ARCHIVED -  Public Notice CRTC 1994-139

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Public Notice

Ottawa, 7 November 1994
Public Notice CRTC 1994-139
Amendment to the Television Broadcasting Regulations, 1987 to permit, by condition of licence, the airing of "infomercials" during the broadcast day
In Public Notice CRTC 1993-137 dated 7 October 1993, the Commission requested public comments on a proposed amendment to the Television Broadcasting Regulations, 1987 (the regulations), the effect of which would be to permit a licensee, pursuant to a condition of licence, to broadcast in excess of 12 minutes of advertising material in any clock hour in a broadcast day.
Comments received from members of the public, and the majority of representations from the broadcasting industry, opposed an increase in the number of minutes per hour of advertising material permitted on television.
There was, however, considerable support from within the broadcasting industry for the introduction of non-traditional forms of advertising, such as infomercials, during the broadcast day. Since the issues related to this particular proposal had not been canvassed under the October 1993 notice, the Commission, in Public Notice CRTC 1994-37 dated 29 March 1994, invited public comment on whether infomercials should be permitted during the broadcast day and what guidelines should govern their broadcast.
In response to this second notice, 63 comments were received from members of the public, broadcasters, the Canadian Association of Broadcasters (CAB), the advertising industry, various institutions, consumer and industry associations, and the Canadian Cable Television Association (CCTA).
Most broadcasters reiterated their support for the introduction of infomercials during the broadcast day. Other comments offered support, provided that mechanisms be put into place to safeguard the Canadian broadcasting system, while others proposed that such programming be broadcast only on separate advertising channels.
Most comments from individual members of the public opposed the introduction of infomercials, and did not address either the proposed guidelines, or the other related issues outlined in the public notice. Comments from industry representatives proposed modified or alternative guidelines to those originally proposed by the Commission.
The Canadian Direct Marketing Association and the CAB both estimated that Canadian advertisers place between $100 million and $125 million annually for infomercials on U.S. border stations. The CAB further noted that it is advertising revenue alone that ensures the ability of private broadcasters to meet their obligations with respect to the broadcast of locally-relevant programs and other Canadian programming.
The Commission's Conclusions
The Commission has considered the comments received, and has decided to permit the airing of infomercials during the broadcast day. In reaching this determination, the Commission is satisfied that allowing the broadcast of infomercials by its licensees will provide a service of interest to a number of viewers and repatriate a significant portion of the revenue otherwise lost to U.S. border stations. This, in turn, will support the production of high-quality Canadian programming.
At the same time, the Commission considers that appropriate mechanisms are essential to ensure that such revenues contribute to the maintenance of Canadian programming. In addition, viewers should be clearly informed, within the context of each infomercial, that it constitutes paid commercial programming. Further, the Commission considers that, because they are essentially long-form commercial messages, infomercials cannot be accepted as contributing to the meeting of regulatory obligations for local or Canadian programming, or for any other requirement.
Accordingly, the Commission has decided that the broadcast of infomercials will only be permitted, provided they conform to the following criteria:
1. An infomercial is defined as programming exceeding 12 minutes in length that combines entertainment or information with the sale or promotion of goods or services into a virtually indistinguishable whole. It may also involve the promotion of products mentioned in distinct commercial breaks within the infomercial programming itself.
2. No infomercial may be broadcast within the body of a program during the broadcast day.
3. Infomercials should be logged as having no program nationality. They will not be counted as part of the 12 minutes per clock hour of advertising material currently permitted under section 11 of the regulations, nor will they be counted as Canadian programming in determining compliance with Canadian content requirements.
4. For the purpose of any condition of licence or expectation that may apply in respect of Canadian programming expenditures, revenues derived from the broadcast of infomercials must be included in a licensee's annual return as advertising revenue. In this regard, licensees should report revenues derived from local and national infomercials separately from other advertising revenues.
5. A licensee may not apply the production costs of an infomercial against any condition of licence or expectation respecting either its expenditures on Canadian programming or its investment in script and concept development.
6. Infomercials may not be directed to children.
7. In order to avoid any confusion on the part of the viewer, infomercials must be identified as follows:
a) each production broadcast must be preceded and concluded with a clear and prominent written and oral announcement that the programming constitutes paid commercial programming; and
b) a clear and prominent written announcement must also be made prior to each ordering opportunity indicating that the programming the viewer is watching constitutes paid commercial programming.
The Commission will also expect licensees who air commercial
messages that are 2 minutes or longer to adhere to this requirement concerning the identification of paid commercial programming.
8. Infomercials must comply with sections 6 and 7 of the regulations concerning the broadcast of advertising for alcoholic beverages.
Other Matters
In its March 1994 notice, the Commission invited comments on who should be permitted to broadcast infomercials. After careful consideration of all the comments on this question, the Commission, by majority, has decided to permit only licensees of private television programming undertakings to air infomercials at this time. In arriving at this determination, the Commission has taken into account the fact that public broadcasters have access to financial support, both from government and from various types of advertising revenues. The majority noted that licensees of specialty services generally have access to both subscriber fees and advertising revenues. Pay television licensees are not permitted to broadcast any commercial messages.
Given the rapidly evolving communications environment, the Commission will re-evaluate its position in three years.
In a further question, the Commission asked whether any advertising material unrelated to the product or service promoted by the infomercial, but that is inserted within it or immediately following its broadcast, should be counted as part of the 12 minutes per hour of advertising material permitted by the regulations.
Based on the comments received on this matter, the Commission is prepared to exclude such unrelated advertising material from the calculation of the regulated 12 minutes per hour. However, this is provided that the infomercial, including any such unrelated commercial content, meets all other regulatory requirements and is clearly identified in the logs submitted to the Commission.
Further, the Commission asked whether permission to air infomercials during the broadcast day should be granted by condition of licence, thereby requiring applications by broadcasters.
The Commission had already published a proposed amendment to the regulations, in October 1993, the effect of which would be to permit a licensee, pursuant to a condition of licence, to broadcast in excess of 12 minutes of advertising material in any clock hour in a broadcast day.
In this respect, the Commission has made the amendment to the regulations as it appeared in the attachment to Public Notice CRTC 1993-137. A copy of this amendment is attached. It was registered on 6 October 1994 (SOR/94-634) and came into force on that date. This amendment was published in the Canada Gazette Part II on 19 October 1994.
Accordingly, the Commission hereby advises the licensees of private television programming undertakings who are interested in airing infomercials during the broadcast day, that they may file applications for the necessary licence amendments. This will allow for a public process where additional comments on the merits of individual applications may be submitted. The Commission will deal expeditiously with such applications.
Allan J. Darling
Secretary General
Whereas, pursuant to subsection 10(3) of the Broadcasting Act, a copy of the proposed amendments to the Television Broadcasting Regulations, 1987, substantially in the form set out in the schedule hereto, was published in the Canada Gazette Part I on October 16, 1993 and a reasonable opportunity was thereby given to licensees and other interested persons to make representations to the Canadian Radio-television and Telecommunications Commission with respect thereto;
Therefore, the Canadian Radio-television and Telecommunications Commission, pursuant to subsection 10(1) of the Broadcasting Act*, hereby amends the Television Broadcasting Regulations, 1987, made on January 9, 1987, in accordance with the schedule hereto.
Hull, Quebec, October 6, 1994
1. (1) Subsection 11(1) of the Television Broadcasting Regulations, 1987 is revoked and the following substituted therefor:
11. (1) Except as otherwise provided in subsections (2) and (3) or by a condition of its licence, a licensee shall not broadcast more than 12 minutes of advertising material in any clock hour in a broadcast day.
(2) Subsection 11(4)1 of the said Regulations is revoked.
(This note is not part of the Regulations.)
These amendments permit a licensee, pursuant to a condition of its licence, to broadcast in excess of 12 minutes of advertising material during each clock hour in a broadcast day.

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