable on a more equal regulatory footing with the telephone companies.
Another likely beneficiary is Alliance Communications Corp. of Toronto. It restructured its share capital in April to create a class of non-voting shares and said it hopes to be listed on Nasdaq by year’s end. Under the new rules, Alliance won’t have to worry about the number of non-voting shares in foreign hands.
The amendments to the 1968 direction to the Canadian Radio-television & Telecommunications Commission include:
* Maximum foreign investment in the voting shares of a broadcasting holding company is raised to 33.3% from 20%.
* The 20% limit on the number of non-Canadians who can be directors or officers, and the requirement that the chairman, chief executive officer or other presiding officer be a Canadian, are eliminated.