ARCHIVED -  Public Notice CRTC 1990-10

Public Notice

Ottawa, 31 January 1990

Public Notice CRTC 1990-10

REGULATIONS RESPECTING PAY TELEVISION NETWORKS

Related Documents: Public Notice CRTC 1988-173 dated 27 October 1988, Public Notice CRTC l989-6l dated 6 June 1989.

I.INTRODUCTION

On 27 October 1988, the Commission released Decisions CRTC 88-772 to 88-774 which renewed the general interest pay television network licences issued to First Choice Canadian Communications Corporation, Allarcom Pay Television Limited and Premier Choix:TVEC Inc. In those decisions, the Commission announced that it intended to amend certain provisions of the Pay Television Regulations in order to deal with matters raised at the hearing which led to the Commission's decisions.

In Public Notice CRTC l989-6l, dated 6 June 1989, the Commission set out the amended regulations for public comment. Comments were originally due on l8 July 1989 but this deadline was extended to l8 August 1989.

The Commission received a total of l3 written comments from the following parties: Lethbridge Television Limited, National Film Board of Canada (NFB), the Government of British Columbia, Friends of Canadian Broadcasting, Cathay International Television Inc. (Cathay), CFCF Inc., Canadian Film and Television Association, Family Channel, Astral Bellevue Pathé Inc. (Astral), First Choice Canadian Communications Corporation (First Choice), Allarcom Pay Television Limited (Allarcom), Premier Choix:TVEC Inc. (SuperEcran) and Ethnic Television Broadcasters.

The Commission wishes to acknowledge the important contribution made by all submissions. The opinions and expertise reflected in the submissions played a significant role in the Commission's final determination of the new pay television regulations.

II. CHANGES TO THE PROPOSED REGULATIONS

As a result of the comments received, the Commission has made a number of changes to the proposed regulations. These changes are highlighted below.

(i)Interpretation

In Public Notice l989-6l the Commission proposed that filler programming would be restricted to programming no longer than l5 minutes in length. SuperEcran noted that it regularly has to use programming longer than l5 minutes because films are typically 98 minutes in length. It therefore suggested that the Commission modify the definition to increase the length of filler programming to 30 minutes. The Commission accepts this argument and has modified the definition accordingly. The Commission emphasizes, however, that filler programming must not consist of series programming.

(ii)Programming Content

(a) Language and Pictorial Representations

The proposed regulations prohibited the distribution of any obscene or profane language or pictorial representations. First Choice, Allarcom and SuperEcran suggested this is unnecessary given the discretionary nature of pay television. They further pointed to the fact that in accordance with the Pay Television Programming Standards and Practices (Standards and Practices) licensees are responsible for the careful selection, classification and scheduling of programming. In addition, the Commission stated in the recent renewal decisions that it expected licensees to comply with these Standards and Practices.

The Commission notes that, under the terms of the Standards and Practices, licensees are responsible for ensuring that no material shall be selected that is contrary to law or offensive to general community standards. The Commission has received very few complaints regarding programming content since 1985, when it accepted the Standards and Practices, and is of the view, following the most recent renewal hearings, that pay television licensees are making every effort to adhere to this industry code. Given the discretionary nature of this service and the guidelines in place, the Commission is of the view that there is no need to introduce this additional requirement.

(b)Commercial Messages

The proposed regulations prohibited licensees from distributing any commercial messages. Cathay submitted that ethnic pay television network licensees should be exempted from this restriction.

The Commission notes that in its Call for Applications for Pay Television Services (CRTC Public Notice dated 21 April 1981) it stated that the Commission was not prepared to license pay television undertakings which draw on advertising revenues. The Commission does not intend to re-open this issue at this time and has therefore not altered the prohibition of commercial messages.

(c) Programming Produced by a Licensee or a Related Person

The proposed regulations restricted licensees from distributing programming produced by a licensee or a related person after the date on which the Commission granted a licence to the licensee.

The Commission notes that the original intent of this section was to ensure that, upon Astral's purchase of First Choice and SuperEcran, Astral would not be given an unfair advantage over other Canadian independent production companies due to its ownership interest.

First Choice and Astral, however, noted that this provision would grandfather only those Astral productions made prior to 18 March 1982. Astral suggested that a more appropriate date would be the one upon which it was authorized to acquire control of First Choice. The Commission is of the view that no regulatory interest is served in prohibiting the distribution of programs produced by Astral between 18 March 1982 and 15 November 1983 and has amended the regulation accordingly.

(d) Advising Viewers of Programming Content

The proposed regulations retained the existing requirement that licensees advise viewers at the beginning and in all promotion of the program if a program was not suitable for an audience other than an adult audience by reason of its subject matter.

First Choice, Allarcom and SuperEcran noted that provisions for ensuring accurate content ratings and disclaimers for use on air and in the TV guide are provided in the Standards and Practices and therefore suggested that there is no need for this section.

The Commission notes that section C of the Standards and Practices provides that 1) program guides must provide warnings regarding the nature of the material to be aired, 2) simple letter classifications must be provided in pay TV guides for all programs, and 3) on-air warnings at the beginning of programs must be provided where appropriate. As noted above, the Commission has received very few complaints recently about programming content and considers that licensees are meeting this requirement by means of their adherence to the Practices and Standards. This provision has therefore been deleted.

(iii) Logs and Records

The proposed regulations stated that a licensee shall retain a clear and intelligible audio-visual recording of all its programs for a period of four weeks after the date of distribution.

First Choice, Family Channel, Allarcom and SuperEcran commented that this provision is unnecessary since they could obtain a copy of their programming from suppliers if necessary.

The Commission notes that it must ensure that a licensee is providing the Commission with an exact copy of the program which was distributed and should not have to depend on a third party to make this material available. This provision therefore remains unaltered in the Pay Television Regulations, 1990.

(iv)Requests for Information

The proposed regulations stated that a licensee, at the request of the Commission, shall respond to any complaint regarding programming or any other matter that the Commission wishes to investigate.

This section has been amended to bring it into line with the modifications made to a similar provision in the Specialty Services Regulations, 1990. The Commission wishes to emphasize that licensees will be required to address only those matters which the Commission has been mandated to regulate and supervise, in accordance with the Broadcasting Act. The proposed section has been reworded to reflect this position.

(v) Transfer of Ownership and Control

In Public Notice CRTC l989-6l, the Commission proposed to modify the licensees' obligations with respect to the transfer of ownership and control to bring them into line with those of Section l4 of the Television Broadcasting Regulations, 1987. In addition, the Commission proposed to change the existing requirements set out in conditions of licence pertaining to the separation of ownership and control of pay television networks from cable television systems or other pay television exhibitors.

Subsection 7(2)(c) of the proposed regulations provided:

7(2) Except as otherwise provided in subsection (6) or pursuant to a condition of its licence, a licensee shall obtain the prior approval of the Commission with respect to any act, agreement or transaction that, directly or indirectly, results in

c) a person who owns more than five per cent of the issued voting securities of

(i) a person licensed to operate a broadcasting receiving undertaking or any undertaking engaged in the exhibition of pay television, or

(ii) a person that has, directly or indirectly, effective control of a person referred to in subparagraph (i)

having control of any of the issued voting securities of the licensee or a person that has, directly or indirectly, effective control of the licensee.

First Choice, Astral, Allarcom and Family Channel noted that paragraph 7(2)(c) would be activated if the person in question acquires control of only one of the voting securities of the licensee or a person that has, directly or indirectly, effective control of the licensee.

Family Channel further noted that it would be virtually impossible for the licensee to obtain the requisite approval under the scenario of paragraph 7(2)(c). It suggested that a licensee may possibly never know that such a transaction has even taken place and that therefore it is not realistic to expect the licensee to police such a transaction.

Family Channel also noted that as a result of the provisions of paragraph 7(2)(c) and subsections 7(3) and 7(4) which require the licensee to give notice of certain transactions, there may be circumstances where the licensee must obtain approval to the transaction then give notice of the same transaction. Family Channel suggests that it would be more effective and efficient to ensure that the notification provisions are complementary to one another to minimize duplication.

The Commission has carefully reviewed the provisions relating to the transfer of ownership and control and has concluded that a less onerous approach, which continues to address its concerns over vertical integration, is appropriate in the current broadcasting environment. Specifically, this provision has been modified to require licensees to obtain the Commission's approval for the acquisition of more than 10% of the issued voting shares of the licensee or a controlling company by a person already controlling a cable company or other exhibitor of pay television. With respect to the notice requirements, the wording of this section has been modified slightly to emphasize that notification is not required where approval is obtained. The Commission notes that these new provisions apply to future acquisitions only.

(vi)Schedule I

(a)Production Source

Schedule I of the proposed regulations identified a number of "Production Sources" as part of the licensee's logging requirements.

First Choice and Allarcom noted that since much of their programming is acquired from independent distributors, they are not usually in a position to determine the source of production.

The Commission recognizes that pay television network licensees may, in some cases, have difficulty in determining the source of productions. The Commission will therefore require the identification of a Canadian production when it is known. The Commission wishes to emphasize, however, that licensees should make their best efforts in acquiring production source information and should log the production source of every Canadian production that can be identified.

(b)Target Audience

The proposed regulations included a number of different target audience classifications which were to be included in the key figure used in the program log or machine readable record to describe the program distributed.

First Choice and SuperEcran noted that they are general interest pay television network licensees andtherefore did not see a need for these specific audience classifications.

The Commission has reviewed the relevant conditions of licence and has modified the classification for "Children" and added a new classification for "Families".

With respect to the logging of target audiences, the Commission wishes to remind the licensees that the key figures are used to monitor compliance with conditions of licence and that a target audience corresponding, where appropriate, to a requirement set out in the conditions, need be identified for each program.

The proposed regulations included logging requirements for film classifications established by the classification boards of Ontario and Quebec.

Allarcom noted that, with respect to item 4(5) of Schedule I, it is reluctant to seek out and ascertain the film classification from two film boards which are located in provinces which it is not licensed to serve. It further pointed out that it is licensed to serve a number of provinces which may have conflicting ratings, and therefore did not consider that information regarding provincial film classifications would be useful to the Commission. Instead, the licensee considered that the Standards and Practices should continue to govern film classifications. First Choice suggested that the tracking of these classifications would be time-consuming and impractical.

The Commission believes that it can rely on any conditions of licence that create the obligation for some Pay TV licensees to submit film classifications for feature theatrical release as well as the guidelines set out for film classification in the Standards and Practices. These film classifications have therefore been removed from the regulations.

(c)Categories

The NFB commented that the exclusion of the term "Documentary" from the "Categories" section of Schedule I may have a detrimental effect on the ultimate use of this genre of programming. The Commission continues to encourage licensees to distribute all types of under-represented programming, however, after carefully reviewing this section, the Commission believes that documentary programs can be adequately logged under the existing categories.

IV.IMPLEMENTATION

As outlined in Circular No. 368, the Commission has introduced in the regulations new logging requirements for pay television network licensees. In order to phase in the new logging procedures, the Commission has provided that the requirement to use the new key figure will not take effect until 1 September 1990. Until that time, licensees are expected to continue to log their programs following the method set out in the Pay Television Regulations, as modified by any conditions of licence. Licensees are invited to apply to the Commission to amend their licences to remove any requirements that are set out in conditions of licence and are now found in the Pay Television Regulations, 1990. Licensees are also invited to apply to the Commission to remove, as of l September 1990, any requirements relative to the use of the categories contained in the Television Broadcasting Regulations, 1987 that are set out in conditions of licence. In the absence of such an application, the licensees will be subject to both sets of requirements, with the attendant enforcement mechanisms.

The changes discussed in this document are reflected in the revised text of the regulations attached to this Public Notice. This document will be registered and published in the Canada Gazette.

Fernand Bélisle
Secretary General