Six years after Radio Shalom, Montreal’s Jewish radio station, announced it was shutting down, and then kind of came back a bit, the company is planning to wind up operations and officially transfer the licence to Gospel Media Communications, which has effectively been running the station since.
On Tuesday, the CRTC posted an application by Communications Média Évangélique / Gospel Media Communications to acquire CKZW 1650 AM (formerly CJRS) from Radio Shalom for $0. The company is owned by André Joly, who also sits on Radio Shalom’s board.
According to the application, Radio Shalom’s board voted to approve the deal after CME had already acquired most of its assets and was subsidizing the station’s financial losses in addition to providing gospel programming.
The fact that Joly has been effectively running things for months if not years would normally trigger some questions from the commission about whether an effective transfer of control happened without approval, but the application states that the station was in contact with the commission about its activities.
One thing the CRTC will need to settle is tangible benefits, the tax new owners have to pay when they acquire radio stations. Both groups are non-profit, and the agreed upon purchase price for the licence is zero, but the commission suggested in a letter it may set a value of $309,125 for the purchase, which includes payments from CME to Radio Shalom as well as the value of leases that would be transferred.
According to an unaudited 2021 financial statement, Radio Shalom had $136,834 in net assets.
If the commission finds the sale has an actual value, Joly has agreed to pay tangible benefits of up to $18,548, representing the standard 6% of the value. But the company argues (as many other acquirers have in other purchase deals) that the CRTC should not consider the value of leases when calculating tangible benefits.
Once the sale is approved and closed, Radio Shalom as a corporate entity would be wound up.
The application does not include any statements about changes to the station’s programming after the sale.
The CRTC will hold a pro forma hearing (without any presentations) on the application Oct. 13 in Gatineau. Those who wish to comment on the proposed sale have until Sept. 1 to do so.
Value of a lease is a really tricky thing. One of the questions that comes up in trying to apply value is how limited the assignments rights are, in other words, can the lease be sold to someone else. A lease only has a true value when you are locked into and that you have a fair bit of control to sell that lease right.
Even then, the other side is the obligation. A lease obliges payment. So there is a balance between whatever theoretical value is above, and the actual obligation to pay. The CRTC is so desperate to get it’s pound of flesh in tangible assets that they will certainly push the limits.
The CRTC needs to go.