ARCHIVED -  Decision CRTC 95-913

Decision

Ottawa, 20 December 1995

Decision CRTC 95-913

Canadian Satellite Communications Inc., Westcom Radio Group Ltd. and Pelmorex Radio Inc., partners in a Partnership to be known as CWP Partnership

Across Canada - 951859800

New, national, pay audio programming undertaking - Approved

Following a Public Hearing in the National Capital Region beginning 14 November 1995, and in accordance with Public Notice CRTC 1995-218 which accompanies this and other related decisions issued today, the Commission approves the application for a broadcasting licence to carry on a new pay audio programming undertaking.

The Commission will issue a licence to the partners expiring 31 August 2002. The licence will be subject to the conditions of licence specified in the appendix to this decision and in the licence to be issued.

The licensee is CWP Partnership (CWP), a partnership of Canadian Satellite Communications Inc. (Cancom) and Westcom Radio Group Ltd. (Westcom) which will each have a 40% partnership interest and Pelmorex Radio Inc. (Pelmorex) which will have the remaining 20% partnership interest. The business and the affairs of the undertaking will be managed by a management committee consisting of two nominees of each of Cancom and Westcom and one of Pelmorex. Control will be exercised by two partners voting in concert.

CWP proposed to establish a service to be known as "Allegro" which will initially be distributed by the ExpressVu direct-to-home (DTH) distribution undertaking, but will eventually be made available to other DTH distribution undertakings and to cable systems. Allegro will include 16 channels of music at the beginning of operations. Additional channels will be added in flights of four, so that the number of channels will increase to 20 after six months of operation, and increase again to 24 channels within two years of commencing operation. All channels would be produced in Canada and at least 30% of the musical selections played on the service each week would be Canadian. Consistent with the Commission's regulatory framework for pay audio programming undertakings announced in Public Notice CRTC 1995-218, the Commission has attached a condition of licence specifying that a minimum of 30% of the musical selections broadcast each week on Canadian-produced pay audio channels, considered together, shall be Canadian. The Commission, however, encourages the applicant to exceed the 30% level of Canadian content that it has proposed.

With respect to channels featuring French-language vocal music, the applicant proposed to begin with two such channels, to add two more after six months of operation, and then to add at least one more within two years of beginning operation. Consistent with the policy set out in Public Notice CRTC 1995-218, the Commission has attached a condition of licence requiring that a minimum of 25% of all Canadian-produced pay audio channels, other than those consisting entirely of instrumental music or of music entirely in languages other than English or French, devote, to musical selections in the French language, on a weekly basis, a minimum of 65% of the vocal music selections from category 2, as defined in the Radio Regulations, 1986. The Commission expects CWP to fulfil this condition from the outset of operations.

The applicant proposed to establish a Rightsholder Reserve in which a portion of the gross annual revenues of the service would be set aside for payments, both to copyright holders and to those seeking to establish new legal rights. The proportion of gross revenues placed in this fund is to be based on a sliding scale: the rate is set at 12.5% for the first $500,000 in annual revenues, and increases by 0.25% for each subsequent interval of $500,000 in gross revenues earned, until a maximum rate of 15% is reached. Assuming projections are attained, this would average approximately 13% of gross revenues over the licence term. The applicant indicated that any money in this reserve that was not paid to rights holders would be contributed 60% to FACTOR and 40% to MusicAction. It further indicated that the amount of money contributed annualy to FACTOR and MusicAction would never be less than 10% of the value of the Rightsholder Reserve, even if the reserve itself were entirely consumed by payments to rights holders.

Consistent with its policy for pay audio undertakings set out in Public Notice CRTC 1995-218, the Commission has attached a condition of licence requiring that the licensee contribute each year a minimum of 4% of gross annual revenues to eligible third parties associated with Canadian talent development. Such eligible third parties are defined as "FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients." All money contributed to eligible third parties must be directly connected with the development of Canadian musical and other artistic talent.

The Commission acknowledges and has considered all of the interventions submitted regarding the application by CWP. It considers that the conditions imposed on the licensee in this decision have addressed the concerns expressed by several interveners.

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. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Allan J. Darling
Secretary General

APPENDIX TO DECISION CRTC 95-913

Conditions of Licence

1. A minimum of 30% of the musical selections broadcast each week on Canadian-
produced pay audio channels, considered together, must be Canadian.

2. A minimum of 25% of all Canadian-produced pay audio channels, other than those consisting entirely of instrumental music or of music entirely in languages other than English or French, must devote, to musical selections in the French language, on a weekly basis, a minimum of 65% of the vocal music selections from category 2, as defined in the Radio Regulations, 1986.

3. A maximum of one non-Canadian pay audio channel may be packaged or linked with each Canadian-produced pay audio channel. In no case may subscribers to a pay audio service be offered a package of pay audio channels in which non-Canadian channels predominate. The licensee must provide the Commission, upon request, with a complete list of all non-Canadian channels being distributed on its service.

4. The licensee shall contribute each year a minimum of 4% of its gross annual revenues to eligible third parties associated with Canadian talent development. Such third parties are defined as FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients. The licensee shall report the names of the third parties associated with Canadian talent development, together with the amounts paid to each, on its annual return.

5. The licensee shall not broadcast commercial messages.

6. The licensee shall not broadcast spoken word programming, with the exception of identification of musical selections, promotion of the service and programming directed to children.

7. The licensee shall adhere to the provisions contained in sections 3 and 11 of the Radio Regulations, 1986, as amended from time to time by the Commission.

8. 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.

9. The licensee shall maintain sequential lists of all recordings played on each pay audio channel, with designations for Canadian musical selections and for French-language vocal music. These lists shall be kept by the licensee for a minimum of four weeks and forwarded to the Commission upon request, along with a notarized attestation of the lists' accuracy.

10. The undertaking shall be in operation within 12 months of the date of this decision or, where the licensee applies to the Commission within this period and satisfies the Commission that it cannot complete the implementation before the expiry of this period and that an extension is in the public interest, within such further period of time as is approved in writing by the Commission.

11. The definitions of "Canadian", "commercial message", "broadcast week" and "spoken word" set out in section 2 of the Radio Regulations, 1986, as amended, and the definition of  "Canadian musical selection" set out in subsection 2,2(2) of the said Regulations, as amended, shall apply to these conditions and the licensee with the necessary changes.

12. The licensee may not distribute any non-Canadian pay audio channel that includes commercial messages or that includes spoken word programming, with the exception of identification of musical selections, promotion of the service or programming directed to children.