ARCHIVED -  Decision CRTC 94-439

Decision

Ottawa, 27 July 1994

Decision CRTC 94-439

CHUM Limited

Across Canada - 931949200

MuchMusic; five-year licence renewal

Following a Public Hearing in the National Capital Region beginning on 25 April 1994, the Commission renews the broadcasting licence to carry on the English-language specialty programming undertaking known as MuchMusic, subject to the conditions specified in the appendix to this decision, and in the licence to be issued.

In light of the reasons detailed below, and by majority vote, the Commission has determined that the term for the new licence for MuchMusic shall be for five years, from 1 September 1994 to 31 August 1999. This term will enable the Commission to assess at an early date the licensee's compliance with all conditions of its licence.

Compliance During the Current Licence Term

CHUM Limited (CHUM), the licensee of MuchMusic, has extensive broadcast interests and is the licensee of various radio and television stations across Canada, including CITY-TV Toronto. It is also a co-owner, with RadioMutuel, of Musique Plus, the French-language music specialty service.

At the hearing, there was extensive discussion related to the licensee's compliance with its condition of licence No. 1 which sets out the nature of the service to be provided by MuchMusic. That condition specifies that MuchMusic shall provide programming "that consists only of a music video service featuring Canadian and international videoclips, music or entertainment-related news or commentaries, video-jockey talk or interviews, music concerts, music specials, music quiz shows and music feature films."

In November of 1992, in response to a complaint on an unrelated issue, the Commission asked CHUM to explain how two programs being broadcast on MuchMusic, namely "Ren and Stimpy" (an animated series), and "The Partridge Family" (a situation comedy featuring a musical group), were acceptable given the above-noted condition of licence. In a letter dated 23 December 1992, CHUM replied that the two programs conformed with MuchMusic's programming philosophy as approved by the Commission in Decision CRTC 88-777.

In a letter dated 16 February 1993, the Commission informed the licensee that neither of the two programs appeared to conform to the condition of licence and asked the licensee to comment. In reply, the licensee expressed the view that the two programs, while perhaps not strictly included under the terms of MuchMusic's condition of licence No. 1, had been interpreted by the licensee as appropriate, in light of the text of the 1988 renewal decision, which noted that MuchMusic intended to introduce new program elements.

In a further letter dated 10 May 1993, the Commission advised MuchMusic that conditions of licence prevail over any references to programming in the text of a decision, and that the Commission expected "MuchMusic to comply with the letter of condition of licence No. 1."

The licensee subsequently informed the Commission that the "Ren and Stimpy" show would be discontinued after the completion of its contract. Monitoring of MuchMusic programming for the week of 22 to 28 October 1993 revealed that "The Partridge Family" was still being broadcast. In February of 1994, the Commission's monitoring report referred to the previous correspondence on this issue, and to the 10 May letter in particular. The licensee was asked to respond to the Commission's concern related to the continued broadcast of "The Partridge Family". CHUM replied that the series "is well within the meaning and intent of the nature of service" and that in order to avoid any "ambiguity in its programming objectives", MuchMusic had filed a revised condition of licence as part of its renewal application. The Commission subsequently informed the licensee that its continued broadcast of the program would be discussed at MuchMusic's licence renewal hearing, then upcoming.

The Commission notes the licensee's statements at the hearing that it "would never come before (the Commission) knowingly being in non-compliance", and that it had interpreted the Commission's correspondence to mean that the appropriateness of "The Partridge Family" program would be discussed only at the time of licence renewal. The Commission notes that on the second day of MuchMusic's renewal hearing, MuchMusic reported that "The Partridge Family" had been removed from the program schedule.

The Commission is of the view that its letter dated 10 May 1993 adequately indicated to the licensee the Commission's conclusion that "Ren and Stimpy" and "The Partridge Family", did not fall within the definition of its nature of service.

The Commission, by majority, has determined that the continued broadcast on MuchMusic of the program "The Partridge Family" constituted non-compliance with its condition of licence and has accordingly not granted a full licence term.

The Renewal Application

As part of the renewal application, the licensee proposed several changes to its conditions of licence. The proposed changes were meant to provide more flexibility in the "nature of service" conditions of licence, and included a proposal to devote at least 55% of the broadcast week to the distribution of music videos, the deletion of the requirement that no more than six hours per week be devoted to feature films, and the deletion of the minimum ratio of music to spoken word permitted for such films.

Further, the licensee requested the deletion of its requirement to broadcast a minimum level of French-language music videos; an increase in the wholesale rate charged cable television licensees for distribution of MuchMusic as part of the basic service; and a change to the definition of "broadcast day".

A. Nature of Service

As indicated earlier, the current condition of licence which defines the "nature" of MuchMusic's service specifies that the service will consist "only of a music video service...music or entertainment-related news or commentaries, video-jockey talk or interviews, music concerts, music specials, music quiz shows and music feature films". This licence condition also specifies that no more than six hours of music-related feature films may be broadcast per week, the content of which must be primarily musical.

In its renewal application for MuchMusic, CHUM proposed to amend this condition by changing the nature of the service from one which is restricted to music-related programming, to one which would feature primarily music videos, the remainder of the programming being music and entertainment-related programming with a minimum level of 55% videos, and would include lifestyle-related and other programming of interest primarily to teens and young adults. During discussions at the hearing, the licensee proposed commitments that would limit the combination of drama, feature films and animated programming to no more than 20% of the broadcast year. The changes proposed at the hearing also include new definitions of the types of feature films to be broadcast on MuchMusic.

The licensee stated at the hearing that the proposed changes were in the interests of flexibility only, and that MuchMusic would remain a music-related service.

Interventions in opposition to the proposed changes were presented at the hearing by CanWest Global Communications Corp., The Movie Network, Allarcom Pay Television Limited, and the Canadian Independent Record Production Association. Concerns were expressed by each of these interveners that MuchMusic was licensed to provide a specifically music-oriented service, and has successfully done so. The interveners argued that approval of the changes, as proposed, could result in the erosion of that video-oriented service. Some interveners also argued that a more lifestyle-oriented MuchMusic could represent direct competition for both existing and future specialty services.

The Commission, following careful consideration of the licensee's request for additional flexibility, and the concerns expressed by the interveners, has decided to approve in part the proposed amendments to the condition of licence defining the nature of service to be provided by MuchMusic.

In the conditions of licence set out in the appendix attached to this decision, the nature of the service to be provided by MuchMusic is described as "consisting only of music-related programming", with the exception of a maximum of 5% of the week that may be devoted to programming related to social and political issues. In the case of extended special event coverage MuchMusic will be able to apply to the Commission to exceed the 5%. A minimum of 65% of the programming week must be devoted to music video programming, and a maximum of 15% of the broadcast week may be devoted to a combination of music-related dramatic series and music-related animated programming.

The description of the music feature films to be broadcast on MuchMusic has been expanded to include specific references to concert films or documentaries, music artists' biographies, and rock operas or plays, although the maximum number of hours to be devoted to such feature films remains unchanged at six per week. The licensee's proposal to also include films which are "driven by" popular music sound tracks was not included by the Commission in the expanded definition, due to its ambiguous and subjective nature and the difficulties of enforcing such a condition of licence.

The Commission is confident that the changes herein approved will afford MuchMusic the flexibility needed to respond to its audience's evolving tastes, while ensuring the continued presence of a service that is distinctly oriented towards music, and music videos in particular.

In view of the licensee's non-compliance in the current licence term, the Commission will monitor closely the interpretation and implementation of the changes approved above.

B. French-language Videos

MuchMusic's current licence includes a condition of licence requiring that "not less than 5% of the total number of music videos distributed by the licensee during each broadcast week shall be French-language music videos". As a part of this application, CHUM requested the deletion of this requirement, and committed to provide "meaningful ongoing support" for francophone artists. The licensee explained at the hearing that a simple quota of French-language videos cannot adequately showcase this music for an audience largely unfamiliar with francophone artists.

At the hearing, the licensee made a specific commitment to broadcast a half-hour weekday program designed to more effectively expose French-language videos by incorporating background information and personal profiles of the featured artists in the program. The Commission notes that a program of this type, titled "French Kiss", which includes between three and five French-language videos each weekday, is already being broadcast.

The Commission is satisfied that the flexibility proposed by the licensee is reasonable. Accordingly, in the attached conditions of licence, it has given the licensee the option either to broadcast a weekday program of the type noted above, or to distribute French-language videos under the same terms as those in the original condition of licence.

C. Rate Increase

As a part of the renewal application, CHUM also requested that the monthly wholesale rate per basic service subscriber be increased, from $0.09 to $0.13. At the hearing, the licensee expressed the opinion that such an increase is justified on the grounds that MuchMusic is an extremely valuable service to the Canadian broadcasting system, and would still be reasonably priced at the proposed level.

In recent decisions, the Commission has stated that services such as MuchMusic 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 ability to improve their operating margins by increasing the overall efficiency of their undertakings, and it has been unwilling to approve rate increases for such licensees. Moreover, in the case of MuchMusic it is clear that the undertaking is currently in a profitable position.

Consistent with its position noted above, and in the absence of any compelling arguments in favour of granting the proposed increase in the wholesale subscriber rate, the Commission denies this part of the application. As set out in the appendix to this decision, the maximum wholesale rate to be charged each exhibitor of MuchMusic will therefore remain at the current level of $0.09 per subscriber.

The Commission acknowledges the intervention in opposition to this element of the application, submitted by CASCO (the Canadian Association of Small Cable Operators).

D. Definition of "Broadcast Day"

In the current licence for MuchMusic, "broadcast day" is defined as the "24 hour period beginning at 00:00:01 hour."

The licensee proposed a new definition that would permit it to begin each 24-hour broadcast day at 12:00 noon. CHUM explained at the hearing that MuchMusic's programming consists of an eight-hour block of programming which is broadcast three times in each 24-hour period. The first of these eight-hour periods commences at noon, and the licensee anticipated that the proposed change would simplify logging procedures. The Commission has no objection to this amendment, and the request is therefore approved.

Code on Violence

In 1993 the Commission accepted the Canadian Association of Broadcasters' (CAB) Voluntary Code Regarding Violence in Television Programming. This code set out a series of guidelines on the depiction of violence in television programming to be used by conventional private television broadcasters. The CAB code is administered by the Canadian Broadcast Standards Council (CBSC).

Also during 1993, the Commission requested the other members of the Canadian broadcasting industry to submit their own proposed codes on programming violence. Given that MuchMusic's code on violence has not yet been approved by the Commission, the licensee shall adhere, by condition of licence, to the CAB's Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission, until such time as the Commission approves MuchMusic's own guidelines.

Once the Commission has approved MuchMusic's own code regarding violence, the licensee will be required to adhere, by condition of licence, to that code, as amended from time to time and accepted by the Commission.

Since CHUM, in respect of MuchMusic, like all specialty service licensees, is not a member of the CBSC, the Commission will oversee the application of any violence code governing MuchMusic.

Other Matters

In Public Notice CRTC 1992-59, the Commission announced the implementation of its employment equity policy. It advised licensees that, at the time of licence renewal or upon considering applications for authority to transfer ownership or control, it would review with applicants their practices and plans to ensure equitable employment.

Based on the public record, including the reports provided to the Commission by Employment and Immigration Canada, the Commission is pleased to commend MuchMusic on its general approach to achieving employment equity, especially in on-air and senior management positions.

The Commission notes the information related to employment equity at the CHUM corporate level submitted following the hearing. It expects CHUM to report on any progress made at this corporate level, at the time of its next appearance before the Commission for the licence renewal of any of its undertakings.

The Commission acknowledges the intervention by the Canadian Music Publishers Association, which expressed that organization's objections to MuchMusic's practices related to obtaining performance rights.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

Conditions of Licence - CHUM Limited (MuchMusic)

Nature of the service:

1. The licensee shall provide a national English-language specialty television service consisting only of music or music-related programming, except as provided by condition of licence No. 5.

2. A minimum of 65% of MuchMusic's broadcast week shall be devoted to the exhibition of programming featuring music videos -  Category 8 (b).

3. The licensee shall devote not more than 15% of the broadcast week to music-related programming from Categories 7(a)-Dramatic Series and 7(e)-Animated Programming combined.

4. The licensee shall not distribute more than 6 hours of music-related feature films - Category 7(d) in each broadcast week. Each feature film shall be from one of the following categories:

 a) concert films and documentaries;

 b) music artists' biographies;

 c) pop/rock operas and plays; or

 d) feature films that have a minimum music:spoken word ratio of 60:40, in ac-
cordance with the following:

  i) where synchronized spoken word occurs within a film, the duration of such dialogue will be counted as spoken word for the purposes of the 60:40 music to spoken word test;

  ii) where synchronized spoken word occurs within a film, accompanied or enhanced by background music, the duration of such dialogue will be counted as spoken word for purposes of the 60:40 test;

  iii) where music occurs in a film, and is not used as background music for synchronized spoken word, the duration of such music will be counted as music for purposes of the 60:40 test;

  iv) where music occurs within a film and small amounts of non-synchronized dialogue are present within such music, the duration of such music will be counted as music for purposes of the 60:40 test.

5. Nothwithstanding condition No. 1, the licensee shall devote no more than 5% of the broadcast week to programming from Category 2-Analysis and Interpretation, except as individually authorized in advance, in writing by the Commission for extended coverage of special events.

Exhibition of Canadian Programming:

6. The licensee shall devote to the distribution of Canadian programs not less than

 a) 60% of the broadcast week and

 b) 50% of the time from 6:00 p.m. to midnight (Eastern time) during each broadcast week.

7. Not less than 30% of the total number of music videos distributed by the licensee during each broadcast week shall be Canadian music videos.

8. The licensee shall schedule its Canadian music videos evenly throughout each broadcast week and in a reasonable manner throughout each broadcast day.

French-language videos:

9. In each broadcast week,

 a) not less than 5% of the total number of music videos distributed by the licensee shall be French-language music videos, or

 b) the licensee shall broadcast each weekday, a minimum of one half-hour video-oriented program, which will feature between three and five French-language videos or performances per program.

Expenditures on Canadian Music Videos:

10. The licensee shall, in each year of the licence term, allocate to VideoFact for the development and production of Canadian music videos not less than 5% of the previous year's gross revenues.

Advertising:

11.a) Subject to subsection (b), the licensee shall not distribute more than twelve minutes of advertising material per clock hour.

b) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may distribute, during each clock hour, a maximum of 30 seconds of additional advertising material that consists of unpaid public service announcements.

c) The licensee shall not distribute any paid advertising material other than paid national advertising.

d) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.

Wholesale Rates:

12. The licensee shall charge each exhibitor of this service a maximum wholesale rate of $0.09 per subscriber per month where the service is distributed as part of the basic service.

Violence in programming:

13.a) The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters' (CAB) Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission, until such time that the Commission approves the licensee's own guidelines on the depiction of violence in programming.

b) Once submitted by the licensee and approved by the Commission, the licensee shall adhere to its own guidelines on the depiction of violence in programming, as amended from time to time and approved by the Commission.

Gender Portrayal:

14. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's "Sex-Role Portrayal Code for Television and Radio Programming", as amended from time to time and approved by the Commission.

Advertising to Children:

15. 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.

Definitions:

"Broadcast day" means the 24-hour period beginning each day at 12:00 noon.

"Broadcast week" means seven consecutive days beginning on Friday.

"Broadcast month", "broadcast year" and "clock hour" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987, except that "broadcast month" and "broadcast year" shall be calculated based on the definition of "broadcast day" provided above.

"Paid national advertising" means advertising that is purchased at a national rate and receives national distribution on the service.

"Canadian music video" has the same meaning set out in Section VIII of the Appendix to Public Notice CRTC 1984-94, entitled "Recognition for Canadian Programs".

"Music-related" shall be defined as about the music or recording industries, or about musical artists, concerts and musical performances, compositions or events.