ARCHIVED -  Decision CRTC 94-603

Decision

Ottawa, 12 August 1994

Decision CRTC 94-603

The Partners of "The Sports Network"

Across Canada - 931950000

Licence Renewal for The Sports Network

Following a Public Hearing in the National Capital Region beginning on 25 April 1994, the Commission renews, from 1 September 1994 to 31 August 2001, the licence issued to The Partners of "The Sports Network", namely Labatt Brewing Canada Inc. and Labatt Communications Inc. (formerly 2765845 Canada Inc.), to operate the national English-language specialty programming undertaking known as The Sports Network (TSN). The licence will be subject to the terms and conditions specified in the appendix to this decision and in the licence to be issued.

TSN was first licensed in 1984. It is available to cable television affiliates across Canada for distribution on a dual status basis.

The Commission has reviewed TSN's performance over the current licence term, and is satisfied that the licensee has met most of the expectations and complied with each of the conditions attached to the current licence. In some areas, the licensee has exceeded the Commission's requirements. Accordingly, the Commission considers that a full-term licence renewal, as requested by the licensee, is justified.

Nature of Service

The licensee requested that the Commission delete from TSN's condition of licence pertaining to the nature of service, the requirement that it not distribute more than one half-hour of audience participation programs per eight-hour block of programming, and not more than ten hours of such programming during each broadcast week.

In support of its request, the licensee stated:

 We feel that this program format is effective at providing the viewers with the opportunity to become involved with our program schedule and to exchange their ideas with other viewers across Canada.

The licensee explained that its schedule operates on an eight-hour cycle, portions of which are repeated within 24 or 48 hours, and that it wants the flexibility to broadcast repeats of audience participation programming in keeping with that schedule. In addition, the licensee stated it would like to be able to broadcast longer audience participation programs, to complement its coverage of special events or proceedings such as the Dubin Inquiry into steroid abuse at the 1988 Olympics. The Commission considers that the licensee's request is reasonable and has therefore deleted the restriction on the amount of audience participation programs that TSN may broadcast.

Programming Plans

As part of its programming plans for the new licence term, the licensee stated at the hearing that
it will:

 search out new areas for interesting documentaries, ... introduce new features and intensify the local reach of our service through our regional bureaus.

At the hearing, the licensee also made a commitment to acquire a minimum of 250 hours of original programming during each broadcast year from Canadian independent producers.

Currently, the licensee is required by condition of licence to devote not less than 50% of the broadcast year, and not less than 50% of the evening broadcast period (i.e. from 6:00 p.m. to midnight), to the distribution of Canadian programs. The licensee proposed to increase the level of Canadian programming broadcast during the evening broadcast period from 50% to 60%. Accordingly, by condition of licence, the licensee shall devote during each broadcast year not less than 60% of the evening broadcast period, and not less than 50% of the broadcast day, to the distribution of Canadian programs.

During the current licence term, the licensee exceeded the expectations expressed in Decision CRTC 88-776 regarding both the number of hours that TSN should devote to the coverage of Canadian amateur sports, and the level of expenditures that should be allocated for this programming. The Commission notes the licensee's commitment to distribute, during each broadcast year of the new licence term, a minimum of 1,400 hours of programming devoted to coverage of Canadian amateur sports.

As proposed by the licensee and as hereby required by condition of licence, the licensee shall spend on the acquisition of and/or investment in programming devoted to coverage of Canadian amateur sports a minimum of $4.2 million in the first broadcast year of the licence term, increasing by 3% in each subsequent broadcast year, to no less than $5 million in the seventh broadcast year of the licence term.

The Commission considers the exposure of Canadian amateur sports by TSN to be an important element of the service's reflection of Canada's people, places, events and leisure activities. Accordingly, the Commission expects the licensee to broadcast Canadian amateur sports programming at a time that is attractive and convenient for subscribers, during the day-time and during the evening broadcast period.

The Commission encourages the licensee to provide "live" distribution of Canadian amateur sports events whenever possible.

Canadian Programming Expenditures

Currently, the licensee is required, by condition of licence, to devote a minimum of 75% of its total programming expenditures in each broadcast year to the acquisition of and/or investment in Canadian programs. The Commission is satisfied that the licensee has complied with the requirement of this condition of licence throughout the current licence term.

The Commission notes, however, that TSN has not met the expectation expressed in Decision CRTC 88-776 that the licensee expend, in each year of the licence term, between 36% and 44.5% of its gross revenues on the acquisition of and/or investment in Canadian programming.

As part of its renewal application, the licensee proposed to increase its expenditures on the acquisition of and/or investment in Canadian programs to a minimum of 80% of its total programming budget. In recent years, however, the Commission's practice in the case of conventional television broadcasters and licensees of specialty services has been to use a percentage of a licensee's gross revenues, rather than a percentage of total programming expenditures, when imposing a condition of licence relating to Canadian programming expenditures. Following discussion with the licensee on this issue at the hearing, the Commission has decided to follow this practice with TSN in setting a condition of licence regarding required expenditures on Canadian programming.

Accordingly, by condition of licence, the licensee shall, in each broadcast year of the licence term, spend a minimum of 44% of the previous year's gross revenues on the acquisition of and/or investment in Canadian programs. Consistent with the Commission's approach governing such expenditures by conventional television broadcasters, this condition of licence gives the licensee some flexibility in the accounting of these expenditures.

Wholesale Rates

Currently, the licensee is authorized, by condition of licence to charge exhibitors of TSN a wholesale rate of $1.07 per subscriber per month for distribution of TSN, by itself, on the basic service. The current condition also authorizes the licensee to charge exhibitors of TSN a combined wholesale rate of $1.50 per subscriber per month in the case of cable distribution undertakings that choose to distribute both TSN and Le Réseau des Sports as part of the basic service.

As part of its licence renewal application, the licensee requested an amendment to this condition which would allow it to increase the per-subscriber wholesale rate for TSN, when distributed by itself, from the present level of $1.07 to a maximum of $1.19, beginning on 1 September 1994.

According to the licensee, the revenues generated by the proposed increase in TSN's wholesale rate are needed to offset the negative impact on the service of increased audience fragmentation and of the increasing costs of program acquisition.

In Public Notice CRTC 1991-23, the Commission stated that it planned to examine carefully the wholesale fees of specialty programming undertakings as part of the renewal process to ensure that the fees continue to be appropriate, taking into account the contributions of such services to the Canadian broadcasting system and the Commission's concerns regarding the affordability of basic cable service.

Moreover, as stated in a number of decisions related to specialty services over the past two years, the Commission's general policy is not to allow increases in wholesale fees for specialty services, such as TSN, that earn revenues from both subscriber fees and advertising. The Commission considers that these specialty services have the ability to compensate for inflation, or otherwise increase their revenues, by maximizing their advertising income. Furthermore, 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. In the case of TSN, the Commission notes that the licensee has, in fact, substantially exceeded the level of profitability that it forecast at the time of the service's last licence renewal in 1988.

Consistent with the general approach described above, the Commission denies the licensee's request to increase the wholesale rate. The licensee continues to be authorized, by condition of licence, to charge exhibitors of this service a maximum wholesale rate of $1.07 per subscriber per month for distribution on the basic service.

Closed-Captioning

The Commission notes that, during the current licence term, the licensee presented more than 5,800 hours of closed captioned programming and, in doing so, exceeded its commitment to the broadcast of closed-captioned programming made at the time of TSN's last licence renewal. As part of its renewal application, the licensee made a commitment to close caption, during each year of the new licence term, a minimum of 1,300 hours of original programming, and to acquire a minimum of 300 hours of additional closed captioned programming, representing a minimum total of 1,600 hours of closed-captioned programming during each year of the new licence term.

In its supporting intervention presented at the hearing, Canada Caption Inc., a charitable organization whose mandate is to increase the quantity and quality of captioning in Canada, commended TSN on its "commitment to the deaf and hard of hearing".

Code on Violence

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

In the same year, the Commission requested the other members of the Canadian broadcasting industry to submit their own proposed codes on programming containing scenes of violence. Given that TSN'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 TSN's own guidelines on the depiction of violence in programming.

Once the Commission has approved TSN's own guidelines on the depiction of violence in programming, TSN will be required to adhere, by condition of licence, to this code, as amended from time to time and accepted by the Commission.

Since the licensee, like the licensees of all speciality services, is not a member of the CBSC, the Commission will oversee the application of any violence code governing TSN.

Employment Equity

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled "Implementation of an Employment Equity Policy", the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. At the public hearing, the Commission discussed with the licensee its progress in implementing employment equity practices at TSN. The licensee indicated that it has developed a formal employment equity plan for TSN and outlined the steps it has taken to put this plan into practice. The Commission encourages the licensee to continue to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Interventions

The Commission acknowledges the more than 200 interventions filed with respect to TSN's application for licence renewal.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

Conditions of licence for The Sports Network

1. The licensee shall provide a national English-language specialty service that consists of programming dedicated exclusively to all aspects of sports from categories 1, 3, 5b, 6 and 11 as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990; that is, programming covering professional and amateur sports events, sports newscasts, magazine shows, interviews, commentaries, documentaries, audience participation programs, instruction and training programs and other programs that promote physical fitness.

 The licensee shall not distribute feature length films about sports personalities, whether factual or fictional.

2. (a) The licensee shall devote not less than 50% of the broadcast day during each broadcast year to the distribution of Canadian programs, and shall distribute these programs evenly throughout the broadcast day.

 (b) The licensee shall devote not less than 60% of the evening broadcast period during each broadcast year to the distribution of Canadian programs.

3. (a) In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1993-93 and 1993-174, the licensee shall, in each broadcast year, expend not less than 44% of its gross revenues for the previous year on the acquisition of and/or investment in, Canadian programs.

 (b) In any broadcast year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming that is up to five percent (5%) less than the minimum required expenditure for that year calculated in accordance with this condition; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underspending.

 (c) In any broadcast year of the licence term, including the final year, the licensee may expend an amount on Canadian programming that is greater than the minimum required expenditure for that year calculated in accordance with this condition; in such case, the licensee may deduct:

  (i) from the minimum required expenditure for the following year of the licence term, an amount not exceeding the amount of the previous year's overspending; and

  (ii) from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overspending and any amount deducted under paragraph (i) above.

 (d) Notwithstanding the above, during the licence term, the licensee shall expend on Canadian programming, at a minimum, the total of the minimum required expenditures calculated in accordance with the licensee's condition of licence.

4. (a) In the broadcast year commencing 1 September 1994, the licensee shall expend a minimum of $4.2 million on the acquisition of and/or investment in programming devoted to coverage of Canadian amateur sports.

 (b) In the broadcast year commencing 1 September 1995 and in each subsequent year of the licence term, the licensee shall increase by 3% its expenditures on the acquisition of and/or investment in programming devoted to coverage of Canadian amateur sports, increasing to no less than $5 million in the seventh year of the licence term.

5. (a) Subject to subsection (b), the licensee shall not distribute more than an average of eight minutes of advertising material during each clock hour over the broadcast day.

 (b) In addition to the eight 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.

6. The licensee shall charge each exhibitor of this service a maximum monthly wholesale rate per subscriber as set out below, for distribution on the basic service:

 (a) A combined wholesale rate of $1.50 per subscriber per month in the case of each cable distribution undertaking that chooses to distribute both TSN and Le Réseau des Sports as part of the basic service; and

 (b) a wholesale rate of $1.07 per subscriber per month, in all other cases.

7. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) "Sex-Role Portrayal Code for Television and Radio Programming", as amended from time to time and approved by the Commission.

8. 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.

9. (a) The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in 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 the licensee's own guidelines on the depiction of violence in programming.

 (b) Once they are 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.

 For the purposes of these conditions:

 (a) all time periods shall be calculated according to the eastern time zone;

 (b) "broadcast day" means a 24-hour period beginning at 6:00 a.m. eastern time;

 (c) "paid national advertising" means advertising that is purchased at a national rate and receives national distribution on the service; and

 (d) the terms "broadcast month", "broadcast year", "clock hour" and "evening broadcast period" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987, except they shall be calculated in accordance with the definition of "broadcast day" in paragraph b) above.