ARCHIVED -  Decision CRTC 88-776

Decision

Ottawa, 27 October 1988

Decision CRTC 88-776

The Sports Network

Toronto, Ontario -880306600

Following a Public Hearing in the National Capital Region commencing 13 June 1988, the Commission renews the network licence issued to The Sports Network (TSN) to carry on a national, English-language specialty sports programming service from 1 April 1989 to 31 August 1993, subject to the conditions of licence specified in the appendix to this decision and in the licence to be issued.

This term, the end of which conforms with the end of a broadcast year, will enable the Commission to consider the renewal of this licence at the same time as that of other Canadian specialty and pay television licences.

The licensee is a partnership of Labatt Brewing Company Limited and Ault Foods Limited. Both of these companies are wholly-owned and controlled subsidiaries of John Labatt Limited, a Canadian company with diversified holdings in the brewing and dairy production industries as well as in the packaging and distribution of grocery food products and wines. John Labatt Limited also holds a 45% interest in the Toronto Blue Jays Baseball Club.

At the hearing, TSN filed a description of its service, according to which it would continue to offer a programming service devoted exclusively to all aspects of sports, including coverage of professional and amateur sports events, newscasts, magazine shows, interviews, commentaries, documentaries, audience participation (phone-in) programming, instruction and training programs and others that promote fitness and healthy lifestyles.

The TSN service is programmed on an 8-hour cycle, portions of which are repeated within 24 or 48 hours. As stated by the President of TSN, Mr. Gordon Craig in his presentation, since its inception TSN has spent more than $40 million on Canadian programming, averaging approximately 81% of its total programming budget. This is significantly in excess of the 70% minimum expenditure level that is required by condition of licence.

At the time the Commission considered its application to be permitted to be distributed as part of the basic cable service, TSN indicated to the Commission that audience participation programming would not exceed three hours per week, and that the fitness and lifestyle programming broadcast on TSN would not include feature-length movies about sports personalities, whether factual or fictional, and would be limited to a half-hour program, Monday through Friday. At the 13 June 1988 hearing, TSN made an identical commitment with respect to the next licence term.

As it has done for other specialty services and in order to ensure that TSN continues to offer the narrowcast service described in its application and at the hearing, the Commission has imposed a condition of licence designed to define and limit the service, in line with the licensee's commitments described above. The details of this condition are set out in the appendix.

TSN's Performance

When originally licensed (Decision CRTC 84-339 dated 2 April 1984), the licensee was required to devote 18% of its overall program schedule and 34% of the 6:00 p.m. to midnight evening broadcast period to Canadian programming, measured on a six-month semester basis. As of 1 January 1987, these levels increased to 35% and 50% respectively. On the basis of TSN's reports and the Commission's own measurements, the Commission is satisfied that the licensee has greatly exceeded these requirements and commends TSN for its performance.

In total, between September 1984 and the June 1988 hearing, the service provided more than 33,000 hours of sports programming, including some 1,600 hours of amateur sports event coverage. TSN now serves more than 1.3 million subscribers through some 600 affiliates and attracts an audience of men, women and children, in a ratio of 54:32:16.

According to a typical weekly schedule, TSN offers an average of 17.5 hours of sports news, scoreboard and background information, including five daily sportscasts. TSN also provides what it terms "high profile sports" (major league baseball and professional football, hockey and basketball games); coverage of events that receive less attention on conventional television services (such as soccer, boxing, college sports, auto racing, skiing and swimming); "long term events" (early rounds of golf and tennis tournaments and of curling bonspiels); "special interest sports" (rugby, cricket, Australian rules football, cycling and moto-cross); weekly sport-specific reviews (of horse racing, golf, football, hockey or baseball, appropriate to the season); as well as lifestyle and fitness programming.

At its January 1984 licensing hearing, the licensee made a number of commitments in respect of its coverage of Canadian amateur sports. It promised to provide 9.5 hours a week of such programming, including a weekly two-hour magazine program distributed during prime viewing hours and consisting of material to be supplied by Sports Canada. TSN committed to transfer all of the advertising revenue from this program to Sports Canada to offset the production and acquisition expenditures. The licensee also undertook to make available free of charge up to six minutes per day of commercial air-time for promotional messages on behalf of Canadian amateur sports groups and their activities.

The licensee reported that it had presented more than 1,300 hours of Canadian amateur sports programming over its first three years of operation, with 385 hours in year one, 426 in year two and 518 in year three.

In its renewal application, TSN advised that although Sports Canada had not supplied program material nor had it taken up the offer of free advertising time, TSN had itself provided more than 1400 promotional spots to the Participaction program and broadcast many other messages on behalf of various fitness and amateur sports activities. At the hearing TSN renewed its offer to make available a weekly two-hour program block to Sports Canada should it be able to develop program material.

TSN also committed to allocate at least 70% of its total programming budget to Canadian program expenditures. In this respect, the Commission notes that of the estimated total of $55.7 million that TSN has spent on programming between 1 September 1984 and 31 August 1988, $45.5 million was spent on the acquisition and production of Canadian material, including more than $10 million for the coverage of Canadian amateur sports. The amount expended for Canadian programming over this period is equal to 81.5% of the total program budget of $55.7 million.

At the January 1984 hearing, the licensee spoke of its plans to rely on independent producers and directors for all of its event coverage, stating that only its news segments would be produced in-house. The Commission notes the licensee's statement in its application that, over the present licence term, TSN has negotiated agreements with the Canadian independent production community resulting in more than 300 hours of original Canadian programming. In its first three years of operation, TSN spent nearly $3 million on free-lance production talent, providing 10,316 days of work for directors, producers, commentators and production assistants. In the Commission's view, the significance of these efforts is reflected in the letters of support for the renewal of TSN's licence received from several of the independent production companies that have provided TSN with programming and from the licensees of conventional television broadcasting services such as CHCH-TV Hamilton whose equipment and facilities have been rented by TSN.

At the 1984 hearing, the Commission discussed with the applicant its concern that the partners proposing to operate TSN might be given preferential treatment with respect to the rights for programs distributed on the sports service. Decision CRTC 84-339 noted "the applicant's assurances that fair and equitable advertising policies and practices [would] be maintained".

At the June 1988 hearing, Mr. Craig stated:

... we set out in September 1984 to deal in the market-place, like any other broadcaster must do, with all parties. And particularly because of program specialty being sports, there was a natural interest and ... affinity to the subject matter by the three Canadian breweries.

We deal openly with all three. We deal with Molson's, Carling-O'Keefe and Labatt's for properties that they either control or influence. We deal with all three as advertisers and all three buy time on TSN as advertisers.

The Commission did not receive any interventions with respect to this issue and is satisfied that TSN has met its commitments in this regard. In this respect, the Commission expects the licensee to continue to adhere to this commitment during the new licence term.

In January 1984 and again at the July 1987 hearing, TSN also committed not to siphon or compete for rights to sports programming distributed on conventional television. In speaking to this issue at the June 1988 renewal hearing, the licensee reiterated this commitment, and emphasized that its sports coverage differs from the event programming of conventional television licensees. It is also scheduled differently and appeals to a specialized audience.

At the June 1988 hearing, the Canadian Association of Broadcasters (CAB) suggested that, in its view, TSN's primary contribution to the Canadian broadcasting system should be through its exposure of the less represented Canadian sports or events that conventional television broadcasters have difficulty scheduling. The CAB expressed concern that as TSN attains a wider audience through distribution on cable's basic service, it might become interested in bidding competitively for the rights to major international sports events coverage. The CAB suggested that such events should be reserved for over-the-air broadcasters who can deliver their programming to more Canadian households than this optional satellite-to-cable specialty service.

When questioned on this matter, TSN admitted its interest in acquiring the rights to sports events that will attract a significant number of viewers. It stated, however, that the revenue generated by its professional sports coverage, both Canadian and international, enables the service to provide the other elements of its program service including amateur and special interest sports, sport-specific program series and programs acquired from Canadian independent producers. Mr. Craig also asserted that although TSN will become a more significant player as more cable systems elect to distribute the sports specialty service as part of the basic service, it will continue to play the role of complementary back-up to the coverage provided by conventional television broadcasters. It will also continue to provide them with live event footage for a wide range of Canadian sports and athletic activities:

... we will still never compete with the conventional broadcaster because the economics still are not there. A conventional broadcaster has access to 9 million television homes. At best, TSN as an English service will have access to maybe 4.5 [million households]...

The conventional broadcaster, as the primary rights holder in all these sports, will always have first choice of games and scheduling dates.

The Commission expects TSN to adhere to these commitments, particularly its undertaking not to siphon or compete for rights to sports programming distributed on conventional television.

The Commission notes that TSN's 1987 annual return showed a cumulative partnership deficit of $25 million. At the hearing, the licensee stated that this amount would not be recovered before the end of the new licence term.

Financial Projections for the New Licence Term

At the June hearing, TSN suggested that it had encountered some difficulties in providing financial forecasts, particularly for the first two years of its new licence term, due to the ongoing negotiations for distribution on the basic service of its cable affiliates. In this respect, on the basis of the status of their negotiations at the time of the hearing, TSN filed revised projections for the years 1988/89 and 1989/90. Its revised projected operating results assume that the transition of TSN from predominantly discretionary to basic cable carriage will take place over the two-year period to 31 August 1990, rather than effective 1 September 1988 as it had forecast in its application. The licensee also projected that TSN would continue to be distributed in the province of Quebec until the commencement of the Réseau des Sports (RDS) network.

According to the revised projections, TSN anticipates 1.782 million subscribers by 31 August 1989, 3.271 million by 31 August 1990 and 4.734 million subscribers by 31 August 1993, the end of the new licence term.

Joanne McKenna, TSN's Vice President of Finance and Administration, clarified that once 70% of TSN's subscribers receive the service on basic cable, it estimates that the penetration level for its discretionary subscribers will be in the order of 15.5% of the remaining available cable households in English Canada. In addition, there would be 7,000 subscribers from the province of Quebec, all served by CF Cable Inc. which has indicated its intention to continue to distribute the English-language sports specialty service on a discretionary basis. The licensee further stated that the proposed wholesale rates will apply to all cable systems distributing TSN whether as part of the basic service or on an unscrambled discretionary tier. The projections anticipate a level of 243,000 discretionary subscribers as of 1 September 1990, declining to 8,000 as of 1 September 1991 for the duration of the licence term. It also projected 8,000 direct-to-home, and SMATV subscribers as of 31 August 1990, increasing to 12,000 by the end of the new licence term.

With these numbers of subscribers, and using a proposed wholesale rate of $0.80 beginning 1 April 1989, increasing each year, to $1.07 as of 1 September 1992, TSN projected subscriber revenues of $241,152,000 between 1 September 1988 and 31 August 1993. In addition, as regards advertising material, TSN suggested that it should be allowed either a maximum of 12 minutes per hour or an average of 8 minutes per hour each day. On this basis, TSN anticipates advertising revenue of $47,044,000 over this same period for total projected revenues of $288,196,000.

The Commission has reviewed TSN's revised financial projections as filed at the hearing and considers that the proposed wholesale rates coupled with an inventory of an average of 8 minutes per hour of advertising material should provide the licensee with considerable flexibility for its advertising sales and should generate sufficient funds to enable the licensee to achieve its anticipated programming plans. Accordingly, in the conditions of licence set out in the appendix, the Commission has authorized the proposed wholesale rates and has imposed a maximum of an average on a daily basis of 8 minutes of advertising material per hour.

Programming Plans

The Commission acknowledges the significant contribution of this Canadian specialty sports programming service and the efforts it has made to design a program schedule which offers diversity and an attractive alternative to the program offerings available on conventional television, specialty and pay television services. In particular, the Commission commends the licensee for its extensive coverage of Canadian amateur sports and for its provision of sports events of more narrow appeal. The Commission is satisfied that TSN has exceeded the expenditure requirements imposed on it in previous decisions, and has met the requirements pertaining to the distribution of Canadian programs during the broadcast day and from 6:00 p.m. to midnight.

The Commission also notes that the licensee's compliance with its commitments and its adherence to the original orientation of the service have not hampered the popularity of the network, as evidenced by the strong subscriber demand. This was attested to at the hearing by interveners, including a number of cable licensees and the Canadian Satellite Communications Corporation Inc.

The Commision has evaluated TSN's proposals and commitments for the new licence term and it is satisfied that the conditions of licence attached to this decision and the specific expectations contained herein are consistent with the obligations imposed on programming services distributed as part of the basic service on cable, and that they reflect the unique characteristics of this 24-hour-a-day specialty sports service, the anticipated demand for the service and projected revenues of TSN in its new licence term as discussed with the licensee at the renewal hearing.

(i) Exhibition of Canadian Programming

In its application, TSN proposed that the Commission, in determining the number of hours that should be devoted to the distribution of Canadian programs, should take into account the fact that, unlike conventional television broadcasters, TSN's schedule is based on a 24-hour day divided into three cycles of eight hours. In addition, the licensee pointed out that it did not anticipate that TSN would be distributed on the basic service of a majority of its cable affiliates until the second or third year of its new licence term.

Accordingly, in its application TSN proposed to devote 35% of its schedule, based on a 24-hour day, to the distribution of Canadian programs while it remained predominantly a discretionary service. Once it is predominantly a basic service, it would increase this commitment to 50% based on a 24-hour day. At the same time TSN indicated that, whether or not it was distributed as part of the basic cable service, it would devote at least 50% of the period from 6:00 p.m. to midnight to the distribution of Canadian programs.

In support of its request that the Commission base TSN's Canadian content requirement on a 24-hour day rather than an 18-hour broadcast day, Mr. Craig stated at the hearing:

TSN is a 24-hour broadcast service and TSN's full broadcast day should be the yardstick against which its Canadian content is measured.

Measured as a 24-hour service, TSN's weekly schedule would contain a minimum of 84 hours of Canadian programming [4,368 hours a year], which materially exceeds the requirement applicable to the conventional broadcasters of 75.6 hours a week ...

TSN is proposing to telecast a minimum of 437 more hours per year of Canadian programming than that required of conventional broadcasters ...

TSN's proposal for 50% of total programming based on a 24-hour day would, in effect, generate 12 hours per day of Canadian programming (including repeats). The licensee argued that, if it is required to measure its Canadian content on the conventional 18-hour broadcast day, TSN would have to reorient its service dramatically and concentrate repeats of foreign programming between midnight and 6:00 a.m. Eastern time, while repeats of Canadian programming would have to be offered back-to-back during the conventional broadcast day. The licensee noted that subscribers in the Pacific time zone would receive little Canadian programming between 9:00 p.m. and 3:00 a.m. and would lose the late-night edition of TSN's half-hour "Sportsdesk" program, which is now broadcast live at 2:00 a.m. Eastern time (11:00 p.m. Pacific time). This sportscast presents a comprehensive package of sports information and is scheduled specifically for subscribers in the Pacific time zone.

It asked the Commission to take into consideration TSN's unique role as the provider of a national specialty satellite network service that reaches viewers simultaneously from one end of the country to the other, as distinct from conventional broadcasters who transmit their signals over-the-air in individual local markets. TSN also stated its intention to originate more live event coverage from the West so as to remove any perception among subscribers that the specialty sports service is predominantly an eastern service. This concern was reflected in the comments of three individuals from Calgary.

The Canadian Broadcasting Corporation and TVOntario intervened against TSN's proposal, noting that in Public Notice CRTC 1986-199 dated 13 August 1986, the Commission had established a number of criteria that specialty programming services seeking basic cable carriage would have to meet, including the requirement that such services comply with the same Canadian content regulations as conventional television broadcasters.

At the hearing, TSN modified its position somewhat. It proposed that, should the Commission agree to consider a 24-hour broadcast day, it would devote at least 50% of this period to the distribution of Canadian programs, whether or not it was on basic, and that these programs would be distributed evenly over the entire day. If, however, the Commission were to retain the 18-hour measurement period, TSN proposed to retain the 35% Canadian content requirement over the broadcast day and 50% between 6:00 p.m. and midnight, measured on a semester basis, until 31 August 1989. Commencing 1 September 1989, when it expects that it will be distributed as part of the basic service by a majority of its cable affiliates, it committed to devote not less than 60% of the 18-hour broadcast day and 50% between 6:00 p.m. and midnight to the distribution of Canadian programs, as is required of conventional broadcasters.

The Commission agrees with the licensee that this 24-hour-a-day national satellite-delivered specialty service has an obligation to provide subscribers in the western part of Canada with a service comparable to that received by those residing in the east. The Commission notes that TSN's proposed 24-hour schedule will provide western Canadians with a live late-night sportscast and will permit more coverage of evening sports events originating in western Canada. Moreover, the 24-hour basis for calculation will result in 8.5 more hours of Canadian programming each week. For these reasons, the Commission has decided to permit TSN's Canadian content to be calculated on this basis, rather than the 18-hour broadcast day as is the case with conventional television broadcasters and the other specialty services that are distributed on cable. Accordingly, by condition of licence, the Commission will require TSN to devote not less than 50% of each 24-hour day and 50% of the time between 6:00 p.m. and midnight (Eastern time), averaged over the broadcast year, to the distribution of Canadian programs. Further, as agreed to by the licensee, the Canadian programming shall be evenly distributed throughout the broadcast day.

In describing its programming plans for the new licence term, TSN stated its intention to continue to make abundant use of Canadian freelance talent and to continue its support of private sector broadcasters through the rental of their mobile facilities. It also spoke of its effort to search out new sports properties for television, "events that would never reach the living rooms of our viewers without TSN". It also pledged to increase its support for Canadian independent producers by co-producing or purchasing a new 13-week series each year of the new licence term. Finally, the licensee committed to increase its coverage of Canadian amateur sports by more than 20% from the current commitment, to a total of more than 600 hours by the final year of the new licence term.

The Sports Federation of Canada (SFC), a non-profit voluntary sports advocacy organization intervened in support of TSN's renewal application. It commended the licensee for its overall sports coverage, the complementarity of its programming and the national scope of its sports news as well as its coverage of lesser-known athletes and sports events. At the same time, the SFC suggested that TSN could increase the number of hours devoted to amateur sports and could provide more coverage of issues affecting the sports community such as alcohol and tobacco advertising, performance enhancing drugs, and violence and fair play.

TSN's projections indicate that the number of hours to be devoted to Canadian amateur sports coverage will increase between 1 September 1989 and 31 August 1993, rising from 500 hours in the first year to 600 hours in the last.

Having reviewed the licensee's commitments to Canadian amateur sports for the new licence term, and the comments of the SFC in this regard, the Commission is not satisfied that the exhibition requirements for the new licence term represent a sufficient effort in respect of this important aspect of the licensee's programming mandate. Accordingly, the Commission expects TSN to devote an additional 20 hours of programming each year to amateur sports over that committed to by the licensee, beginning with 217 hours for the five-month period from 1 April 1989 to 31 August 1989, 540 hours for the year ending 31 August 1990, increasing by 20 additional hours per year up to and including the broadcast year ending 31 August 1993.

(ii) Expenditures on Canadian Programming

In its application, TSN proposed to allocate a minimum of 70% of its total programming budget over the new licence term to Canadian programming expenditures. The sports specialty service produces its own news, sports updates and background information and other program segments that link the various sports events it covers. The largest portion of its program budget is spent on the acquisition of program rights.

According to the licensee's programming expenditure projections, TSN will spend 76.5% of its program budget on Canadian programming production and acquisition on average between 1 September 1988 and 31 August 1993, and an average annual Canadian programming expenditure of $22,075,000; this compares with projected foreign programming expenditures averaging $6,992,000 per year over the same period.

Although the 76.5% level appears to be less than the approximately 81% of its total programming expenditures which TSN has spent in the current licence term on Canadian programs, Mr. Craig explained at the hearing that the difference is the result of a readjustment in the payments for broadcast rights because of the existence of the RDS network.

When questioned at the hearing as to why it was committing to maintain in the coming licence term a level of expenditure on Canadian programming, expressed as a percentage of its total programming budget, lower than the level actually achieved during the current licence term, Mr. Craig explained that, in addition to the adjustments required by the licensing of the RDS network, TSN generally considered each of the conditions of its licence to be a minimum standard to be exceeded wherever possible:

We also need to be able to accommodate, on an ongoing basis, key international events from around the world that are of high interest to our viewers ... the commitment that we have permits us the flexibility to ... accommodate in our schedule some of the things like non-Canadian product that reflect the multicultural value of the communities we serve.

He went on to say that according to TSN's financial projections for the new licence term, calculated on the basis of a 70% Canadian program expenditure commitment, between 1 September 1988 and 31 August 1993, TSN will spend approximately $110,373,000 on Canadian programming.

The Commission acknowledges that the projected increases in subscriber and advertising revenues will result in a meaningful increase in its dollar commitment to Canadian programming. However, the Commission considers that TSN is in a position to allocate 75% of its total programming expenditures to Canadian programs, without losing the necessary flexibility to provide coverage of significant international sports events. Accordingly, as set out in the appendix to this decision, the Commission will require TSN, by condition of licence to devote a minimum of 75% of its total programming expenditures in each broadcast year to the acquisition of or investment in Canadian programs.

In its application, the licensee proposed that its Canadian programming expenditures will range between 36% and 44.5% of gross revenues during the new licence term. The Commission expects that the licensee will expend the percentage of gross revenues on Canadian programming projected for each year of the new licence term.

In addition, the Commission expects TSN to increase its proposed expenditures on Canadian amateur sports, in keeping with the increased number of hours to be devoted to this programming. Specifically, the Commission expects that TSN should expend $1 million from 1 April 1989 to 31 August 1989, $2.8 million from 1 September 1989 to 31 August 1990, and an additional 5% in each subsequent year of the new licence term, so that by 31 August 1993, TSN will have spent approximately $13 million for Canadian amateur sports over the new licence term.

When questioned at the hearing about the budget it proposed to allocate in the new licence term to Canadian amateur sports coverage as compared to its expenditures on foreign programming, TSN indicated that it could not maintain the past ratio of expenditures in these two areas because of the ever-increasing cost of foreign program rights.

In terms of investment in Canadian programming, the Commission notes the licensee's statement at the hearing that the independent production community will have provided TSN with some 500 original hours of Canadian programming over the first term of licence. TSN estimated that it would obtain 125 hours of independently-produced programs in the 1987/88 broadcast year, and cited as examples a weekly 90-minute wrestling program that originates in Calgary, a 52-week half-hour fishing series produced in Hamilton, and another half-hour weekly program devoted to horse racing. At the hearing, TSN committed to increase the number of original hours of independently-produced material from 135 original hours in 1988/89 to 175 hours by the end of the licence term. The Commission expects the licensee to adhere to this commitment in respect of independent production.

Other Matters

Closed Captioning

In its application, TSN committed to the closed captioning of the half-hour 6:30 p.m. telecast "Sportsdesk" as of 1 September 1989. This will represent more than 900 hours of closed captioning and an expenditure of $250,000 over the new licence term.

It also stated that it had not yet determined which type of captioning technology would be most appropriate for in-house production and for live event coverage.

The Canadian Captioning Development Agency Inc., the Ontario Closed Caption Consumers, Premier Subtitling Inc. and Sous-Titrage Plus all commended TSN's interest in serving hearing-impaired viewers but objected to the delay in implementation of the closed-captioned telecast "Sportsdesk". They also pointed out that the technology exists to provide captioning of sports events, and is currently being used by the TVA network for the hockey games of the Montreal Canadiens.

In response to these concerns, at the hearing the licensee committed to close caption a minimum of 50 hours per year of event programming, commencing immediately. It promised to increase this to 75 hours per year as of 1 September 1991 for the duration of the new licence term.

The Commission commends TSN for its initiatives in this area and expects it to abide by its commitments, particularly with respect to the captioning of "Sportsdesk". The Commission encourages the licensee, within the first year of the new licence term, to install a Telephone Device for the Deaf to provide for better communication between TSN and the deaf and hearing-impaired.

Sex-Role Stereotyping and Violence

TSN is currently adhering on a voluntary basis to the CAB's self-regulatory guidelines on sex-role stereotyping. Joanne McIntosh, TSN's supervisor of network presentation, also described the specialty service's mechanisms for prescreening acquired programming and its efforts to ensure the strong representation of women in its sports coverage either as participants or commentators and program hosts. The Commission commends the licensee for its efforts in this area and, as is the case for conventional television broadcasters and other specialty services available as part of the basic service, requires TSN to adhere to the CAB's guidelines on sex-role stereotyping, by condition of licence.

The matter of violence in sports programming was also discussed with the licensee. TSN explained that it reviews all taped program material before it is broadcast and that scenes of gratuitous violence are identified and, if considered offensive, eliminated. The Commission notes TSN's policy not to emphasize violent acts in the live broadcasting of body contact sports such as hockey through unnecessary replays of such actions and analysis by commentators. The Commission also notes TSN's participation on the television subcommittee of the Commission for Fair Play. This Commission, a national organization formed by the Minister of State for Fitness and Amateur Sport in 1986, consists of 20 volunteer representatives from professional and amateur sports organizations, the broadcast and print media, the private sector and the educational field, whose objectives are to promote application of the principles of fair play and to eliminate violence in sport.

Multiculturalism

In line with the licensee's commitments given at the hearing, the Commission expects TSN to ensure that its programming reflects realistically the participation of multicultural minorities in Canadian society, and to continue to recognize the diversity of its viewing audience by providing coverage in its programming of sports of particular interest to Canada's ethnic communities.

Regulatory Provisions

The Commission intends early next year to issue for public comment proposed regulations dealing specifically with specialty undertakings. Included in these regulations will be those provisions of the Television Broadcasting Regulations, 1987 that were incorporated by reference into the licences of the specialty networks licensed by the Commission on 30 November 1987. In the interim however, as discussed with the licensee, the Commission expects TSN to adhere to sections 5, 6, 7, 8, 12, 13, 14 and subsections 10(1), 10(3) to 10(6) of the television regulations with the necessary changes.

Financial Reporting

In its evaluation of this renewal application, the Commission notes that the partners who hold the licence for TSN do not prepare audited financial statements for this licensed undertaking separate from those of the parent company, John Labatt Limited. Although the divisional financial reporting may meet the internal requirements of the licensee, the Commission found that the financial statements provided made it difficult for the Commission to reconcile the figures submitted in the licensee's annual returns with the calculations contained in its renewal application of the amount it had expended on Canadian programs.

Accordingly, the Commission will issue a revised version of the annual return to be filed by TSN. The licensee will be required to file, as part of its annual return, annual audited financial statements for the partnership licensed to carry on this undertaking for each fiscal year that terminates during the term of its licence. The licensee will also be required to provide unaudited financial statements for the TSN undertaking for each twelve-month period ending 31 August, on which the licensee's auditor has performed a review in accordance with section 8200 of the Canadian Institute of Chartered Accountants (CICA) handbook.

Interventions

In its assessment of TSN's renewal application, the Commission has given consideration to the views expressed by the 47 interveners who endorsed TSN's plans for the new licence term, including the Canadian Satellite Communications Corporation Inc., TVOntario a dozen cable television operators, and individual subscribers who commented on the positive contribution of this service to enhanced viewer choice.

A number of interveners addressed the move of this specialty service to basic cable, including the Government of Ontario, the Canadian Broadcasting Corporation, the Canadian Cable Television Association and the Canadian Association of Broadcasters. They provided a range of views on recent industry trends in the packaging and marketing of narrowcast services and on the obligations that ought to be imposed on programming services that are carried on basic cable. In addition, the Satellite Communications Association of Canada and Multi-Unit Cable Corporation commented on TSN's lack of precise plans for serving the DTH/SMATV market and the pricing of the service when distributed in this way. The Public Notice introducing the renewal decisions released today addresses these matters in general terms.

Letters of endorsement were also received from three Ontario community colleges commending TSN's internship and student employment policies and from Canadian amateur and professional sports associations.

Earlier in this decision, the Commission noted the comments of certain western Canadians objecting to the renewal of TSN's licence on the grounds of the strong eastern orientation of the service. Their concerns have contributed to the Commission's decision to adjust the measurement period for calculating Canadian content from an 18-to a 24-hour basis, resulting in more Canadian programming and enhanced opportunities for the coverage of sports events originating in western Canada.

The Commission thanks all of the interveners for their contribution to the public process.

Fernand Bélisle
Secretary General

THE SPORTS NETWORK

Conditions of Licence

Nature of the Service

1. The licensee shall provide a national English-language network service that consists of programming that is dedicated exclusively to all aspects of sports, including coverage of professional and amateur sports events, sports newscasts, magazine shows, interviews, commentaries, documentaries, audience participation programs, instruction and training programs and other programs that promote physical fitness.

The licensee shall not distribute more than one half-hour of audience participation programs per 8 hour block of programming, with a maximum of 10 hours per broadcast week and shall not distribute feature length films about sports personalities whether factual or fictional.

Exhibition of Canadian Programs

2. The licensee shall devote to the distribution of Canadian programs not less than

(a) 50% of the broadcast year and

(b) 50% of the time from 6:00 p.m. to midnight (Eastern time) during the broadcast year

and shall distribute these programs evenly throughout the broadcast day.

Expenditures on Canadian Programs

3. The licensee shall expend not less than 75% of its total programming budget in each broadcast year on the acquisition of or investment in Canadian programs.

Advertising

4. The licensee shall distribute not more than an average of 8 minutes of advertising material per clock hour during each broadcast day and shall not distribute any commercial messages other than national commercial messages.

5. The licensee shall charge each cable television licensee that distributes TSN as part of its basic service the wholesale rate set out below:

1 April 1989-31 August 1989/1er avril 1989-31 août 1989 $0.80
1 September 1989-31 August 1990/1er septembre 1989-31 août 1990 $0.88
1 September 1990-31 August 1992/1er septembre 1990-31 août 1992 $0.97
1 September 1992-31 August 1993/1er septembre 1992-31 août 1993 $1.07

Sex Role Stereotyping

6. The licensee shall adhere to the CAB's self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.

Financial Statements

7. The licensee shall file audited annual financial statements for the partnership licensed to carry on this undertaking for each of its fiscal years that terminates during the term of the licence.

Definitions

8. In these conditions:

"broadcast day" means a 24-hour period beginning at 6:00 a.m. Eastern Time;

"broadcast year" means the broadcast days in the period from 1 April 1989 to 31 August 1989 and in each 12-month period thereafter beginning on 1 September.

"expend on acquisition" means

(a) expend to acquire exhibition rights for the licensed territory, excluding overhead costs;

(b) expend on the following items associated with the production of a program:

* talent fees (on air and other)

* directly attributable salaries and benefits

* film and tape

* studio sets, props and other production materials

* use of remote and other production facilities

* delivery of remote programs to the satellite uplink or main studio and

* any other matter directly related to the production of a program; or

(c) expend on the production of filler programming, as defined in section 2 of the Pay Television Regulations, SOR/84-797 including direct overhead costs.

"expend on investment" means expend for the purposes of an equity investment or an advance on account of an equity investment but not overhead costs or interim financing by way of loan.

"advertising material", "Canadian program", "clock hour" and "commercial message" shall have the meanings set out in section 2 of the Television Broadcasting Regulations, 1987 SOR/87-49, as amended.