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Ottawa, 3 September 1993
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Decision CRTC 93-580
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Canadian Interfaith Network
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Across Canada - 930126800
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Authority to Implement a Wholesale Rate
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Following a Public Hearing held in the National Capital Region beginning on 6 July 1993, the Commission approves in part the application submitted by the Canadian Interfaith Network (Vision TV) to amend the licence for the English-language national interfaith religious specialty programming service by adding a condition of licence authorizing the licensee to charge a maximum wholesale rate of $0.08 per subscriber per month, effective 1 January 1994, to each cable operator wishing to provide Vision TV as part of its basic service. The authorized wholesale rate approved herein is $0.02 less than the $0.10 proposed by the applicant.
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Vision TV is a not-for-profit, balanced specialty programming service devoted to programming focused upon the varied religious practices and beliefs of Canadians. It was first licensed in 1987 (Decision CRTC 87-900) in accordance with the provisions of the Commission's 1983 policy on religious broadcasting set out in Public Notice CRTC 1983-112.
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Over its five years of operation, Vision TV has consistently provided a quality, balanced service with limited resources. Recently, in Public Notice CRTC 1993-78 dated 3 June 1993, the Commission announced its new religious broadcasting policy. Although this policy now makes provision for an expanded range of religious services, including single-faith religious television services to be offered on a discretionary basis to cable subscribers, the Commission gave particular emphasis to Vision TV's positive contribution to the Canadian broadcasting system:
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The Commission recognizes the important role played by the existing national, multifaith religious service, particularly through its ability to promote tolerance and co-operation among different religious groups in Canada. The Commission notes in this regard, the strong support for Vision TV expressed by the representatives of both Christian and other churches at the hearing. This service has welcomed all religious groups, speakers, and philosophies, and has presented them in a manner that has encouraged and facilitated the discussion and appreciation of all facets of religious experience. In the Commission's view, this type of balanced service should be available to the largest pos-sible number of Canadians.
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Hitherto, Vision TV has operated as a satellite-to-cable service available free of charge to cable television affiliates on an optional basis for distribution on basic service. Currently, Vision TV receives its revenues from three sources: viewer donations; advertising time sales, which constitute about 10% of all Vision TV's revenues and are asso-ciated with the CORNERSTONE interfaith programs produced or acquired by the licensee; and paid-time programming for its MOSAIC programs, including denominational programs produced or acquired by arm's length faith groups and organizations. With the anticipated licensing of undertakings offering single-faith, discretionary religious services, Vision TV expects to lose some of its MOSAIC programming and funding and is therefore requesting authorization to charge a wholesale rate for its service. According to Vision TV, the revenues generated by the introduction of a wholesale rate will enable it to maintain and to enhance its Canadian programming in order to solidify its viewership and to compete with the expected providers of new specialty and religious services.
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In considering Vision TV's request, the Commission has taken the same approach followed in the case of the wholesale rate increases proposed by the licensees of the specialty services YTV (Decision CRTC 92-571), Newsworld (Decision CRTC 92- 529) and Le Canal Famille (Decision CRTC 92-570). As a general approach to its evaluation of rate applications by the licensees of specialty programming services that have been in operation for three to five years, the Commission reviews a licensee's revenues and expenses and examines whether its programming conforms to the service's mandate at a satisfactory level of service. The level of any rate increase subsequently authorized is based upon the Commission's determination of the amount of financial resources required by the licensee. Having granted such a fee increase, or, in this case, having authorized the introduction of a rate for the first time, the Commission would generally not foresee any subsequent increase as being warranted.
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The Commission has decided not to authorize annual increases based upon inflation. While such increases may be justifiable in the case of specialty services that do not have access to advertising revenues, and whose income from subscribers is thus their only source of revenue, services such as Vision TV normally have the ability to compensate for inflation, or otherwise to increase their revenues, by maximizing their advertising income. The Commission notes that licensees of such services also have the abi-lity to improve their operating margins by increasing the overall efficiency of their undertakings.
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Consistent with the general approach described above, based in particular upon its analysis of the licensee's various revenue sources, its proposed programming initiatives and the justifiability of their related costs, the Commission has decided to authorize Vision TV to introduce a wholesale rate of $0.08 per subscriber per month. Accordingly, by condition of licence, Vision TV shall charge exhibitors of this service a maximum wholesale rate of $0.08, effective 1 January 1994.
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As noted earlier, the rate approved herein is less than the amount requested by the licensee and will generate total revenues over the remainder of the licence term less than those projected in Vision TV's application. Nevertheless, the Commission is satisfied that this wholesale rate is reasonable and sufficient to enable the licensee to increase its expenditures on Canadian programming and to continue to provide a viable and attractive service to subscribers. The Commission advises the licensee that it would not be favourably disposed to granting any increase in this rate in the foreseeable future.
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In authorizing a wholesale rate of $0.08, the Commission wishes to emphasize the importance it attaches to Vision TV's commitment to allocate 80% of the revenues generated by the subscriber fees to the programming improvements described in the application. As emphasized by the licensee at the hearing:
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Vision, of course, will remain a non-profit service. The additional revenues will be dedicated to programming quality and quantity.
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Vision TV outlined, in general terms, its plans to use the additional revenues generated from the subscriber fees to increase its present broadcast schedule by an additional 18 hours and 30 minutes of programming each week, and to "quadruple" the amount of original Canadian programming offered on its service. Vision TV also stated that it would add two new programming categories to its schedule: children's programming, and distance learning programming in association with theology schools. It added that it would reduce the number of repeats in its prime-time programming block from original distribution plus three repeats, to original distribution plus two repeats. In addition, Vision TV indicated that it would establish a live capability on its service to allow for phone-in/phone- out programs, and that it would introduce a two-hour programming block on Sunday evenings targeted to families.
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The Commission notes that, since Vision TV does not intend to establish its own production facilities, other than the live rapid response capability, most of the funds used for the new programming will go to the Canadian production community. The Commission also notes Vision TV's plans to distribute some programming produced by the community channels of cable undertakings across Canada.
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Vision TV indicated that a portion of the total amount of additional revenues would not be directed to "pure production" expenses, but would instead be used for "production related" activities such as promoting its service to Canada's various faith groups and communities, to cable companies and to viewers.
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The Commission has assessed the licensee's proposed programming initiatives and is satisfied that they are consistent with Vision TV's mandate. It notes in this regard the licensee's statement that:
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The overall programming ... the thrust and the priorities have not changed. We are trying to provide programming [that] focuses on spirituality, ethics and values ... and our new programming would do the same thing.
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The Commission acknowledges that it will be some time before many of the programming and other changes outlined by the licensee at the hearing are fully realized. Accordingly, the Commission expects Vision TV to move forward with these programming plans and to be prepared to provide full, concrete details regarding their implementation at the time of licence renewal in 1994.
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Expenditures on Canadian Programming
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At the hearing, the Commission also discussed with the licensee its failure during four of the five years of the current licence term to operate in compliance with its condition of licence pertaining to expenditures on the acquisition of and/or investment in Canadian programming. Vision TV stated that its non-compliance in this area was due to the expenses associated with its bank debt and with higher-than-expected satellite costs.
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The licensee stated that it will be "in a position to be in compliance" in 1993-1994. It expects to retire its bank debt in 1993 and to realize savings in satellite delivery costs as a result of the introduction in 1993-1994 of digital video compression and arrangements to share satellite transponder space with other licensees. The Commission will review the licensee's performance in this area at the time of licence renewal.
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Interventions
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The Commission acknowledges the views expressed in the interventions submitted by the Canadian Cable Television Association (CCTA) and other representatives of the cable industry that the wholesale rate proposed by the licensee would more appropriately be considered as part of Vision TV's licence renewal. The Commission, however, is satisfied that Vision TV has provided adequate justification to support the introduction, in January 1994, of the maximum wholesale rate of $0.08 approved herein. The CCTA also opposed the request that originally formed part of this application, that Vision TV be designated as an essential service for mandatory distribution on the basic service of cable distribution undertakings. The Commission notes that Vision TV withdrew its request for mandatory carriage at the hearing.
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In this context, however, Vision TV suggested at the hearing, that "cross-tier linkage" would be one means whereby cable operators might be encouraged to carry this service. The Commission reminds Vision TV that section 3(f) of the distribution and linkage rules set out in Public Notice CRTC 1993-75 dated 3 June 1993 states that "a licensee is not permitted to link services on the list of Part II Eligible Satellite Services with a Canadian specialty service distributed on the basic service".
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The Commission acknowledges the intervention submitted by Thelma Thompson in support of this application.
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Allan J. Darling
Secretary General
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