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Decision
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Ottawa, 30 January 1987
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Decision CRTC 87-73
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Cathay International Television Inc. Vancouver, British Columbia
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Cathay International Television Inc. (Cathay) was called to appear at the 5 November 1986 Public Hearing in Vancouver to enable the Commission to examine whether or not Cathay had complied with the condition imposed by the Commission in Decision CRTC 85-628 dated 1 August 1985, with respect to the provision of programming in two languages other than Chinese, English, French or native Canadian within one year of the date of the decision.
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I. Background
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Following a Public Hearing in Hull, Quebec on 30 April 1985, the Commission approved, by majority decision, the application by Cathay for authority to acquire the assets of World View Television Limited (World View), the licensee of an ethnic (formerly known as "multilingual") regional pay television network serving the Province of British Columbia, and for a broadcasting licence expiring 31 March 1987 to continue the operation of that undertaking.
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Approval of the Cathay application was conditional upon the licensee meeting the programming requirements that were set out in that decision.
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In view of the needs and expectations expressed by the many linguistic and cultural groups in British Columbia to receive a variety of programs in their mother tongue, the Commission stated its concern in Decision CRTC 85-628 that, given the limited commitments made by Cathay for the broadcast of programs in languages other than Chinese, this ethnic regional pay television service would evolve into an essentially Chinese language service.
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At the same time, the Commission took into account the serious problems that had beset World View in its efforts to develop this ethnic regional pay television operation, and noted that Cathay wished to adopt a more cautious approach in the phasing-in of languages other than Chinese.
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In addition to the above considerations, the Commission also expressed its concern about the integrity of its licensing process, whereby it had granted a licence for an ethnic regional pay television service on the basis of very specific and fundamental commitments to serve a number of ethnocultural groups in the British Columbia region.
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In reaching its decision in 1985 that approval of Cathay's application was in the public interest, the Commission gave particular weight to Cathay's assurances that it was fully committed to re-introducing an ethnic pay television service in British Columbia for the provision of programming in languages other than English, French or native Canadian, which was an essential element of the application approved originally by the Commission. The Commission also took into consideration the professional expertise and sound financial resources of Cathay's principal shareholders; the advantages of local ownership of an ethnic regional service; the extensive public support for that application; and the applicant's commitments to effective management, quality programming and ongoing consultation with representatives of the multicultural community.
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Accordingly, the Commission approved Cathay's application on the condition that, in addition to Chinese-language programming, Cathay, as a minimum, provide programming in two languages other than English, French or native Canadian within one year of the date of the decision and that at least 15 hours per week be allocated to each language distributed on the network.
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The Commission also expected the licensee to submit a progress report in this regard within twelve months. A progress report was submitted to the Commission by Cathay on 25 July 1986 which, among other matters, provided documentation that Cathay had explored a number of possibilities with respect to the provision of programming in languages other than Chinese. The report did not indicate, however, that Cathay was in compliance with the condition imposed by the Commission in Decision CRTC 85-628 with respect to the provision of programming in two languages other than Chinese, English, French or native Canadian.
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II. The Public Hearing
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At the Vancouver hearing held 5 November 1986, the Commission set out to determine whether or not Cathay had complied with the programming requirement specified in Decision CRTC 85-628 dated 1 August 1985. The hearing also provided an opportunity to assess the development of ethnic pay television and review the experiences encountered by Cathay during its first year of operation.
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On the fundamental issue of whether or not Cathay had met its programming requirement with respect to the provision of ethnic programming in two languages in addition to Chinese, Mr. Brian Sung, President and Managing Director of Cathay, stated that Cathay had not.
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Later in the hearing, Mr. Sung added that "our first task was to stabilize and then develop the Chinese service. However, we also knew that we had an obligation to take steps to develop a service which was viable and operated in languages other than Chinese."
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In elaborating on the various measures that Cathay had taken to develop a viable operation, Mr. Sung emphasized "the Chinese service of Cathay is not only viable [but] it is successful" because of the marketing and business strategies that had been employed. These included, among others, developing and stabilizing a solid base of subscribers to the Chinese language programming, improving the programming, reducing overhead and other expenses, introducing computerized accounting, and assessing the market for existing and potential viewers by conducting marketing and socio-economic demographic studies.
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As a result of these strategies, Mr. Sung informed the Commission that the Cathay service "now has in excess of 10,500 subscribers" and estimated that "Cathay has over 30 per cent penetration level in its market" in the Vancouver region.
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Cathay indicated, however, that although its Chinese language programming was always carried on cable, it had encountered difficulties in negotiating arrangements for such carriage, particularly in the areas of "subscription price, joint cooperative marketing, [and] the provision of other languages through other channels". Mr. Sung further stressed, "[I]t has only been in the last month and a half that we have been even able to obtain a basic affiliation agreement ...".
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The Commission has taken note of the information presented by Cathay indicating that the provision of programming in other languages will have to be subsidized by the Chinese language portion of the Cathay service, at least during the initial period. It has also noted the steps taken by Cathay to improve the Chinese programming on its network service and recognizes that the discretionary and narrowcast nature of this ethnic service would make it vulnerable to unfavorable exhibition arrangements on cable.
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The Commission has also considered the information provided by Cathay that, based upon an independent professional survey it had commissioned, the addition on its single-channel service of programming in two languages in addition to Chinese would result in a service which "strong majorities of present Cathay subscribers are unlikely to purchase".
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At the hearing, the Commission also questioned Cathay on its willingness and ability to meet its programming requirement. In addressing this matter, Cathay stated:
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...with regard to the East Indian programming, as of 29 July 1986 we were ready to broadcast in that language. We had secured our sources of supply for that language...
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and:
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...the other area of language we were considering seriously was the Japanese language. We would probably need four to six weeks in order to start that up.
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Cathay also indicated it has had discussions with various ethnic program producers and distributors, has undertaken research with respect to the broadcasting needs of various ethnic groups and travelled at considerable cost to Japan and Korea to secure quality programs.
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III. The Decision
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The Commission was encouraged by the broad range of the discussion that took place at the November 1986 hearing. Nevertheless, the Commission is concerned that Cathay, by its own admission, has not met its programming requirement within the specified one-year period.
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In assessing the situation, the Commission has considered the various issues and concerns raised by Mr. Sung during the course of the proceedings. It has also taken into account Cathay's ability and expressed willingness to provide programming to additional ethnic groups.
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The Commission has decided to provide Cathay with a further opportunity to show its good faith by re-introducing the regional ethnic pay television service in British Columbia for the provision of programming in at least two languages other than Chinese, English, French and native Canadian.
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The Commission, therefore, by majority decision:
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a) renews the licence of Cathay from 1 April 1987 to 31 August 1987;
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b) imposes a condition on Cathay's renewed licence that it provide, as part of a single service on an ongoing basis, and in addition to Chinese language programming, as a minimum, programming in two languages other than English, French or native Canadian by 0 April 1987 and that at least 15 hours per week be allocated to each language;
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c) schedules a Public Hearing on 9 June 1987 in Vancouver at which time Cathay will be required to demonstrate that it has complied fully with its conditions of licence, failing which it will be required to show cause why its licence should be further renewed.
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The other conditions of licence with respect to the ownership, programming and operation of this undertaking, as set out in the appendix to Decision CRTC 85-628, remain unchanged and continue to apply.
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IV. Cable Distribution
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During the hearing, Cathay stated that, after investigating the potential impact that the addition of other languages would have on the viability of its present operation, it decided "to embark on a broadcasting model" that would permit its network to offer programming in languages other than Chinese, on a second, separate channel.
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The Commission has considered this proposal but does not accept the proposed splitting of the programming between two separate channels, as it is not in keeping with the mandate and licence of Cathay. However, the Commission would be willing to consider the re-distribution of Cathay's service on a repeat channel where all of its programming is distributed but is scheduled at different times so as to provide each of the ethnic groups with access to relevant programs during viewing hours more appropriate to its distinct needs. Under this arrangement, subscribers would have access to all of Cathay's programming on each of two separate channels but at different times. Cathay may wish to seek agreement with cable systems for such an arrangement and cable licensees may file applications for authority to carry such a repeat channel which would be processed expeditiously by the Commission.
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Should Cathay decide to seek such a repeat channel on cable systems in British Columbia, the Commission will expect it to submit monthly reports on the status of these negotiations.
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Fernand Belisle Secretary General
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Dissenting Opinions
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Opinion of Commissioner Jean-Pierre Mongeau
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While recognizing without any reservation the sincerity of my colleagues in reaching this majority decision and their wish to include equitable considerations in the solution to Cathay's problems, I must nevertheless express my dissenting opinion.
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The regulatory process must be flexible and, under certain circumstances and conditions, must take into account equitable considerations, which may modify the established rules. Such flexibility, however, does not mean that to include equitable considerations in the solution to a specific problem should lead to a larger problem of equity. The public interest demands that regulatory practice not be arbitrary or discriminatory. For example, all participants are entitled to be aware of the consequences of compliance or non-compliance with established rules, unless there is clear and well-founded justification for the contrary.
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In this particular case, a licence for a multilingual service was granted as a result of a competitive process (see Decision CRTC 82-240). World View (Cathay's predecessor) won; other parties lost. Since the integrity of the licensing process is basic to the regulatory process, a majority of the Commissioners, in authorizing the transfer of the service to Cathay, wished to remind the licensee formally of the necessity of maintaining the multilingual nature of the service. The Commission therefore imposed a condition sine qua non to the authority granted (see Decision CRTC 85-628). Cathay therefore had the option of not accepting the decision or appealing it, if it intended to offer a unilingual service or a service exclusively in Chinese on one channel.
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Although I hold the opposite opinion, there may be grounds for legal debate on the nature and scope of such a fundamental condition. Even if the condition were not fundamental, which would lead to nullification ab initio in the case of non- compliance, it is at the very least a condition of licence and would result in revocation in the case of non-compliance. Otherwise, the condition would have no significance.
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At the hearing, Cathay suggested that some ambiguity may have resulted when, in the same decision, the Commission agreed to suspend the application of this fundamental condition for one year. This suspension of the condition was granted precisely to allow Cathay greater flexibility, and it is ironic that Cathay now wishes to use it to avoid meeting the condition itself. When the application of a condition has been suspended, I am of the opinion that, once the term has expired, non-compliance leads to the same sanction as would have resulted from non-compliance if the suspension had not been granted in the first place, that is, nullification ab initio. Be that as it may, there is some justification for the majority decision not to consider, in the case of this decision, the prerequisite nature of the condition in question (or the fact that the condition would again be a prerequisite following expiry of the term of suspension) in order to avoid any unnecessary litigation, and to consider the condition only as a condition of licence (which it is at the very least, if it were not a prerequisite).
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However, in such case, I am of the opinion that Cathay is at a minimum in non-compliance with a condition of licence and subject to having its licence revoked for non-compliance. Cathay admitted to non-compliance (see p. 63, Volume I, Transcript of Proceedings).
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Cathay argued that it had not been given notice, or at least, not sufficient notice. I do not agree. There can be no doubt as to the Commission's clear intention throughout the whole process to provide the Vancouver region with a multilingual service, and there can be no doubt that Cathay did not comply. After all, to call a public hearing cannot be interpreted as a desire to ask Cathay for information that was already on the public record or to talk about the weather in Vancouver. Although there may be some justification for not considering the immediate nullification of the licence, it cannot reasonably be argued in the same breath that revocation of the licence could not be considered at this same hearing. The public record proves this; the applicant was aware of non-compliance and was willing to reply to questions regarding the facts and circumstances, as in fact it did.
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Furthermore, Cathay implied that private meetings with Commission officials led it to believe that it was not required to comply with the condition to provide multilingual service. This subjective interpretation would seem to be based on the fact that the Commission representatives had not raised the issue of non-compliance at each meeting. Whether this is the case or not is in no way relevant. All particulars relating to Commission's decisions are public, and placed on the public record, and in the present case there is absolutely nothing on the public record to justify such an interpretation.
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Finally, Cathay suggested that its licence entitled it to fragment its Promise of Performance into as many separate services as it wished. According to this point of view, compliance with a licence for a multilingual service could be achieved by offering an indefinite number of unilingual or combined services. Here I agree with the majority who rejected this concept, which, to my knowledge, has been put forward for the first time, and runs counter to the whole structure of the Canadian broadcasting system and is absolutely unfounded.
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I am not here challenging Cathay's good faith; I recognize the effort it has made and the resources it has invested to serve its community. Nevertheless, I maintain that all those involved in the broadcasting system must abide by the same fundamental rules. There are also equitable considerations which are of fundamental importance. The majority decision, once again, formally orders Cathay to comply with its licence. Moreover, the decision again allows Cathay to benefit from an extraordinary flexibility so that it may comply. I respectfully submit that this solution, which puts Cathay in a privileged position, nevertheless poses a problem for the original competitive applicants, for the other interested parties in the Vancouver region, for all those involved in the broadcasting system and for the public interest. I would have preferred that equitable treatment for all and for each individual party in the same situation would have prevailed in this case over an extraordinary solution based on special treatment for one party. I would consider the transaction to be null and void ab initio or would revoke the licence, depending on the action taken.
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Opinion of Commissioner Monique Coupal
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In 1982, the Commission licensed World View as a discretionary pay television service to provide multilingual programming to Vancouver. When problems arose, in order to maintain direct control of the company, some of the original shareholders forced it into receivership and, after bidding for the service with the receivers, applied to the Commission for a new licence which envisaged the provision to Vancouver of service primarily in the Chinese language with fewer programs in other languages. The Commission approved the application on the condition that the new licensee, Cathay, provide service in at least two additional languages within one year. Had it not been for this condition, the Commission would have denied the application as it did not specify either when, or which other ethnic communities would be served. It was almost deficient at its inception; however, Cathay received a licence and a one-year delay in providing services to at least two other ethnic communities.
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Cathay did not meet the condition of its licence and so admitted during the 5 November 1986 Public Hearing in Vancouver. In my opinion, it does not legally have a licence to provide any service. To argue that Cathay required additional cable channels to provide service in the two other languages and accordingly, could not meet the condition imposed by the Commission, is contrary to the whole concept of discretionary services licensed to date by the CRTC. Can the music channel, the sports channel, or either of the movie services use as many cable channels as they would like in order to provide specific programs to those of their subscribers who prefer jazz over rock, baseball over hockey, or family movies over adult movies? This is a fallacious argument which was not referred to at any time during Cathay's licensing process. Furthermore, at no time during the one-year period of grace did Cathay officially apply to the Commission seeking changes or clarifications regarding its condition of approval.
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