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Ottawa, 28 August 1991
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Decision CRTC 91-675
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Consortium de Télévision Québec Canada
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Montréal, Quebec - 910612100 - 910102300
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Following a Public Hearing in the National Capital Region beginning on 8 July 1991, the Commission approves the application by Consortium de Télévision Québec Canada (the Consortium), a company incorporated by letters patent issued under the provisions of Part II of the Canada Corporations Act, for authority to acquire the assets of the French-language specialty programming network "TV5 Québec Canada" (TV5), owned by the Consortium de Télévision Québec Canada (an association of broadcasters and producers linked by a partnership agreement), and for a licence to operate the specialty programming undertaking.
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The Commission notes that the application for approval of the transfer of assets results from an internal reorganization of the Consortium designed to rationalize the undertaking's operations and ensure more balanced representation of each of the partners. With respect to its incorporation as a non-profit corporation, the applicant stated at the public hearing that any future financial surplus would be entirely reinvested in program production. In view of the continuity ensured by the presence on the board of directors of the majority of the founding members, and the fact that the restructuring does not change the Consortium's control over TV5's program schedule, the Commission considers that approval of the asset transfer application is in the public interest.
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The application for renewal of TV5's licence, which expires on 31 August 1991, was also scheduled for consideration at the public hearing. Since the Commission will issue a new licence pursuant to the transfer of assets authorized by this decision, the current licence does not have to be renewed. However, the amendments proposed as part of the renewal application, and which were discussed at the public hearing, are dealt with in this decision. The Commission notes the applicant's statement at the hearing that it would assume the commitments and obligations made in the context of the renewal application.
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The Commission will issue a licence to the Consortium, expiring 31 August 1993, subject to the terms outlined in this decision and the conditions of licence contained in the Appendix. The two-year licence term will allow the licensee sufficient time to decide on the orientation it intends to follow in the future and enable the Commission to follow closely the development of TV5's service. This term will also enable the Commission to consider the renewal of TV5's licence at the same time as those of other Canadian specialty programming services.
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On 30 November 1987 (Decision CRTC 87-895), the Commission licensed the operation of TV5, along with other Canadian specialty programming and pay television services. TV5 is a French-language international specialty television service. Approximately 80% of its programming originates with television networks in France, Belgium and Switzerland, while the remainder of the schedule consists of Canadian programs. This satellite-to-cable service is available on an optional basis to cable television affiliates for distribution on the basic service, in accordance with the provisions outlined in Public Notices CRTC 1987-260 and 1987-261 published the same day.
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TV5 began operations on 1 September 1988. The service is currently available in more than 2.7 million Canadian homes, including approximately 1.6 million homes in Quebec.
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In its renewal application, the Consortium asked the Commission to amend its status, as currently recognized, as well as certain of its conditions of licence relating to Canadian content, advertising and rates. The applicant indicated that, after a little over two years of operation, it must now take into account new factors that are affecting its initial objectives. These factors include the creation of a body for multilateral co-operation entitled the "Conférence des Ministres responsables de TV5", which is responsible for defining the overall orientation of TV5 both in Europe and in Canada, as well as the proposals relating to the future of TV5 contained in two official reports prepared in Canada and France (the Bureau and Decaux reports). Among the general directions that participating governments have proposed for TV5 is an emphasis on extending the service internationally to include Africa, the Caribbean and South America, in addition to Europe and the United States.
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The Consortium requested that the Commission grant it special status whereby TV5 would become a programming service serving the national public interest. Specifically it requested the Commission, pursuant to subsection 9(4) of the Cable Television Regulations, 1986 (the regulations), to make the distribution of TV5 mandatory on the basic service of all Class 1 and 2 cable distribution undertakings in Canada.
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In support of its application, the applicant noted that TV5 is supported by the governments of Quebec and Canada and is the subject of international reciprocity commitments regarding its distribution. It therefore concluded that its service presents a special case and that it should be distributed as widely as possible and made available to all Francophones in Canada.
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In its 1987 decisions, the Commission rejected all applications for the mandatory distribution of specialty programming services. The Commission was concerned that, over time, problems would arise with licensees' accountability to their audiences and to the broadcasting system. It also considered that the distribution of these services could not be deemed to be of national public interest pursuant to subsection 9(4) of the regulations.
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The Commission notes the numerous interventions it received opposing mandatory distribution for TV5, including those filed by the Canadian Cable Television Association (CCTA), the Canadian Association of Broadcasters (CAB) and the Ontario Ministry of Culture and Communications. CCTA pointed out that the applicant has not conducted any market surveys to demonstrate that cable subscribers throughout Canada would be prepared to pay for TV5 on the basic service. The two private French-language television services, Télé-Métropole and Télévision Quatre Saisons, were also opposed to this request. Télé-Métropole, which is a member of the Consortium, maintained that mandatory status must be granted to its programming service and to that of the TVA network before being granted to TV5. Moreover, many cable subscribers in non-Francophone markets feared that the mandatory distribution of TV5 would lead to the removal of English-language services currently available on the basic service.
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Having studied the various aspects of the application before it, the Commission considers that the applicant has not provided it with sufficient grounds to justify a departure from the position taken in 1987. Specifically, given the emphasis placed on TV5's international role, along with the proposed substantial reduction in Canadian programming, the Commission considers that it does not have sufficient information to determine the nature of the TV5 service in the foreseeable future. Therefore, the Commission denies the application for special status filed by the applicant. TV5 must continue to be made available on an optional basis to cable television affiliates for distribution in accordance with the provisions set out in Public Notices CRTC 1987-260 and 1987-261. The Commission notes that, in general, during its first two years of operation, the licensee has significantly surpassed the commitments it made with respect to Canadian programming. According to the data in the renewal application, the level of Canadian content was 27.4% the first year and 21.4% the second year, while the promised level was 19.5%. Original, first-run Canadian programs amounted to 370 hours the first year, compared to a commitment of 357 hours, and 444 hours the second year, compared to a commitment of 365 hours.
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The amount devoted to Canadian programming totalled $5.2 million the first year compared to a promise of $4.9 million, and $5.7 million the second year, which matches the amount promised. The above-noted amounts were to include $100,000 for script development. The licensee indicated in its application that it expended $316,366 and $110,500 in its first and second years of operation, respectively, on script development. However, it was revealed at the hearing that the amounts spent did not comply with Commission guidelines on eligible expenditures in this category. In addition, the Commission notes that the applicant has not planned any expenditures for script development in the new licence term.
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Overall, the applicant proposed a reduction of 50% in its level of Canadian programming. It explained at the public hearing that the proposed changes reflect TV5's international mandate. It added that, under the new directions that TV5 is now pursuing, the objective is to give more exposure to Canadian programming abroad [TRANSLATION] "while still maintaining a minimum of Canadian content here".
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The Commission notes that these requests run counter to Decision CRTC 87-895 in which it established for TV5, as a condition of licence, an already exceptionally low level of Canadian content of 19.5%, and expected that the level would be increased on licence renewal. However, in considering the proposed reduction in Canadian programming, the Commission has taken into consideration the uncertain situation that TV5 faces in the next licence term, as well as the funds that will be allocated to improve the quality and quantity of Canadian programming to be broadcast by TV5 Europe, and to extend the service internationally.
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The proposals for Canadian programming included two possible scenarios, depending on whether or not the Commission granted TV5 special status. At the hearing, however, the applicant amended its application by committing to distribute 8% and 9% Canadian content during the first and second years of the new licence term, respectively, and 10% in subsequent years, regardless of the Commission's decision on its status. After reviewing the situation, the Commission has made it a condition of licence that the licensee devote at least 10% of the broadcast year to the distribution of Canadian programs throughout the new licence term, as set out in condition 2 in the Appendix. The licensee's compliance with this condition will be assessed on the basis of a broadcast day, which includes a period of up to 18 consecutive hours, beginning each day not earlier than six o'clock in the morning and ending not later than one o'clock in the morning of the following day, as stipulated in the Television Broadcasting Regulations, 1987 and specified in condition 12 of the Appendix to this decision.
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As proposed by the applicant, it is also a condition of licence that the licensee devote not less than 2%, or not less than 134 hours 30 minutes, of the broadcast year to the distribution of original, first-run Canadian programs, as indicated in the Appendix under condition 3. The Commission notes that this commitment will take the form of a fifteen-minute magazine-type program, seven days a week.
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In addition, as proposed by the applicant in the event that special status was not granted, it is a condition of licence that the licensee expend on investment in Canadian programs, during the first and second year of the new licence term, the amounts of $2,375,000 and $2,500,000, respectively, in accordance with condition 4 in the Appendix.
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The Commission emphasizes that the above-mentioned conditions will only be in effect during the two years of the new licence term. At the time of next licence renewal, the Commission expects the licensee to have settled upon a clear direction with respect to its status and objectives. If it decides to maintain its current status as a Canadian specialty programming service, the Commission will expect firm commitments with respect to Canadian programs, including a Canadian content level of more than 20% and an expenditure of more than $5 million each year devoted to investment in, or acquisition of, Canadian programs.
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With respect to advertising, the applicant proposed an increase in the distribution of advertising material from three minutes to a maximum of five minutes per clock hour and a relaxation of current restrictions on the type of advertising it may broadcast. This request was opposed in interventions filed by CAB, Télé-Métropole, and CFCF Inc., on behalf of Télévision Quatre Saisons and CFCF 12.
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At the hearing, the applicant sought to amend its proposal somewhat by committing to devote only two minutes per clock hour to institutional advertising, with the three remaining minutes to be devoted to the promotion of its service or programs and to public service announcements.
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The Commission denies the proposal to increase the distribution of advertising material from three to five minutes. It considers that the applicant has not justified an increase in advertising content, given the acknowledgment at the hearing that it does not use the entire three minutes of advertising material for which it is currently authorized.
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It is therefore a condition of licence that the licensee not distribute advertising material other than a maximum of three minutes per clock hour of national advertising material devoted exclusively to sponsorship advertising or institutional advertising, public service announcements and material promoting the service or one of its programs as specified in condition 5 in the Appendix.
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With respect to the clarification requested by the applicant regarding the type of advertising it may broadcast, the Commission notes that the definitions in condition 5 in the Appendix allow it to broadcast promotional slogans that include a simple mention of the goods or services offered, but do not promote the products in question.
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In its renewal application, the applicant also proposed to increase the wholesale rate charged to affiliates in Quebec from $0.28 to $0.30 in the first year of the new licence term and by $0.01 in each of the following years. It also proposed to charge affiliates outside Canada a standard rate of $0.025 for the first three years of the new licence term, increasing thereafter to $0.035.
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When questioned at the hearing on the reasons for the proposed rate increases, the applicant stated that they were based on the trend in rates charged by other specialty services and that there had been no [TRANSLATION] "scientific reasoning" involved.
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Following an analysis of the applicant's financial situation and its statements at the public hearing, the Commission considers that a rate increase is not justified under the circumstances and therefore denies the request. In accordance with condition 8(a) in the Appendix, the licensee shall charge each affiliated exhibitor in a Francophone market, as defined in Public Notice CRTC 1987-261, the wholesale rate of $0.28 per subscriber per month during the new licence period.
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The Commission also denies the proposal to standardize the rates charged to undertakings located elsewhere in Canada. The licensee shall therefore charge each affiliated exhibitor in a non-Francophone market a wholesale rate of between $0.02 and $0.08 per subscriber per month, depending on the percentage of Francophones in the service area, as indicated in condition 8(b) in the Appendix.
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In denying the proposed rate increases, the Commission has taken into account the fact that the increased expenditures forecast by TV5 are related mainly to its plans for international expansion. For example, the applicant has planned to allocate between $500,000 and $800,000 per year over the next five years to the planned extension of its service in the United States. The Commission considers that subscribers should not have to pay for the costs of these service extension projects. In this context, the Commission notes that subscribers to TV5 Europe do not have to bear such costs, which are borne entirely by participating governments. Having denied these rate increases, the Commission is also of the opinion that there is no reason to change the rates currently authorized in non-Francophone markets during the new licence term.
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The Commission notes that the TV5 service includes distribution of the Radio France Internationale signal as background audio for an alphanumeric service when regular programming is not being distributed.
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Allan J Darling
Secretary General
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ANNEXE
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Conditions of licence/
Conditions de licence
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Consortium de Télévision Québec
Canada (TV5 Québec Canada)
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1. The programming provided by the licensee shall consist exclusively of French-language programming originating with broadcasters from various Francophone countries.
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2. In each broadcast year, the licensee shall devote not less than 10% of the broadcast year to the distribution of Canadian programs.
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3. In each broadcast year, the licensee shall devote not less than 2%, or not less than 134 hours 30 minutes, of the broadcast year to the distribution of original, first-run Canadian programs.
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4. a) From 1 September 1991 to 31 August 1992, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than $2,375,000.
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b) From 1 September 1992 to 31 August 1993, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than $2,500,000.
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5. The licensee shall not distribute any advertising material other than a maximum of 3 minutes during each clock hour of national sponsorship or institutional advertising, public service announcements and material promoting the service or one of its programs.
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Sponsorship advertising is not permitted in newscasts. The sponsorship messages shall only be placed at the beginning and/or end of programs. All sponsored programs must clearly identify the name of the sponsor.
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Institutional advertising messages shall have no connection in terms of content with sponsored programs. Institutional advertising messages shall only be permitted to interrupt programs that last at least two hours, and have one or more natural breaks, for example an intermission in a play or concert.
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Institutional advertising is not permitted on behalf of companies whose primary products are drugs, alcoholic beverages or tobacco products.
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For the purpose of this condition, the following definitions apply:
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(i) Sponsorship advertising: Sponsorship advertising consists, in exchange for a direct or indirect financial contribution, of the name and distinctive visual and sound signs or symbols of a firm and a sound accompaniment according to the following formulas:
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"This program has been made (was made) possible through the co-operation of (name of company)"; or "This program has been made (was made) possible through the co-operation of (name of company), maker of (product)"; or "This program has been (was) presented to you by (name of product)."
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Sponsorship advertising does not include the promotion of the features of the goods and services produced and/or offered by the sponsoring firm.
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(ii) Institutional advertising: Institutional advertising consists of an identification of the advertiser by name, corporate logo or distinguishing visual or sound symbol. While the accompanying text may include a musical background or an institutional slogan, institutional advertising does not include promotion of the range of products or services offered or the use of such products or services.
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6. The licensee shall adhere to the guidelines on sex-role stereotyping prescribed in the Sex-Role Portrayal Code for Television and Radio Programming, published by the Canadian Association of Broadcasters (CAB), as amended from time to time and approved by the Commission.
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7. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.
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8. a) The licensee shall charge each exhibitor of this service in a Francophone market the wholesale rate of $0.28 per subscriber per month.
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b) The licensee shall charge each exhibitor of this service in a non-Francophone market the following wholesale rates:
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Percentage of Francophone and other
French-speaking persons in the service
area/pourcentage de francophones et
d'autres personnes d'expression française dans la zone de desserte Coût mensuel par abonné
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- Monthly cost per subscriber/
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between/entre 15% and/et 49.99% 8¢
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between/entre 5% and/et 14.99% 6¢
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between/entre 2% and/et 4.99% 4¢
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between/entre 0% and/et 1.99% 2¢
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The licensee may decrease the 2¢ wholesale rate to a minimum of 1¢ should the mark-up decrease accordingly.
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9. The licensee shall keep separate accounts which set out, for each financial year or partial year ending 31 August,
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a) the gross revenues in respect of its operations under its licence;
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b) the amounts expended by it on the acquisition of and/or investment in Canadian programs intended for distribution on its undertaking; and
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c) the amounts expended by it on the acquisition of non-Canadian programs for distribution on its undertaking. 10. The licensee shall file a statement of the accounts referred to in condition 9 above with the Commission on or before 30 November of each year.
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11. For purposes of these conditions, all time periods shall be calculated according to the eastern time zone.
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12. The definitions of broadcast day, broadcast month, broadcast year, and clock hour set out in Section 2 of the Television Broadcasting Regulations, 1987 (SOR/87-49), as amended, shall apply to these conditions and to the licensee with the necessary changes.
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