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Decision
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Ottawa, 1 December 1987
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Decision CRTC 87-897
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CHUM Limited and Radiomutuel (1985) Limitée, on behalf of a company to be incorporated(MusiquePlus) - 871225900
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The Commission approves the application by CHUM Limited and Radiomutuel (1985) Limitée, on behalf of a company to be incorporated (the applicant) for a network licence to operate a French-language specialty music video service (MusiquePlus). This satellite-to-cable service will be available on an optional basis for distribution on the basic service of cable television affiliates situated in regions served by a satellite beam covering eastern Canada, in accordance with the provisions outlined in the Public Notices accompanying this decision (Public Notices CRTC 1987-260 and CRTC 1987-261). The licence, which will be issued and be effective on 1 September 1988, will expire 31 August 1993 and will be subject to the conditions specified in the appendix to this decision and in the licence to be issued.
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This authority will only be effective and the licence will only be issued at such time as the Commission receives documentation establishing that the company has been incorporated in accordance with the application in all material respects.
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The applicant proposes to offer a 24-hour-a-day French-language music video service originating in Montreal. its programming will consist of video clips, concerts, theme programs, magazine-type programs and others offering news about music and musicians. The MusiquePlus service will consist of an 8-hour cycle of original programming to be broadcast daily from noon to 8:00 p.m. and repeated twice. Compared to the partial service that is currently available, the applicant's proposed broadcast schedule will offer francophone viewers triple the number of broadcast hours and twice as many original programming hours. As proposed by the applicant and as set out in the appendix as a condition of licence, the applicant is required to offer a programming service dedicated exclusively to music in all its forms.
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At the 20 July public hearing, the Commission also examined an application submitted by the Réseau de Musique Télévisée du Québec Inc. (MTVQ), for a licence to operate a 24-hour-a-day French-language specialty video music service to be distributed in the province of Quebec. Given the approval of the MusiquePlus proposal, and for the reasons set out in Decision CRTC 87-906, the application submitted by MTVQ has been denied.
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Ownership
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The ownership of the applicant company will be held equally by two major Canadian broadcast entities, CHUM Limited of Toronto (CHUM) and Radiomutuel (1985) Limitée of Montreal (Radiomutuel). CHUM is authorized to operate several AM, FM and television stations in virtually every province of Canada. It also holds a licence to operate the national English-language specialty music video service (MuchMusic). In 1986 (Decision CRTC 86-215), the Commission authorized MuchMusic to amend its network licence in order to add a part-time French-language music video service, which it offered on a discretionary basis to subscribers in eastern Canada. At the hearing, CHUM made a commitment to apply to have this amendment to its licence deleted, should this application be approved.
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For its part, Radiomutuel is one of the largest broadcast undertakings in the province of Quebec, where it operates an AM radio broadcast network, as well as AM and/or FM radio stations in the Montreal, Quebec City, Trois-Rivières and Sherbrooke markets. It was also recently authorized to operate an FM radio station in the National Capital Region and to be co-owner of an FM radio station in Abitibi.
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Demand
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The applicant claims that it is convinced that a French-language music video service will respond to an obvious cultural need which was acknowledged in all of the interventions from the industry. The applicant also stated that the francophone audience has expressed interest in such a service. In this regard, the Commission notes that a study conducted by Sorécom Inc. revealed that nearly a third of francophone cable subscribers would be very or somewhat interested in a French-language specialty music video channel that would be distributed as part of the basic service. The applicant also pointed out that the MusiquPlus service will help to stimulate the French-language vocal music industry, since the video clip has become the preferred means of promoting performing artists and their recording artists and their recordings. The applicant specified that its major objective will be to stimulate the production and broadcasting of Quebec music, an objective that it will pursue with diligence and determination.
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In support of its MusiquePlus proposal, the applicant described CHUM's recognized expertise in the management, programming and marketing of a music video service, as well as its long-standing commitment to the development of the Canadian and, more recently, the Quebec music industry.
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In this regard, the applicant emphasized the extremely positive impact of the part-time French-language MusiquePlus service after less than a year of existence. It also stated that during this time more than a year of existence. It also stated that during this time more than a dozen French-language video clips have been produced, compared to the total of 25 that were produced in the total of 25 that were produced, compared in the five years between 1981 and 1986. In addition to the more than $100,00 that VidoFACT has allocated to Quebec musicians, MusiquePlus has broadcast more than 212 reports on Quebec musicians and more than 160 different French-language video clips and contributed to the promotion of various events such as the ADISQ gala, the Montreal International Jazz Festival, and la Semaine de la chanson française d'ici. The applicant added that by virtue of an agreement reached by the two parties, CHUM is committed to ensuring, though the MuchMusic network, a broadcast window for promotion of the MusiquePlus service and of the Quebec music industry throughout Canada.
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The applicant also stressed that Radiomutuel has a thorough knowledge of the francophone market and the French-language vocal music industry, gained through its Quebec-wide network of radio stations, particularly its FM stations which aim for the same young adult francophone audience to which the MusiquPlus service will be targeted. In addition, the applicant indicated that by virtue of the agreement between the two partners, Radiomutuel will assume full responsibility for the sale and promotion of the MusiquePlus and MuchMusic services in Quebec. At the hearing, the applicant specified that in order to help MusiquePlus become established in Quebec cultural life, it will establish during the first year of operation, regional correspondents in Quebec City, Sherbrooke, Trois-Rivières, Hull and Saguenay/Lac St-Jean who will report on the musical activities in these communities for a daily information program as well as promoting touring francophone musicians.
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According to the applicant, the combined support of CHUM and Radiomutuel will contribute to the emergence of a major broadcasting undertaking endowed with sufficient resources to establish a high quality, French-language music requirements and of ensuring an outlet for the distribution and promotion of Canadian French-language vocal music in English Canada and in French-speaking European countries.
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Programming
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The applicant proposed a program schedule similar to that of a radio station an based on the rotation of musical selections and of more structured programs at different times. In targeting primarily the 12-to-34 age group, it will offer a rock-oriented music format.
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In line with the applicant's commitment at the hearing, at least 60% of the broadcast day will be devoted to Canadian programming. In addition, at least 30% of the total number of video clips broadcast each day by the licensee must be Canadian and they are to be distributes in a reasonable manner throughout the broadcast day. The licensee will be required, by conditions of the MusiquePlus licence as set out in the appendix to this decision, to abide by these commitments. For the purposes of these conditions, to abide by these commitments. For the purposes of these conditions, Canadian programming is comprised of Canadian music videos as defined in Public Notice CRTC 1987-83 dated 24 March 1987 entitled Music Video Programs and Canadian programs as defined in section 2 of the Television Broadcasting Regulations, 1987.
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With regard to French-language content, the applicant made a commitment that at least 25% of the total number of video clips broadcast in the first year will be French-language, with the percentage increasing to 30% in the second year and to 35% from the third year to the expiry of the licence. By condition of licence, these minimum levels are to be attained on a weekly basis. The Commission expects the licensee to increase the French-language content of its video clips at the time of the renewal of this licence.
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The Commission notes that the applicant intends to present on an occasional basis a certain number of variety and game shows and feature films with a high musical content. In line with the applicant's proposals, by condition of licence, the licensee shall distribute no more than 2 hours per 8-hour program block and a maximum of 6 hours per week of such productions, which must have a ratio of music to synchronized spoken word of at least 60:40.
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In order to attain its objective with respect to the broadcasting of French-language video clips, the applicant stated that it was essential that their production be stimulated immediately. To this end, as set out in the appendix as a condition of licence, it has committed to transfer the equivalent of 2.4% of its gross annual revenues and not less than $100,000 a year to VideoFACT, the Canadian French-and English-language video clip development fund administered by MuchMusic and MusiquePlus. It also committed to ensure that the funds committed to VideoFACT by MusiquePlus would be earmarked exclusively for the production of French-language video clips. The applicant specified that, according to its revenue projections, it should be in a position to inject a total of $830,700 for this purpose over a period of five years, all of which will be directed to musicians and producers.
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Viability
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When questioned at the hearing as to its revenue projections and the estimated penetration of its service, the applicant stated that it was confident that it would be able to ensure the viability of the service, noting that the existing part-time music video service already has more than 350,000 subscribers in the province of Quebec. Further, the applicant explained that it has received letters from 36 Quebec cable companies expressing interest in subscribing to the MusiquePlus service. These companies represent approximately 1,200,00 subscribers.
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MusiquePlus will derive its revenue income from two main sources, advertising and subscription fees. As set out in the appendix to this decision, by condition of licence, the applicant may broadcast a maximum of 12 minutes per hour of national advertising material. Under these terms, it expects to generate approximately 70% of its revenue from advertising during its first year of operation, and s much as 80% by the fifth year.
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With regard to subscriber fees, the applicant proposed, and is authorized by condition of licence, to charge cable companies subscribing to the MusiquePlus service a wholesale rate of $0.10 per subscriber per month.
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Moreover, the applicant maintained that the impact of the MusiquePlus service on the other components of the broadcasting system will be negligible. To support this statement, it pointed out that approximately 80% of the advertising broadcast on radio is local, while MusiquePlus will broadcast only national advertising. It also pointed out hat it will have no impact on AM radio stations which have a greater spoken word content and are targeted to an older audience, nor on Group I or Group III FM stations whose music format is generally geared to adults. While the contemporary music format of Group I and Group IV FM stations closely resemble that proposed for MusiquPlus, the applicant noted that such radio stations are currently the most profitable in the industry and, furthermore, that they stand to benefit from the positive repercussions of the stimulation MusiquePlus through-out MuschMusic and MusiquePlus through-out Canada, radio stations with musical formats similar to that offered by these two specialty programming services have never enjoyed so much success. This would seem to indicate that MusiquePlus will be able to support the easting interest in this music format.
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The Commission notes that the MusiquePlus service should not have a significant negative impact on the number of subscribers to other licensed specialty programming services since it will not be competing directly with them, with the sole exception of the English-language MuchMusic service, which, in any event, will benefit from the positive effect of MusiquePlus through the involvement of CHUM in the applicant company.
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Other Matters
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In presenting its distribution plan, the applicant indicated that the MusiquePlus service, of which the production centre and head office will be located in Montreal, would be available on a satellite beam serving eastern Canada and would thus be available to cable companies in the four Atlantic provinces, Quebec, Ontario, and the most densely populated part of Manitoba, thereby reaching the vast majority of francophone Canadians.
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With respect to issues of public concern, as discussed with the applicant at the hearing and as set out in the appendix to this decision, the Commission requires, by condition of licence, that MusiquePlus adhere to the CAB's guidelines on sex-role stereotyping and to the CAB's Broadcast Code for Advertising to Children.
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The Commission also expects the applicant to ensure that its programming reflects realistically the participation of multicultural minorities in Canadian society.
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The Commission notes further that violence in television programs continues to be a matter of public concern. It therefore expects the licensee to exercise particular care and discretion in the presentation and scheduling of programs which depict scenes of violence and to abstain from showing any programs portraying excessive or gratuitous violence.
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In this regard, the applicant made a commitment at the hearing to submit the video clips it proposes to broadcast to a programming committee, as MuchMusic does at present. The video clips are submitted to this committee on a weekly basis, and those that give cause for concern are examined by a second committee made up of a representative sample of staff members. Video clips may only be broadcast after having undergone this second examination following a vote by the members of the committee.
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Conclusion
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The Commission is satisfied that the implementation of a full-time French-language specialty music video service will make a tangible contribution to the objective of increasing the diversity of programming service offered to Canadians, particularly to French-speaking viewers. The Commission also considers that this service will make an important contribution to the rapid development of French-language music in the context of the specific measures taken in recent years by broadcasters and governments to promote production in this sector. Considering the profound cultural impact of music on the young and the fact that it constitutes an essential resource for broadcasters, the Commission believes that the MusiquePlus service will be able to enrich the francophone component of the Canadian broadcasting system.
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In approving this application, the Commission is satisfied that the proposed service has fulfilled the Commission's basic criteria of demand, viability and audience appeal. The Commission has, in addition, taken into account a number of other favourable factors, including the unique combination of experience that CHUM and Radiomutuel have acquired in both radio and in television as well as music, particularly that of the CHUM MuchMusic service, the solid financial backing of these two companies, and the benefits that will result from their association in the applicant company.
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The Commission is also of the opinion that the advantages that will result from this approval outweigh any concerns regarding an increase in the concentration of ownership of broadcast undertakings.
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With respect to the repercussions on existing broadcasters that the licensing of this service may bring about in terms of audience fragmentation and erosion of advertising revenue, the Commission has carefully examined the evidence and information presented by the applicant, in particular the fact that its projected advertising revenues are expected to increase from $3.4 million in the first year of operation to $7.2 million by the fifth year. It has also assessed the comments and studies available in the context of this hearing.
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Having considered all of the information available to it, the Commission has concluded that even if this service could attract up to 1.9% of the audience to conventional broadcasting stations, the overall impact on existing broadcasters will be minima.
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Interventions
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The Commission notes that more than thirty individuals, groups, businesses and record companies intervened in support of this application, while the Association des câblodistributeurs du Québec Inc. and some twenty-five cable licensees offered conditional support.
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In approving this application, the Commission has also taken into consideration the concerns raised by the interveners, in particular from the Canadian Association of Broadcasters and Radio Furura Ltée with respect to, among other things, distribution on the basic service, audience fragmentation and investment in programming. The Commission notes that these concerns have been addressed in this decision or in the introductory statement to the decisions released today.
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The Commission has also noted the comments submitted by other interveners, including the Quebec Department of Communications and the Montreal Chamber of Commerce.
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Fernand Bélisle Secretary General
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APPENDIX
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Conditions of Licence
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CHUM Limited and Radiomutuel (1985) Limitée, on behalf of a company to be incorporated (MusiquePlus)
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1. The service provided by the licensee shall consist of programming dedicated exclusively to music in all its forms.
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2. The licensee shall devote not less than 60% of the broadcast day to the distribution of Canadian programming. "Canadian programming" is comprised of "Canadian music videos" and "Canadian programs". The definitions of "Canadian music video" as set out in Public Notice CRTC 1987-83 dated 24 March 1987 entitled Music Video Programs, and of "Canadian program" as set out in section 2 of the Television Broadcasting Regulations, 1987 (SOR/87-49), as amended by SOR/87-425, shall apply.
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3. 30% or more of the total number of music videos distributed by the licensee each broadcast day shall be Canadian music videos and they shall be scheduled in a reasonable manner throughout the broadcast day. For the purpose of this condition of licence, a "Canadian music video" means a Canadian music video as defined in Public Notice CRTC 1987-83.
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4. a) From 1 September 1988 to 31 August 1989, 25% or more of the total number of music video clips distributed by the licensee in each broadcast week shall be French-language music video clips.
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b) From 1 September 1989 to 31 August 1990, 30% or more of the total number of music video clips distributed by the licensee in each broadcast week shall be French-language music video clips.
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c) From 1 September 1990 to 31 August 1993, 35% or more of the total number of music video clips distributed by the licensee in each broadcast week shall be French-language music video clips.
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For the purpose of this condition, broadcast week means seven consecutive broadcast days beginning on Sunday.
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5. The programming distributed by the licensee shall include no more than 2 hours per 8-hour programming block and a maximum of 6 hours per week of feature films and other programming, provided that such programming has music-to-spoken word ratio of at least 60:40.
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6. From the date of commencement of service,, the licensee shall charge each exhibitor of this service the wholesale rate of $0.10 per subscriber par month.
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7. The greater of 2.4% of the licensee's gross revenues, or $100,00, shall be expended each year on the development of French-language Canadian music video clip productions.
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8. a) The licensee shall distribute no more than 12 minutes of advertising material during each clock hour;
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b) the licensee shall not distribute any advertising material other than national advertising.
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9. The licensee shall adhere to the provisions of the Broadcast Code for Advertising to Children published by the CAB, as amended from time to time and accepted by the Commission.
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10. The licensee shall adhere to the CAB self-regularity guidelines on sex-role stereotyping, as amended from time to time and accepted by the Commission.
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11. The licensee shall keep separate accounts which set out for each financial year ending 31 August
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a) the gross revenues in respect of its operations under its licence;
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b) the amounts expended by it on the acquisition of and/or investment in Canadian programs intended for distribution in its undertaking, including a breakout of the amount invested in the production of Canadian music video clips; and
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c) the amount expended by it for the distribution of non-Canadian programs on its undertaking.
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12. The licensee shall file a statement of the accounts referred to in section 11 with the Commission on or before 30 November of each year.
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13. For purposes of these conditions, all time periods shall be reckoned according to the eastern time zone.
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14. The definitions of advertising material, broadcast day, broadcast month, broadcast year, Canadian program, clock hour and commercial message set out in Section 2 of the Television Broadcasting Regulations, 1987(SOR/87-49), as amended by SOR/87-425, and the provisions of sections 5, 6, 7, 8, 10(5) and (6), 12, 13 and 14 of the said Regulations shall apply to these conditions and to the licensee with the necessary changes.
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15. The licensee shall maintain, and enter in a program log, on a daily basis,
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a) in respect of each music video clip, the title, name of the performer and language, together with an indication as to whether the clip is Canadian;
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b) in respects of each program other than music video clips, the title and a brief description, the time at which such program began and ended, and an indication of whether it is a Canadian program;
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c) for each eight-hour programming block, the time of commencement and completion; and
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d) the time of commencement of advertising material and its duration.
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16. The licensee shall present to the Commission, within seven days after the end of each month its program log for that month carrying an attestation by, or on behalf of, the licensee certifying the accuracy of its content.
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