ARCHIVED -  Decision CRTC 95-908

Decision

See also: 95-908-1

Ottawa, 20 December 1995

Decision CRTC 95-908

Canal Première, a general partnership consisting of Canal Première/Viewer's Choice Canada, Cogeco Radio-Télévision inc., Réseau de télévision Quatre Saisons Inc. and Télé-Métropole inc.

Across Canada - 952065100

New, national, direct-to-home (DTH) French-language pay-per-view television programming undertaking - Approved

Following a Public Hearing held in the National Capital Region, beginning 30 October 1995, and in accordance with Public Notice CRTC 1995-217 which accompanies this and other related decisions issued today, the Commission approves the application by Canal Première/Viewer's Choice Canada, Cogeco Radio-Télévision inc., Réseau de télévision Quatre Saisons inc. and Télé-Métropole inc. for a broadcasting licence to carry on a national, French-language, general interest, DTH pay-per-view (PPV) television programming undertaking to be known as Canal Première.

The Commission will issue a licence for a DTH pay-per-view television programming undertaking to the partners of the Canal Première service. The licence will expire 31 August 2002. The licensees will be Canal Première/Viewer's Choice Canada, Cogeco Radio-Télévision inc., Réseau de télévision Quatre Saisons inc. and Télé-Métropole inc. (the licensee or Canal Première). The licence will be subject to the terms and conditions set out in the appendix to this decision and in the licence to be issued. The licence will only be issued upon receipt, by the Commission, of a copy of the agreement reached between the four partners in the service in accordance with the application in all material respects and signed by them.

Ownership

Canal Première is the product of an agreement between four French-language broadcasters, namely, Canal Première/Viewer's Choice Canada, Cogeco Radio-Télévision inc., Réseau de télévision Quatre-Saisons inc., and Télé-Métropole inc. The parties' holdings in Canal Première are 40%, 20%, 20% and 20%, respectively. None of the parties will control the partnership. Control will be exercised by a six-member board of directors composed of three representatives of Canal Première/Viewer's Choice Canada and one representative of each of the other three parties. Some of Canal Première's partners and other parties will, under a management contract, supply various administrative services related to programming, marketing and program broadcasting.

The applicant indicated at the hearing that [TRANSLATION] "the Partners of pay-per-view television prepared a draft agreement with the Canadian Broadcasting Corporation and Radio-Québec which provides that these two public broadcasters will be able to offer their programming to Canal Première without discrimination and according to terms and conditions comparable to those offered to the shareholder broadcasters and independent producers. The latter will be ... the principal providers of Canadian programming to Canal Première". The applicant indicated that this is designed to include all the major French-language broadcasters in the DTH PPV market. The Commission expects the applicant to implement this plan.

The applicant further stated in its application that Premier Choix:TVEC Inc. will assume responsibility for operating the broadcast centre that provides the films, series and training programming, while the Réseau des sports (RDS) will be in charge of the reception, technical production, French adaptation and retransmission of events.

Canal Première's proposal

Canal Première intends to use nine channels for its DTH service (including the barker channel).

The service will be transmitted via fibre optic cable from the broadcast centre to the Teleport in Montreal, from where it will be offered via Canadian satellite to DTH distribution undertakings, which will distribute it nationally to all homes equipped with the required compatible receiving apparatus.

The programming proposed by the applicant will consist mainly of feature films, special events (sports, concerts, performances), first-run drama series, and educational and learning programs. Viewers will be able to select only the programs they wish to receive and will be billed a unit charge for each of those programs.

The licensee shall, by condition of licence, adhere to the Pay Television Regulations, 1990 (the regulations), with the exception of paragraphs 3(2)(d), (e) and (f). Because DTH pay-per-view television programming undertakings represent a new class of programming undertaking, the definition of "licensee" contained in subsection 2(1) of those regulations shall also not be applicable in the case of this licensee.

Paragraph 3(2)(d) of the regulations prohibits the inclusion of commercial messages in pay television programming. The Commission's decision not to apply this prohibition to the licensee is in recognition of the fact that the sports programming the licensee proposes to acquire could sometimes contain commercial messages for which it would not be practical or cost-effective for the applicant to delete, given that they form an integral part of a live feed.

Accordingly, the licensee is required, by condition of licence, to ensure that commercial messages contained in the programming it assembles for distribution by licensed DTH distribution undertakings are restricted to those contained in the live feed of out-of-market programming in the category of sports.

Moreover, it is a condition of licence that the licensee not sell, or accept compensation for any commercial messages on the service.

Paragraphs 3(2)(e) and (f) of the regulations prohibit the licensee of a pay television undertaking from distributing programming, other than filler programming, that is produced by itself or by a person related to the licensee. In this regard, the Commission notes that it has issued a public notice calling for comments on an amendment to the regulations that would permit pay television licensees, by condition of licence and in certain circumstances, to include programming in their services that is either produced by themselves or by others with whom they are related (Public Notice CRTC 1995-209 dated 8 December 1995).

The applicant indicated in its application that it would like to be able to devote up to 20% of the program schedule of its service to programming produced by its partners, or such proportion as the Commission may consider reasonable. The Commission approves the licensee's request. Accordingly, it is a condition of licence that the licensee is authorized to distribute programming, other than filler programming, which is produced by the licensee or by a person related to the licensee, and that such programming shall not exceed 20% of its overall program schedule.

The Commission is not prepared to allow DTH distribution undertakings to link the proposed service with any non-Canadian discretionary service or services. By condition of licence, the Commission requires Canal Première to ensure that all affiliation agreements entered into between it and DTH distribution undertakings incorporate a prohibition against linkage.

Canal Première made a commitment to remit all gross revenue derived from the broadcast of Canadian feature films on its service to distributors and providers, with a minimum of 60 % to the providers. The Commission requires the licensee to adhere to this commitment by condition of licence.

Exclusivity and preferential rights

By virtue of section 5(a) of Order-In-Council P.C. 1995-1106 dated 6 July 1995 (the Order), the Commission is required "to prohibit, by appropriate means, [DTH pay-per-view programming undertakings] from acquiring exclusive or other preferential rights to pay-per-view distribution of feature films and other programming within Canada". Most of the participants who addressed this issue at the hearing were of the view that a condition of licence would constitute the most appropriate means of implementing this component of the Order. The Commission agrees with this approach and, accordingly, the licensee is prohibited, by condition of licence, from acquiring exclusive or any other preferential rights to pay-per-view programming exhibited as part of its service.

The term "preferential rights" is broad in scope and could be the subject of different interpretations in light of the particular circumstances at hand. For this reason, the Commission considers that, in dealing with complaints relating to the acquisition of preferential rights, it is preferable to allow the parties to address the issues, as they see fit, and to put forward their respective views as to what might constitute a breach of the condition of licence, on a case-by-case basis.

Non-proprietary rights

The Canadian Association of Film Distributors and Exporters (CAFDE) submitted an intervention to this and other applications, requesting that the Commission require all general interest DTH pay-per-view licensees to purchase non-proprietary exhibition rights for feature films from Canadian distributors. This would include any production, other than the exceptions specified in Investment Canada's current policy which defines proprietary rights as those where the worldwide distribution rights are owned by the licensor, or where the licensor has provided not less than one-half of the cost of the creation of the film.

The Commission considers that such a requirement would provide strong support for Canada's film distribution industry, which is an important element of the broadcasting system. The Commission has, therefore, decided to include this requirement as a condition of licence with respect to all licensees of general interest DTH PPV programming undertakings.

The Commission notes that, since this service has the same ownership as the cable-delivered, PPV service to be known as Canal Première licensed today, the licensee would therefore purchase rights for both services in tandem.

Accordingly, it is a condition of licence that Canal Première purchase non-proprietary exhibition rights for feature films from Canadian distributors.

Canadian content and promotion of Canadian programming

The applicant made a commitment to distribute in each broadcast year a minimum of 20 Canadian feature films available in the original, French-language version or dubbed in French which have been exhibited in theatres in French-language markets (including all new Canadian feature films which are available and suitable for PPV and meet the "Pay Television Programming Standards and Practices"), and a minimum of six Canadian-based events targeting the French-language market in years 1 and 2, eight in years 3 and 4, 10 in years 5 and 6, and twelve in year 7. The Commission requires, by condition of licence, that the licensee adhere to these commitments. For the purposes of this decision and the attached conditions of licence, broadcast year means the period from 1 September to 31 August and each twelve-month period thereafter beginning on 1 September. For the period from the commencement of operations of the service approved in this decision to 31 August 1996, the licensee's performance with respect to its commitments regarding Canadian content in feature films and events will be assessed on a pro rata basis.

Canal Première made a commitment to maintain a ratio of no less than 1:12 with respect to Canadian:non-Canadian first-run feature films in each broadcast year and a ratio of no less than 6:20 for Canadian events in years one and two, 8:20 in years three and four, 10:20 in years five and six, and 12:20 in year seven, on each channel used for their broadcast. The Commission requires, by condition of licence, that the licensee adhere to this commitment.

Finally, the Commission notes the applicant's commitment that all drama programs (series, mini-series, made-for-TV feature films, etc.) as well as the learning and training programs that it broadcasts will be Canadian. The Commission also requires, by condition of licence, that the licensee adhere to this commitment.

With regard to the scheduling of Canadian programming, the Commission expects the licensee to honour its commitment to give Canadian films the same treatment as non-Canadian films.

The Commission expects that the exhibition window to be given Canadian films will be at least equal to the minimum length of the window given to non-Canadian films.

The Commission expects the licensee to ensure that there is equity in the promotion of Canadian and non-Canadian feature films and events.

Production fund

As stated in the preamble to the decisions published today, (Public Notice CRTC 1995-217), the Commission has decided to require the licensees of all DTH distribution undertakings and of all DTH pay-per-view television programming undertakings to make contributions representing no less than 5 % of their annual gross revenues to fund Canadian program production. In the interests of cost effectiveness and efficiency, the Commission specified that such contributions should be made to an existing Canadian program production fund. Pursuant to Public Notice CRTC 1995-114 dated 11 July 1995 relating to the Order, the above contributions shall be remitted into a fund administered independently of the undertaking.

In addition to the gross revenues derived from the broadcast of Canadian feature films that it will remit to distributors and providers, the applicant made a commitment to devote 10% of the service's annual gross revenues to fund Canadian feature films and Canadian events for French-language PPV television. The applicant indicated in its application that its contributions could reach $4 million in seven years, an amount which would be transferred to a fund that it intends to establish for its programming undertaking (PPV distributed by cable), approved in Decision CRTC 95-900 dated 20 December 1995. These contributions will be devoted entirely to financing Canadian events and feature films for French-language PPV television produced by the independent sector.

Accordingly, by condition of licence, the licensee is required to contribute a minimum of 10 % of the gross annual revenues earned by its DTH pay-per-view programming undertaking to an existing Canadian program production fund administered independently of the undertaking. The applicant indicated that it expects the operations of Canal Première to commence in June 1996.
Accordingly, as part of this condition, the licensee is required to report to the Commission, before the service commences operations, identifying the name of the existing fund to which it will remit its contributions. The licensee is further required to remit its first contribution no later than 45 days following the end of the month in which it commences operations; contributions thereafter shall take the form of monthly installments remitted within 45 days of month's end and representing a minimum of 10 % of that month's gross revenues.

Service to the deaf and hard of hearing

In its application, the applicant made a commitment to contribute to the close-captioning of Canadian feature films amounts ranging from $27,000 in the first year of its licence term to $132,000 in the seventh year to closed captioning of Canadian feature films. The applicant also pledged that 50% of all of the feature films it broadcasts in the first year will be closed captioned, increasing to 100% in the seventh year. The Commission expects the licensee to adhere to its commitments regarding closed captioning.

The Commission notes that the licensee will acquire, in the first year of the licence term, a telecommunication device for the deaf (TDD), and will ensure that the TDD number is well publicized.

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

The Commission acknowledges the many interventions filed in regard to this application.

Allan J. Darling
Secretary General

APPENDIX TO DECISION CRTC 95-908

Conditions of licence

1. The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of paragraphs 3(2)(d),(e) and (f). The definition of "licensee" contained in subsection 2(1) is not applicable.

2. The licensee shall ensure that commercial messages contained in the programming it assembles for distribution by licensed DTH distribution undertakings are restricted to those contained in the live feed of out-of-market programming in the category of sports.

3. The licensee shall not sell, or accept compensation for any commercial message on the service.

4. The licensee shall distribute on its programming undertaking, in each broadcast year, a minimum of 20 Canadian feature films in the original French-language version or dubbed in French which have been exhibited in theatres in French-language markets (including all new Canadian features that are available and suitable for PPV and meet the "Pay Television Programming Standards and Practices"), and a minimum of six Canadian-based events targeting the French-language market in years 1 and 2, eight in years 3 and 4, ten in years 5 and 6, and twelve in year 7. For the period from the commencement of operations of the service to 31 August 1996, the licensee's performance with respect to its commitments regarding Canadian content in feature films and events will be assessed on a pro rata basis.

5. The licensee shall maintain a film ratio of no less than 1:12 with respect to Canadian:non-Canadian "first run" feature films exhibited on its service in each broadcast year and a ratio of no less than 6:20 for Canadian events for the first two years of the licence term, 8:20 in years three and four, 10:20 in years five and six and 12:20 in year seven, on each channel used for their broadcast.

6. All drama series (series, mini-series, films for television, etc.) and educational television programs shall be Canadian.

7. The licensee shall remit all gross revenues derived from the broadcast on its service of Canadian feature films to distributors and to providers, with a minimum of 60 % to the programming providers.

8. The licensee is required to contribute a minimum of 10% of the annual gross revenues earned by its DTH pay-per-view programming undertaking to an existing Canadian program production fund administered independently of the undertaking. The licensee is also required to report to the Commission, before the service commences operations, identifying the name of the existing fund to which it will remit its contributions. The licensee is further required to remit its first contribution no later than 45 days following the end of the month in which it commences operations; contributions thereafter shall take the form of monthly installments remitted within 45 days of month's end and representing a minimum of 10% of that month's gross revenues.

9. The licensee is authorized to distribute programming, other than filler programming, which is produced by the licensee or by a person related to the licensee, but such programming shall not exceed 20% of its overall programming schedule.

10. The licensee shall not enter into an affiliation agreement with the licensee of a DTH distribution undertaking, unless the agreement incorporates a prohibition against linkage of the Canal Première service with any non-Canadian discretionary service.

11. The licensee shall not acquire exclusive or any other preferential rights to pay-per-view programming exhibited as part of its service.

12. The licensee shall purchase non-proprietary exhibition rights for feature films from Canadian distributors.

13. 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.

14. The licensee shall adhere to the "Pay Television Programming Standards and Practices Code", as amended from time to time and approved by the Commission.

15. 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:

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