National Post from Toronto, Ontario, Canada • 32

h'P'J I A I A POS'I 1) I A IT SUMMARY Rogers a leading contender CT CTV Inc Knew was rolling till' dice when il went before the federal bniaili-asl regulator last month looking fr approval to hold onto the five Citytv stations as part ol its planned takeover ol CHUM Ltd. Nevertheless, it believed the odds were in their favour. As it turned out, CTV gambled badly, as the Canadian Radio-television and Telecommunications Commission issued an unequivocal no to its request As .1 result, the broadcasting land-seapi is sel i slight inakeovei with the pending auction i the large market anil high-profile Citytv stations that could turn into a feeding frenzy involving the biggest media players in the land. See Page FPl DOMAIN NAME CAPITAL To those not in their tight eireleor familiar with the hidden underpinnings of the online world, British Columbia's domainers are the anonymous i nun wiiu i ii i uev nave none ui me suit power of their real world brethren, the Don- alii 'IVlinins anil trllmv hillinnairp ntniwta J. developers whose dealings the world follows iKM III 1 IS III I'MMIU Ki.

with tabloid interest. But over the past decade, they have quietly made southern B.C. into the world's Internet ownership capital, a sort of virtual Manhattan that is home to some of earth's most valuable addresses. One, who lives in Vancouver, owns god.com, a name so lucrative one fellow domainer said "everybody on earth" will visit it at one time or another. See Page FP1 NORTEL NETWORKS The U.S.

Securities and Exchange Commission plans to fine Nortel Networks Corp. for accounting fraud in the first test of a policy that gives the agency's commissioners more say in corporate penalties, four people with direct knowledge of the matter said yesterday. SEC attorneys got the commissioners' approval last month to seek a fine of less than USSlOO-million from Nortel, North America's largest telephone-equipment maker, according to one of the people, who declined to be identified because the decision isn't public. Staff lawyers previously could negotiate settlements without having to obtain permission in advance. Sec Page FP6 CRUISING As the Seven Seas Mariner casts its first rope onto the multi-million-dollar cruise ship dock that has been Jodee Dick's dream for years, her face splits into a huge smile and she breaks into a frenzy of whistling and clapping.

"It's just unbelievable that I'm watching this ship dock here. Everybody said it wouldn't happen and it's just so nice it's happening," she says. "Exciting!" Not far down the shore, past the flames leaping out of a bonfire and the traditionally clad drummers beating ancient rhythms across the waters of Discovery Passage, the Mayor of this small north Vancouver Island town admits to some nerves. "You always have a certain amount of butterflies," Roger McDonell says. "It's the first time on stage and I guess the whole community's on stage in this case.

See Page FP4 ONLINE GAMBLING U.K. gambling Web sites meet the safeguards U.S. Congress may demand in legislation to allow online gambling in the United The future of Citytv's relationship with MuchMusic and CP24 was thrown in doubt yesterday. FROM THE RULING Decision threatens Citytv's long alliances CITYTV Continued from Puge FPl Other potential bidders may lurk, sources add, Mich as Larry Tanenbaum, co-owner of Maple Leaf Sports Entertainment and investor in various specialty spurts channels, and John Bitove, businessman hose holdings include Canadian Satellite Radio. The sale of Citytv outlets in Toronto, Winnipeg, Calgary, Edmonton and Vancouver could fetch between $17f-million and $2f)0-million.

analysts and industry insiders said. In its ruling, the CRTC gave the trustee holding the CHUM assets 30 days to present a plan to the regulator on how the Citytv sale would proceed and when it would be completed. Meanwhile, the planned sale of CHUM's mid-market A-Channel properties to Rogers Communications Inc. appears dead. Sources said that deal is likely off the table because of yesterday's ruling, freeing Rogers to pursue the more profitable Citytv channels instead.

CIV must notify the CRTC within 30 days of whether it intends to keep the A-Channel properties and other assets as part of its transaction. CTV said yesterday it would comment only after undertaking a "careful review" of the CRTC decision. "No decisions have been made yet. People are reflecting," said an informed source about the CTV strategy. But other industry sources said the Toronto-based broadcaster would proceed with the deal in terms of taking over CHUM's specialty channels and radio stations.

An appeal to cabinet is possible but unlikely, legal observers say, because the issue does not relate to the renewal, issue or denial of a TV licence. Jan Innes, a spokeswoman for Rogers, said the deal for the A-Channel assets was contingent on CTV getting its CHUM acquisition approved on reasonable terms. "So we have to hear from CTV as to what's the next step," she said. As for her company's interest in Citytv, Ms. Innes would say only that Rogers "looks at everything as a matter of course." Randal Rudniski, a Toronto-based analyst with Credit Suisse, said Rogers was the leading contender to acquire Citytv because it would be able to derive savings on movie purchases; local news-gathering, through TV and radio; and sports programming (Rogers owns Sportsnet).

Quebecor spokesman Luc Lavoie said the company is interested, but cautioned it would not overpay for the assets. He said with the Citytv stations, Quebecor would commit to producing and broadcasting more Canadian content during prime time hours, compared with its rivals. He added the company would accomplish this by using its existing production studios in Quebec to make shows for both the French and English audiences. "We have something to offer to the Canadian broadcasting system," Mr. Lavoie said.

"But if you believe we are going to into a bidding war, well we are not" Mr. Rudniski said Citytv appeals to Quebecor because it would give it a presence in English Canada, and Citytv represents a low-margin business with room for improvement. There would also be links between the Quebecor newspapers and Citytv stations in Toronto. Calgary and Edmonton. Torstar, meanwhile, lost out in 2002 to Craig Media in its bid for a conventional TV licence in To-; ronto, so observers say it would likely be keen on the Citytv asset this time itround.

Also, Torstar holds a 20 stake in CTVglobemedia. which includes CTV TSN and The Globe Now that CTVGlobemedia Inc. is being forced to sell off Citytv's assets it could be splitting a broadcast giant from two of its closest specialty channel offspring. City's Toronto flagship shares a location the ChumCity Building a unique culture and a great deal of programming with specialty channels MuchMusic States, executives of two companies that provide Internet payment services told lawmakers yesterday. A TOUGH SELL Gerald Kitchen, chief executive of SecureTrad-ing and Jon Prideaux, CEO of Asterion Payments, testified to the House Financial Services Committee in Washington that software and computer technology can be used From the majority CRTC decision released yesterday "The rationale for exceptions to the CRTC's common ownership policy has generally rested on the need for strong, locally focused programming for smaller communities located adjacent to large urban centres.

The commission notes that none of the Citytv stations are located in smaller communities located adjacent to large urban centres, but are rather located in the large urban centres themselves." "The Commission also believes that the proposed transaction would result in a concentration of ownership that would have an unacceptable impact on the plurality and diversity of voices in the English-language market." "The CRTC finds that the acquisition of the Citytv stations by CTV would not conform to the common ownership policy or fit any of the exceptions to that policy established by the Commission." From the dissent, Commissioner Stuart Langford My colleagues in the majority appear to believe that some other as yet unknown purchaser will step in, buy and successfully operate the Citytv stations as much or even more in the public interest than CTV. Hopefully, they are correct. I have my doubts, however. and CP24. CHUM Ltd.

acquired CityTV in 1978, launched MuchMusic in 1984 and both moved to the landmark building on Toronto's trendy Queen St. West in 1987 where they are still located. The Toronto-centred news channel CP24 joined them when it launched in 1998. CityTV and CP24 share a newsroom, anchors, reporters and programs like CityNews and Breakfast Television. MuchMusic and City have some common programming and all three use the innovative street-level, open-concept studio.

This would be a tough breakup, but just because CTV is being forced to jettison the City assets doesn't mean it has to keep all of the 21 CHUM specialty channels. It could package CP24 with CityTV stations, as the two are closely integrated. Observers say MuchMusic and the rest of the specialty channels have much greater value to CTV. But no matter how assets are divvied up, the trio seem stuck together for some time. "I would imagine they'd end up continuing to operate out of the same building for a considerable period of time," said Alan Sawyer, a media strategist with Two Solitudes Consulting.

"It's too big a thing to move overnight." Financial Post effectively to prevent vices that stem from gambling. See Page FPU FP COMMENT When the history of Europe's waning pre-eminence and the rise of Asia's new superpowers is written, the German G8 summit that has just ended in the Baltic seaside town of Heiligendamm will be regarded as a momentous turning point. It will also be seen as the moment when the Western powers decided to bury their hatchets over Kyoto and start exerting pressure on their Asian challengers. See Page FP15 WHAT CTV MUST SELL 5 CityTV broadcast stations I CKVU-TV Vancouver I CKAL-TV Calgary I CKEM-TV Edmonton ICHMI-TV Winnipeg I CITY-TV Toronto WHAT CTV CAN KEEP 1 21 specialty channels including MuchMusic, CP24, MuchMoreMusic BRAVO! 1 34 conventional radio stations including CHUM-EM Toronto CHQM-FM Vancouver 1 6 A Channel stations including channels in Victoria and Ottawa 1 1 CBC affiliate in Brandon. Manitoba CRTC slaps down bid to sell allocated time Download FP Podcast daily for a complete summary of national and international business news, plus overnight markets.

www.nationalpost.com Said would create insufficient gain for broadcasters help the industry than just running promotional spots. Only Imagine wanted to keep the rest of the money for itself. But the plan drew tough opposition from many in the industry, including cable companies such as Rogers Communications which has accused Only Imagine of attempting to "confiscate" commercial time that did not belong to it. In rejecting Only Imagine's plan, the CRTC argued it would result in insufficient gains to the Canadian broadcasting system. Indeed, the regulator said, the benefits Mr.

Craig's company-hoped to achieve could likely be realized through other methods. One obvious way. it has been suggested, would be to let the cable companies sell the ad time themselves. Financial Post jgTtenwoodnationalpott.com COMPANIES IN THE NEWS ABN AMRO Holding FP8 Imperial Oil Ltd. FP8 Rogers Comms Inc.

FP1 Asterion Payments. KP14 Irunbndne Capital. FP8 Secure Trading Ltd. FP14 Ii.ink of America FP8 Liquor Barn Int Fund F'Pti Starbucks Corp FP6 Can West Global FP8 Liquoi Stores Inc Fnd FPti SXR Uranium One FPti CHUM Ltd FP1 McDonald's Corp FPti 11) Ameritrade FP8 CTYglohemedia Inc. FP1 Nortel FPti Tor-lXiminion Bank.

FP8 Deere Co FP7 Onl Imagine Inc FP2 TbrstarCorp FPl Goldman Sachs FP8 Porter Airlines Inc. FP8 HI' Media Ltd FP8 Quebecor Inc FPl THIS WEEK IN THE FINANCIAL POST get the same deal, but under rules laid down by the Canadian Radio-television and Telecommunications Commission, those spots two minutes for every hour of programming must be used to promote home-grown cable programming. Yesterday, the Canadian regulator denied a bid by a company called Only Imagine Inc. to sell that time to advertisers instead. Only Imagine, headed by former Craig Media Inc.

chief executive Drew Craig, proposed to hand over half the revenue generated from the sale of the ads to help fund Canadian drama, arguing this would be a better way to John swoon Ever wonder about the TV ads you sometimes see on feeds of major U.S. networks like CNN and plugging Canadian programming? They run on time set aside by the U.S. cable companies for use by their local affiliates across the United States Canadian networks that run the feeds and Mail newspaper. Officials from Torstar did not return phone calls. In the ruling, the CRTC said CTV failed to persuade the regulator as to why it should provide an exemption to its ownership policy, limiting an owner to one station.

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