ARCHIVED -  Decision CRTC 87-904

Decision

Ottawa, 1 December 1987

Decision CRTC 87-904

Canadian Broadcasting Corporation - 871185500

The Commission approves, by majority decision, the application by the Canadian Broadcasting Corporation (CBC) for a network licence to provide a national English-language news and information specialty service. This satellite-to-cable service will be available to cable television affiliates on an optional basis for distribution on the basic service, in accordance with the provisions out-lined in the Public Notices accompanying this decision (Public Notices CRTC 1987-260 and CRTC 1987-261). The licence, which will be issued and be effective on 1 September 1988, will expire 31 August 1991 and will be subject to the conditions specified in the appendix to this decision and in the licence to be issued.

In considering the CBC's application, the Commission has taken into account the applicant's statement that the comprehensive service outlined in its proposal will only be fully implemented by the end of the second or even third year of operation. While noting the CBC's commitment to institute financial control mechanisms to identify the incremental costs to the CBC of the news and information channel, the Commission will wish to be assured that the specialty service is not being developed using funds allocated by Parliament for existing CBC services. For these reasons, the Commission has determined that a three-year licence term is appropriate.

At the 20 July Public Hearing, the Commission also examined an application by Allarcom Limited ("Canadian Cable News" - 871188900) for a licence to provide a 24-hour-a-day, English-language national news and information service to be distributed on amendatory basis to Class 1 and 2 cable systems. Given the approval of the CBC's application and for the reasons set out in Decision CRTC 87-906, the Commission has denied the application by Allarcom Limited.

As indicated by the CBC, the proposed news and information channel will feature only news reports and actuality coverage, analysis and interpretation of news stories through documentaries, interview and discussion programs, and a divers selection of informal educational and religious programs. It has made a firm commitment not to broadcast live sports coverage of feature films and entertainment programs, and will be required, by condition of licence, to abide by the definition of program service it has filed.

The CBC has characterized its proposed 24-hour-a-day news and information channel as a continuous, quality service that will make extensive use of material already produced using the Corporation's existing technical and human newsgathering resources to provide Canadians in all parts of the country with a comprehensive understanding of news events and the people and issues behind the news stories. More particularly, it intends to make optimum use of the large volume of local and regional material produced every weekday for the CBC's fifteen English-language supper-hour information programs, most of which material is never seen outside of the region in which it is produced. In addition, regional productions "in fields such as current affairs, agriculture and resources, the arts, medicine, and business" will now be made available to a national audience so that all Canadians will be able "to see distinct and different voices from every part of the country". The service will combine live event coverage such as political conventions or royal tours, newscast, discussion and analysis, documentaries and interviews, and repeats or edited segments of such CBC current affairs programs as Nature of Things, Man Alive, the fifth estate, Land and Sea, Pacific Report and Market Place.

The CBC argued that the time has come to make such a Canadian service available and noted that recent advances in communications technology have contributed to a potential risk to our "information sovereignty":

 At the most fundamental level, Canadian [television] networks, with limited resources for foreign bureaus and international coverage, must already rely heavily on U.S. networks for much of their foreign cover-age. Further, the existence of simultaneous substitution cable rules makes it irresistibly attractive for Canadian networks and stations to acquire and schedule not only U.S. news magazine programs.

The CBC has not, however, requested that the Commission remove Cable News Network or CNN Headline News from the list of eligible non-Canadian programming services. In this regard, the Commission notes the Corporation's statement in its application that the CBC's English-language television service and CNN have been "in active partnership". Consequently, Cable News Network (CNN) and CNN Headline News will remain on the Commission's lists of eligible satellite services.

In response to concerns that a service of the type proposed in this application might be equally urgent for French Canadians and that the Corporation's mandate under section 3 of the Broadcasting Act requires the provision of services in both languages, the Corporation answered that the provision of services in both languages did not necessarily need to be accomplished simultaneously and explained that most of the available foreign information programming is in English, constituting a greater imbalance of domestic to foreign English-language news and public affairs programming. It stated that a high quality English-language service is immediately achievable at a reasonable cost to cable subscribers. It further noted that the Corporation is a partner in a separate specialty application, also considered at this hearing, for an international French-language television service for which, in partnership with Canada's French-language broadcasters, the National Film Board of Canada and independent producers, the CBC French-language television network will provide original Canadian news stories from the various regions of Quebec and from across the country as well as documentaries and arts programs. The CBC stated that, at a future date when such a project would be financially viable, it may apply for licence to provide a French-language news and information service and suggested that such a service would be able to benefit from the experience of the proposed English-language channel.

The Commission has considered the CBC's position on this matter, particularly its argument that it could not proceed at this time with a comparable French-language service with-out guaranteed mandatory distribution provisions or supplementary government funding. Nevertheless, given the CBC's mandate and its existing French-language resources and facilities, the Commission requires the CBC, by condition of licence, to submit, within one year of the date of this decision, the findings of a feasibility study for implementing a French-language news and information of such a service could only be undertaken on a gradual basis or in association with other public or private partners.

Demand

The application asserted that "audiences to CBC news and information programs lend credence to the notion that a Canadian news and information service would provide a product which would be watched and valued by a significant number of Canadians". It also sited the recent report of the Federal Task Force on Broadcasting Policy in support of its argument:

  Canadians are "insatiable" consumers of news programming. But it is not just news from any source that Canadian audiences turn to when they wish to be informed. It is, specifically, news from Canadian sources that they turn to first, and in overwhelming numbers.

  As the Task Force noted, some 56% of the news an English-speaking Canadian viewer has access to is foreign. Only 44% comes form Canadian stations. Yet despite this imbalance, when it comes to viewing, 90% of the news and information programs Canadian audiences choose to view is Canadian.

The CBC went on to cite average 1/4-hour audiences to The National in its 10:00 p.m. time slot, when it is up against prime time entertainment programming, at 1.9 million, with occasional weeks in which the weekday audience for the CBC's late-evening television newscast is 2.5 million (as opposed to audiences of 1.2 million in 1981 when the program was broadcast at 11:00 p.m.); The Journal and the fifth estate, 1.6 million; Nature of Things and Market Place, 1.3 million, and Man Alive, more than one million Canadians every week. Viewers to the CBC's regional news programs have increased from just over a million in 1982/83 to 1.35 million in 1986/87.

At the hearing, CBC representatives referred to CBC audience research studies which indicate that more Canadians are relying more than ever before on television to satisfy their information needs and that they prefer this programming to come from Canadian sources. Reference was made to the May 1987 study by Angus Reid Associates Inc. in which 78% of cable subscribers surveyed stated they would watch a Canadian all-news channel (33% indicated they would likely view such a service often), and to the Ontario Government's public opinion survey "Specialty Television Services: Demand, Pricing and Packaging" (Moss, Roberts and Associates, December 1986) in which 25% of respondents stated that such a service would be "very good" for the household. The Commission notes that other market studies submitted in connection with this hearing indicate interest levels of 41% (C.C.T.A. survey, December 1986) and 49% (Sorécom Inc. for The Sports Network, September 1986).

Programming

The Corporation repeatedly referred at the hearing to the benefits to the public of its proposal wherein existing CBC services, technical facilities and personnel are to be utilized at incremental cost which will be totally assumed by the new service.

Mr. Denis Harvey, Vice-President of the English Television Network, explained:

 We start from a base that no one else can march: 153 electronic news-gathering cameras of our own; another 400 cameras on every continent of this world through our association with Visnews. We can call on 30 television newsrooms in our English and French operations across this country, and call on another 40 radio newsrooms.

The CBC emphasized that the Canadian public demands the very highest standards of journalism of the CBC. In this regard, the Commission notes the CBC's reference to the code of ethics to which its journalists are required to adhere, "Journalistic Policy" (1982). It expects that, with the licensing of this new specialty service, the CBC will make every effort to ensure that its journalists comply even more rigourously with the criteria it has established for the reporting of and commentary upon public affairs. It also expects the Corporation to put in place proper mechanisms to ensure such compliance, including constant monitoring and a regular reassessment of both the adequacy of the code's provisions and its effectiveness. The Commission puts the CBC on notice that it intends to re-examine with the Corporation at the time of the renewal of this licence, the efficiency and adequacy of the CBC's "Journalistic Policy" code of ethics.

The CBC intends to make extensive use of the existing production capability in its regional centres for the proposed program service and it indicated that at least 6 hours of programming every day will originate from Atlantic Canada with a further 6 hours a day being produced in western Canada.

The major program blocks in which there will be a high component of regional input are Daybreak (Monday to Friday, 5:00 to 11:00 a.m.), and This Country in the Evening (Monday to Friday, 6:00 to 11:00 p.m.).

The latter program is to be an innovative, rolling format, originating form a different region each hour and scheduled in such a manner that the supper hour regional news reports will be available at a reasonable hour to viewers in every part of the country. Each segment will consist of a national and international newscast and the weather, followed by lengthy regional reports and special features on such subjects as medicine, business, entertainment and the arts. The Commission notes that the first hour will be anchored from the CBC's British Columbia production centre, and the report from Halifax will commence three hours later, at 9:00 p.m. eastern time.

In the hour from 11:00 p.m. to midnight, the new service will exhibit, with English subtitles, the French-language programs Téléjournal and Le Point from the Corporation's French-language television network.

Mr. Bill Morgan, Director of English Television News and Public Affairs, explained that other programs such as Looking At You (with daily fashion, exercise and nutrition features), Just Look (profiles of people in the news), Keeping Up (current affairs with topical interviews and regular "columns" on medicine, business, law and consumer issues) and Hometime (relevant information on the home environment, consumer reports and child rearing), which fall within the realm of soft information rather than traditional hard news and public affairs, will also be provided.

 There is no intention, on our part, of departing from providing the news, but we think there are some other elements that may be useful to those people and we want to try to offer them.

The programming proposed to be provided on weekends will combine news and alternative information, presented in a more leisurely manner. There will be summaries of the week's developments in such areas as business and finance, politics, popular entertainment in such areas as business and finance, politics, popular entertainment, and sports, as well as religious programming and interactive discussion through phone-in programs.

The Commission is concerned that the CBC's description of certain parts of the proposed daytime and weekend schedule, particularly those programs that come under the definition informal education, could be construed as being closer t the kinds of programs that conventional television broadcasters provide than to what might be expected of a news and information specialty programming service. Accordingly, the licensee should ensure that the material classified as informal education constitutes a very small portion of the total schedule o f this service and does not duplicate the programming of existing broadcasters.

The CBC's description of service specifies that all of the programming on the news and information channel will fall within the program categories 1 to 4 and 5b (information), with a limited amount of category 6 (sports) programming as set out in schedule 1 of the Television Broadcasting Regulations, 1987.

The CRTC program categories that will be permitted are news, analyses and interpretation, reporting and informal education. The CBC stated that there will be news headlines every hour of each 24-hour program day.

The only foreign program content mentioned in the application is the BBC World Report which the CBC would like to acquire for insertion in the Daybreak program "should it come into existence as planned", and occasional documentary programs for inclusion in the weekday afternoon slot entitled Document. The application stated that "foreign contend programming will be acquired at no cost through program exchange news rights agreements".

Thus the entire program budget will be allocated to domestic production. Program expenditures are projected to range form $10.7 million in year 1, to $13.9 million in year 2 and $16.5 million in year 3, and the CBC has committed to devote 55.9%, 59.2% and 58.8% of gross revenues in years 1, 2 and 3 respectively for Canadian program production. In line with the Corporation's commitment, the Commission will require the CBC, as a condition of licence, to devote these percentages to the gross revenues from this service to investment in and/or acquisition of Canadian programs.

In line with the applicant's undertaking, the news and information service must ensure that a minimum of 90% of the total hours of its 24-hour program schedule, measured on a weekly basis, is devoted to the distribution of Canadian programs.

The application further states that in designing the program schedule, care has been given to prevent the pre-release of any whole programs that are also available to CBC affiliated stations. The Corporation anticipates, moreover, that the new specialty service will "serve as an expanded news syndication service", which will be available to CBC affiliates.

The Corporation has undertaken to add, with revenues earned from the news channel, three foreign correspondents to the six who currently maintain news bureaus in London, Paris, Washington, Moscow, Jerusalem and Beijing. Its priorities for placement of the new staff are Central and South America, southern Africa and the Pacific Rim. The CBC emphasized that each of its correspondents provides material to CBC radio and television services, frequently in both English and French.

Financing an Viability

The CBC stated emphatically that its news and information specialty services would be self-sustaining, and that it was designed to make use of "the existing structure of people, equipment, studios and transmission systems, owned and paid for by Canadians, and ... located in every part of the country" without diverting financial resources away from its existing broadcasting activities. It submitted detailed information as to how the costs of the new service that are incremental to the costs of the existing service would be maintained separately from those of the English television network though the CBC's computerized that separate revenue and expense notations for the channel would be identified in the income statement of the Corporation's annual reports:

 We have the capability to identify the marginal expenses ... through the assignment disc methodology that we use for assigning reporters and the costs associated with their initiatives ...

 We [already] live with cross-charging of costs for resources and manpower and travel, and so on as a way of life ... We work on the basis that there is a commitment made a the assignment level for costs that are going to be incurred and that there is a cross-charging agreement when more than one entity of the organization is involved ...

The Corporation expressed confidence that its accounting system is capable of distinguishing the direct incremental costs of the news and information channel, including such expenditures as overtime, travel and extra land lines "associated with asking people in the field to do something for this service".

The application projects capital expenditures of $5.9 million for studio, editing, master control and satellite reception equipment, and additional pre-operating costs of $3.9 million.

Revenue is to be derived from subscriber fees (representing 77% of all revenue in year 1) and national advertising (23%). In years 2 and 3 the revenue to be derived from subscriber fees is projected to be 72% and 69% respectively.

The CBC estimates that it will attract a sufficient volume of advertisers to sell between 33% (year 1) an 47% (year 3) of its commercial availabilities. As proposed by the applicant and as set out in the appendix to this decision, the Commission will require, by condition of licence, that the CBC news and information service restrict its advertising to 8 minutes per hour of national advertising material. Advertising revenue projections for year 1 are based on an average costs per thousand of $3. While not planning to package these commercial availabilities to national advertisers jointly with availabilities on the existing English television network, the CBC stated that, if it were to do so, it would maintain separate accounts so as to readily identify the revenue to each service.

The CBC stated in its application that it believes that its proposed service will have minimal impact on other broadcasters. It anticipates first year net advertising revenues of $4 million.

 Further, the Corporation's proposed service is unique. It does not duplicate any other Canadian television service, and it is specialized and targeted to a specific audience which is not now served with news and information programming through much of the broadcast day. Additionally, the service will only be available to the households of cable companies which are capable of delivering the service. On this basis, the bulk of the monies necessary to run there proposed service will be generated through subscriber revenues and not advertising revenues. Finally, the advertising revenues that are projected are national, no local. Consequently, Canadian television stations which rely on local advertising to finance their local news programs should not be unduly affected by the inception of the Corporation's proposed service.

The CBC's application assumes subscriber revenues of $14.7 million in year 1 rising to $19.3 million in year 3. Since the service is founded on the principle "that no additional financial burden will be placed upon CBC operation", subscriber revenue must make up the difference between operating expenses (which are estimated at $19.2 million in year 1 rising to $27.7 million by year 3) and projected advertising revenue. According to its application:

 CBC expects that the service can reasonably attract cable systems representing 4.9 million subscribers, which will allow the service to be offered at a subscriber charge of $0.25 per month. From the date of licensing to the launch of service, CBC will aggressively pursue distribution arrangements with Canadian cable systems to ensure the maximum reach for the new service. However, should the service be purchased by fewer systems, with the consequence that there are fewer subscribers, then the monthly charge will have to be higher to provide the revenue needed to cover projected operating expenses, On this basis, a subscriber base of 4.9 million would result in a $0.25 monthly , 4 million would require $0.31 etc.

At the hearing, CBC representatives described the sliding scale of subscriber fees as "an arithmetic exercise" an that, bases on discussions with cable operators, it estimates that 3 million subscribers would be a "realistic" minimum, and, at this level, it would require a maximum pass-though charge of $0.40 per subscriber per month.

The Commission has assessed the applicant's financial projections and the basis on which subscriber revenues have been calculated in order to ensure that the proposed news service will not be a financial burden on the CBC's existing services and that it is not funded through the use of funds allocated by Parliament for such services. It is satisfied that the expense projections are reasonable and, accordingly, as set out in the appendix to this decision, authorizes wholesale rates on a sliding scale, as applied for, on the basis of the number of subscribers as of 1 September of each year of the licence term as follows: $0.40 per subscriber per month with less than 4,000,000 subscribers; $0.31 when subscribers number between 4,000,000 and 4,499,999; $0.27 when subscribers number between 4,500,000 and 4,899,99; and $0.25 when subscribers number more than 4,900,000. These amounts will increase by 21/2¢ per subscriber per month for years 2 and 3, as set out in the appendix to this decision.

To ensure that the service will be managed efficiently within the budget constraints set out above, CBC representatives insisted that, even if advertising projections were not met, they would not apply to the Commission for an increase in wholesale rates. The applicant stated that it intends to increase program offerings of the service consistent with the revenue earned:

 It is important that we be realistic about the process of building the proposed service. We expect that a number of its most important and valuable features will be present from day one, but ... in order to ensure that it is no drain on existing services, some time will be required before the entire news and information service reaches maturity.

 If it can be done more quickly we will do it, bur our expectation is that the comprehensive service outlined here will be fully implemented only by the end of the second or perhaps even the third year of operation, when anticipated revenues will fully support its costs.

In this respect, the news and information channel will have a complement of 187 persons in the first year of operation, with an additional 30 employees to be added in year 2 and a further 42 in year 3 as revenues increase.

In establishing a licence term of three years for the CBC's proposed news and information specialty service, the Commission has determined that this period will enable the CRTC and the Canadian public to assess the degree of implementation of the service as well as the effectiveness of the cost-separation measures taken to prevent any cross-subsidization by the existing services.

In this regard, the Commission requires the Corporation, by condition of licence, to submit within six months of the date of this decision, detailed plans describing the schedule for full implementation of the news and information service as specified in the application and as discussed at the hearing, in terms of the levels of subscribers, advertising revenue, and operating expenses necessary for the addition of those programming elements that will not be available at the beginning. The cross-subsidization concerns are dealt with below.

Concentration of Ownership and Cross Subsidization Concerns

The Commission also discussed with the applicant at the hearing the potential for public concern over the licensing of a publicly-supported broadcaster to provide a national news service.

In response to reservations expressed by interveners over granting another network licence to the CBC (which already operates four radio networks, two television networks, the Northern Service, two channels for coverage of the proceedings of the House of Commons, and Radio-Canada International, a shortwave radio service), the applicant presented three arguments. First, that by virtue of this country's size, large corporations have been developed in both the public and private sectors to ensure an equitable distribution of information in both the print and broadcast media. Secondly, because it is supported by Canadian taxpayers, the CBC is subject to various accountability controls; in terms of its programming and service, through the public of Canada who choose to view those programs and the CRTC. The third point was that, with respect to diversity, "the CBC is, in relative terms, smaller than it was in, say, 1968":

 When the Broadcasting Act was passed, the CTV for instance covered about 67% of the population. I now covers as much of the population as the CBC. Global did not exist. TVA did not exist. Quatre-Saision did not exist. CANCOM did not exist. The American stations covered just about 50% of the population by the border stations [and] by a little bit of cable. Cable now covers 70% of the country. The CBC in relative terms is much smaller and occupies a much smaller space in the "paysage audiovisuel", to use a French phrase, than it did in 1968. There is much more fragmentation ...

The CBC also enumerated the benefits to the public in terms of adding a specialty news channel to the existing CBC services. The Corporation explained that the planned news and information channel will enable the CBC to fully utilize its plant (technical facilities) and extend the circulation of its products; Canadians across the country will have more access to news and public affairs programming; there will be more opportunities to develop regional programming and talent; the incremental costs will be minimal, because the news and information service can benefit from the CBC's existing news-gathering resources across the country and around the world; a quality service can thus be provided to Canadians at a reasonable cost; the channel will be a forum for the reflection of each part of Canada to itself and to the other regions; and the fact that the creation of the news and information service with its complementary coverage of events which will be made available for use on the CBC's existing services, as well as the creation of three foreign news bureaus, will improve the existing news services of the CBC.

The risk that the new service could be developed at the expense of the CBC's existing services was the subject of much discussion during the hearing and, in response, the Corporation made a commitment that there would be no cross-subsidization of the new service from funds paid to the Corporation out of Parliamentary appropriations for the existing English-language television network service. These concerns, which were raised by the Commission and other parties, prompted the CBC to file a description of the financial control mechanisms which would be put in place to prevent any such cross-subsidization.

The Commission is satisfied that the three-year licence term that has been granted will permit the Commission to ensure that the cost separation mechanisms described by the CBC have been implemented effectively. Accordingly, the CBC is required, as conditions of licence, to submit the following, by the deadlines herein set-out:

 ° by 30 November of each year a report for the broadcast year of part there of completed on the preceding 31 August identifying separately each of the types of incremental costs incurred as a result of providing the news and information service, with a detailed breakout, based on the cost separation accounting procedures filed with the Commission as part on this application.

 ° by 30 November of each year the results of an audit carried out by an independent outside auditor for the broadcast year or part there of completed on the preceding 31 august certifying that the news and information service is recovering fully the incremental costs incurred as a result of provision of the service and that funds paid to the Corporations out of Parliamentary appropriations are not being spent for the purpose of covering these incremental costs.

  The audit report shall also certify that appropriate accounts have been maintained in respect of advertising revenue earned by the news and information service and that advertising revenue derived from joint sales by the news and information service ant the existing radio and television services of the Corporation have been appropriately allocated between the news and information service and existing CBC services.

 ° by 30 November of each year, for the broadcast year or part there of completed on the preceding 31 August, a report identifying in detail the quantifiable and non-quantifiable benefits flowing to the Corporation's English-language radio and television network services form the news and information service and vice versa.

Impact of Regional Programming

With respect to the impact of the news channel on the role of regional programming on the CBC's English-language television stations, the Commission notes Mr. Harvey's statement at the hearing that the specialty service will complement the existing regional news services and permit broader distribution of "that incredible wealth of material" that has not previously been given the opportunity to be seen other than in its place of origin:

 It will not in any way affect the budgets doing to regions, the amount of [air] time they have ... it just means that the material they produce, seen now only in limited regions, will now be seen across the country. The reflection of this country, to the entire country will be increased tremendously.

Mr. Morgan added that a further benefit of this application is that certain of the regional production centres will be upgraded in order that they will have the capacity to "bring substantial amounts of programming" to the new service. The Director of the CBC's Northern Service, Mr. Brian Cousins, spoke to the news channel as " a special opportunity" for the North:

 This new national service, in the way it has been designed, provides some of [the] where-withal to deal with the North more effectively ... We would have the technical means to contribute to such a service and our ... journalists would be able to share the material they are producing for the [North] with the rest of the country and, indeed, ... to improve the existing levels of regional and national programming on the conventional service that the CBC provides to the North.

Mr. Cousins further revealed that "with the development of a news channel service" a Northern uplink capability would be established, permitting residents of the Territories "the opportunity to be active participants in Canadian life". In addition, the CBC has begun discussions with northern native broadcasters and the territorial governments, who have an interest in providing educational programming, to share uplink facilities so that "it may very well be feasible that we will have in the very near future uplink capacity in Whitehorse for the Yukon, in Yellowknife, and in Iqualuit for the Eastern Arcitic".

The Commission will require, by condition of licence, that the CBC install and put into operation a northern satellite video uplink facility in the Northeast Territories or the Ykon Territory by January 1989.

National Coverage

The application includes a letter of confirmation from Telesat Canada that it would be able to provide transponder space on the Anik D-2 satellite for the CBC's representative explained that the service also plans to make occasional use of transponder time on other Telesat channels. An annual allocation of $195,00 has been budgeted for local loop and uplink charges.

Conclusion

In assessing this application, the Commission has given particular consideration to the quality of the CBC's existing English-language news and public affairs programming and to the tradition of excellence in terms of journalistic standards that the CBC has achieved and for which it deservedly receives international recognition. The Commission also recognizes the CBC's argument that there is a strong, demonstrated demand for a dedicated news and information channel and acknowledges the viability of the proposal in terms of its financial projections.

Indeed, were it not for the utilization of existing news material and of existing staff and technical resources, with no additional costs to the CBC's existing services, it is doubtful that a quality news and information service could be offered to Canadians at this time at such a reasonable cost.

The Commission has also given particular consideration to the true reflection of each part of the country to the others in matters as important as news and public affairs. It is satisfied that the strong regional character of the proposed schedule will allow for a beneficial exchange of views among Canadians.

The Commissions has, at the same time, given due consideration to concerns raised by interveners with respect to the question of concentration, and the potential disadvantages accruing from a single entity holding a number of licences for national broadcasting services. It notes, in particular, the concern expressed in some quarters that, by adding such a service to the CBC's existing spectrum, it could be expanding the CBC's influence in the field of news and information in a way that could potentially be detrimental to viewer choice and the first possible formulation of public opinion on matters of sensitive public interest.

In weighing these factors, the Commission has taken into account the CBC's mandate, its existing news-gathering infrastructure, and the fact that with this proposal, cable subscribers will have an opportunity to receive at an affordable cost a truly Canadian, English-language 24-hour-a-day specialty service dedicated to the news and information needs of Canadian viewers rather than one that is essentially prepared from an external or foreign perspective. It has also taken note of the accountability mechanisms to which the CBC in particular, as a publicly-funded crown corporation, is subject and has put the Corporation on notice that the Commission intends to re-examine the efficiency and adequacy of the CBC's "Journalistic Policy" code of ethics at the time of the renewal of this licence.

On balance the Commission is convinced that the advantages to Canadian cable subscribers and to the Canadian broadcasting system outweigh any potential disadvantages. Moreover, by granting a three-year licence term and, as set out in the appendix to this decision, by requiring the Corporation to fulfill all of its commitments with respect to the orientation, operation, structure as well as the programming content and expenditures of its news, and information service, the Commission is satisfied that the public interest will be adequately protected.

As to the impact that the licensing of this service may have on existing broadcasters in terms of audience fragmentation and the erosion of advertising revenues, the Commission has examined the evidence and information presented by the applicant and assessed all of the comments and studies available in the context of this hearing.

In particular, the Commission has assessed the applicant's contention, made at the hearing, that:

 ... in the beginning, we have projected a rating of .6 and even by year five a rating of .9, and we don't anticipate losing all the audience from our own [services]; we feel that would be spread over the whole broadcast universe.

 So, in that context, we don't feel that any single broadcaster will ... feel a great impact.

The Commission also notes the applicant's projection that its advertising revenues will range from $5.7 million in year 1 to $11.3 million in year 3. On the basis of its assessment of all of the evidence, the Commission is satisfied that the overall impact on existing broadcasters will be minimal.

With regard to other issues of public concern, the Commission notes the CBC's reiteration that it will meet the expectation expressed in its television network licence renewal decision that its programming will represent multicultural minorities in a manner that reflects realistically their participation in Canadian society and contributes to eliminating negative stereotypes.

It has also undertaken to abide by the conditions of licence with respect to sex-role stereotyping and advertising to children as set out in Decision CRTC 86-140 renewing the CBC's television network licences.

The CBC has also given a commitment that fully half of each 24-hour broadcast day of the new specialty service will be either closed captioned or signed for the hearing impair and stated in this regard that $250,00 has been allocated for this purpose in year 1. The Commission notes this undertaking and, as set out in the appendix to this decision, will require, by condition of licence, that the CBC fulfill this commitment.

The Commission will follow with interest the applicant's progress in developing this specialty news and information programming service, and fully expects the CBC to abide by all of the conditions of licence set out in the appendix to this decision.

In evaluating the relative merits of this application, the Commission has also considered the concerns of a number of broadcasters, including the CTV Television Network, Global Communications Limited and Canwest Broadcasting Ltd., who voiced the opinion that Canadians are already well-served in terms of news.

The Commission has also been cognizant of the views expressed by the hundreds of interveners who supported the CBC's application, including various elected representatives. Among others, cable operators strongly endorsed the CBC's application. Rogers Cablesystems Inc. stated that "We believe that this service would be particularly attractive to subscribers given its well-developed program design and that it would constitute an effective and efficient utilization of existing resources within the C.B.C". Western Cablesystems, in referring to the Corporation's proposal, stated: "Their existing infrastructure is extensive and we feel that the C.B.C. has the ability to provide a world-class service". The application was also supported by the Alberta Federation of Labour and by Alliance Quebec.

Fernand Bélisle Secretary General

APPENDIX

Conditions of Licence

Canadian Broadcasting Corporation

1. The programming provided by the licensee on the news and information service shall be dedicated exclusively to programs drawn from the following categories as set out in Schedule I to the Television Broadcasting Regulations, 1987:

News (category 1);
Analysis and Interpretation (category 2);
Reporting and Actualities (category 3);
Religion (category 4);

Education, informal (category 5b); and
Sports (category 6).

Programs from the sports category shall include no live programming.

2. The licensee shall devote no less than 90% of the broadcast week to the distribution of Canadian programs.

For the purpose of this condition of licence, broadcast week means seven consecutive broadcast days, beginning on Sunday.

3. a) From 1 September 1988 until 31 August 1989, the licensee shall expend no less than 55.9% of the annual gross revenues derived form its operations under this licence on the acquisition of and/or investment in Canadian programs.

 b) From 1 September 1989 until 31 August 1990, the licensee shall expend no less than 59.2% to the annual gross revenues derived form its operations under this licence on the acquisition of and/or investment in Canadian programs.

 c) From 1 September 1990 until 31 August 1991, the licensee shall expend no less than 58.8% of the annual gross revenues derived from its operations under this licence on the acquisition of and/or investment in Canadian programs.

4. a) The licensee shall distribute nor more than 8 minutes of advertising material during each clock hour.

 b) The licensee shall not distribute any advertising material other than national advertising.

5. The licensee shall charge each exhibitor of this service the monthly wholesale rate per subscriber as set out in the table below:

Number of subscribers | 1 Sept. 1988 1 Sept. 1989 1 Sept. 1990 as of 1 September/ | to 31 Aug.89/ to 31 Aug. 90/ to 31 Aug. 91/ Nombre d'abonnés au | 1 sept. 88 1 sept. 89 1 sept. 90 1 septembre | au 31 août 90 au 31 août 90 au 31 aout 91 Less than 4,000,000 | subscribers/Moins de | $0.400 $0.425 $0.450 4 000 000 d'abonnés | | Between 4,000,000 and | 4,499,999 subscribers/| $0.310 $0.335 $0.360 Entre 4 000 000 et | 4 499 999 abonnés | | Between 4,500,000 and | 4,899,999 subscribers/| $0.270 $0.295 $0.320 Entre 4 500 000 et | 4 899 999 abonnés | | More than 4,900 000 | subscribers/Plus de | $0.250 $0.275 $0.300 4 900 000 abonnés |

 The monthly wholesale per subscriber rate is ti be determined on the basis of the number of subscribers as of 1 September of each year of the licence term.

6. The licensee shall install and put into operation by 1 January 1989 a satellite video uplink facility in a location in the Northwest Territories or Yukon Territory.

7. The licensee shall expend in the first year of operation of the news and information service a minimum of $250,000 for closed captioning and/or signing for the hearing-impaired of programs distributed on the news and infirmations service.

8. The licensee shall carry out and file with the Commission by 1 December 1988 the findings of a study examining the feasibility of the Corporation implementing a French-language news and information service.

9. The licensee shall file with the Commission by 30 November of each year, for the broadcast year or part thereof completed on the preceding 31 August, a report identifying in detail the quantifiable and non-quantifiable benefits flowing to the Corporation's English-language radio and television network services form the news and information service and vice versa.

10. The licensee shall file with the Commission by 30 November of each year a report for the broadcast year or part thereof completed on the preceding 31 August identifying separately each of the types of incremental costs incurred as a result of providing the news and information service, with a detailed breakout, based on the cost separation accounting producers filed with the Commission as part of this application.

11. The licensee shall file with the Commission by 30 November of each year the results of an audit carried out by an independent outside auditor for the broadcast year or part thereof completed on the preceding 31 August certifying that the news and information service is recovering fully the incremental costs incurred as a result of provision of the service and that funds paid to the Corporation out of Parliamentary appropriations are not being spent for the purpose of recovering these incremental costs.

 The audit report shall also certify that appropriate accounts have been maintained in respect of advertising revenue earned by the news and information service and that advertising revenue derived rom joint sales by the news and information service and the existing radio and television services of the Corporation have been allocated between the news and information service and existing CBC services.

12. The licensee shall file with the Commission within six months of the date of this decision detailed plans describing the schedule for full implementation of the news and information service in terms of the necessary levels of subscribers, advertising revenue and operating expenses.

13. The licensee shall adhere to its self-regulatory guidelines on sex-role stereotyping, as amended form time to time and accepted by the Commission. Until such time as the Commission has accepted revised CBC guidelines, the CBC shall adhere to its current self-regulatory guidelines on sec-role stereotyping (as set out in Appendix C to Public Notice CRTC 1986-351 dated 22 December 1986) and, as a minimum, to the CAB's self-regulatory guidelines on sex-role stereotyping, as amended from time to time and accepted by the Commission.

14. The licensee shall adhere to the standards for children's advertising set out in the Corporation's Advertising Standards Policy C-5 dated 4 June 1986 and entitled "Advertising Directed to Children Under 12 Years of Age", as amended form time to time and accepted by the Commission, provided that the policy meets as a minimum the standards set out in the CAB's Code on Broadcast Advertising to Children, as amended from time to time and accepted by the Commission.

15. The licensee shall keep separate accounts which set out for each financial year ending 31 March

 a) the gross revenues in respect o its operations under this licence:and

 b) the amounts expended by it on the acquisition of and/or investment in Canadian programs intended for distribution on its undertaking, including a breakout of the amount expended for closes captioning and"or signing for the hearing-impaired of programs distributed on the news and information service.

16. The licensee shall file a statement of the accounts referred to in section 15 with the Commission on or before 30 June in each year.

17. For purposes of these conditions, all time periods shall be reckoned according to the easter time zone.

18. The definitions of advertising material, broadcast day, broadcast month, broadcast year, Canadian program, clock hour and commercial message set out in Section 2 of the Television Broadcasting Regulations, 1987 (SOR/87-49), as amended by SOR/87-425, and the provisions of sections 5, 6, 7, 8, 10(1) and (3) to (6), 12, 13, and 14 of the said Regulations shall apply to these conditions and to the licensee with the necessary changes.