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Decision
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Ottawa, 1 May 1987
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Decision CRTC 87-332
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Canadian Broadcasting Corporation, Blenheim/Chatham, Kitchener, London, Sarnia, Simcoe and Wingham, Ontario - 861571800 - 861575900 - 861576700 - 861574200 - 861573400 - 861572600
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Following a Public Hearing in the National Capital Region on 1 December 1986, the Commission approves applications by the Canadian Broadcasting Corporation for licences to carry on English-language television broadcasting transmitting undertakings at Blenheim/Chatham, Kitchener, London, Sarnia, and Wingham, Ontario to rebroadcast the programs of CBLT Toronto, Ontario.
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The Commission will issue licences expiring 31 August 1988, subject to the conditions specified in this decision and in the licences to be issued. This term will enable the Commission to consider the renewal of these licences at the same time as that of CBLT.
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At the same hearing, the Commission heard applications by CFPL Broadcasting Limited and CKNX Broadcasting Limited to amend, respectively, the broadcasting licences for CFPL-TV London and for CKNX-TV Wingham by deleting the conditions of licence which require CFPL-TV and CKNX-TV to operate as affiliates of the English-language television network of the CBC. The Commission approved the disaffiliation of these stations effective 31 August 1988, as outlined in Decision CRTC 87-331 of today's date.
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The Corporation's new rebroadcasting transmitters are designed to provide CBC English-language television programming in areas presently served by CFPL-TV London and CKNX-TV Wingham, in order to ensure that residents of those areas continue to have access to the national television broadcasting service following disaffiliation from the CBC network by the London and Wingham stations.
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UHF Transmission
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CFPL-TV London and CKNX-TV Wingham are licensed to operate on the VHF channels 10 and 8, respectively. The CBC, through its affiliation with CFPL-TV and CKNX-TV, is presently available to area viewers on these two VHF channels. With their disaffiliation, CFPL-TV and CKNX-TV will retain the channels licensed to them. As a result, it has been necessary for the CBC to find alternative channels on which to continue to distribute its service. As no other VHF channels are available in the London-Wingham area, the CBC applied to operate its new rebroadcasters on UHF channels. The CBC's proposal called for six UHF rebroadcasters to cover the same area as CFPL-TV and CKNX-TV in order to compensate for the reduced range of UHF transmission.
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While indicating its preference to remain on VHF "which the audience associates with the CBC", the Corporation acknowledged that there were mitigating circumstances in moving to UHF in the London area. The CBC noted that viewers in and around London are accustomed to tuning to UHF channels since a number of UHF signals, including the CBC French service and TVOntario, are already available over-the-air in that area.
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With respect to the Wingham area, the Corporation has budgeted promotional funds for an information campaign to acquaint viewers with the availability of the CBC on the UHF band and to provide details as to the tuning to and reception of the new service.
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In addition to being available over-the-air, the CBC's new UHF signals will also be available on a priority carriage basis on cable systems in the London/Wingham area. To this effect, the Commission notes that cable penetration in the London and Wingham markets is 69% and 52%, respectively.
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The Capital Lease Arrangements
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At the hearing, the Corporation informed the Commission that it had applied to the Treasury Board for special funding for its six-transmitter proposal over and above the standard annual capital budget, but that its application had been denied. As a result, the Corporation proposed that it would fund the establishment of its transmitters by means of capital leases. The Corporation indicated that the capital leases would be for five years with annual payments of 26% of the value of the assets to be leased. At the end of the term, the Corporation would have an option to purchase the facilities at their market value to be determined at that time. Based on its financial projections, the Corporation forecasts that its proposed facilities will be self-supporting "and will not require resources from any other part of the Corporation."
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Advertising Revenues
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Under the CBC's proposal, the new rebroadcasters, plus CBLX-TV Wiarton, Ontario (licensed to the CBC in Decision CRTC 84-429 dated 22 May 1984) would provide the CBLT programming service via a special feed from Toronto which would substitute advertising sold specifically on behalf of the rebroadcasters in place of that carried over CBLT. The CBC has projected that such advertising would generate $5 million in the first year of operation and that this figure would increase by 10% in each subsequent year. According to the CBC, the estimated new revenues and the savings in affiliate payments "are sufficient to finance the increased costs [associated with its proposal], as well as to amortize the required capital investment over an estimated 5-year licence period."
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At the hearing, the Corporation informed the Commission that it expected that 10% of the revenue generated under its proposal would be derived from the sale of local advertising. The Commission notes, however, that the CBC does not intend to initiate local programming for the area to be covered by its new transmitters. Instead, the Corporation indicated that CBLT will develop a broader response to the region of southwestern Ontario, especially in its news and public affairs programming.
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As expressed in Decision CRTC 75-522 and reiterated by the Commission in a number of subsequent decisions, including Decisions CRTC 77-83, 82-866 and 79-422:
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The Commission believes that the establishment of broadcasting services in a community should, wherever possible, be a reciprocal matter. Where an applicant proposes to seek local commercial revenue from a community, he should also be prepared to provide some service to the community in the way of locally-produced, locally-oriented programming.
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The CBC's intention to sell local advertising in the London/Wingham market to be aired on the new transmitters would conflict with this policy, which is primarily intended to encourage broadcasters to provide local service in the areas they are licensed to serve.
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In presenting its application to disaffiliate at the same public hearing, CFPL Broadcasting Limited requested the Commission to impose a condition of licence restricting the Corporation from soliciting local advertisements.
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Subsection 17(2) of the Broadcasting Act provides for consultation between the CRTC's Executive Committee and the Corporation with regard to any condition to be attached to a licence of the CBC. Following consultation, the Commission acknowledges that there exists a difference of opinion between itself and the Corporation with respect to the imposition of such a condition. The CBC argued that since it had not initiated the disaffiliation, it did not feel that it should have to cross-subsidize the cost of the new rebroadcasting facilities with revenues derived from other CBC operations.
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Nevertheless, after considering that the CBC projects total revenues of $5 million per year, that certain savings will result from disaffiliation, and that the CBC does not intend to offer local programming, the Commission is not convinced that the $500,000 per year which the Corporation projects to derive from local advertising is essential for the implementation and operation of the CBC's proposals to set up rebroadcasters in the approved locations.
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Accordingly, by majority decision, the Commission attaches the following condition of licence in respect of local advertising to each of the five licences approved in this decision:
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It is a condition of licence that the CBC not solicit any advertisements from the area to be served by the Blenheim/ Chatham, Kitchener, London, Sarnia, Wingham, Ontario transmitters.
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The Commission is satisfied that the imposition of this condition will not jeopardize the viability of the new undertakings. The Commission also notes that the proposed condition of licence is identical to the one imposed for broadcast policy reasons on CITY-TV in Decision CRTC 86-216.
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The Corporation may wish to apply to delete this condition of licence in the event that the above scenario with respect to the CBC's overall savings and revenues does not materialize to the extent projected by the Corporation, particularly should revenues be insufficient to pay for the Corporation's proposed facilities.
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Technical Description
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The technical parameters of the CBC's applications are set out in the Appendix to this decision.
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The Commission notes that, in the case of the Blenheim/Chatham and Sarnia applications, the Department of Communications had stated that technical acceptability was conditional upon the CBC submitting certain technical amendments. Consequently, the Commission's approval will only take effect on the receipt of notice from the Department of Communications that the above-noted applications are technically acceptable.
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At the hearing, the Commission questioned the CBC as to whether the applications as presented provided for the most effective use of available broadcasting frequencies. In the applications, the Corporation had proposed to provide its service to Kitchener and Simcoe by constructing a transmitter in each of these locations. However, at the hearing, the Corporation indicated its intention to amend its proposal so as to serve Kitchener and Simcoe by means of a single transmitter. For this reason, the Commission denies the Corporation's application to carry on a television transmitting undertaking in Simcoe.
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The CBC's six-transmitter proposal also raised concerns about the quality of the signal in the Blenheim/ Chatham area and the overall efficiency of frequency utilization. In response to these concerns, the CBC offered to submit additional technical amendments to its Sarnia, Blenheim/Chatham and London licences. These amendments and the Corporation's application to amend its proposal for Kitchener are the subject of a public notice dated today.
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Implementation Date
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At the hearing, the Corporation made the following statement with respect to the date it expects to begin operating its new transmitters:
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We have developed a plan which shows an on-air date from the CRTC decision of 14 months. The ability to shorten that will depend upon us undertaking certain in-house work prior to the CRTC decision and we could shorten it to eleven and a half or twelve months if we were to do that.
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The Commission considers it to be in the public interest that the CBC be in a position to operate its new transmitters at the earliest date possible. The Commission therefore expects the Corporation to begin operating its new transmitters no later than 31 August 1988.
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Fernand Bélisle
Secretary General
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Dissenting Opinion:
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Commissioner McRae disagrees with the attachment of the condition of licence which prohibits the CBC from soliciting advertising.
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Appendix
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Location Channel Effective radiated power
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a) Applications Approved
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1. London 69C 1,000,000 watts
2. Wingham 45C 828,000 watts
3. Blenheim/Chatham 16B 2,000 watts
4. Kitchener 56B 15,100 watts
5. Sarnia 17B 10,100 watts
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The London and Wingham transmitters
will rebroadcast the CBLT feed by
microwave from Toronto. The
Blenheim/Chatham, Kitchener and
Sarnia transmitters will rebroadcast
the programs of CBLT received over-
the-air via the transmitter at
London.
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b) Application Denied
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6. Simcoe 67B 26,000 watts
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