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Ottawa, 3 June 1993
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Public Notice CRTC 1993-77
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CALL FOR APPLICATIONS FOR LICENCES TO CARRY ON NEW CANADIAN SPECIALTY, PAY TELEVISION AND PAY-PER-VIEW PROGRAMMING UNDERTAKINGS
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1. Introduction
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The broadcasting environment of the next decade will be characterized by the rapid expansion of digital distribution and transmission technologies, deployment by the cable industry of addressable terminal equipment permitting greatly expanded subscriber choice, and a significant increase in the amount of competition for viewers to be faced by existing television programming undertakings, coming from both new Canadian and non-Canadian programming services, including pay-per-view (PPV) services. These developments, and their significance for the Canadian broadcasting system of the future, are discussed at considerable length in Public Notice CRTC 1993-74, issued today.
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In light of this changing environment, and in view of the strong interest expressed by potential applicants in developing a range of new special interest programming services for launch at the earliest possible date, the Commission considers that it is in the public interest to encourage a greater diversity and expansion of Canadian programming available through Canadian licensees. Consistent with its mandate under the Broadcasting Act (the Act), in particular its responsibilities to ensure that programming on the Canadian broadcasting system is predominantly Canadian and to "encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinion, ideas, values and artistic creativity", the Commission is committed to encouraging the development of programming services owned and operated by Canadians. It considers this an effective means of increasing Canadian programming and of providing opportunities for the expression of Canadian talent.
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Accordingly, the Commission now invites applications for licences to offer Canadian specialty, pay television and pay-per-view programming services.
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In its consideration of applications for licences to carry on new television programming undertakings, the Commission will be guided by certain general principles and objectives. Specifically, the new programming services should:
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* contribute to the realization of the objectives set out in the Act and strengthen the Canadian broadcasting system;
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* increase the diversity of high quality programming available to Canadians and provide new opportunities and revenue sources for Canadian program producers and creative talent; and,
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* exemplify innovative programming concepts that are not directly competitive with existing Canadian programming services.
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The Commission is also sensitive to the potentially negative effects that increased audience fragmentation may have on conventional licensees which have a vital role in providing Canadian programming. For this reason, in assessing applications for new programming services, the Commission will examine themerits of each proposal on the basis of the originality of the programming concept and the licensing criteria set out below.
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2. Licensing Criteria
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In Notice of Public Hearing CRTC 1992-13, the Commission sought comment on appropriate criteria for licensing new specialty, pay and PPV undertakings. As a result of the discussions on this subject at the 1 March 1993 public hearing, the Commission will consider the following factors to be significant criteria in assessing applications for new programming undertakings.
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a) Financial Viability
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Applicants will be expected to provide evidence that clearly supports the financial viability of, and market demand for, the proposed service.
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b) Impact on Existing Licensees
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Applicants will be expected to demonstrate that their proposals reflect the existing industry structure for pay and specialty services, and to provide evidence that the proposed new programming undertakings will not have a significant negative impact on the ability of existing licensees to fulfil their obligations, particularly in respect of Canadian programming.
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c) Canadian Content
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The Commission expects that each new programming undertaking will make a significant contribution to Canadian programming. Specifically, all new undertakings should contribute to Canadian program production through appropriate expenditure and/or scheduling commitments. Specific requirements in these areas will be established on a case-by-case basis. Applicants proposing new undertakings and requesting distribution on basic cable will be required to meet Canadian content requirements equivalent to those imposed on conventional Canadian television broadcasters, unless the specialized nature of the service makes this impracticable.
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Canadian content requirements for new services that will be distributed on a discretionary basis only will be established on a case-by-case basis.
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d) Revenue Sources
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The Commission is prepared to consider applications for programming undertakings that derive their revenue from subscriber fees and/or advertising.
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The Commission will also examine the applicants' projected advertising revenues with particular reference to the impact on existing licensees. For specialty undertakings, the Commission will continue to establish, on a case-by-case basis, the maximum quantitative limit per clock hour for advertising material.
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e) Cable Distribution of Specialty Services
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As stated in Public Notice CRTC 1993-74, in licensing a new specialty undertaking, the Commission will generally be prepared to accord dual carriage status for its cable distribution, unless the nature of the service is such that it would be more appropriately distributed on a discretionary basis only.
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In the case of any applicant whose business plan is predicated on distribution, in whole or in part, on the basic cable service, the Commission will examine carefully the proposed wholesale subscriber fees that the applicant proposes for such service, taking into account the Commission's concerns regarding the affordability of basic cable service, and the contribution of the service to the Canadian broadcasting system. Applicants proposing any new programming undertaking should provide evidence of discussions with distribution undertakings so that the Commission may accurately assess the impact of the proposed service on subscriber fees, distribution and linkage arrangements and the viability of the service.
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3. Conclusion
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The Commission licensed the first Canadian pay television networks in 1982. Specialty programming undertakings were licensed in 1984, 1985 and 1987. Subsequently PPV and special events undertakings have been established. At the same time, there have been major changes in the ownership structure of many conventional television undertakings and several new independent stations have been licensed. The Canadian broadcasting system and Canadian viewers have benefited from the additional programming choices available to them, and this expansion has provided opportunities for the growth and development of the Canadian artistic and technical talent engaged in all aspects of creating and exhibiting the programs offered on these services.
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In making past calls for applications, the Commission has outlined the formats of services it would encourage or would specifically discourage as a means of achieving the greatest possible diversity and complementarity with existing services. The present call contains no such limitations as to format. Nevertheless, the Commission wishes to make it clear that this is not the last opportunity for new programming proposals to be considered.
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Public Notice CRTC 1993-74 refers to the next few years as a time of transition primarily due to technological changes. In light of the greatly increased channel capacity that digital video compression will offer and the expected widespread deployment of addressable terminal equipment, the Commission will, in future and on an ongoing basis, without a general call for applications, be prepared to consider applications proposing discretionary narrowcast programming undertakings targeted to very specialized audience interests.
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In issuing this call for applications for licences for the distribution of specialty, pay and PPV undertakings, the Commission encourages innovative and creative program concepts and formats that will make maximum use of Canadian resources and appeal to broad segments of the Canadian population. It intends to consider these proposals at the earliest possible opportunity. Applications should be filed with the Secretary General of the Commission on or before 3 September 1993. At a later date, the Commission will announce details of the public hearing at which these applications will be considered.
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Allan J. Darling
Secretary General
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