Business

Business Notes

July 17 2000
Business

Business Notes

July 17 2000

Business Notes

Global’s got it—a TV network

After years of sparring with rivals, regulators and sometimes his own business partners, entertainment czar Izzy Asper has achieved a long-held dream. The founder of Winnipeg-based CanWest Global Communications Corp. now presides over a string of television stations that stretches from Victoria to Halifax.

In a crucial ruling last week, the Canadian Radio-television and Telecommunications Commission gave the final go-ahead for CanWest to buy eight television stations from WIC Western International Communications Ltd. of Vancouver. Although concentration of outlets has long been a thorny issue, the CRTC’s decision

says that such consolidation will help Canadian companies achieve “the cultural objectives set out in the Broadcasting Act.” The ruling effectively alters the national TV landscape by allowing CanWest to compete more directly with the two existing English-language networks, CBC and CTV. It could also lead to further cross-country competition. As part of the decision, CanWest is required to sell Montreals CFCF and Vancouver’s CKVU. A likely buyer for the Vancouver station is Toronto-based CHUM Ltd., which could extend its edgy City TV franchise to the city. CHUM was also granted a TV licence in Victoria.

Courtroom battles in the tobacco war

A U.S. district court judge tossed out Ottawa’s $1-billion lawsuit against Toronto-based RJR-Macdonald Inc. The government says the tobacco giant smuggled huge amounts of cigarettes into Canada in the early 1990s, for which it owes back taxes. But the judge in Syracuse, N.Y., said U.S. courts cannot enforce foreign tax laws. In Montreal, meanwhile, three major cigarette firms launched a suit challenging a new federal law that requires graphic health warnings that would cover half the package. The firms cited the right to freedom of expression.

Financial Outlook

This doesn’t look like General Motors’ year. Its Canadian vehicle sales are falling, off nearly a full per cent from June of last year. And its market share,

DRIVING HARD

Cars and light trucks sold in Canada Company Vehicle sales Annual change

DaimlerChrysler 27,581_-1.2

Ford 37.687 +0.5

Hyundai 4,860 +47

while still the largest, has slipped to 30.6 per cent from 32.2 per cent. “GM is struggling with its products,” says auto analyst Dennis DesRosiers, who compiled the figures. “One-third to one-half of its vehicles are not competitive.” GM, he notes, doesn’t have a vehicle to match the success of the Honda Civic, the Ford Focus and Chrysler’s PT Cruiser. The Civic and Focus are fighting for the No. 1 spot, each selling roughly 16,000 units this year through May. While the Big Three saw their overall sales fall by 1.5 per cent in a year, Japanese and European vehicles each rose by about nine per cent.

Saudi oil promise

After Saudi Arabia pledged to pump more oil in order to bring down world prices, the cost of a barrel of crude fell by five per cent. The Saudi commitment of an extra 500,000 barrels per day bucked a consensus among members of the Organization of Petroleum Exporting Countries, which is trying to keep the price high by limiting production. But even with the drop, analysts say the cost of gasoline—which has surged by 20 cents a litre or more in recent months—will fall by only three or four cents a litre this summer.

Royal damage control

As some of its clients talked about moving their pension assets out of the firm, RT Capital Management Inc. pledged to reimburse its customers for all excess fees and costs incurred as a result of a stock manipulation scheme. The Ontario Securities Commission has accused RT, a wholly owned subsidiary of the Royal Bank of Canada, and 22 individuals of artificially inflating the performance of pension funds. The first hearing is due on July 19.

Merging airline points

Air Canada announced that the three million members of the Canadian Airlines frequent flyer program will join Air Canada’s Aeroplan program on Jan. 1,2001. Canadian Plus points will be converted to Aeroplan miles on a one-for-one basis.

Pause in job growth

Canadian employment declined slightly—by 14,100 jobs—in June, the first monthly setback since January, 1998. The unemployment rate stayed unchanged at 6.6 per cent. A similar trend in the United States sent markets higher, as confidence grew that a gently slowing economy would head off new interest-rate hikes.

The Bay on the Net

In an effort to turn itself into a leading North American e-tailer, the Hudsons Bay Co. formed an alliance with IBM Canada Ltd., Microsoft Canada Co. and Oracle Corp. Canada Inc. The heavyweight group plans to use the Bay as a showcase for e-business.