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Ottawa, 8 May 1986
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Decision CRTC 86-433
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FOURTH ENGLISH-LANGUAGE TELEVISION SERVICE IN SOUTHERN MANITOBA
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Jack R. London, on behalf of a company to be incorporated under the name Manitoba Public Television Winnipeg and area, Manitoba - 852084300
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Table of Contents
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The Applications
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a) Jack London
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b) Western Broadcasters
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The Market
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The Interventions
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Conclusion
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Following a Public Hearing in Winnipeg on 3 December 1985, for the reasons outlined in this decision, the Commission approves an application by Western Manitoba Broadcasters Limited (Western Broadcasters) for a licence to operate an English-language television broadcasting transmitting undertaking to serve Portage La Prairie/Winnipeg.
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At the hearing, the Commission also considered an application by Jack R. London, on behalf of a company to be incorporated under the name Manitoba Public Television (Jack London), for a licence to operate a non-profit, community-based English-language educational/informational television service in Winnipeg. This application is denied.
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Based on the Commission's assessment of a number of factors, including the business experience and financial resources of Western Broadcasters, the size of the market to be served, the potential for growth in the market, and evidence presented at the hearing with respect to the potential impact of a fourth English-language television service on Winnipeg and other area broadcasters serving Winnipeg and surrounding areas, the Commission is convinced both that there is a demand for a fourth television service in Manitoba and that the existing market is sufficient to support the ongoing viability of the commercial service proposed by Western Broadcasters without causing undue harm to existing broadcasters.
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Moreover, based on the characteristics of the proposed service, in particular the commitments for regional and rural programming and the commitments in support of independent production in Manitoba, the Commission is satisfied that the service proposed by Western Broadcasters best responds to the needs and interests of the residents of southern Manitoba.
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Accordingly, the Commission will issue a licence to Western Broadcasters, expiring 30 September 1990, subject to the conditions of licence specified in this decision and in the licence to be issued. The station will operate on channel 13 with an effective radiated power of 287,000 watts from a transmitter site located three miles south of Elie, Manitoba, mid-way between Portage la Prairie and Winnipeg.
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It is a condition of licence that construction of the station be completed and that it be in operation within 18 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 18 months, deem appropriate under the circumstances.
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The Applications
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On 16 April 1985 (Public Notice CRTC 1985-78), the Commission announced that it had received an application for a licence to carry on a new privately-owned English-language television broadcasting undertaking to serve the Portage La Prairie/ Winnipeg region of southern Manitoba that would make use of the last VHF allocation for Winnipeg.
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In accordance with its usual procedures, the Commission invited other interested parties to submit applications. The Commission emphasized in its notice that, in assessing the possible licensing of an additional English-language television station, it would want to be assured of the financial viability of prospective applicants and the contribution the programming would make in the market to be served. As well, the Commission required evidence of the impact of the proposed service on existing broadcasters.
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a) Jack London
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In response to this notice, an application for a licence to carry on a television transmitting undertaking at Winnipeg on channel 13 with an effective radiated power of 154,000 watts was submitted by Jack London. This application proposed a service combining educational, ethnic and community-access programming, to be funded and produced by the community at large, relying on outside studio facilities and equipment.
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It proposed a public corporation without share capital. Revenue and expense projections were provided for only the first year. The applicant stated that government funding, corporate donations, membership dues and program brokerage fees would cover operating expenditures. However, when questioned about these sources of income at the hearing, the applicant was unable to supply any firm indication that these funds would be forthcoming. Neither did the application provide sufficient information about programming costs or sources. The content was described generally rather than identified in terms of specific and firm proposals.
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On the basis of the application as filed, the Commission considers that the applicant did not provide it with sufficiently detailed financial and programming information to permit an adequate assessment of the feasibility of the proposed service, and accordingly, irrespective of the technically competitive application by Western Broadcasters, the Commission has denied the application.
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The Commission wishes to acknowledge, however, the merits of the programming concept proposed in the Jack London application, which is predicated on a high level of community participation including access by ethic and native community groups.
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b) Western Broadcasters
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Western Broadcasters was established in 1948 and is controlled 96.7% by Manalta Investments Ltd. which, in turn, is controlled 100% by Mr. A. Stuart Craig.
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Western Broadcasters has operated CKX-TV Brandon, a CBC affiliate, since 1955. CKX-TV has rebroadcasters at Foxwarren, Melita and McCreary, Manitoba. Radio stations CKX and CKX-FM Brandon are also licensed to Western Broadcasters.
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Relay Communications Ltd. (Relay), which operates CKYB-TV Brandon, CKYB-TV-1 McCreary and CKYD-TV Dauphin, is owned jointly by Western Broadcasters and by Moffat Communications Limited (Moffat) under an agreement whereby CTV service has been extended to the western part of Manitoba in return for program subsidies to Western Broadcasters and the opportunity for it to sell local advertising availabilities on CKYB-TV Brandon and its rebroadcasters. The Commission notes that, under the terms of the Relay agreement between Western and Moffat, these obligations would cease should any program service of Western be "licensed to be broadcast in the City of Winnipeg by over-the-air transmission".
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CKND-TV-2, the CanWest Broadcasting Ltd. (CanWest) rebroadcaster at Minnedosa, has also committed not to sell local advertising in the Brandon market and its Winnipeg-specific commercial and promotional spots are made available to Western Broadcasters (see Decision CRTC 81-784).
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In its written application, Western Broadcasters estimated capital expenditures at $2.9 million and first-year expenses at $4.8 million. It has submitted income projections of $140,000 from program sales, $800,000 from local advertising and $3.1 million from national advertising in the first year of operation. Necessary financing will be obtained from bank loans ($4.1 million), cash reserves of $900,000 and unspecified funds from Western Broadcasters' share of the assets of Relay.
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Western Broadcasters proposed a television service essentially regional and rural in its orientation. As described at the hearing by Mr. Craig, President of Western Broadcasters:
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We are [applying to provide] the Portage La Prairie area [with] ... a service which is alternative, basically rural and agricultural, and regional as well ...
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The main studios for the station will be located in Portage La Prairie. A news bureau will be located in Winnipeg ... [These] will be linked to the existing facilities of CKX-TV in Brandon and Dauphin, forming a Manitoba television network ...
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The new station will be distinctively different from any of the existing stations in the market. [It] will have its own personality, will be intensively local, regional, neighbourly ... We have designed a program schedule for Portage La Prairie and surrounding area with a special makeup of urban - including Winnipeg - and rural audience.
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Western Broadcasters' proposal is based on a weekly program schedule of 135 hours of unduplicated programming, including 37 hours of local production (25 hours 39 minutes per week will be produced in Portage La Prairie complemented by 11 hours 21 minutes of programming produced at CKX-TV Brandon), and an additional 36 hours 30 minutes of new Canadian programming. The station would be receivable over-the-air in Winnipeg and would be in operation by September 1987.
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Western Broadcasters proposes a unique program concept which it calls the "Prairie Pulse Network" incorporating:
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a reversible video system so that programs can be fed both ways from four major points in Manitoba. This would result in local, live input, not only from Portage La Prairie and Brandon, but Winnipeg and Dauphin ... To reflect the views, interests and lifestyles of people living in these areas of Manitoba ... it is essential to create two-way dialogue.
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Regional news will be gathered by nine electronic news gathering units. There will be 27 full-time news staff located in Portage La Prairie and some 18 additional people to be assigned to cover stories in Winnipeg, Brandon and Dauphin for input to the "Prairie Pulse News".
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In addition, Western Broadcasters has undertaken to provide exposure for Manitoba talent on such programs as The Country Video Show, Student Concert Series and Night Time and to develop other innovative program concepts such as Newskids.
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The applicant has budgeted a total of $1.75 million for independent production over five years. Of the first year's allocation of $300,000, $50,000 is allocated to a wildlife series entitled Manitoba Habitat, a further $50,000 will be spent on The Country Video Show and a minimum of $100,000 will be a direct contribution to drama production, to be possibly augmented by additional funding from Telefilm Canada and Film Manitoba.
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Out of a total first year programming budget of $2.76 million, $1.35 million has been allocated to program purchases. Western Broadcasters explained that it had agreed to pool some of its purchasing dollars with the independent Hamilton station CHCH-TV in order to buy some competitive American programming that would not be duplicated on other Winnipeg television stations.
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The Market
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The province of Manitoba is currently served by English- and French-language owned-and-operated television stations of the CBC; CKX-TV Brandon, a CBC affiliate licensed to Western; CKY-TV, the Winnipeg CTV affiliate which is licensed to Moffat; CKND-TV, an independent Winnipeg television service licensed to CanWest; and their rebroadcasters.
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At the hearing, Western Broadcasters filed two independent studies it had commissioned to document its claims that the combined Winnipeg/Portage La Prairie market could sustain a fourth English-language television service, and that licensing of its proposal will result in an increase in the total advertising revenue for this market. It claims that the geographical market area accessible by its proposed signal is equivalent to 79% of the population of Manitoba; that the city of Winnipeg alone contains 60% of the province's population; and, in addition, its transmitter will serve 130 other communities in southern Manitoba consisting of some 200,000 persons residing outside the city of Winnipeg.
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Western Broadcasters defined the proposed combined Portage La Prairie/ Winnipeg coverage area as the fifth largest market in Canada and stated its expectation to obtain a significant portion of the national selective and local advertising revenue of that combined rural and urban market.
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The applicant has committed not to solicit local advertising in Winnipeg and proposed that it should retain market exclusivity with respect to local commercial revenue in Brandon, Dauphin and McCreary. It expected, however, to compete with CKND-TV, CKY-TV and the CBC for selective national advertising revenues in Winnipeg.
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The Interventions
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The existing private television operators in Winnipeg, CKY-TV and CKND-TV, filed interventions against the proposal, questioning the validity of some of the economic indicators and marketing assumptions made by Western Broadcasters, in particular its premise that it could achieve a 9.1% share of the selective national advertising revenue in the Winnipeg market. They also questioned the applicant's assumption that the total advertising revenue base would expand with the entry of a new station into the Winnipeg market.
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Winnipeg Videon Inc. (Winnipeg Videon) submitted an intervention against both applications, noting the present capacity of its cable system, and requesting an exemption from priority carriage of either service on channel 13 "until such time as the cable plant is rebuilt and can accommodate services on unimpaired channels in the mid-band".
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In response to the Winnipeg Videon intervention, Western Broadcasters proposed that the Commission allow Winnipeg cable operators to be permitted on an experimental basis, for a period of time, to carry its over-the-air channel 13 signal on cable channel 13 to minimize subscriber disruption. Western Broadcasters' proposal was subject to the use of phase-locking techniques to minimize interference and to the duplication of cable channel 13 on the mid-band as soon as additional cable channels are available.
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While the Commission acknowledges that there may be some merit in the suggestion by Western Broadcasters, it can only consider such a proposal in the context of a formal application by the Winnipeg cable operators.
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Portage-Delta Broadcasting Company Ltd., licensee of the local Portage La Prairie radio station CFRY, also filed an intervention opposing the application, on the grounds that the new television station's local advertising revenue would be derived at its expense.
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The Commission has reviewed all of the points raised in this intervention and has concluded that this well-established Portage La Prairie radio station should not be adversely affected by the introduction of this new television service.
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In addition, the Commission notes the strong support for the type of alternative programming proposed by Western Broadcasters as expressed in the numerous letters of endorsement submitted in support of its application from municipal representatives of dozens of small towns in southern Manitoba and from numerous businesses in the Portage La Prairie area and appearing interventions by the Cities and Chambers of Commerce of Brandon and Dauphin.
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Conclusion
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The Commission has examined carefully the market's growth potential and the advertising revenue available to the electronic media as well as the financial situation of the existing broadcasting undertakings. After a review of the data developed at the hearing, together with an evaluation of financial information available to it, the Commission is of the view that the Winnipeg/Portage La Prairie market has the capacity to support an additional television service projecting modest revenues, as proposed by Western Broadcasters.
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The Commission is convinced both CKY-TV and CKND-TV will be able to withstand the introduction of the new station. In particular, the Commission notes the healthy rate of profitability of these two existing private television stations. Furthermore, the Commission expects Western Broadcasters to abide by its commitment to restrict solicitation of local advertising to communities outside Winnipeg.
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The Commission is also satisfied that the applicant's proposed financing and revenue and operating projections are sound, and that the regional and rural programming proposals submitted by Western Broadcasters have considerable merit.
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The Commission has considered the commitments made by Western Broadcasters, as expressed in its application and as developed at the hearing, with respect to the regional and rural orientation of its program proposals. In order to ensure that southern Manitoba receives a complementary, non-centralized programming service that is responsive to both rural and urban viewers, it is a condition of this licence that Western Broadcasters adhere to the regional and agricultural orientation it has proposed throughout its licence term, through the implementation of the Prairie Pulse Network, providing 24 hours per week of regional news, and other rural programs such as Agri-Views and Made in Manitoba which have been described in detail in the application, or through programs closely resembling them in orientation, character and content.
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As proposed by the applicant, it is a further condition of licence that Western Broadcasters contribute a minimum of $500,000 to Manitoba drama productions over five years. The Commission expects that, in total, the licensee will contribute $1.75 million to independent program production over the first five years of operation.
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Since the licence herein authorized to Western Broadcasters is for the last available VHF frequency in the Winnipeg/Portage La Prairie market, the Commission notes that any new television service could only be accommodated on a UHF channel.
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Although denying the Jack London application, for the reasons stated above, the Commission commends the applicant on the goals it has sought to achieve with its innovative proposal. The Commission strongly supports the concept of wide ethnic and community involvement in programming embodied in the Jack London proposal and encourages the applicant to continue to develop its programming ideas and, as discussed at the hearing, to explore all possible means of incorporating its programming concept into the Manitoba broadcasting system.
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Fernand Bélisle
Secretary General
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