ARCHIVED -  Decision CRTC 85-733

Decision

Ottawa, 6 September 1985

Decision CRTC 85-733

Télévision de Montréal Inc. Télévision de Québec Inc. Télévision Saint-Laurent Inc. Montreal and Quebec City, Quebec - 841057300 - 850307000 - 850308800

Four Seasons Television Network Inc. Montreal and Quebec City, Quebec 850310400 - 850311200

Table of contents

Pages

Background 2

The Applicants and their Proposals 5

Evaluation Criteria 7

Decision 9

a) projections 10 b) finances 11 c) experience 11

Program Proposals 12

Market Capacity 16

Concentration of Ownership 21

Other Matters 25

Dissenting Opinion 27

At a public hearing in Montreal which began on 13 May 1985, the Commission considered applications for licences to operate new French-language television services in Montreal and Quebec City. The hearing followed a Call for Applications issued by the Commission on 15 November 1984 (Public Notice CRTC 1984-281), in which the Commission announced that it had received an application for a licence to carry on a new privately-owned French-language television broadcasting undertaking to serve the Montreal area. In accordance with its usual procedure in such cases, the Commission invited other interested parties to submit applications.

Background

As early as 1968, the Commission demonstrated its interest in the establishment of a third French-language commercial television service in the province of Quebec. In 1972 it annouced its willingness to consider applications to provide such a service, and in 1974 licences were granted to Télé Inter-Cité Québec Ltd. (decision CRTC 74-75) for the operation of television stations in Montreal and Quebec City and for a third French-language television network. This project, however, was never realized. Since that time, the Commission has taken a number of steps to increase the quality, choice and variety of services available to francophone audiences in Canada.

Thus, in 1974 the Commission granted licences to Radio-Québec for the operation of television stations in Montreal and Quebec City and for an educational television network. In 1979 the Commission approved the cable distribution of TVFQ-99, a service which rebroadcasts programming selected from the three national television networks of France. Another significant event was the establishment in 1981 of the French-language television service TCTV, whereby most of the programs of Télé-Métropole and the TVA network are relayed across the country by the Canadian Satellite Communications Inc. network. In addition, the Commission has, in the past few years, approved the introduction of French-language pay television services and, more recently, has strongly encouraged the establishment of French-language specialty services.

While these new services were being implemented, the existing broadcast services substantially increased their coverage in Quebec. With the completion of the extension of the CBC's French-language television network to the Gaspé in 1983, this service is now available off-air to virtually the entire population of the province of Quebec. The Radio-Canada signal is also available by satellite. The stations affiliated to the TVA network are also directly available to virtually the entire population of Quebec as well as to residents of adjacent areas of New Brunswick and Ontario. In addition to the ten hours of programming provided by the TVA network, these stations carry programming originating with CFTM-TV Montreal, which together comprise the second French-language commercial television service in Quebec. As for Radio-Québec, after a decade of existence, it provides primarily an educational television service over-the-air to more than 90% of the population of Quebec. Since the beginning of 1985, its signal has also been available by satellite.

These achievements, along with a marked increase in the penetration of cable television during this period and the significant impact of new technologies such as video recorders and satellite dishes, have all helped to broaden the television viewing options of Francophones.

Moreover, it should be noted that, overall, the television industry in Quebec, both public and private, has been tremendously successful in meeting the challenge of producing highly popular quality Canadian programming reflecting the culture and values of the population it serves, despite ever-increasing competition from foreign programming in Quebec. In fact, two out of every three programs watched by francophone audiences are Quebec productions. This success is particularly striking in the area of drama programming since, of the ten French-language programs which attracted the most viewers in the last few years, the overwhelming majority were Quebec productions, most of which were drama series. With respect to the financial health of privately-owned television stations in Quebec, in aggregate over the last ten years their profits have generally been higher than the national average.

It should also be noted that Montreal and Quebec City are vitually the only cities of their size in Canada not served by three commercial television services in the same language, as a result of the failure of the Télé Inter-Cité proposal which was authorized in 1974, as described above. During the 1970s the Commission sought to add new television services which could be received off-air, thereby increasing the choice and diversity of Canadian programming in the major cities of Canada, by approving among others, the operation of stations CITY-TV Toronto, the Global television network in the province of Ontario, CKND-TV Winnipeg, CFAC-TV Calgary, CITV-TV Edmonton and CKVU-TV Vancouver.

The Applicants and their Proposals

At the hearing in Montreal on 13 May 1985, the Commission considered two competing applications submitted respectively by Télévision de Montréal Inc., Télévision de Québec Inc. and Télévision Saint-Laurent Inc. (TSL et al); and by the Four Seasons Television Network Inc. (Four Seasons).

TSL et al proposed to operate television stations in Montreal, on channel 35 with an effective radiated power of 941,000 watts, and in Quebec City, on channel 2 with an effective radiated power of 27,600 watts, as well as a network comprised of the two above-mentioned stations. The Montreal station would be operational by September 1986, broadcasting a weekly schedule of 56 hours and 35 minutes for the first three years and 84 hours and 35 minutes for the next two years, while the Quebec City station would go on the air in September 1987, and would broadcast the same number of hours weekly.

According to the proposals submitted, TSL et al would be controlled by a management company, Telinvest Inc., which would hold a 61.5% interest. Telinvest Inc., in turn, would be controlled by the Cogeco Inc. group, which would hold a 60.3% interest, and by Moffat Communications Ltd., which would hold a 39.7% interest. Cogeco Inc. is ultimately controlled by Mr. Henri Audet of Trois-Rivières. This same company indirectly controls CKSH-TV Sherbrooke and CKTM-TV Trois-Rivières, television stations affiliated with the CBC's French-language network, and La Belle Vision Inc., a cable television company which serves Trois-Rivières, Shawinigan, Louiseville and Montmagny, Quebec and has about 35,000 subscribers. Cogeco Inc. also has interests in Premier Choix: TVEC Inc., licensee of the French-language pay television network. Moffat Communications Ltd., for its part, has interests in several radio, television and cable television companies, primarily in Western Canada, including television station CKY-TV of Winnipeg, an affiliate of the CTV television network.

Four Seasons, on the other hand, proposed to operate television stations in Montreal, on channel 35 with an effective radiated power of 566,000 watts, and in Quebec City, on channel 2 with an effective radiated power of 23,700 watts. The two stations would go on the air simultaneously in September 1986 and would broadcast 77 hours of programming each week.

For its part, a 66% share of Four Seasons would he held by CFCF Inc., which is ultimately controlled by Mr. Jean A. Pouliot of Montreal. CFCF Inc. directly controls CFCF-TV Montreal, an English-language television station affiliated with the CTV network, as well as two conventional radio stations, CFCF and CFQR-FM Montreal, the short-wave station CFCX-SW and CF Cable TV Inc., a cable television company which serves part of Montreal and the city of Laval, and which has about 155,000 subscribers.

A basic characteristic of both proposals is that they planned to delegate all local program production to independent producers, except for news and public affairs programming which would comprise the major portion of the production activities of the proposed stations.

Evaluation Criteria

In its November 1984 Call for Applications, the Commission invited potential applicants to address the following issues, the responses to which formed the basis of the Commission's analysis.

1. The contribution that the new service will make to the achievement of the objectives of the Broadcasting Act, particularly with respect to the development of French-language programming services;

2. the positioning of the proposed program format in relation to existing television services and its potential impact on these services;

3. the anticipated audience reach of the new service having regard to the viewing behaviour of Francophones; and an explanation as to how the new service could repatriate Francophones away from English-language viewing;

4. the contribution of independent program production companies in Canada, and particularly in Quebec, to the proposed new service;

5. the availability of the creative talent, particularly with respect to script and concept development, necessary for the sustained production of new quality programs;

6. an indication of possible shared investment or co-operative program buying arrangements with Canadian or foreign broadcasters;

7. an analysis of the markets and potential advertising revenues, taking into account the results of any surveys conducted that substantiate the projections;

8. a marketing plan, if any, for the development and distribution of the new service taking into account the potential of satellite distribution;

9. a clear demonstration of financial viability consistent with the requirements indicated by the applicant's financial projections, including demonstrated availability of supplementary financing in the event that projected revenues are not realized;

10. a clear demonstration of the financial viability of the principals involved. In its review of these applications, the Commission paid particular attention to: projected shares of viewing hours and advertising revenue submitted by both applicants, characteristics of the programming plans and content proposed by the applicants in the context of the current availability of French-language television services, project financing and the availability of additional funding in the event that revenues fall short of projections, as well as the experience of the applicants and the respective prospects for success of the two projects in a highly competitive environment.

The Commission also took into account the many studies and the mass of information provided, both in the applications themselves, and in the many written and oral interventions that formed part of the Public Hearing process. The Commission would like to thank all of the interveners for their significant contribution to the examination of these applications.

Decision

The Commission hereby announces that, by a majority decision, it approves the broadcasting licence application submitted by the Four Seasons Television Network Inc. to operate a French-language television station in Montreal, on channel 35, with an effective radiated power of 566,000 watts. The Commission will grant a licence expiring 31 March 1990, subject to the conditions of licence stipulated herein and in the licence to be issued.

The Commission denies, however, the application submitted by the Four Seasons Television Network Inc. to operate a television station in Quebec City. It also denies the applications submitted by Télévision de Montreal Inc., Télévision de Québec Inc. and Télévision Saint-Laurent Inc. to operate television stations in Montreal and Quebec City and a television broadcasting network comprised of the above-mentioned stations.

a) Projections

The Commission has analysed the projections of both applicants with respect to the viewing shares of the French-speaking Montreal and Quebec City audiences.

In the Montreal market, TSL et al projected a share of 11% in the first year, rising to 29% of the francophone audience or 22% of the total audience by the seventh year. Four Seasons, on the other hand, projected shares of 11% in the first year and 16% by the fifth year. The Commission notes that the more optimistic projections of TSL et al are based on an analysis of the growth of television stations in other major markets such as Toronto and Vancouver, while Four Seasons' projections were based on a special study conducted in January 1985 of the viewing habits of Francophones and Anglophones in Montreal and Quebec City and on the least optimistic scenario of various other studies conducted for Four Seasons. The Commission also notes that, in the fall of 1984, the largest total audience share obtained by a Montreal television station was 26%.

Similarly, TSL et al projected $17.6 million in total advertising revenue for Montreal in the first year, while Four Seasons projected revenues of $12.3 million. This disparity between the applicant's projections was maintained through to the fifth year of operation, since TSL et al projected revenues of $62.9 million, of which $3.4 million would be provided by the proposed network, while Four Seasons projected $34.7 million. Although the Commission is aware that it is difficult for applicants to establish with precision their expected viewing shares and consequently their advertising revenues, particularly given the lack of precedents in markets as unique as Montreal and Quebec City, the Commission considers that the more conservative projections of Four Seasons are more realistic.

b) Finances

In terms of financial resources, the TSL et al proposal would have required considerably more capital than that of Four Seasons. This disparity in capital needs is explained primarily by the fact that TSL et al would have had to tie up a significant portion of its capital in order to construct and equip its Montreal studios, while Four Seasons planned to utilize a site which had already been developed by CFCF Inc. The Commission also took into consideration the unconditional nature of Four Seasons' financial backing.

c) Experience

The Commission also believes that the experience of the promoters of the Four Seasons proposal and its proposed management team are important assets for a new television station in a highly competitive market such as Montreal. Furthermore, the solid financial position in the Montreal market of CFCF Inc., the main shareholder in Four Seasons, constitutes an important additional guarantee in the event of any difficulty which might arise during the start-up of the new station. The Commission notes in this respect Four Seasons' commitment not to pay a dividend during the first five years of operation so as not to deplete its financial reserves while the new station is establishing itself.

Program Proposals

The programming plans submitted by the two applicants were designed to attract the largest possible audience, with particular appeal to younger viewers. The proposed schedules of local programs for Montreal were virtually the same for both applications - slightly over 40 hours a week - while for Quebec City, TSL et al proposed 17 hours a week and Four Seasons 1 hour and 25 minutes. Another distinctive feature of the applications was that, as pointed out above, both applicants planned to have nearly all local programs, other than news and public affairs, produced by independent producers.

The Commission has carefully examined, both in terms of program content and the type of programs proposed, the degree of complementarity of the two proposals vis-à-vis existing services which have been operating for many years and have significant resources at their disposal. Four Seasons' application does include elements of complementarity, in terms of its proposed approach, which is based on a consistent daily program schedule, its presentation of a thirty-minute televised series Monday to Friday during peak evening viewing hours, its intention to devote the entire Saturday afternoon time slot to youth programs, and its presentation of mini-series or feature films during peak evening viewing hours seven days a week and of newscasts in the late afternoons on weekends. Four Seasons, like TSL et al, also proposed not to broadcast sports events and to air its major newscast, which would be one hour in length, at 5:30 p.m. Monday to Friday.

Four Seasons stated at the hearing that it planned to spend approximately $14.6 million on programming for the Montreal station in the first year, $8.6 million of which would be allocated to independent production. Four Seasons also made a commitment at the hearing to spend more money on programming, stating that [translation] "any improvement in our estimates would translate into increased spending on programming".

The weekly broadcast schedule of 77 hours proposed by Four Seasons for the first year consists of approximately 29 hours of productions from the independent sector, and 11 hours of programming to be produced by the applicant, with the remainder being programs purchased from foreign sources. The Commission wants to emphasize that it is concerned with the appreciable drop in the number of foreign programs dubbed into French in Canada, and it expects that Four Seasons will give this matter its attention and inform the Commission, one year after the new station goes on the air, of the measures it has taken in this regard.

Four Seasons clearly expressed its willingness to contribute to the development of Canadian talent including actors and musicians, particularly through its use of independent productions. The Commission notes that such an intensive use of independent production is a first in Quebec for a television station and it considers that this should result in an important contribution to the development of the independent production industry in the province and that, for this reason, the programming of the new station should contribute to the diversity of program styles. The Commission also notes that the programs to be produced either by Four Seasons or by independent producers represent, globally, a Canadian production effort that compares very favourably with that of other independent television stations in Canada, taking into account the number of hours broadcast. In addition, this effort would place the new station in the ranks of other major-market television stations in Quebec in terms of local production.

Four Seasons also made a commitment to set up an advisory committee on programming made up of five persons, of whom two would represent the public, one would be from the creative community, one from the performing community and one would represent the independent producers. The Commission would appreciate being kept informed on an annual basis of the activities of this committee and the results of its deliberations.

Emphasizing the quality and quantity of information afforded by the market to be served, Four Seasons proposes to air its major newscast Monday to Friday from 5:30 to 6:30 p.m., as well as a 45-minute newscast late in the evening and a five-minute summary at midnight. The weekend schedule will also be well supplied with news, with a newscast from 6:00 to 6:30 p.m. on Saturday and Sunday and another 30-minute newscast late Saturday evening. News capsules will also be presented during the evening every day of the week.

Four Seasons has also proposed to broadcast 1 hour and 30 minutes of public affairs programs, in addition to brief items within its newscasts. The Commission expects that the major one-hour public affairs program, which was to be produced by the Quebec City station, or an equivalent program, will be retained in the schedule.

Drama programs would account for approximately 45% of Four Seasons' broadcast time and they will be aired during peak evening viewing hours. For the most part, this aspect of its programming will be comprised of feature films, made-for-television movies or mini-series to be broadcast seven evenings a week. The major Canadian drama effort will be a drama series to be broadcast Monday through Friday evening during peak viewing hours. The Commission also notes Four Seasons' plans to expand its Canadian drama content, by co-producing films with France and through agreements with Canadian theatre companies for the production of stage plays adapted for television viewing.

Four Seasons indicated that it planned to stimulate the Quebec artistic community through its musical and variety programs, which represent approximately 18% of its weekly schedule. The major program of this type will be in the form of a talk show broadcast late in the evening Monday through Friday. On Sunday evening a one-hour program will feature young Quebec performers who will be promoted by established musical and theatrical stars. The Commission also noted Four Seasons' program plans for Sunday, consisting of specials in all the performing arts - theatre, variety, vocal or instrumental music, dance and ballet - to be implemented as developments in budget forecasts allow, as specified in the commitment noted above. Four Seasons also stated that it plans to help revitalize the Quebec recording industry by broadcasting French-language video music featuring Quebec singing stars, as part of its magazine for young people to be broadcast on Saturdays.

In this regard, the Commission wishes to emphasize the efforts of Four Seasons in terms of the quantity and diversity of the programs it intends to schedule for children and youth. Two programs aimed specifically at children will be broadcast, including one to be shown Monday through Friday from 4:00 to 4:30 p.m. and four programs intended for teenagers which will be aired Saturday afternoon.

Market Capacity

Before deciding whether it was realistic and feasible to authorize the operation of new television stations in Montreal and Quebec City, the Commission carefully examined the status of these markets, their growth potential, the advertising revenues available (especially for the electronic media), the financial situation of broadcasting undertakings currently established in these markets, and the possible impact of such authorizatin on them and on the other television stations in peripheral markets. These are the primary criteria by which the Commission determines, for each market, the best possible local service.

After a careful study of the results of the analyses submitted by the applicants, the various interventions received and the discussions at the public hearing, the Commission concluded that the Montreal advertising market is sufficiently strong to justify the establishment of a new French-language television station and that the financial situation of the existing broadcasting undertakings in that city is sufficiently sound that neither their existence nor the quality of their service would be endangered.

Moreover, Montreal's two private television stations, CFTM-TV and CFCF-TV occupy a largely dominant position, capturing approximately 60% of all private television revenues in Quebec. The French-language station, CFTM-TV, enjoys a dominant position even on the national level, as the Canadian television station with the highest advertising and total revenues, with the largest viewing share and, historically, with one of the highest levels of profitability and rates of return on investment for a broadcasting undertaking in Canada. As for the English-language station CFCF-TV which is owned by CFCF Inc., and which enjoys a very strong financial position, the Commission notes that the rate of growth of its revenues has been higher than the provincial and Canadian averages from 1979 to 1984. In addition, the Commission noted the statements by the applicant at the hearing indicating that CFCF-TV has nearly doubled its advertising sales during the last four years.

The Commission also took into consideration the marginal impact of Radio-Québec on advertising revenues, which, according to its own current and projected figures, amounts to only a few percentage points of Quebec's total television advertising market.

Nevertheless, the impact on the viability of existing television and radio stations by the establishment at this time of a new television station in Quebec City and, at some time in the future, in other Quebec markets is of great concern to the Commission, in view of the difficulty in predicting the actual impact of a new service on the local and national advertising revenues of the Quebec City stations and on national revenues in the other markets. It was, in fact, this issue that prompted most of the interventions opposing the current applications, in particular those by licensees of television broadcasting undertakings serving these regions.

The data available to the Commission concerning private television stations in the province of Quebec indicate that, from 1979 to 1984, revenues from the sale of national advertising amounted to twice the revenues of local advertising, or a 2:1 ratio for major-market stations such as CFTM-TV and CFCF-TV Montreal and CFCM-TV Quebec City. Most of the regional stations, however, do not follow this trend and the ratio is closer to 1:1. This indicates that these stations most rely more on local advertising and that any reduction in the volume of national advertising would require a corresponding increase in the volume of local advertising, for which there is often less demand, given the more limited resources of the regional markets.

In their projections regarding the proposed operation of a new television station in Quebec City, Four Seasons and TSL et al forecast nearly the same levels of revenue: approximately $2.6 million in local advertising for the first year of operation and approximately $4 million in national advertising for the same period. In the Commission's view, the Quebec City market does not, at this time, have the capacity to withstand the withdrawal of advertising revenues of such magnitude. In terms of constant dollars, local advertising revenues derived by private television stations in the Quebec City market declined between 1979 and 1984 while the returns from national advertising remained stable. Quebec City radio stations also sustained a substantial decrease in local advertising revenue from 1979 to 1982. Although 1983 marked a return to the 1979 level for local revenues, the number of stations sharing this advertising market rose from five to eight during this period, and only three of these have made a profit over the past three years. Finally, according to data available to the Commission, negative demographic growth is forecast for the Quebec City market from 1986 to the year 2000, and this could exacerbate the present situation.

For these reasons the Commission has decided that it would not be appropriate, in the current circumstances, to authorize Four Seasons to become established in Quebec City. However, in order to enable the people of Quebec to enjoy a third French-language television service while minimizing the impact on local stations, the Commission would be prepared to consider an application from Four Seasons to operate a retransmitter of the Montreal station in Quebec City, without seeking local advertising there, or an application from any other interested party that, in agreement with Four Seasons, wished to operate a twin-stick antenna or a rebroadcaster. The Commission assumes that, in the meantime the third service will be available in Quebec City via cable.

The Commission also considered the possible consequences for adjacent stations should a new television station be established. While it appears that the former would be affected only in terms of their national advertising sales, the Commission considers that an appreciable drop in these revenues could be harmful to more than one of them, in view of the low rate of profitability of a number of these stations. In the Commission's view, by their multiplier effect, these consequences could be especially severe on licensees operating in more than one market.

With regard to secondary Quebec markets, the Commission anticipates that the new service could be made available by cable or by establishing a relay transmitter to be operated by an existing station. In the case of a twin-stick or rebroadcaster, the Commission will examine each case on its own merits, taking into account the particular circumstances of each market.

Consequently, the Commission hereby announces that it is prepared to receive applications that will permit the extension of the new television service by the various means suggested above.

Concentration of Ownership

The application by Four Seasons clearly raises the issue of the concentration of ownership of broadcasting undertakings in the same market since, as mentioned above, CFCF Inc. will control in Montreal two television stations (one English-language and one French-language), two commercial radio stations, a short-wave station, and a cable television company. CFCF Inc.'s ownership of the independent production company Champlain Productions Inc. also raises the issue of the vertical integration of production and broadcasting operations.

The Commission's concerns regarding concentration of ownership have been expressed in previous decisions, such as Decision CRTC 72-316 dated 24 November 1972, in which the Commission stated:

 The Commission has frequently expressed the view that while the Canadian broadcasting system will of necessity contain a certain number of large units, there must be maintained within it a degree of diversity of ownership sufficient to enable the objectives of the Broadcasting Act, particularly those set out in Section 3(d), to be achieved.

Section 3(d) specifies, among other things, that "the programming provided by the Canadian broadcasting system should be varied and comprehensive and should provide reasonable, balanced opportunity for the expression of differing views on matters of public concern".

Also, in Decision CRTC 81-911 dated 29 December 1981, in which it authorized the transfer of control of CF Cable TV Inc. to CFCF Inc., the Commission stated that while it must establish a general policy applicable on a nation-wide basis, policies regarding ownership had not been set out in detail in the regulations, specifically so that the Commission could remain flexible enough to assess each case on its own merits and to study each application in the specific context of the region in question.

The problems that generally arise from concentration of ownership relate to the lack of diversity of information and to the excessive control that could be exercised over the various sources of information. Usually, these problems are more likely to arise in markets in which the sources of information are relatively limited. This situation does not in fact exist in Montreal, where there is a unique abundance and diversity of media in both the French and English languages. The metropolitan Montreal area has 23 radio stations, three French-language and two English-language conventional television services, American televison networks whose signals are directly receivable, as well as all the additional signals available via cable. Montreal also has three French-language and one English-language daily newspapers, and numerous periodicals in both languages.

The Commission also considers that it is important to put into perspective the audience shares that would be claimed by the Montreal broadcasting undertakings under the control of CFCF Inc. According to surveys carried out in the autumn of 1984, the viewing and listening share of CFCF-TV CFQR-FM and CFCF was 13% of the Montreal market. If one adds the share of viewing hours that Four Seasons estimates for its new television station, the audience share of CFCF Inc. will still represent less than 20% of the total. Even with a 20% audience share, CFCF Inc. will achieve a lower share than that of other multiple licensees in other Canadian markets.

Consideration most also be given to the fact that despite the tendency of a portion of the francophone audience to watch certain kinds of English-language programs, whether on Canadian or American networks, nevertheless, the vast majority of the audience for the new station would be distinctly different culturally and linguistically from that of CFCF-TV.

The Commission also considered the assurances given by Four Seasons at the hearing regarding its concern for ensuring diversity even within its own management structures. The applicant stated that [translation] "each undertaking in the CF group is a separate operation, with its own clearly identified objectives ... the major functions - programming, production, promotion and sales - come under the direction of each station". ln connection more specifically with CFCF-TV and the new French-language television station, the applicant stressed that there would be two directors, of programming and that [translation] "in terms of programming, there is not and there will not be any relationship between CFCF and the Four Seasons Network ... Despite the fact that the Four Seasons Network and CFCF will have common shareholders, there is no doubt that this will in no way limit access to the airwaves nor will it affect the news on CFCF or on the Four Seasons Network". The applicant also stated that the newsroom staff of Four Seasons would be clearly separate from that of CFCF-TV.

The Commission also noted the assurance given by Four Seasons that Champlain Productions Inc., the production company of CFCF Inc., [translation] "will not act as an independent producer of programs for the Four Seasons Network", in order to avoid problems related to the vertical integration of production and broadcasting operations, which generally tend to limit the access of independent producers to the airwaves. The applicant did, however, state that the facilities of Champlain Productions Inc. would be available to independent producers should they wish to use them but that "in no event would they be forced to make use of our production facilities".

At the hearing Four Seasons also explained the advantages to be derived from co-operation between CFCF Inc. and Four Seasons in terms of establishing the new station. According to the applicant, the mere fact of being able to share the facilities of an existing broadcaster represents a very appreciable saving. The new station will be able to use production and post-production equipment, to exchange film footage and information between the news services and to share existing microwave services to Ottawa and Quebec City as well as the editing bureaux of CFCF-TV in those two cities. CFCF Inc. has also made a commitment to provide Four Seasons with administrative and management services without levying management fees during the first five years of operation, in order to assist the new station to set up and begin operation.

In assessing the possible impact of an increased concentration of media ownership in a given market, the determining factor in the Commission's deliberations rests with the advantages that will accrue to the public in general and to the broadcasting system in particular. On the basis of the Commission's evaluation, it is clear that the public interest will best be served by granting a licence to Four Seasons and that the resulting advantages for French-language television in Quebec outweigh the possible disadvantages.

Taking into account all of the foregoing, the Commission considers that the granting of this licence to Four Seasons will result in the establishment in Montreal of a stronger corporate body which, in the relatively near and distant future, will be able to produce additional financial resources should the need arise. The Commission also anticipates that such a strengthened Quebec undertaking will be capable of withstanding the intense competition that it will encounter as it establishes itself so that it will be able to develop in an increasingly competitive environment.

Other Matters

In its call for applications, the Commission mentioned that a portion of the French-language audience in Montreal had, in recent years, shifted toward English-language viewing. According to the additional information it received at the hearing and its analysis of recent surveys, the Commission notes that this phenomenon may have been caused in part by external and situational factors, that the audience erosion trend stopped in the autumn of 1984, and that the share of viewing hours for French-language stations is now back to what it was in 1979. The Commission is confident that the addition of a new French-language service in Montreal, by increasing the availability of services in that language as opposed to English-language signals, could contribute to ensuring the audience stability of French-language television stations.

The Commission also notes that Four Seasons was not able to formulate specific plans at the hearing with respect to closed captioning in answer to the intervention by the Quebec Centre for the Hearing Impaired. The applicant stated that it was conducting exploratory studies but that no final decision had been taken or funds allocated for this purpose. The Commission is greatly concerned by this situation and expects the licensee to inform the Commission of its specific plans in this regard within six months of the date of this decision.

It is a condition of licence that construction of the station be completed and that it be in operation within twelve months of the date of this decision or such further period as the Commission may, upon receipt of a request for extension before the expiry of the said twelve months, deem appropriate under the circumstances.

Fernand Bélisle Secretary General

Dissenting opinion of Mrs. Monique Coupal, Member of the Commission

Although I believe that the application by Four Seasons Television Network Inc. is better than the proposal submitted by Télévision Saint-Laurent Inc., I would not grant it a licence on the grounds of the issue of concentration of ownership in the Montreal market. For this reason, I would not grant any licence for a television station in Montreal. In my opinion, it is not justifiable in the public interest that a company or individual hold two television licences in the same market, except in very rare instances to ensure the extension or the maintenance of a service in a particular market. I feel that concentration of ownership confers unfair advantage on an individual or company and limits the diversity of viewpoints.

Ottawa, 6 September 1985

ERRATUM

PLEASE NOTE THAT PAGE 10 OF DECISION 85-733 UNDER SECTION A) PROJECTIONS SHOULD READ AS FOLLOWS: (corrections underlined)

a) Projections

The Commission has analysed the projections of both applicants with respect to the viewing shares of the Montreal and Quebec City audiences.

In Montreal, TSL et al projected a share of 11% of the total audience in the first year, rising to 29% of the francophone audience or 22% of the total audience by the seventh year. Four Seasons, on the other hand, projected shares of 8% of the total audience in the first year and 12% of the same audience by the fifth year. The Commission notes that the more optimistic projections of TSL et al are based on an analysis of the growth of television stations in other major markets such as Toronto and Vancouver, while Four Seasons' projections were based on a special study conducted in January 1985 of the viewing habits of Francophones and Anglophones in Montreal and Quebec City and on the least optimistic scenario of various other studies conducted for Four Seasons. The Commission also noted that, in the fall of 1984, the largest total audience share obtained by a Montreal television station was 26%.

Fernand Bélisle Secretary General