ARCHIVED -  Decision CRTC 95-69

Decision

See also: 95-69-1

Ottawa, 28 February 1995

Decision CRTC95-69

The Family Channel Inc.

Across Canada - 931951800

Licence renewal for the Family Channel

Following a Public Hearing in the National Capital Region beginning on 25 April 1994 and Decision CRTC 94-607 dated 12 August 1994, the Commission renews the broadcasting licence issued to The Family Channel Inc. (Family Channel) to carry on an English-language pay television programming undertaking to provide a national general interest service across Canada, from 1 March 1995 to 31 August 2001, subject to the conditions specified in the appendix to this decision and in the licence to be issued.

The Commission is satisfied that, with the exception of conditions of licence 5 and 6 which are addressed below, Family Channel has complied with the terms and conditions of its licence. In evaluating Family Channel's proposals and commitments for the new licence term, the Commission has taken into account the distinct characteristics of the pay television marketplace and has given consideration to the licensee's past performance, the assumptions underlying its subscriber and revenue projections, and its plans for the new licence term.

The conditions of licence contained in the appendix to this decision reflect the Commission's general concerns with respect to Canadian pay television services; they are also in line with the licensee's own commitments, as set out in its application.

With respect to the conditions related to expenditures on Canadian programs, the Commission notes that the licensee failed to meet condition of licence 5 in 1991/92 and 1992/93 and 6 in 1988/89 and 1989/90. These conditions of licence required a certain level of expenditures on Canadian programs "in each year" of the licence term. Family Channel has stated that it met the requirements of both conditions when measured over the entire licence term. The licensee further stated that it had used overexpenditures from previous years to top up the amounts expended during the years in question. The Commission has reviewed the arguments submitted by Family Channel and notes that this approach is consistent with the flexibility that had already been accorded to licensees of conventional television stations.

As part of this renewal application, Family Channel requested revisions to the condition of licence related to Canadian programming expenditures. These proposed revisions would base the calculation of such expenditures on the revenues of the preceeding year rather than the current year; allow some flexibility in total expenditures from year to year; and base the calculation of those expenditures on the number of subscribers to the service.

The Commission has decided to adopt the approach based on the revenues of the previous year for all specialty and pay television services and therefore amends the licensee's relevant condition of licence accordingly.

Furthermore, the Commission has decided to extend to licensees of specialty and pay television services the same flexibility already granted to licensees of conventional television stations.

In addition, the licensee has proposed to delete the condition of licence related to the logging requirements pertaining to target audience, program categories, "Disney Channel" acquisitions, and designation of 150% Canadian content programming, which have been rendered redundant by the enactment of the Pay Television Regulations, 1990; and to delete the logging requirement to include the Ontario Film Review Board ratings for each feature film distributed. The licensee stated that the content of its service is safeguarded by other conditions and commitments, and that the nature of the service and of changes to the Ontario Film Review Board's rating system negate the benefit of this requirement. Accordingly, the Commission approves these proposals.

The Commission expects Family Channel to adhere to the "Pay Television Programming Standards and Practices" as amended from time to time, and approved by the Commission.

In Public Notice CRTC 1994-155 dated 21 December 1994, the Commission announced that it had accepted, with certain qualifications, the new code on the depiction of violence on television submitted by the pay-television and pay-per-view industry in November 1994. The Commission also stated that at the time of licence renewal, it would require compliance with the code as a condition of licence. Accordingly, the relevant new condition of licence is set out in the appendix to this decision.

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. The Commission encourages the Family Channel to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

With respect to closed captioning, the Commission acknowledges the interventions received from the Canadian Association of Captioning and Closed Captioning & Subtitles. The Commission is satisfied with the licensee's reply to the concerns raised in these interventions.

The Commission also acknowledges the many interventions submitted regarding Family Channel's renewal application and has noted the licensee's reply to the concerns raised in some of these interventions.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

CONDITIONS OF LICENCE FOR THE FAMILY CHANNEL INC.

Nature of Service

1. The programming provided by the licensee shall have as its target audiences only children, youth to age 17, and families in conjunction with such children and youth.

2. The licensee shall not provide on the Family Channel any programming with an "Adult", "Restricted" or equivalent rating from the Ontario Film Review Board.

3. The licensee shall not distribute programming from the following categories as set out in Item 6 of Schedule I to the Pay Television Regulations, 1990: news (category 1), religion (category 4), education (category 5) and sports (category 6).

Exhibition of Canadian programs

4. Commencing 1 March 1995 and during each semester of this licence term, the licensee shall devote not less than 25% of the total time during which programming is distributed on the Family Channel and 30% of the total time between 6:00 p.m. and 10:00 p.m. (prime viewing hours) to the distribution of Canadian programs.

 In the calculation of time devoted to the distribution of Canadian programs under this condition, a 150% credit shall be awarded for a new Canadian production distributed by Family Channel that

 a) is scheduled to commence and be completed within prime viewing hours, as defined above, and

 b) in the case of a new Canadian production intended for children, is scheduled to be completed prior to 9:00 p.m.  Family Channel will receive a new Canadian production programming credit for each subsequent showing during the time periods specified above of such a production within a two-year period from the date of first showing by the licensee.

Expenditures on Canadian programs

5.a) During the period 1 March 1995 to 31 August 1995, the licensee shall expend on the acquisition or investment in Canadian programs, a percentage of its revenues for the period 1 March 1994 to 31 August 1994 that is not less that the percentage shown in the table below. For the broadcast year beginning 1 September 1995 and in each subsequent broadcast year during the term of this licence, the licensee shall expend on the acquisition of or investment in Canadian programs, a percentage of its revenue for the previous broadcast year that is not less than the percentage shown in the table below:

Average number of residential, bulk
and Satellite Master Antenna television
subscribers (SMATV) in the previous
broadcast year/Nombre moyen d'abonnés
du service résidentiel, de groupe et du
système de télévision par satellite à
antenne collective (STSAC) au cours de Percentage of revenues/
l'année de radiodiffusion précédente Pourcentage des recettes

300,000 or less/ou moins 20%
300,001 - 350,000 22%
350,001 - 400,000 25%
400,001 - 450,000 26%
450,001 - 500,000 27%
500,001 - 550,000 28%
550,001 - 600,000 29%
600,001 and over/et plus 30%

b) In any broadcast year of the licence term, including the partial broadcast year ending 31 August 1995 but excluding the final broadcast year, the licensee may expend an amount on Canadian programming that is up to 5% less than the minimum required expenditure for that broadcast year as set out and calculated in accordance with this condition of licence. Should the licensee avail itself of this flexibility in any broadcast year including the partial broadcast year ending 31 August 1995, it shall expend in the next broadcast year of the licence term, in addition to the minimum required expenditure for that broadcast year, the full amount of the previous year's underspending.

c) In any broadcast year of the licence term, including the partial broadcast year ending 31 August 1995, the licensee may expend an amount on Canadian programming that is greater than the minimum required expenditure for that year as set out and calculated in accordance with this condition of licence; in such case, the licensee may deduct

  i) from the minimum required expenditure for the next broadcast year of the licence term, an amount not exceeding the amount of the previous broadcast 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 an 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 as set out and calculated in accordance with this condition of licence.

6. In each broadcast year of the licence term, the licensee shall expend not less than 5% of its total expenditures on Canadian programs, on script and concept development.

7. In making the calculations required for the purposes of conditions of licence 5 and 6, only actual cash outlays shall be taken into account.

8. In each semester, the time devoted to the distribution of programs obtained from "The Disney Channel" shall comprise not more than 60% of the total time during which programming is distributed on the Family Channel.

Gender portrayal

9. 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.

Depictation of violence

10. The licensee shall adhere to the "Pay Television and Pay-Per-View Programming Code Regarding Violence", as amended from time to time and approved by the Commission.

Definitions

In these conditions:

 "acquisition" means to acquire exhibition rights for the licensed territory, excluding overhead costs;

 "broadcast year" means the period from 1 September to 31 August and each twelve-month period thereafter beginning on 1 September.

 "new Canadian production" means:

 a) a Canadian dramatic production

    i) which exceeds 75 minutes in duration and in relation to which all financial expenditures made by the licensee were made prior to the commencement of principal photography or taping and in which principal photography or taping was completed after 1 January 1985; and

   ii) which is intended for children and which exceeds 22:30 minutes in duration and in relation to which all financial expenditures by the licensee are made prior to the completion of principal photography or taping; and

 b) which qualifies as Canadian content in accordance with the criteria for Canadian program recognition set out in the appendix to Public Notice CRTC 1984-94 dated 15 April 1984.

 "expend" and "expenditure" both mean actual cash outlay.

 "investment" means an equity investment or advance on account of an equity investment, but does not include overhead costs or interim financing by way of a loan.

 "revenue" means revenue from residential, bulk and SMATV subscribers and does not include revenue from Direct-to-Home Satellite Services (DTH) subscribers or any return on an investment in programming.

 "script and concept development expenditures" means those expenditures, excluding overhead costs, that are incurred prior to the commencement of pre-production and before the financing of the project is in place. Spending on programs that are assured of going to air at the time of the expenditure is not considered as script and concept development expenditures.

 "semester" means each six-month period beginning 1 September and 1 March.