August 10, 2007 Eight page fax

Mr. Robert A. Morin Secretary-General CRTC Ottawa, ON K1A 0N2

Dear Mr. Morin:

Re: BN CRTC 2007–11: CanWest MediaWorks Inc.’s Proposed Acquisition of Communications Inc. (Application No. 2007-0700-5)

1. of Canadian Broadcasting wishes to place before the Commission some comments and advice regarding CanWest’s application to acquire the regulated assets of Alliance Atlantis Communications. Friends does not seek to appear at the Public Hearing.

2. In order to protect diversity and competition, a viable and sustainable CanWest is important to the integrity of the Canadian broadcasting system, as long as public policy and regulation ensure that CanWest makes strong contributions to Canadian programming, including high production value fiction programming.

3. CanWest’s failure, until now, to diversify into specialty has weakened its competitive position vis-à-vis CTVglobemedia. 1 The acquisition of Alliance Atlantis’ regulated assets could, under the right conditions, address this competitive disadvantage. Friends’ comments and advice to the Commission focus on those conditions.

4. Friends notes with concern that the Commission has granted CanWest and its partner unprecedented

1 And potentially, in future, Rogers Communications.

200/238, 131 Bloor Street West, Toronto, ON M5S 1R8 PN CRTC 2007-11, page 2

confidentiality regarding significant parts of their proposed “arrangement”, and has even suggested undertaking a highly unusual process involving an in camera portion of the oral public hearing to address questions regarding this confidential information. We also find it unprecedented to learn much more about the CanWest/Goldman Sachs agreement from a CanWest press release dated July 31, 2007 2 than from documents in the CRTC’s public record of the proceeding.

5. Friends notes that the CanWest/Goldman Sachs agreement appears to have been lawyered in such a way as to satisfy the technical requirements of the “Ineligibility of Non-Canadians” Order- in-Council, at least at the outset of the CanWest/Goldman Sachs arrangement (should it receive approval). This raises two troubling questions.

6. The lawyering has created a proposed entity in which the controlling party has 67% of the voting shares of CW Investments (the holding company) while providing only 36% of the equity, while the non- controlling partner has 33% of the voting shares and 64% of the equity. This structure raises legitimate questions about effective Canadian control. The Commission will need to satisfy itself that, notwithstanding the language and appearances, Goldman Sachs will in fact allow CanWest to control the destiny of a company whose purchase it has largely financed.

7. As well, the Commission should focus its attention on the implications of the July 31, 2007 “Plan of Arrangement” for effective control down the line. As the Ineligibility of Non-Canadians Order-in- Council states: “the Commission must be satisfied that the broadcasting undertakings are under Canadian control at all times”. Owing to the above-mentioned confidentiality issue, interested observers are placed in the position of having to blindly trust the Commission’s judgment, without the benefit of public scrutiny. In our opinion, this circumstance raises the standard for the Commission’s scrutiny of the Plan.

8. The present application is not the first aggressively financed venture to come before the Commission. Friends sees distinct parallels to the Craig Broadcasting/Providence agreement, where the “partnership” morphed into a “noose”, with negative effects not just

2 http://www.canwest.com/mediarelations/newsreleases.html

Friends of Canadian Broadcasting PN CRTC 2007-11, page 3

for Craig, but also for diversity and competition in the broadcasting system.

9. We therefore recommend that the Commission satisfy itself that this negative outcome is, at the very least, unlikely in the play-out with the present application as such a “noose”, in the context of the present application would have a much more deleterious effect on diversity and competition in the broadcasting system.

10. According to the July 31, 2007 Plan of Arrangement announcement, CanWest has committed to EBITDA-based 3 equity allocations four years out in a merger of CanWest’s existing television business with the proposed CW Investments group. There can be no certainty regarding this outcome, and in fact there is a significant risk. It is akin to “betting the family farm”. And, in our view, this raises troubling scenarios for the Commission’s statutory mandate as CanWest strives to manage and reduce that risk during the next four years.

11. CanWest’s risk reduction options include choosing its Hollywood properties with more alacrity than it has managed to do over the past decade, squeezing its expenditures on Canadian content, and repeating programming between the newly acquired Alliance Atlantis specialty services and its over-the-air stations. Only the first of these three options is congruent with the public interest.

12. Friends recommends that the Commission ensure that a baseline of Canadian content spending by the Alliance Atlantis licensees and CanWest’s existing television properties collectively is, at a minimum, maintained as a condition of approval of this application, net of the proposed programming benefits. We further recommend that the Commission impose, as a condition of approval, a maximum repetition of programming between the former Alliance Atlantis properties and CanWest’s existing television properties of no more than 5%.

13. We note with concern that CanWest has proposed spreading its benefits spending over an unprecedented ten years, and we recommend instead that the Commission require that these benefits be expended over a five to seven year cycle. We also count on the Commission to ensure that all the proposed benefits spending is truly incremental, directed to projects and initiatives that would not

3 Earnings before Interest, Taxes, Depreciation and Amortization

Friends of Canadian Broadcasting PN CRTC 2007-11, page 4

be undertaken or realized in the absence of the transaction, and flow predominantly to third parties, such as, in the case of programming, independent producers.

14. Friends supports the proposal of the Directors Guild of Canada that that 64% of the on-screen benefits should be directed to high production value original Canadian drama, in line with the recent CTVgm/CHUM transaction.

15. Finally, we append for the Commission’s files a copy of the form letter which CanWest circulated to solicit letters of support, as well as an attachment to that letter entitled “How to support CanWest’s Acquisition of the broadcasting assets of Alliance Atlantis”.

16. We also attach evidence that a copy of this intervention has been served on the applicant.

Yours sincerely,

Ian Morrison Spokesperson

cc: Charlotte Bell, CanWest Media Works

Att: Appendix

For information: Jim Thompson 613-567-9592

Friends of Canadian Broadcasting PN CRTC 2007-11, page 5

Appendix

CanWest form letter soliciting supportive comments (July 2007)

Through this letter, we are asking for your support for CanWest MediaWork’s application to the CRTC to acquire the broadcasting assets of Alliance Atlantis Communications Inc. The CRTC will be accepting written comments on or before midnight, August 10th 2007.

To provide you with some background, on January 10, 2007 CanWest MediaWorks and GS Capital Partners, a private equity firm affiliated with Goldman Sachs & Co. announced an agreement to acquire the specialty services owned by Alliance Atlantis. A list of these specialty services is attached.

By combining CanWest’s conventional television stations and specialty portfolio, with Alliance Atlantis’ high quality specialty services, we believe that the individual strengths of both companies together will generate significant benefits for journalists, our viewers, and to the Canadian broadcasting system as a whole through a number of initiatives being proposed as part of our benefit package. Approval of this transaction will ensure that CanWest remains a strong Canadian media voice in a rapidly evolving media landscape.

CanWest has proposed a benefit package $136.9 million, one of the largest in Canadian history. $14 million will be directed to news and public affairs programming, which is designed to enhance the development of the Canadian news sector and provide viewers with more high-quality Canadian information programming. As well, we will contribute $9 million toward the funding of documentaries. Also, the $13.9 million envelope dedicated to social benefits will assist in the development of Canadian broadcast and journalistic talent and will benefit our industry and the communities we serve.

The CRTC needs to know that the public supports this transaction and we hope we can count on you for a letter expressing your support. The process is simple.

Attached you will find details regarding the benefits of our

Friends of Canadian Broadcasting PN CRTC 2007-11, page 6

application and the filing guidelines. The deadline for filing this letter is August 10th 2007. Someone from our office will be contacting you in the next few days to discuss your support in this endeavour and would also be pleased to provide any assistance in filing your letter. In the meantime, if you have any questions please do not hesitate to contact me at 416-386-2895 or via email at [email protected].

For more details about our application, go to www.globaltv.com/allianceatlantis

How to Support CanWest’s Acquisition of the Broadcasting Assets of Alliance Atlantis

You can play an important role to ensure that this application is a success by sending in a letter of support to the CRTC with a copy to CanWest MediaWorks.

Here’s how...

1. The letter must clearly identify the applicant, which is CanWest MediaWorks Inc., and the application number 2007-0700-5.

2. In the first paragraph of your letter, please indicate that you are writing in support of the application by CanWest to acquire the broadcasting assets of Alliance Atlantis.

3. Please briefly describe your background and why you believe that this application should be approved and why CanWest’s proposal would best serve the Canadian broadcasting system. Some possible suggestions for your letter could be:

CanWest has a strong commitment to diversity and is continually building relationships with community organizations in order to better reflect the communities they serve.

We believe that CanWest is committed to building on the legacy of creativity, innovation and service to the community Alliance Atlantis has created.

CanWest’s contribution of $13.9 million to social benefits will provide under-represented groups with training and exciting media opportunities that would not otherwise be available.

Friends of Canadian Broadcasting PN CRTC 2007-11, page 7

In our opinion, the Canadian broadcasting system and its audiences will benefit when these two media success stories meld, as it will create a stronger media voice in a rapidly changing media landscape.

The deadline to file is August 10th 2007

Here’s where to send it...

You can send your letter by mail or fax to the following addresses:

Addressed to: Robert A. Morin Secretary General CRTC Ottawa, K1A 0N2 Fax: (819) 994-0218

Copied to: Karen Clout Coordinator, Regulatory Affairs CanWest MediaWorks Inc. 1450 Don Mills Rd. Toronto, Ontario M3B 3R5 email: [email protected]

Or via the :

Through the CRTC’s website at http://www.crtc.gc.ca/archive/ENG/Hearings/2007/n2007-11.htm

Or our link at www.globaltv.com/allianceatlantis.

We appreciate your support and THANK YOU. If you have any questions about this process, please contact Karen Clout.

(End of attachment)

Friends of Canadian Broadcasting