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Decision
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Ottawa, 27 January 1987
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Decision CRTC 87-62
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APPLICATIONS FOR AUTHORITY TO TRANSFER EFFECTIVE CONTROL OF TÉLÉ-MÉTROPOLE INC. TO LE GROUPE VIDÉOTRON LTÉE, Montreal, Quebec - 862122900 - 862123700
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Table of Contents
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PARTIES TO THE TRANSACTION
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OWNERSHIP POLICY CONSIDERATIONS
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PROPOSED BENEFITS
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a) Development of Programming
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b) Independent Producers
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c) French-language Vocal Music
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d) Children's Programming
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e) News and Public Affairs
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f) Canadian Content
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g) Upgrade of Facilities
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h) Dubbing
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i) Closed-captioning for the Hearing-Impaired
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j) CJPM-TV Chicoutimi
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INTERVENTIONS
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CONCLUSION
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Following a Public Hearing in Montreal on 1 December 1986, the Commission approves the applications for authority to transfer effective control of Télé-Métropole Inc. (Télé-Métropole), through the transfer of 1,434,318 Class A voting shares and 1,746,958 Class B shares from the Estate of J.A. DeSève, the J.A. DeSève Foundation and Ciné-Monde Inc. to le Groupe Vidéotron Ltée (Vidéotron).
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Vidéotron agreed to purchase 1,434,318 Class A voting shares, representing 99.6% of the voting rights in Télé-Métropole, as well as 1,746,958 Class B non-voting shares, at $40 per share, for a total of $127.2 million, together with the sum of $6.9 million, upon Commission approval of the transaction, as repayment by Vidéotron of debentures held by the Estate of J.A. DeSève and the J.A. DeSève Foundation. This would bring the total value of the transaction to $134.1 million. Vidéotron would thereby acquire 40.7% of the capital shares of Télé-Métropole in circulation.
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Vidéotron stated that financing would be provided fully by Vidéotron's shareholders, and that its commitments with respect to cable television would in no way be affected. The funds would come from two share issues: the first, offered to the public in September 1986, raised a net sum of $48 million; the second, for $50 million, would be made in early 1987 following Commission approval and, depending on market conditions, would seek public savings or private investment by interested institutions. The rest of the financing would come from a long-term bank loan of $40 million. The Commission notes, moreover, that for the immediate purposes of the transaction, Vidéotron has deposited in trust a bank letter of unconditional and irrevocable guarantee issued to the vendors for a sum of $140 million.
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PARTIES TO THE TRANSACTION
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Télé-Métropole is involved mainly in television broadcasting and related activities and is among the ten largest broadcasting companies in Canada.
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Télé-Métropole is the licensee of CFTM-TV Montreal, the largest and most important private Frenchlanguage television station in Quebec and one of the leading Canadian television stations in terms of local production with a weekly commitment of 61 hours. It also owns 100% of C.J.P.M.-T.V. Inc., licensee of CJPM-TV Chicoutimi and CJPM-TV-1 Chambord and a minority shareholder (4%) of Réseau Pathonic Inc. (previously Télé-Capitale Inc.) which is the licensee of CFCM-TV and CKMI-TV Quebec City, CFER-TV Rimouski and CFER-TV-2 Sept-Iles. Réseau Pathonic Inc. also owns 100% of Pathonic Communications Inc., licensee of CHEM-TV Trois-Rivières and CHLT-TV Sherbrooke, and is a minority shareholder (44.5%) of Télé-Inter Rives Ltée, licensee of CIMT-TV Rivière-du-Loup and its three rebroadcasting stations at Trois-Pistoles and Baie Saint-Paul, Quebec and Edmundston, New Brunswick. The proposed transaction covers all of the broadcasting interests held by Télé-Métropole.
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Télé-Métropole thus controls 100% of two (2) of the ten (10) TVA affiliates, including CFTM-TV, the network's flagship station, and has corporate ties to five (5) others, among them the network's most important stations.
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Other companies owned exclusively by Télé-Métropole and active in broadcasting-related fields include Paul L'Anglais Inc., responsible for national advertising sales for TVA affiliates, J.P.L. Productions Inc., which operates a large audio-visual production centre, and Sonolab Inc., which is primarily involved in the area of post-production and dubbing.
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Télé-Métropole's important provincial role is reflected not only by its corporate structure but also by the province-wide exposure and reach of the programming produced by CFTM-TV Montreal. In addition to producing most of the programming distributed by the TVA network and its ownership of 20% of the Réseau de Télévision TVA Inc.'s shares, Télé-Métropole makes CFMT-TV productions available to nine other TVA affiliates. On average, these productions represent the greater part of all programming broadcast by the other TVA affiliates throughout Quebec. CFTM-TV programming is available to almost 100% of Quebec's French-speaking listeners and constitutes the essence of the province's second largest French-language television service.
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Cable licensees throughout Canada also have access to CFTM-TV programming via the TCTV service which is distributed by the Canadian Communications Satellite Inc. (CANCOM) network.
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Télé-Métropole's financial position is excellent. Between 1981 and 1985 net earnings ranged from $13.8 million to $16.1 million. In 1986 Télé-Métropole showed a profit before non-recurring expenditures of $13.4 million and a net profit of $5.2 million on total revenues of $99.4 million.
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The vendors under the proposed transaction are the estate of J.A. DeSève, the J.A. DeSève Foundation and Ciné-Monde Inc. Pursuant to Decision CRTC 69-395 dated 11 December 1969, the executors of the Estate of J.A. DeSève control the board of directors of the licensee company, Télé-Métropole Inc. The J.A. DeSève Foundation is a charitable foundation established in 1966 and Ciné-Monde Inc. is a company currently involved in the provision of management services.
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The representatives of the vendors explained at the hearing that they wished to divest themselves of their interests in Télé-Métropole in order to ensure increased and steady revenues on a permanent basis for the Estate of J.A. DeSève and its various components. In this regard, it was noted that the Estate's source of annual revenue would triple or quadruple in size, and that it would acquire the autonomy and stability necessary to plan more effectively its donations to the charitable and other institutions that it supports.
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The purchaser, le Groupe Vidéotron ltée, operates cable companies in Canada, mainly through subsidiary companies, and in fact constitutes the second largest undertaking of its kind in Canada. One of its subsidiaries, Vidéotron Ltée, serves more than 700,000 subscriber households in Quebec, approximately 55% of the number of subscriber households in the province, through its companies in the regions of metropolitan Montreal, Quebec City, Sherbrooke, Mont-Laurier, Cap-de-la-Madeleine and Victoriaville. Vidéotron Ltée also controls QCTV Ltd., a cable company that serves some 120,000 subscribers in Alberta, nearly one-quarter of subscriber households in the province, through cable companies in Edmonton and 25 other municipalities.
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Vidéotron is also the main shareholder of Intervision-Montréal and Intervision-Québec which together own and operate head-ends shared by a number of companies and from which signals are retransmitted by an extended range microwave system.
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Vidéotron is also very much involved in the research and development of cable technology. Its studies and research have led, in particular, to the development of its Vidéoway system which is designed to give its subscribers access to a range of non-programming services such as data banks, downline loading of software, and electronic mail. The company also operates in the European cable market, specifically in France. It recently announced its acquisition, for approximately $5 million, of 10% of the capital stock of Vidéocommunication Téléservice, a subsidiary of the Compagnie Générale des Eaux, a large company in France which has concluded agreements with French cities representing three million potential subscriber households.
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In 1986 Vidéotron showed a net profit of $16.1 million on total revenues of $129.7 million. As of 31 August 1986 its assets totaled $241.8 million.
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Given the facts noted above, it is evident that the transaction under consideration is of major importance, especially when viewed in the context of Quebec, not only because of the financial scale of the transaction but also because of the importance and prominence of the principal parties, the possible impact and implications on the broadcasting system in general, and on French-language television in Quebec in particular.
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Ownership Policy Considerations
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As the Commission has stated in a number of recent decisions on applications for authority to transfer effective control of licensee companies, it is the sole responsibility of the applicant requesting such a transfer to demonstrate to the Commission that the application as filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature. The first test any applicant must meet is that the proposed transfer of ownership or control yield significant and unequivocal benefits to the communities served by the broadcasting undertakings, and to the Canadian broadcasting system as a whole, and that it be in the public interest.
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Once it is satisfied that the first test regarding the benefits of the proposed transaction has been met, the Commission must consider other aspects that could cause problems, such as, in the case of the present applications, issues of concentration of ownership and cross-ownership as a result of Vidéotron's ownership of both cable and broadcasting undertakings.
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In this regard, consistent with a number of recent decisions, the Commission repeats that concentration of ownership in broadcasting is not in and of itself a concern provided that there continues to be an effective degree of diversity of ownership and of programming sources to ensure that the objectives of the Broadcasting Act are met. Today's highly competitive communications environment in every market, as well as the high costs and risks involved, dictate that the ownership structure undoubtedly be composed of broadcasting holdings of various sizes, including larger entities with larger pools of resources, which are strong enough to compete with foreign competition and have the capacity to produce Canadian programming of competitive quality.
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Furthermore, the Commission must be satisfied that the purchaser has demonstrated that the advantages of any such concentration clearly outweigh the disadvantages, and that the transaction is in the public interest.
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In the case of applications involving media cross-ownership, the central concern is that in any given region there continues to be available a diversity of information, opinion and broadcast sources to provide the communities served with differing points of view on matters of public concern. This fundamental concern for diversity of information is an essential element of the structure and programming of the broadcasting system of any democratic society. Because of this, the onus is again on the purchaser to demonstrate that adequate safeguards have been put in place to protect that requisite diversity.
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In each case, however, even before the Commission is prepared to consider such specific concerns as the potential impact of concentration or media cross-ownership, it will first want to be satisfied that the purchaser has met the first test and that it has demonstrated that clear, significant and unequivocal benefits will accrue to the Canadian broadcasting system as a whole and to the communities served in particular.
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In light of these principles and the predominance Vidéotron would have in the provincial market following approval of this transaction as the largest broadcasting interest in Quebec in terms of its size, total revenues and assets, the onus is on Vidéotron to demonstrate to the Commission's satisfaction that this transaction would be in the public interest.
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Proposed Benefits
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Vidéotron stated in its application that it was pursuing two fundamental objectives:
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- to maintain a dynamic, original francophone television broadcasting system, in the context of increasing television services;
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- to make sure that Télé-Métropole continues to be a leader in programming and technology through innovative programming and the judicious use of the best human resources and the most modern production and broadcasting equipment.
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Vidéotron made a commitment to assume all the current responsibilities and commitments of Télé-Métropole and to maintain CFTM-TV's distinct character as a high-quality entertainment station. In addition, in order to ensure that the station remains on the leading edge and to improve the quality of its programming, Vidéotron intends to emphasize research and development in programming and audience appeal as well as in production and broadcasting technology. The importance that it attaches to research and development and to the levels of programming and its listening audience is reviewed in detail later in this decision. With respect to technology, Vidéotron is counting especially on close co-operation between its and Télé-Métropole's engineering departments.
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Vidéotron indicated it would divest itself as soon as possible of Télé-Métropole's oil holdings and to allocate this money, along with other money on deposit, to investments in the communications sector.
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Vidéotron expressed a willingness to allow Télé-Métropole to expand into foreign markets, particularly in France, in light of the expertise that Télé-Métropole has acquired and growing competition, and taking into account constantly increasing production costs.
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For the past number of years, Vidéotron has been trying to establish contacts in the European cable television environment. As mentioned previously, its efforts have led recently to the purchase of capital shares in a large French company already involved in broadcasting in France, as well as to its plan to become the licensee of a television company in that country. Vidéotron pointed out that, in view of the present movement toward privatization of certain television broadcasting undertakings in France, this is an opportune time for Télé-Métropole because of its expertise and recognized success in private television. Vidéotron stated that its objective would be to acquire enough capital shares in French broadcasting companies to be on their boards of directors and have a voice in making decisions that could have a positive effect on CFTM-TV in areas such as co-production, the sale of programs and the shared purchase of foreign programs dubbed into French in Canada. Furthermore, in order to strengthen ties with European broadcasters, Télé-Métropole would join the European Broadcasting Union (EBU).
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In the following sections, the Commission has examined each of Vidéotron's commitments in light of the commitments made by Télé-Métropole at the time of its last licence renewal (Decision CRTC 85-677) and its present performance. Overall, the commitments made by Vidéotron represent a total value of almost $55 million for the five-year period ending in 1991-1992, of which $30 million are new funds. The Commission notes that the cost of these commitments will be borne by Télé-Métropole and carried by all its shareholders, including Class B shareholders, except for Vidéotron's commitment to award annual prizes of $100,000 as part of a new program to promote new Canadian talent. In this regard, Vidéotron stated [TRANSLATION]:
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All Télé-Métropole shareholders will profit from the proposed benefits. Just as it is normal for all shareholders to benefit from the spinoffs, so it is normal for all to contribute to the investment required to ensure that Télé-Métropole's position is maintained and strengthened.
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a) Development of Programming
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In the context of its last licence renewal, Télé-Métropole undertook to set up a programming development department with an annual budget of $250,000. According to statements made at the hearing, Télé-Métropole devoted $189,000 to this end in 1985-1986, spending $83,000 specifically on research, study committees and script development. The proposed budget for 1986-1987 is $278,000, of which $167,000 is allocated for research into new programming projects.
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Videotron has proposed to place greater emphasis on this sector by creating a position of vice-president of research and programming development, reporting directly to the president. Vidéotron has also proposed to allocate new funds amounting to $1 million over five years for this purpose, which doubles Télé-Métropole's present contribution in this area.
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Apart from co-ordination and analysis functions with respect to viewer feedback, this division's main objective will be to enrich TéléMétropole's programming through the implementation of a support service designed to solicit new programming proposals. It will maintain close relations with independent producers and government organizations supporting creative endeavours; provide support for individuals showing promise; formulate financial, production and co-production, and distribution policies; and identify funding sources for projects. It will also direct the projects evaluation committee, establish acceptance criteria, and ensure that projects that have been accepted are followed up, before and after they go on the air, so as to assess their impact and success.
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b) Independent Producers
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In Decision 85-677, the Commission noted that Télé-Métropole's contribution to the independent production sector was very limited and encouraged the licensee to increase it efforts in this regard. In a report submitted at the request of the Commission, Télé-Métropole outlined six programming development projects for 1985-1986, representing an expenditure of $39,000, and four coproductions, including two feature films, at a cost of $557,159. At the hearing, Télé-Métropole estimated that its contribution in this area for 1986-1987 would remain at about $600,000.
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Vidéotron proposed to allocate $19.5 million to independent Canadian productions over a period of five years beginning 1 September 1987, through the reallocation of existing funds for Canadian productions. This is a radical departure from TéléMétropole's present approach, since the proportion of the programming budget going to independent productions would increase almost eight-fold over five years, from 1.3% in 1985-1986 to 10% in 1991-1992. Vidéotron specified that it would give priority to mini-series, children's programs, music and variety programming, movies for television and serials.
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Furthermore, in response to concerns raised in the interventions, Vidéotron stated [TRANSLATION]: "The full $19.5 million will be allocated only to Canadian producers." Vidéotron added that Télé-Métropole subsidiaries would not receive any of the above-mentioned funds, that use of its studios would be optional for independent producers, and that payments and fees in respect of this $19.5 million commitment would be made in cash rather than in the form of an exchange of services.
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c) French-language Vocal Music
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At the last renewal, the Commission emphasized the important role of television in the promotion of Quebec French-language performers and expected Télé-Métropole to undertake special efforts to encourage the creation, production, promotion and programming of recordings of francophone performers in Quebec. It also encouraged the licensee to support the work of the Consultative Committee on French-language Music which the Commission had recently established.
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Since that time, both the private sector and government have made concerted efforts to counter the marked drop in Canadian French-language recordings revealed by studies on the matter. In October 1985, French-language broadcasters and sound recording companies set up MUSICACTION to gather new funds for the production of French-language recordings. Many broadcasters have since made substantial contributions to MUSICACTION. Moreover, in the spring of 1986, the Department of Communications of Canada announced the creation of a Sound Recording Development Assistance Program, which includes assistance for video production, to support the efforts of Canadian firms in this area. Given the particularly urgent needs identified in the French-language sector, the Government announced that 40% of the funding provided under the program would be allocated to French-language recordings.
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As noted in the last licence renewal decision, Télé-Métropole has continued to broadcast high-quality musical entertainment programs, which are always a major source of employment for Quebec French-language performers. TéléMétropole also pointed out at the hearing that it had made a considerable effort to discover new talent and promote it through its various programs and that it had adjusted its program "Pop Express", a one-hour weekly primetime presentation, so as to broadcast French-language musical selections and videos.
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Vidéotron proposed to launch a new series of weekly, 30-minute programs entitled "Musicart" in order to contribute to the discovery of new talent and the recovery of the Quebec francophone recording industry. This project is to take the form of a French-language popular music contest for writers, composers and performers from all regions of Quebec. The series will permit approximately 80 artists to participate each year and will culminate in an annual gala at which Vidéotron will award prizes totalling $100,000 to the winners.
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The winners will also share 500 hours of studio time to record their work and Télé-Métropole will guarantee purchase of the first pressing. First-prize winners will be given the opportunity to produce a video which will be given on-air promotion. The commitment represents an expenditure of $8.3 million over five years, of which $5.3 million involves new funding.
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Vidéotron also announced at the hearing that Télé-Métropole would join MUSICACTION and contribute $500,000 over five years ($100,000 per year) for the production of videos in French.
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d) Children's Programming
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Vidéotron proposed to adopt a systematic approach to meet the needs of target audiences identified as being underserved by the present television system. Noting the absence of children's programs designed to popularize information and the complex phenomena of today's society, it has proposed to broadcast, beginning in September 1987, a new series of 38 weekly 30-minute public affairs magazine programs, intended for 8 to 12 year-olds, whick will include newscasts, reports, stories and special features adapted to children. This commitment represents additional funding of $3 million over five years.
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Vidéotron also pointed out that Quebec had nearly 30,000 young business people under the age of 30 in 1983 and it proposed to broadcast a series of programs to highlight the importance of this growing phenomenon in Quebec and the enterprising spirit of its young people. The proposal covers five years, and the series of 30-minute programs would be tested in the 1988 summer season.
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e) News and Public Affairs
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In Decision CRTC 85-677, the Commission stated that it expected the licensee to improve its local and regional news and to continue to broadcast public affairs programming on Montreal and the surrounding area. The Commission notes that the licensee has already begun to improve local news with its program "Ici Montréal", and that, according to the data at its disposal and the figures provided by the licensee, a total of a little more than 8 hours per week of news (category 1) is currently being broadcast.
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Vidéotron has proposed a series of measures to increase the effectiveness and promote the independence of Télé-Métropole's news and public affairs service, as well as to improve the visual quality of its newscasts. To this end, Vidéotron plans to computerize the newsrooms, including those in Quebec City and Ottawa, and to use new sources of written and audio-visual documentation. This represents a new commitment of $800,000. Vidéotron has also proposed to equip the Montreal newsroom with a pre-recording studio, a semiautomated control room and an electronic graphics system, at a cost of $725,000 in new expenditures.
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Vidéotron stated that its major contribution in the area of news would be a new public affairs and news program to be broadcast beginning September 1987 from 7:30 a.m. to 9:00 a.m. Monday to Friday. This program represents new funding of $8 million over 5 years and will lead to the creation of 20 new jobs, including 5 journalist positions, under the full responsibility of the news department. Vidéotron stated that it wished to repatriate francophone viewers during time slots when there currently is no French-language television service.
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Vidéotron has also made the commitment to broadcast in-depth reports of at least 3 minutes as part of its regular newscasts beginning in September 1987 in order to provide better coverage of basic issues. It also pointed out that public affairs content would be increased through the proposed children's magazine and other Télé-Métropole programs.
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f) Canadian Content
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The Commission has pointed out more than once in the past that TéléMétropole has played an exemplary role in the production of Canadian programming. The Commission notes that the level of Canadian content achieved by CFTM-TV was 59.2% during peak viewing hours in 1985-1986 and that the average weekly local production was 55-57 hours for the same period.
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Vidéotron noted that, according to recent polls, 20 of the 30 most popular French-language television programs in Quebec are Quebec productions, and that they [TRANSLATION] "are winners". As a result of the commitments noted above, Vidéotron indicated that CFTM-TV's weekly local production will be increased by 8 hours, from 61 hours to 69 hours per week of local original production, thereby raising Canadian content to 63% for the full day in the 1987-1988 season.
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g) Upgrade of Facilities
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Vidéotron has proposed a capital investment program of more than $10 million to upgrade CFTM-TV's facilities, in addition to the $18 million that Télé-Métropole would normally have invested during the fiscal years 1986-1987 to 1991-1992. Above and beyond the capital investment noted above to improve the news department, this program includes the progressive conversion of CFTM-TV to stereo by 1988-1989, the gradual replacement of studio equipment over a period of five years, the acquisition of videotape recording equipment, improvements in the editing unit and the upgrading of a mobile unit and its replacement in 1991-1992.
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In a related commitment, Vidéotron stated that Télé-Métropole would make a studio for mixing and post-syncronization available to its subsidiary Sonolab Inc. and would allocate $600,000 to Sonolab Inc. for the purchase of equipment.
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h) Dubbing
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At the last renewal of CFTM-TV's licence, the Commission noted a significant decline in the number of foreign programs broadcast by the station that were dubbed into French in Canada. In view of the resources at the licensee's disposal, the Commission urged it to begin a careful study of the problem in order to find a solution in cooperation with other concerned parties in the field.
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At the hearing, Télé-Métropole reported on the discussions and consultations it had pursued with government and the private sector to find an overall solution to the problem, and indicated that these efforts were ongoing. The licensee also stated that, for the 1986-1987 season, 4.7% of dubbed programming presented by Télé-Métropole was done in Canada, representing the equivalent of 371/2 hours.
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A number of factors explain the constant decline in the number of programs dubbed into French in Canada, notably certain legislation and corporate agreements that make access to the European market difficult. The Commission notes, however, that recent developments have significantly changed the dubbing situation in Canada. In June 1986, the Federal Government announced the creation of a dubbing assistance fund with an annual budget of $3 million to be administered by Telefilm Canada. Its goal is to promote the development of the Canadian dubbing industry for both Canadian and foreign programs. As well, the federal Department of Communications announced in November 1986 that an agreement had been reached with American producers and distributors, whereby French-language Canadian broadcasters could acquire first broadcast rights for American programs at the same time as English-language broadcasters and thus -- an important factor -- at the same time as European broadcasters.
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Vidéotron stated that it wished Télé-Métropole to play a determining role in the recovery of the dubbing industry in Canada and made a commitment to increase the percentage of programs dubbed into French in Canada and broadcast by CFTM-TV, from 4.7% to 18% in 1991-1992. According to Vidéotron, this commitment represents an additional 500 hours of dubbing done in Canada and a total of $6 million to remain in the Canadian economy. Vidéotron also pointed out the possibilities of stepping up its efforts in this area as a result of the more favourable circumstances noted above.
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i) Closed-captioning
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In response to an intervention at the last renewal, the Commission asked Télé-Métropole to report on concrete steps taken to improve closed-captioned programming. In its report, the licensee indicated that it had established a committee on the hearing-impaired which is still active and that for the 1986-1987 season a second television serial has been closed-captioned. In addition, the local newscast, "Ici Montréal", will be closed-captioned five days a week beginning 1 April 1987 for a total of 31/2 hours of closed-captioned programming per week, excluding closed-captioned programming from the TVA network.
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Vidéotron has made a commitment to increase the weekly number of hours of closed-captioned programming from 31/2 hours to 81/2 hours in 1991-1992, at the rate of one additional hour per year, excluding the 30-minute children's public affairs magazine which will also be closed-captioned. Vidéotron stated that this commitment represented an investment of $1.5 million up to 1992. It made a further commitment to contribute financially to the development of closed-captioning in the amount of $25,000 per year for three years, in co-operation with the Canadian Caption Development Agency and another partner, or to invest an equivalent amount in the production of other closed-captioned programming.
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j) CJPM-TV Chicoutimi
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Vidéotron undertook to invest more than $500,000 in capital assets and operating costs with a specific view to improving the morning information and public affairs programs and the newscasts broadcast by CJPM-TV, including the hiring of another journalist, and to broadcast in stereo beginning in the 1987-1988 season. Vidéotron also indicated that four of the seven members of the board of directors of C.J.P.M.-T.V. Inc. would represent the Saguenay-Lac Saint-Jean region.
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Interventions
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The Commission received fifteen interventions regarding the applications. Three were in support of the proposals, five were opposed, and seven raised questions or concerns regarding various aspects of the applications. The main grounds for opposition or concern were concentration and media cross-ownership. Related issues such as the adequacy of control measures proposed by Vidéotron and the danger that the two undertakings would become overly integrated at the expense of public interest, in particular the exchange of personal information and the use of CFTM-TV to advertise the non-programming services offered by Vidéotron, were also raised. Other interventions sought assurances or clarification from Vidéotron with respect to its programming commitments and the maintenance of Télé-Métropole's objectives.
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In response to the issues of concentration and media cross-ownership, Vidéotron first pointed out that the usual concerns about the diversity of information sources are much less serious because of the availability of a large array of media in the metropolitan Montreal area, both electronic and written, French-language and English-language. Vidéotron also added that the kind of information it offers is specialized and of a factual nature, for example, weather and program schedules. It stated that, as a result of its commitments with respect to Télé-Métropole, the quality and diversity of the general information broadcast by Télé-Métropole would be enhanced.
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Moreover, in order to prevent any negative consequences of media cross-ownership, Vidéotron proposed a number of measures, including the establishment of an outside equity and control committee. Its mandate would be to receive any complaint regarding access to Vidéotron's cable undertakings, to conduct inquiries, and if necessary to make a recommendation to the board of directors of Vidéotron with a copy to the CRTC. Vidéotron would also inform the Commission of the measures taken following the recommendation. Vidéotron stated that the following three individuals would sit on the committee: Mr. Jean Baillargeon, until recently the secretary general of the Quebec Press Council, Ms. Louise Martin, member of the advisory committee of the Regulated Industries Research Centre, and Mr. Laurent Picard, professor in the Faculty of Business Administration at McGill University and former president of the CBC. The Commission notes that Mr. Picard is also administrator for Le Groupe Vidéotron Ltée as well as on Vidéotron Ltée's administrative council, and that he will also sit on the proposed board of directors of Télé-Métropole.
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In addition, Vidéotron made a commitment to maintain completely separate and confidential from Télé-Métropole any personal information obtained from its cable subscribers. Vidéotron added that it subscribes to the code of ethics of the Canadian Cable Television Association (CCTA) regarding personal information. Moreover, except for possible close co-operation in the area of technological development, Vidéotron pointed out that its proposals imply no vertical integration since the two undertakings would continue to be operated independently.
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In response to interventions seeking assurances from Vidéotron with respect to its programming commitments and Télé-Métropole's objectives, Vidéotron stated [TRANSLATION]:
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We wish to continue making Télé-Métropole a popular television station offering quality entertainment, and we have no intention of internationalizing Télé-Métropole or causing it to lose its distinct character.
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We cannot, nor do we want to, ever forget who our viewers are and where they live.
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Consequently, our plans for involvement abroad will be chosen systematically in relation to the positive impact such involvement could have in Quebec. Vidéotron's priority will always be to serve the francophone communities of Quebec.
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Vidéotron added that it did not plan to make any changes in relation to television stations affiliated to the TVA network.
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The Commission notes that the following interveners supported the present applications: Réseau Pathonic Inc., Denis Héroux et Justine Héroux.
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Conclusion
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After a careful consideration of all the commitments made by Vidéotron, the Commission is satisfied that they would yield clear, significant and unequivocal benefits for the undertakings concerned and for the French-language television broadcasting industry, and that Vidéotron has met the first test described previously. The Commission is also of the opinion that Vidéotron's dynamism, combined with the expertise of Canada's largest private French-language television station, will ensure continuity while opening new horizons for Canadian French-language productions, particularly in the European market. While recognizing that Télé-Métropole's non-voting Class B shareholders will share the costs of the proposed benefits, the Commission is satisfied that they will enjoy benefits in the long term insofar as Vidéotron's plans will enable Télé-Métropole to maintain and strengthen its competitive position.
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Furthermore, the Commission is satisfied that the numerous and substantial benefits to be derived from these applications, combined with the measures proposed and commitments made by Vidéotron in response to concerns raised by interveners and the Commission, clearly outweigh any potential disadvantage that could result from the concentration of broadcasting undertaking ownership in Quebec. The Commission notes in this regard that Quebec has other important broadcasting organizations which will also help to ensure a balance in the broadcasting environment.
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Accordingly, the Commission deems that the applicant has met all the required criteria and that approval of the present applications is in the public interest. The Commission firmly expects all the commitments proposed by Vidéotron to be totally fulfilled. Vidéotron must submit a progress report to the Commission on the implementation of the various initiatives proposed no later than October of each year, until the expiry of the present licences for CFTM-TV and CJPM-TV in September 1990. In addition, a new Promise of Performance for CFTM-TV incorporating the commitments already made at the last licence renewal and new ones made by Vidéotron must be filed with the Commission immediately.
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In view of the discussions at the public hearing on Canadian programming during peak viewing hours, Télé-Métropole, on or before the expiry of its licence, must have increased the level of Canadian programming broadcast between 6 p.m. and midnight by one hour per week, preferably in the drama category. In imposing this requirement, the Commission has taken into account the amount of drama programming that has been produced and aired in recent years, the anticipated positive impact of the commitments made by Vidéotron with regard to the development of new programming and the search for new Canadian and international partners, as well as the financial assistance programs now available, particularly through Téléfilm Canada.
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Also in light of the discussions at the hearing and the concerns raised by the interveners, the Commission strongly expects that the mandate of the proposed equity and control committee will be expanded to deal with all issues arising from the inter-relationship between Vidéotron and Télé-Métropole, not only in the area of access to cable television undertakings but particularly with regard to the protection of personal information and the use of the undertakings for promotional purposes. Moreover, any change in the composition of the committee must be brought to the attention of the Commission, as well as any complaint or comment.
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The Commission further expects that the financing that remains to be finalized with respect to the transaction will not reduce the capacity of Vidéotron's subsidiaries to meet their projected capital cost expenditures intended to improve service. The Commission intends to review the situation, with particular attention to the adherence to all commitments, when it considers the renewal of the licences held by Vidéotron Ltée, Télé-Métropole Inc., and C.J.P.M.-T.V. Inc. which expire 30 September 1990.
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Fernand Bélisle
Secretary General
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