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ARCHIVED -  Decision CRTC 94-745

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Decision

Ottawa, 14 September 1994
Decision CRTC 94-745
CKVR Television, a division of CHUM Limited
Barrie, Parry Sound and Huntsville, Ontario - 940044100 - 940045800
Disaffiliation of CKVR-TV Barrie from the CBC English-language
television network - approved
Following a Public Hearing commencing 20 June 1994 in the National Capital Region, the Commission approves the applications by CKVR Television, a division of CHUM Limited (CHUM), to amend the broadcasting licence for the television programming undertaking consisting of CKVR-TV Barrie, CKVR-TV-1 Parry Sound and CKVR-TV-2 Huntsville by deleting the condition of licence requiring the undertaking to operate as an affiliate of the CBC English-language television network; and by deleting the authority for the operation of CKVR-TV-2 Huntsville.
Upon the disaffiliation of CKVR-TV from the CBC, the station will operate as an independent station authorized to provide a local service to Barrie and the surrounding area of central Ontario. The Commission is satisfied that the applicant's programming plans and commitments, tempered by the safeguards proposed by the Commission in this decision, will be effective in ensuring that the focus and orientation of the CKVR-TV service remain fixed on Barrie and Central Ontario, and will not expand to include the area of Metropolitan Toronto.
In approving the deletion of CHUM's authority for the operation of the Huntsville transmitter, the Commission notes the licensee's assurances that the coverage area served by this low-power facility has, for some time, been overlapped by a superior signal from CKVR-TV as the result of technical changes implemented by the licensee several years ago, and that good quality off-air service to the Huntsville area will continue to be provided by the CKVR-TV transmitter.
At the hearing, CHUM indicated that, under the terms of its agreement with the CBC, the authorities granted herein shall only be implemented at such time as the CBC's proposed television transmitters at Barrie, Huntsville and Parry Sound, authorized in Decision CRTC 94-744 of today's date, commence operations. This is expected to occur in September 1995.
Background
CHUM, a public company effectively controlled by Mr. Allan F. Waters of Toronto, owns or holds ownership interests in a number of radio, television and specialty service programming undertakings across Canada. CHUM assumed ownership of CKVR-TV in the late 1960s. In 1978, CHUM acquired effective control of the independent television station CITY-TV Toronto, in circumstances that saw CHUM act as financial guarantor of a then-unprofitable undertaking.
CHUM's ownership of two English-language television stations having such proximity to each other constituted an exception to the Commission's general policy not to permit the common ownership of two broadcasting undertakings in the same language in the same market. In Decision CRTC 78-513, which created this exception by approving CHUM's application to acquire control of CITY-TV, the Commission acknowledged the station's difficult financial circumstances. It also noted the "clear and significant benefits to both the community served by CITY-TV and the broadcasting system generally" that would flow from CHUM's ownership, including continuation of "a productive involvement [by CITY-TV] in Canadian television, freed from continuous financial and sales constraints."
With regard to CHUM's ownership of CKVR-TV Barrie, the Commission noted:
...the applicant's commitment to maintain the regional orientation of that station which provides primarily a rural and northern CBC affiliate service to the Barrie region. Its signal is distributed by a number of Metro Toronto cable systems but is an optional service...with negligible viewership in Metro Toronto.
The Commission examined the current applications against the background of its 1978 decision. It also took into account various concerns raised in Decision CRTC 89-546 dated 4 August 1989, in which the Commission denied an application by CHUM requesting authority, as in the present case, to disaffiliate CKVR-TV from the CBC. The 1989 proposal had been accompanied by other CHUM applications, also denied, to establish and operate transmitters at Barrie, Bala and Huntsville to broadcast the complete English-language network schedule of the CBC.
In Decision CRTC 89-546, the Commission noted that the disaffiliation of CKVR-TV would have been consistent with a long-term objective the Commission had identified for the CBC when it renewed the Corporation's television network licences two years earlier, that being the extension of full CBC network service to all communities through the eventual replacement of its affiliated stations. The Commission, however, was also conscious of the fact that approval would have left CHUM as the operator of two English-language television undertakings, both operating independently of any network affiliation, whose signals have a broad overlap and whose services are thus available, off air or via cable, in many of the same communities, including virtually all of Metropolitan Toronto.
The combined service area of CKVR-TV and its rebroadcasting transmitters, as defined by the Commission in its decisions over the years, includes the counties of Simcoe, Muskoka, Haliburton, Parry Sound, Dufferin and Victoria, as well as the regional Municipality of York. In its 1989 decision, the Commission emphasized that, given CKVR-TV's role as the "principal television station providing local programming to viewers in Barrie, Parry Sound, Huntsville and surrounding areas", it was of particular importance that the station maintain a local focus on this service area.
Despite assurances by CHUM that the local focus of CKVR-TV would not be diminished, the Commission expressed concern regarding the very narrowcast nature of the service the applicant then proposed to offer. This included more than 60 hours per week of documentary/entertainment programming, which CHUM acknowledged was designed to carve a niche for the Barrie station by providing an alternative for viewers in the greater Toronto metropolitan area.
The Commission concluded that:
...the central Ontario audience now served by CKVR-TV would not be as well served by the proposed independent television service offering a limited range of programming.... CKVR-TV could not operate as an independent station serving the Barrie area without compromising the station's local orientation. In the Commission's view, this concern outweighs the benefits associated with the extension of the full CBC network service to the areas in question.
The Current Applications
In the applications now before the Commission, CHUM emphasized that CKVR-TV can no longer remain an affiliate of the CBC and maintain either the quality or the quantity of the local service the station currently provides viewers in the Barrie area. Despite a major internal reorganization and staff lay-offs, CHUM stated at the hearing that it projects a five-year cumulative financial loss by CKVR-TV amounting to more than $5 million by the end of the 1995 broadcast year.
The applicant attributed much of this loss to the fact it has very little inventory to sell in prime time, this being the period when most CBC network programming is broadcast. CHUM also claimed that CKVR-TV has been adversely affected by the CBC's practice, since 1990, of requesting the substitution of the CBLT Toronto signal against CKVR-TV on all cable systems for which carriage of the Barrie signal has been optional.
According to the applicant, it needs access to the advertising inventory that has been denied it within the CBC's prime time network programming, to compensate for the shift by advertisers away from small market stations, such as itself, in favour of those serving large urban markets. The applicant argued that the negative impact of this trend is magnified, in its particular case, by the large amount of "spill advertising" that Toronto television stations deliver into the Barrie market.
The applicant also brought attention to the difficulties that CKVR-TV has long experienced in acquiring attractive programming, at a reasonable cost, to fill the non-network hours of its schedule. As an independent station, CKVR-TV's need for such programming will expand significantly in order to replace the hours in its schedule now occupied by CBC network programming. According to the applicant, however, independent stations are no longer able to acquire programming by themselves, and must therefore enter into alliances with other stations for this purpose.
CHUM noted CKVR-TV's circumstances as a small market station located adjacent to the country's largest market, and the fact that much of the attractive programming it might otherwise seek to acquire through such an alliance is already under licence to Toronto-area stations. The applicant argued that reaching a satisfactory agreement with any other Toronto area station for joint program acquisition would be unlikely. Thus, according to CHUM, the only practicable means of obtaining the programming it needs to establish a viable independent television station in Barrie lies in taking advantage of CHUM's common ownership of CKVR-TV and CITY-TV by establishing a "strategic programming linkage" between the two stations for the purpose of lowering programming costs through the joint purchase of program rights.
CBC network programming broadcast on CKVR-TV currently represents 20 hours per week in the evening and a further 18 hours 30 minutes each week during the period between 6:00 a.m. and 6:00 p.m. The applicant proposes to replace some of this CBC programming with programs that are now a part of CITY-TV's local program schedule, including Breakfast Television, Fashion Television, Movie Television and City Line. Other programming, including certain feature films and some non-Canadian syndicated drama, will be purchased jointly for broadcast on the two stations, while still other programs will be acquired for broadcast solely on CKVR-TV.
CHUM stressed, however, that virtually all of the programming currently produced or acquired by CKVR-TV, representing fully 50% of all programming now being broadcast on the station and including some 13 hours per week of local news, will remain in CKVR-TV's schedule. It also emphasized that its programming plans do not contemplate a new service, but rather the continuation of "a broad, general service designed for the viewers of Barrie and Central Ontario." It described its application as a survival plan:
...that will allow us to maintain meaningful local reflection; a plan based on strong local news [and] active community service.... Our personality will be clearly the product of the extensive recreational and agricultural components of our primary service area.... Matched comfortably with the best in family programming, it is a format that our viewers have come to expect and enjoy.
CHUM noted that, once CKVR-TV commences operations as an independent station, its signal will change from optional to mandatory carriage on a number of cable television systems, including all of those in Metropolitan Toronto. It also emphasized that its programming plans and prospects for financial viability hinge upon the continued distribution of the CKVR-TV signal on these cable systems, as a priority signal under the Cable Television Regulations, 1986 (the regulations).
At the same time, it acknowledged a concern that carriage of CKVR-TV on the basic band (channels 2 to 13), in strict accordance with regulatory provisions, would displace cable community channel programming, which is currently distributed on channel 10 by cable systems in Toronto. Accordingly, the applicant stated that it would agree to distribution of the Barrie signal by Metropolitan Toronto cable systems on a channel above the basic band, provided the distribution channel is no higher than channel 25. CHUM noted that CKVR-TV is already distributed on channels below channel 25 on cable systems serving approximately 74% of all subscribers in the Toronto area.
According to CHUM, an independent CKVR-TV could increase its audience share in the Toronto market from the present level of 2% to approximately 2.5%. It also estimates that the station will experience an increase of $3.5 million in advertising revenues in the fourth year.
In the sole opposing intervention to CHUM's application for authority to disaffiliate CKVR-TV from the CBC, CanWest Global Communications Corp. (CanWest) submitted that the 20 hours of new, prime time programming on the Barrie station would allow CKVR-TV to achieve 1,000 rating points per week in the Toronto market, a performance that, when translated, would far exceed the applicant's estimated audience share. The intervener, licensee of CIII-TV-41 Toronto, also suggested that an independent CKVR-TV could increase its share of Toronto advertising revenues significantly beyond the level projected by the applicant.
The Commission's Findings
Regarding the potential impact on Toronto area stations of an independent CKVR-TV, the Commission considers the licensee's estimates of increased viewing share and advertising revenues to be understated. Nevertheless, based upon the evidence, the Commission is not convinced that the operations of CKVR-TV, as an independent television station, would have an undue negative impact on the economic well-being of the Toronto television market, even should CanWest's projections concerning the station's advertising revenue potential be realized.
Regarding the higher cable distribution priority CKVR-TV will acquire upon disaffiliation, and the prospect that this might displace the popular community programming service distributed by Metropolitan Toronto cable licensees, the licensee noted at the hearing that it would not be "in anybody's best interest to create a situation that dislodges the community channel." In the Commission's view, CHUM's willingness to accept the distribution of CKVR-TV by these cable systems on other than the basic band offers a practical means of resolving this concern.
Accordingly, the Commission will be prepared to proceed expeditiously with consideration of applications by the licensees of cable television undertakings, the majority of whose subscribers reside within the corporate limits of Metropolitan Toronto, for relief by condition of licence from the requirements of paragraph 9(1)(d) of the regulations, and for authority to distribute the signal of CKVR-TV on other than the basic band, but on a channel no higher than channel 25. The Commission wishes to underline the importance with which it views the maintenance of a consistent channel position for the distribution of community programming on cable systems in Metropolitan Toronto.
Turning to the specific matter of the licensee's programming plans, the Commission considers that CHUM's current proposal has advanced a considerable distance towards meeting the Commission's concerns expressed in its 1989 decision. The applicant's commitment to retain, as part of its proposed independent service, some 50% (approximately 76 hours per week) of its existing program schedule, including all 13 hours per week of its highly successful news programming, and a further 2 hours 30 minutes each week of other local production, provides a measure of assurance that CKVR-TV's Central Ontario audience should continue to be well served.
The Commission also views as reasonable, the applicant's plans to air on CKVR-TV some 17 hours per week of programming produced for broadcast on CITY-TV. Some of CITY-TV's local production, such as Breakfast Television, will be simulcast on the two stations, while other programs will be broadcast on both stations, but at different times. Although the CITY-TV service is distributed on most of the cable systems within CKVR-TV's coverage area, this CITY-TV local production will add diversity to the television fare available to off-air viewers of CKVR-TV, for many of whom a good quality CITY-TV signal is not available.
According to the applicant, the rest of the proposed schedule is to consist of acquired programming. CHUM indicated that, although some of this programming would be reflective of the family-oriented style of programming familiar to CKVR-TV's audience, and would thus be obtained specifically for broadcast on the Barrie station, the remainder would be programming purchased for broadcast on both CKVR-TV and CITY-TV.
The Commission considers that the broadcast of this acquired programming, whether it is aired uniquely on CKVR-TV or on both the Barrie and Toronto stations, would give CHUM an unprecedented opportunity to maximize the competitive advantage arising from its common ownership of two commercial television stations, whose signals are both widely available in the Toronto market.
The Commission also notes that CKVR-TV's proposed program schedule reflects a heavy reliance on feature films during the evening broadcast period. As acknowledged by the licensee at the hearing, "much of what is being acquired from [CITY-TV]...are movie titles." The proposed schedule includes movies scheduled at 8:00 p.m. on as many as six days per week, compared to the one or two that are currently broadcast on CKVR-TV during this time period in a typical week. Of the six movies, CHUM proposes that one would be a Canadian film and one other would be a film simulcast with CITY-TV.
This dependence upon feature films during prime time evening hours on CKVR-TV would seem to lend the proposed service more the appearance of a movie channel than of a continuation of the "broad general service" described by CHUM at the hearing. The fact that CHUM proposed to simulcast only one movie per week on CKVR-TV and CITY-TV could also be perceived as a strategy to maximize CKVR-TV's audiences in Metropolitan Toronto.
In making these observations, the Commission is mindful of the licensee's concern that it retain the ability to determine whether to simulcast or to time shift the programming that will be shared by the Barrie and Toronto stations, in order to ensure that the schedules of the two stations respect and reflect the significant differences between the needs and interests of the Toronto station's viewership and those of the audiences traditionally attracted to CKVR-TV. CHUM noted that many of the acquired films and other programs that it might schedule on CITY-TV during the afternoon, for example, it would only deem appropriate for broadcast on the Barrie station during the evening hours, if at all. Nevertheless, it is a reasonable inference that a majority of the films, and much of the other programming CHUM will acquire, will ultimately be broadcast on both stations.
The Commission's general policy not to permit the common ownership of two undertakings in the same language, class and market, while directed primarily at ensuring diversity among broadcast voices in a given community, is also designed to avoid conferring upon one broadcaster an unfair competitive advantage over others providing service to the same market. In the case of CKVR-TV and CITY-TV, the Commission's underlying purpose in continuing to allow an exception to its general policy is to ensure that the two stations remain in operation as viable undertakings, offering valued local service to their respective audiences. At the same time, the Commission considers it appropriate that steps be taken to address the potential undesirable effects created by this, or any other policy exception, provided the steps taken do not prevent achievement of the purpose the policy exception is intended to serve.
As noted above, a principal concern of the Commission regarding the applicant's programming plans is the number of feature films in CKVR-TV's proposed prime time schedule and their potential influence on the overall focus of the service. The Commission is also concerned by the possibly unfair competitive advantage that would fall to CHUM through its ability to present these films and other acquired programs to a Toronto audience on two different television stations, only one of which is licensed to serve that audience as its primary market.
In the circumstances, the Commission considers it reasonable to examine safeguards that would remove, or at least limit, these concerns. One such mechanism in response to the first concern would be to require CHUM, when airing a film on CKVR-TV during the evening broadcast period, other than one that is a Canadian production, to simulcast the film on CITY-TV. As for the second concern, one remedy would be to prohibit CHUM from requesting cable operators, the majority of whose subscribers reside within the corporate limits of Metropolitan Toronto, to substitute the signal of CKVR-TV over the signal of a station having lesser priority, when the two stations are simultaneously broadcasting the same program.
The Commission is of the view that imposition of these two constraints would have no significant negative effect on CKVR-TV's ability to provide a viable local programming service to viewers in the Barrie area. Accordingly, the Commission advises CHUM that it intends to impose the foregoing safeguards as conditions of licence in CKVR-TV's new licence term, and in that context, will wish to discuss this matter with the licensee at the time it considers the application for the licence renewal of CKVR-TV at the Public Hearing commencing on 3 October 1994 in Toronto.
On another matter, and as agreed to by CHUM at the 20 June 1994 public hearing, the Commission also intends to introduce for the next licence term, a condition of licence setting requirements for Canadian programming expenditures by CKVR-TV, expressed as a formula tied to the station's gross annual advertising revenues.
The Commission acknowledges the interventions submitted in support of CHUM's application for disaffiliation from the CBC, representing the views of many businesses, business associations, service clubs, community groups, local residents and other interested parties.
Allan J. Darling
Secretary General