ARCHIVED -  Public Notice CRTC 1989-2

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Public Notice

Ottawa, 10 January 1989
Public Notice CRTC 1989-2
Table of Contents
1. Delegation of Control
a) Formal Reserved Time
b) De Facto Reserved Time
c) Editorial Control
2. Use of the Word "Includes"
3. Two or More Broadcasting Undertakings
RELATED DOCUMENTS: Decisions CRTC 80-704 dated 17 October 1980, 82-940 and 82-941 dated 14 October 1982, 85-653 dated 8 August 1985 and 86-976
dated 30 September 1986; Public Notices CRTC 1986-176 dated 23 July 1986, 1986-355 dated 23 December 1986 and 1987-8 dated 9 January 1987.
In Public Notice CRTC 1986-355 dated 23 December 1986, the Commission set out a number of issues with regard to radio and television networks as well as radio syndication and other new audio program developments. The Commission invited public comment on these issues and announced its intention to hold a public hearing, involving separate discussions concerning radio and television, commencing 13 April 1987 in the National Capital Region.
Following the 13 April 1987 Public Hearing, and taking into account the comments received and the discussion at the hearing, the Commission issued separate radio and television policy proposals for comment. In response to Public Notice CRTC 1988-90, "A Review of Television Policy", eleven comments were received.
Two of the comments were from individuals expressing opposing points of view about Canadian content. In one case, the commentator voiced fears that the policy would result in a reduction of U.S. programming and, in the other case, the correspondent expressed the hope that better quality Canadian programming would result.
The Government of the Yukon acknowledged the proposed changes and suggested no further recommendations. The Government of British Columbia, on the other hand, expressed disappointment that no changes to the regulatory framework were proposed and suggested that it would be preferable to identify different classes of networks. British Columbia also referred to a lack of clarity in the Commission's proposal to "retain criteria" for determiningthe existence of a network where such an operation has a significant impact on the Canadian broadcasting system.
Of the two industry-related associations which commented, the Writers' Guild of Alberta supported the proposed approach to temporary networks but expressed concern that the Commission had not addressed the need for a "defined minimum [Canadian] content in television broadcasting, similar to that proposed for radio".
The Syndicat canadien de la Fonction publique (SCFP) expressed its belief that the licensing process for temporary or "quasi-networks" should always be open for public comment. The SCFP was disappointed that the proposed policy did not ensure that networks would broadcast an appropriate quantity of programming produced by their regional affiliates.
Four licensees, in addition to the Canadian Association of Broadcasters (CAB), provided the Commission with their comments on the proposed approach to the definition respecting television networks.
Access Alberta agreed with the proposal as long as the transmission of strictly educational programming between educational broadcasters would not be the subject of a licensing process. The CTV Television Network expressed full support for the Commission's proposals though it noted that it would prefer to see the concept of intent to form a network as part of the definition of network in any new broadcasting legislation.
Global Communications Ltd. (Global), Le Réseau TVA (TVA) and the CAB all expressed concerns with respect to the proposals outlined in Public Notice CRTC 1988-90. For the most part, all three comments focused on the same issue.
Global maintained that the Commission should not widen its interpretation of the definition of network beyond clearly-defined instances of delegation of control. Delegation of control should be the primary criterion in determining the existence of a network and Global suggested that the definition should apply even if the undertakings have common ownership. Lastly, Global questioned the validity of the Commission's proposals with respect to the use of the word "includes".
TVA also disagreed with the apparent broadening of the concept of a network in the Commission's proposal. TVA stated that a network should not include operations with de facto reserved time and they proposed a much narrower definition involving a clear delegation of control by more than one undertaking, as well as a formal reserved time agreement. TVA also said that arrangements involving only the sale of programming from one licensee to another should not be considered a network operation.
In their comments, the CAB supported the principles enunciated in Public Notice CRTC 1988-90. However, the CAB also expressed its concerns with respect to any extension of the Commission's interpretation of the activity that is included under networking regulation and supervision. As was the case with Global, the CAB questioned whether the Commission's interpretation of the definition of a network is "a valid interpretation of the Commission's jurisdiction".
In summary, of the relatively few comments received by the Commission in response to Public Notice CRTC 1988-90, four express major concerns with the proposal. Three of these focus on the perceived broadening of the Commission's interpretation of the definition of network beyond clearly-defined operations where delegation of control or formal reserved time are evident. The Commission has taken all of the comments received into account in the approach which follows.
In setting out its policy regarding television networks, the Commission has taken into account the policies outlined in Public Notice CRTC 1988-89, "A Policy Respecting Radio Broadcasting Networks and Radio Syndication; and Proposed Amendments to the Radio Regulations, 1986". Clearly, the Commission's objectives in developing these proposals are the same. The Commission is aware of the need to be consistent in its approach to both radio and television networks. Increasingly, networks and syndicated programming activities are capable of reaching, informing and entertaining Canadians with high quality, diverse programming. Consequently, the Commission regards networks as an important vehicle to achieve the goals set out for the broadcasting system in the Act. However, there are important differences between the radio and television industries. While radio has been, and remains, primarily a local medium, the largest part of the broadcast day for many television stations is occupied with programming acquired from outside the local market. In the case of television network affiliates, most of the program material is usually supplied by a network operator while the remainder is produced or acquired by the local licensee. Radio uses network programming to complement its local programming and to add diversity, and such programming constitutes a relatively small percentage of its total output. Television, on the other hand, uses network programming in large blocks amounting, in many cases, to more than three-quarters of all programs broadcast.
There are three essential elements to the definition of a network as set out in the current Broadcasting Act. These are: the concept of delegation of control; the use of the word "includes"; and the existence of two or more broadcasting undertakings. A discussion of these three elements and the criteria which the Commission will use to determine their existence respecting television are set out below.
1. Delegation of control
The specific reference in the Act to the concept of control over programs or program schedules requires the Commission to regulate as a network operation any program distribution arrangement wherein such delegation occurs. To determine the existence of a delegation of control from a television station to another party, the Commission will use three primary criteria. These involve: formal reserved time; de facto reserved time; and, editorial control. Accordingly, delegation of control, and hence a television network operation, will be deemed to exist when one or more of the primary criteria are present.
a) Formal Reserved Time
Formal reserved time exists where a television broadcaster, as a condition of the acquisition of all or parts of a program, is required by a formal agreement to broadcast the program at a specified time or within specified time frames. Where formal reserved time exists, the Commission will consider that a television network operation exists. Accordingly, it will require that, prior to the broadcast of the program, a network application be filed and a network licence obtained by the person who provides the proposed programming.
It is the Commission's view that a formal reserved time agreement clearly represents a situation where a local television station has, in effect, consented to relinquish control of the station's program schedule, or parts thereof, to another party. A formal reserved time agreement is generally evinced by the existence of an affiliation agreement or similar contractual arrangement.
Under a formal reserved time agreement, a local station generally does not have the power to refuse to air a program which it has contracted to broadcast until the expiration of the agreement, except on a temporary basis and under special circumstances as provided for in the contract. The local station is required to air the program at, or within, specified clock hours or time frames.
In contrast, a purchase contract allows individual television stations to determine the scheduling of the program, whether or not a time frame is suggested by the program distributor and, thus, does not constitute a formal reserved time commitment.
Whether the programming is distributed live, by tape, or is tape-delayed has no bearing on whether formal reserved time exists.
b) De Facto Reserved Time
De facto reserved time exists where there is no formal contract or written reserved time commitment, but where there is evidence that a program, or programs, are being broadcast by more than one undertaking at a designated time and where, in the Commission's view, the program or programs affect the Canadian broadcasting system in a way similar to that where a formal reserved time agreement exists.
It is conceivable that program acquisition arrangements between distributors and local television stations may involve an informal or unwritten requirement for a program or programs to be scheduled at a specified time, as determined by a person other than the licensee of the local station. A useful indicator of the existence of such de facto reserved time is the presence of commercial content that is broadcast at a pre-determined time by the local station as a condition of the acquisition of the program. Another indicator of the existence of de facto reserved time is the simultaneous broadcast of the program by a number of local stations.
Consequently, the net effect of the distribution and broadcast of this programming on the broadcast system may be similar to the effect of centralized programming by networks and may produce a significant impact on other licensed components of the broadcast system and on a sizeable segment of the population. In such situations, the Commission may consider that a de facto television network operation exists.
As with formal reserved time, the fact that a program is delivered live, by tape or has been tape-delayed has no direct bearing on whether de facto reserved time may be deemed to exist.
c) Editorial Control
The definition of "network" in the Act implies that broadcasters may delegate control over part or all of a program or program schedule to another party, namely a licensed network operator. The Commission considers that editorial control is central to the determination of "control" referred to in the definition of "network" in the Act. Editorial control is, therefore, a key criterion in determining the existence of a network. It should be noted that there are two distinct kinds of editorial control: the power to edit or alter the contents of a program, and the power to decide whether or not to broadcast a program.
In television, it is common for the local licensee to retain the power to decide whether or not to broadcast a program but, having decided to broadcast, the licensee does not have the power to edit or alter the program's editorial content. In such a case, the Commission could consider that the local licensee has delegated editorial control to a network operator.
With respect to news distribution arrangements which generally involve some degree of pre-screening and editing by the distributor and where the station is not bound by a formal agreement to broadcast the program, the Commission will not consider these to be network operations.
In addition, the Commission has considered the matter of brokered programs. Brokerage is the practice of purchasing blocks of time from stations to produce and broadcast programming oriented to specific audiences. As stated in Public Notice CRTC 1985-139 entitled "A Broadcasting Policy Reflecting Canada's Linguistic and Cultural Diversity", the Commission recognizes that brokerage is an important source of programming, particularly for audiences not well served by mainstream broadcasting.
The Commission will not consider brokerage arrangements to be network operations provided the local station maintains control over the content of the programs and program scheduling, and brokered programs are not distributed as live programs to other stations.
In all cases where the existence of a network operation is not clear, the Commission will be guided primarily by the presence of some aspects of one or more of the above criteria, and the impact of that operation on the Canadian broadcasting system as a whole.
2. Use of the Word "Includes"
In Decision CRTC 80-704, approving the issuing of a licence for the satellite distribution of the proceedings of the House of Commons, the Commission considered the use of the word "includes" in the definition of a network found in the Act to be enlarging. Consequently, the Commission is not restricted to treating as a network only those program distribution operations where a delegation of control is present. In support of this interpretation, the Commission made reference to section 3(j) of the Act, that the system should be flexible and adaptable to new developments.
Furthermore, section 15 of the Act confers upon the Commission the authority and responsibility to:
 regulate and supervise all aspects of the Canadian broadcasting system with a view to implementing the broadcasting policy enunciated in section 3 of the Act.
The licensing, as networks, of major television program distribution operations that fulfill the criteria of delegation of control or produce a significant impact on the broadcasting system allows the Commission to regulate and supervise centrally-distributed programming at the level of the program source, as well as regulating the affiliated stations.
The Commission considers that this approach allows it to supervise and regulate the broadcasting system more effectively, ensuring the fair treatment of such operations and the orderly utilization of such sources of programming.
3. Two or More Broadcasting Undertakings
The network definition set out in the Act applies to arrangements which involve two or more broadcasting undertakings. In the past, the Commission has received several requests for an interpretation of this clause.
The Commission considers that a network operation may be deemed to exist in the case of a program arrangement involving a network operator and only one station, where the network operator also transmits the programming as a broadcaster. For private broadcasters where the undertakings are owned by the same licensee, no network licence is required since no delegation of control to another licensee occurs.
The Commission regards television network licensees as a primary component of the Canadian broadcasting system and the network licensing process as an important instrument to help strengthen that system. The programming of television network licensees contributes significantly to achieving the goals set out for the Canadian broadcasting system in the Act.
In considering a streamlined regulatory framework and licensing approach for television network operators, the Commission finds that the wide variation in network structures and programming makes it difficult to construct procedures applicable to all situations. In addition, the Commission is constrained by the Act, which, amongst other things, requires that all applications for network licences be handled via the public hearing process, with the exception of temporary network licences which may not exceed thirty days in duration.
The Commission has therefore decided to maintain its current licensing procedures for the present time.
Fernand Bélisle
Secretary General

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