ARCHIVED - Decision CRTC 84-338

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Ottawa, 2 April 1984
Decision CRTC 84-338
Applications for a Network Licence to distribute a Canadian Music Specialty Programming Service
CHUM Limited - 832447700 Rogers Radio Broadcasting Limited - 832442800 CMTV Canadian Music Television Ltd. - 832435200
During the 24 January 1984 Public Hearing in Hull, Quebec on the introduction of discretionary, specialty services, the Commission considered three competing applications to provide a discretionary, Canadian music video specialty service.
The evolution of music video programming on an international scale has brought a new dimension and new growth to the music industry. Music video has allowed for the increased exposure of new as well as established artists and the emergence of new talent and musical styles. While some Canadian artists have benefited from this additional visual medium, the Canadian record industry has not been able to take sufficient advantage of this important development, in large part, due to the absence of a full-time Canadian music video service.
In Canada, music video has thus far been generally limited to specific programs on conventional television stations. The establishment of a Canadian specialty music network should, therefore, assure a marked increase in the production of Canadian music videos and the exposure of Canadian talent, and should stimulate both the independent Canadian production and the Canadian recording industries to experiment and respond to the demands of the growing audience for music video programming.
The Commission was encouraged by the innovative and attractive programming alternatives presented by the three applicants for a music video specialty licence. The Commission recognizes, however, that such ambitious programming concepts can only be realized with substantial financial resources, supported by programming and marketing expertise.
Notwithstanding the interesting and imaginative programming plans submitted by CMTV Canadian Music Television Ltd., the Commission was not convinced, based on the application and additional information presented at the hearing, that the applicant has sufficient financial resources to establish and operate a discretionary music video specialty service and, therefore, denies this application.
The Commission found that the applications by CHUM Limited (CHUM/CITY-TV) and Rogers Radio Broadcasting Limited (Rogers) were both well-researched and financially sound, with substantial commitments for the development of a quality Canadian music video service. The Commission is convinced, however, that, based on the size of the potential Canadian market, only one video music network can be licensed at this time.
Accordingly, for reasons stated below, the Commission approves the application by CHUM/CITY-TV for a licence to carry on a national, 24-hour-a-day, specialty music service to be distributed via satellite to cable television affiliates on a discretionary, user-pay basis. The Commission will issue a licence to CHUM/CITY-TV expiring 31 March 1989, subject to the conditions specified in this decision and in the licence to be issued. The competing application by Rogers is, therefore, denied.
In. reaching its decision, the Commission has taken into consideration various factors, including the ownership and financial stability underlying the CHUM/CITY-TV application, the applicant's extensive experience in broadcasting, and its musical expertise and ongoing support for the development of Canadian musical talent. The Commission has also taken into account the high costs and economic risks involved in the development of such a discretionary music video specialty service and considers that, under the circumstances, CHUM/CITY-TV's plans for a conservative, cost-effective and gradual approach towards the development of a quality discretionary music specialty service, based on existing expertise and resources, represents the most realistic proposal with the greatest potential for success.
The Commission finds it particularly significant and encouraging that established and successful broadcasters such as CHUM and CITY-TV are willing to take up the challenge offered by this new visual dimension in musical programming where changing tastes in popular music will require a high degree of innovation and experimentation.
The applicant is controlled by its Chairman, Mr. Allan F. Waters, who holds directly and indirectly approximately 80% of the common voting shares. CHUM Limited is licensed to operate various radio and television stations across Canada, including CITY-TV Toronto.
Under the creative talent and management of its President and Executive Producer, Mr. Moses Znaimer, CITY-TV has been experimenting in the production and marketing of music video programming for several years. Mr. Znaimer will hold the same key responsibilities in the new operation and is committed to build on the existing expertise, resources and facilities of the CHUM/CITY-TV group to develop and promote the new service efficiently from coast to coast.
The applicant stated that it will harness all the resources of its established off-air radio and television broadcasting undertakings across Canada, including the music libraries, technical facilities, talent and experience that are already in place at CITY-TV, to reduce to a minimum the network's capital and production costs:
 instead of investing the start-up effort into hardware and real estate, we could concentrate that energy and money into programming, an area in which we were already active and effective.
In describing its proposed Much Music service, the applicant stated that it will be of the highest standards in picture and stereo sound and will provide:
 The best of Canadian and international videos, surrounded and supported by music-related information: news, features, interviews, big ticket attractions ... the latest experiments in video art, music in genres other than rock, videos and video culture from around the world.
The applicant indicated that the service could be operational "within 60 to 90 days".
Scheduling will consist of six-hour program blocks which will initially be produced daily at CITY-TV studio facilities and broadcast via the MuchMusic network. Each block will be redistributed on a rotating basis on three additional occasions to complete the network's schedule. The programs will rely extensively on the use of music video clips, and, to a lesser degree, on interviews with artists, and will include the occasional concert. The applicant indicated that while it expects rock music video clips will predominate initially, there will be other types of music, including country and jazz. selections. "Each show (will be) packaged afresh, and ... will reflect the ebb and flow of tastes week by week, day by day".
CHUM/CITY-TV made a number of important commitments at the hearing. It indicated that MuchMusic will contribute 2.4% of its gross revenues or $100,000 per year, whichever is the greater, to a video production incentive fund which will be administered by an independent, seven-member advisory board known as the "Foundation to Aid Canadian Talent On Video" (FACTOV), under the Chairmanship of Mr. B. Finkelstein, who is well-known in the Canadian music industry. The board will also consist of two representatives from the MuchMusic network, two from the Canadian Independent Record Producers Association (CIRPA) and two from "various other disciplines inside the music business". Mr. Finkelstein said that "regional considerations" would be taken into account in these appointments so that the board will adequately reflect the needs of the various regions of Canada.
At the hearing, Mr. Znaimer stated that the fund will work on a matching basis, so immediately, our $100,000 has the impact of $200,000", and also that:
 MuchMusic, together with CITY-TV, are in a position to offer further technical and marketing assistance to those producers who wish to have it, again on a matching, dollar-for-dollar basis. Now, I underline that the fund money is not tied to these additional technical and marketing incentives. A producer will be free to spend his or her budget how and where he or she likes. But were a producer interested in using CITY facilities, and were he or she persuaded by our point that it is important to sell things as well as to make them, we could show them how another $200,000 worth of value could he added for a total of $400,000 worth of impact growing out of our fund.
As noted in the appendix to this decision, the Commission requires that, as a condition of licence, CHUM/CITY-TV honour the above-noted commitments and expects this important contribution to the Canadian video production industry to increase, as revenues permit.
Further, to stimulate increased activity in the Canadian production industry, the applicant promised that a minimum of 10% of all music video clips will be Canadian, rising to 20% by the end of the third year of operation. While the Commission finds this commitment to be realistic for the first two years, during which period the market for discretionary, specialty services will have to be intensively developed, it emphasizes that the applicant will be expected to exceed this commitment, based on the availability of Canadian music video clips.
Accordingly, the condition of licence requiring that the distribution of Canadian music video clips comprise at least 10% of the total number of music clips on a daily basis, reasonably scheduled throughout the broadcast day, will remain in effect for the first two years of operation. From the beginning of the third year, this requirement will be increased to at least 20% of the total number of video clips, and will be increased further by 5% at the beginning of the fourth year and 5% at the beginning of the fifth year of operation (see conditions of licence set out in the appendix to this decision). These increases would bring the Canadian music requirement of this licence in line with the Canadian music content obligations of radio broadcasters.
As discussed with the applicant, the Commission intends to conduct a general review of specialty services after the initial two years of operation. Within the context of this review, the Commission will discuss with the applicant the evolving production of Canadian music videos, and the feasibility of reaching the minimum Canadian content levels set out for years 3, 4 and 5, in the light of of its experience during the first two years of operation.
For purposes of the proposed music service of the licensee, a music video clip will be recognized as Canadian where at least three of the following six elements are Canadian: music, artist, lyrics, sound production, video production, video facilities. In addition, at least two of the first four of these criteria, and after 1 January 1986, at least one of the last two criteria listed above, must be Canadian. Where appropriate, the criteria for the recognition of a Canadian program set out in the Commission's public notice entitled, "Recognition for Canadian Programs - 15 April 1984" will apply (see appendix to decision).
With respect to advertising, the Commission notes that the applicant will not distribute any local advertising on the network, and that it will not broadcast more than eight minutes of advertising material per hour. The applicant is expected to adhere to these commitments.
The applicant indicated that it would initially broadcast about one concert per month. The Commission considers that the presentation of concerts will contribute to the diversity of programming offered on this service and be of great benefit in the promotion of Canadian talent by providing exposure to new and emerging artists. However, given the substantial number of concert presentations already available on established conventional and pay television services, the Commission would be concerned if the service relied heavily on live or taped concerts. In this regard, the Commission acknowledges CHUM/CITY-TV's undertaking that it "will ensure that it does not siphon programs and concerts from free television" and expects it to adhere to this commitment. Furthermore, as noted in the attached appendix, the licensee is prohibited from distributing feature films or variety programs on this specialty network service, as a condition of licence.
During the hearing, CHUM/CITY-TV estimated that because of the relatively small number of French-language clips currently available in Canada, only about 1% of all music video clips presented on its network would be broadcast in French. However, the applicant indicated that it was prepared to contribute to the development of French-language clips through its production incentive fund, noting that "undoubtedly, portions of that money will he spent in Quebec or on French-Canadian artists". The Commission expects the applicant to make every effort to increase the exposure of French-speaking Canadian artists on its service, to use whatever French-language videos are available, and to explore other sources of French-language music video clips.
Further, as noted in Public Notice CRTC 1984-81, the Commission encourages the applicant to consult with the cable television licensees serving predominantly Francophone communities, to arrive at some reasonable arrangement for the provision of French-language programming in their markets.
Mr. Znaimer also indicated that, in addition to clips of Canadian artists, CITY-TV's existing music programs present video clips from a variety of foreign sources including the United States, Great Britain, Jamaica, Japan and Germany. The Commission encourages the licensee to provide video clips from a diversity of sources, including performances in other languages.
In keeping with CHUM/CITY-TV's financial commitment to Canadian talent, the applicant proposed to contribute 2.4% of its gross revenues to performance royalties to the appropriate performing rights organizations. In reply to an intervention from the Performing Rights Organization of Canada, the applicant indicated that CHUM/CITY-TV would be willing to augment this rate after "fair-minded negotiations". The Commission expects the licensee to undertake such negotiations and to advise the Commission on the results thereof.
While it acknowledges CHUM/CITY-TV's positive commitment to the support and development of Canadian talent, the Commission reminds the licensee that this support should not be devoted exclusively to the presentation of music video clips by established Canadian artists who may have the resources to create elaborate or sophisticated productions. New artists and bands should not be denied access to the network, provided their video material meets the licensee's minimum standards of acceptability.
The Commission was encouraged by the applicant's assurances that it will maintain a policy of open access and notes its statement at the hearing that the standards to be set for the selection and presentation of music video clips will be "suitable, lenient enough to give as much exposure as possible to all Canadian performers". The Commission expects the applicant to take all necessary measures to ensure that fair and equitable access policies are established and closely adhered to. It will follow the applicant's practices in this regard and will examine this matter further in the context of its general review of specialty services after the initial two years of operation.
When the Commission questioned CHUM/CITY-TV on how it would deal with public concerns with regard to such matters as sex-role stereotyping and the possible exploitation of violence and sex in music video programming, the applicant confirmed that no material would be presented on the MuchMusic network before it was screened by an internal committee. In view of public sensitivity to such concerns, the Commission directs the applicant to file a report, prior to commencement of its operations, which considerably strengthens this aspect of its proposal, and sets out in detail the proposed policies and standards to be implemented by CHUM/CITY-TV in respect of the presentation of video music programming.
The Commission notes the assurances given by the applicant in response to the concern expressed by certain interveners during the hearing that this new service might give CITY-TV's night-time programming national exposure, thus changing the status of this Toronto service into a superstation:
 The viewer in Vancouver, the viewer in Newfoundland, the viewer in the Prairies would never see anything that was identified as CITY-TV, nor would he or she see program elements in a consistent flow. I mean, to really be a superstation, you have got to lift that CITY signal in long chunks and send it over the air as it exists. In fact, the reverse is happening. We are building a new service. We are taking the leverage of the fact that we are already in the business. We believe that this situation demands that kind of leverage.
The Commission will follow with interest the licensee's progress in developing this music video service and will review its performance in the context of the public hearing to be held after two years on the development of discretionary specialty programming services in Canada.
J.G. Patenaude Secretary General
Conditions of Licence
CHUM Limited
Canadian Music Specialty Programming Service
1. From the date of commencement of service until 31 December 1986, on a daily basis, the Canadian music video clips distributed shall comprise not less than 10% of the total number of music video clip titles in all programming in which video clips are presented, and shall be reasonably scheduled throughout the broadcast day.
2. On a daily basis, commencing 1 January 1987, Canadian music video clips distributed shall comprise not less than 20% of the total number of music video clip titles in all programming in which video clips are presented, and shall be reasonably scheduled throughout the broadcast day.
3. On a daily basis, commencing 1 January 1988, Canadian music video clips distributed shall comprise not less than 25% of the total number of music video clip titles in all programming in which video clips are presented, and shall be reasonably scheduled throughout the broadcast day.
4. On a daily basis, commencing 1 January 1989, Canadian music video clips distributed shall comprise not less than 30% of the total number of music video clip titles in all programming in which video clips are presented, and shall be reasonably scheduled throughout the broadcast day.
5. The greater of 2.4% of the licensee's gross revenues, or $100,000, shall be devoted each year to the development of Canadian music video clip productions.
6. No feature films or variety programs may be included in the programming.
7. For purposes of these conditions, a music video will be recognized as Canadian where:
 (1) at least two of the audio requirements a) through d) which follow, and three of the requirements a) through f) are met:
 a) instrumentation or lyrics are principally performed by a Canadian;
 b) music is composed by a Canadian;
 c) lyrics are written by a Canadian;
 d) performance is in Canada;
 e) video director or production company is Canadian;
 f) video production facilities are located in Canada; and
 (2) as of 1 January 1986, at least one of the two video requirements e) or f) is met.
8. Where appropriate, the criteria for the recognition of a Canadian program set out in the Commission's public notice entitled, "Recognition for Canadian Programs - 15 April 1984" will apply.
9. The licensee shall maintain, and enter in a program log, on a daily basis,
 a) in respect of each music video clip, the title and name of the performer, together with an indication whether each clip is Canadian,
 b) in respect of programs other than music video clips, the title and a brief description, the time at which such programs began and ended, and an indication of whether each program is Canadian, as set out in these conditions.
10. 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.
11. The licensee shall keep separate accounts which set out for each financial year ended 31 August
 a) the amounts expended by it for the development of Canadian music video clip production;
 b) the gross revenues in respect of its operations under its licence.
12. The licensee shall file a statement of the accounts referred to in section 11 with the Commission on, or before, 30 November in each year.
13. Sections 14, 15, 18 and 19 of the Television Broadcasting Regulations, c.381 Consolidated Regulations of Canada 1978, shall apply to the licensee mutatis mutandis.

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