ARCHIVED -  Decision CRTC 96-182

Decision

Ottawa, 31 May 1996

Decision CRTC 96-182

Télécâble Tête à la Baleine inc.

Halton Cable Systems Inc.
Georgetown, Acton, Milton and surrounding area; and Rockwood, Ontario

Western Co-Axial Limited
Fergus-Elora; Grimsby; part of Hamilton, Dundas, part of Ancaster and surrounding area; part of Hamilton, Stoney Creek and surrounding area, Ontario - 199604822 - 199604830 - 199604848 - 199604856 - 199604864 - 199604872

Transfer of control and licence amendments

Following Public Notice CRTC 1996-57 dated 19 April 1996, the Commission approves the application for authority to transfer effective control of Halton Cable Systems Inc. (Halton), licensee of the cable distribution undertakings serving >Georgetown, Acton, Milton and surrounding area, and Rockwood, through the transfer of all of the issued and outstanding shares of Halton from Halton-Triangle Investments Limited to 1167656 Ontario Inc., (Newco) a wholly-owned subsidiary of Western Co-Axial Limited (Western). The Commission also approves the request by Western, as part of this transaction, to increase the voting rights of Clairvest Group Inc. in Western from 29.99% to 42.46%.

The Commission notes that following the transfer of shares, Halton and Newco will amalgamate and continue under the name of Halton Cable Systems Inc.

The purchase price for the shares of Halton is $23,520,000. Based on the evidence filed with the application, the Commission has no concerns with respect to the availability or the adequacy of the required financing.

Because the Commission does not solicit competing applications for authority to transfer effective control of broadcasting undertakings, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature. As a first test, the applicant must demonstrate that the proposed transfer will yield significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system as a whole, and that it is in the public interest.

The Commission has assessed the benefits package identified by the applicants as flowing from this transaction and, in general, is satisfied that it is significant and unequivocal, and that approval of this application is in the public interest.

The Commission expects the applicants to ensure that the commitments identified as benefits are implemented in accordance with the application, and has also taken into account Western's statement that the cost of this transaction will not be passed along to subscribers.

The Commission acknowledges the interventions in support of the transfer of control.

The Commission has also noted the comments expressed in an intervention to this application and it is satisfied with the licensee's reply thereto.

Licence amendments - Georgetown, Acton, Milton and surrounding area

a) Interconnection

The Commission approves the application to amend the broadcasting licence of the cable distribution undertaking serving Georgetown, Acton, Milton and surrounding area by authorizing the licensee to interconnect this undertaking with the Western cable distribution undertaking serving part of Hamilton, Dundas, part of Ancaster and surrounding area, via optical fibre.

The Commission notes that both undertakings are Class 1 undertakings and that subscribers of the undertaking serving Georgetown, Acton, Milton and surrounding area will receive additional programming services at no additional cost.

b) Addition of WNEQ-TV

The Commission further approves the application for authority to distribute WNEQ-TV Buffalo, New York, a duplicate PBS signal, received via optical fibre, as part of the basic service of the cable distribution undertaking serving Georgetown, Acton, Milton and surrounding area.

In view of the interconnection authorized herein, the approval to distribute WNEQ-TV is consistent with the authority granted to Western in Decision CRTC 92-458.

TVOntario submitted an intervention in which it reiterated its concerns with respect to the increased presence of WNEQ-TV (PBS) on cable systems in the Golden Horseshoe region of Southern Ontario and the potential harm to TVOntario, especially in the areas of fund raising and children's programming. TVOntario also proposed that, if the Commission approves an application which has the effect of increasing the reach of WNEQ-TV, a condition of licence be attached to the decision such that a public review by the Commission of WNEQ-TV's presence on Ontario cable systems would automatically be triggered should it undertake on-air fund raising drives or undergo a format change that would increase the amount of children's programmming in its schedule beyond the current level.

The Commission notes that, in response to TVOntario's intervention, Western indicated that WNEQ-TV is currently offered as part of the basic service of the undertaking to be interconnected to the Halton system, and that WNEQ-TV is already offered to 90% of Halton subcribers on a discretionary tier. Western maintained that, in order to offer some 20 new services to Halton subscribers, which is one of the major benefits of these applications, the services to be added must be distributed on the same channels as they are for Western subscribers, thus necessitating the move of WNEQ-TV from a high-penetration discretionary tier to the basic service for Halton subscribers.

Furthermore, Western added that it had confirmed with WNEQ-TV that it did not now, nor did it intend to solicit financial support on this channel. Western also indicated that WNEQ-TV confirmed that its children's programming content had not changed in recent times, and that WNEQ-TV did not intend to change it or increase it.

In view of the above, the Commission is satisfied that the addition of a condition of licence, as suggested by TVOntario, would not be appropriate in the circumstances.

c) Insertion of promotional material

The Commission approves the application for authority to alter the signal of U.S. satellite services for the insertion of promotional material in the local availabilities of those services by adding the following condition of licence:

The licensee may, at its option, insert certain promotional material as a substitute for the "local availabilities" (i.e. non-Canadian advertising material) of non-Canadian satellite services. At least 75% of these local availabilities must be made available for use by licensed Canadian programming services for the promotion of their respective services, for the promotion of the community channel and for unpaid Canadian public service announcements. A maximum of 25% of the commercial availabilities may be made available for the promotion of discretionary programming services and packages, customer service information, channel realignments, cable FM service and additional cable outlets.

This amendment is consistent with the approach taken by the Commission in Decision CRTC 95-12 dated 18 January 1995.

The Commission reminds the licensee that it is not prepared to consider applications to use such availabilities for the broadcast of commercial advertising.

In view of the interconnection authorized herein, this approval is consistent with the authority granted to Western in Decision CRTC 95-893.

d) Distribution of a video games service

In addition, the Commission approves the application to amend the broadcasting licence of the cable distribution undertaking serving Georgetown, Acton, Milton and surrounding area, by authorizing the licensee to originate a video games service as a special programming service, offered on a discretionary basis.

The Commission stresses that all programming for the proposed interactive video games service is the responsibility of authorized cable licensees. The Commission notes that the video games will be provided by Sega Canada Inc. (Sega, the video games supplier).

Based upon indicators of control outlined in Public Notice CRTC 1995-5 dated 13 January 1995 entitled "Policy Governing the Distribution of Video Games Programming Services" and on information provided by the applicant, the Commission is satisfied that the licensee will be, in fact, the operator of the service, and that approval of a licence amendment is appropriate. Accordingly, the following conditions of licence will apply:

1. The video games service (the service) not include programming that is religious or political in nature.

2. The service consist only of:

a) software and related information which will enable a person to select and play video games using broadcasting receiving apparatus located at the subscriber's premises; and

b) ancillary programming consisting of promotional information concerning only the programming service and video games offered by the video games supplier, except for such games that are rated or found to be unsuitable for the cable service, provided such programming is broadcast in conjunction with programming set out in a) above and not on a separate channel.

3. The service make the greatest practicable use of Canadian creative and other resources in the creation and presentation of programming.

4. At least 10% of the total number of video games offered on the monthly menu be Canadian. Where fewer than 10% of the video games on the monthly menu are Canadian, the service shall be distributed on a channel that would otherwise be available, under the current linkage rules, for the distribution of a non-Canadian eligible satellite service as part of a discretionary tier.

5. The service be in compliance with the Canadian Association of Broadcasters' "Sex-Role Portrayal Code for Television and Radio Programming", "Voluntary Code Regarding Violence in Television Programming" and "Broadcast Code for Advertising to Children", as amended from time to time and approved by the Commission.

6. The video games offered be categorized, and information be provided to subscribers indicating, at a minimum, the suitability of individual games for use by children and adolescents.

7. The licensee provide to the Commission, upon request, the monthly menu of the games offered during any month within the previous twelve months of the date of the request and indicate which games are Canadian.

In Public Notice CRTC 1995-5, the Commission had noted Sega's commitment to establish an Interactive Entertainment Development Fund to provide financial assistance to Canadians developing and producing new Canadian multimedia products. More specifically, Sega committed to contribute to such Fund on a monthly basis, depending upon the total number of paying subscribers obtained in Canada, an amount ranging from 3% to 5% of the gross revenues in the previous month attributable to the video games service.

The Commission has considered it central to its approval of this application that the licensee commit to ensuring that the terms of this commitment are met. Accordingly, and consistent with the approach taken by the Commission in Decision CRTC 95-591 dated 24 August 1995, the Commission requires that the licensee ensure that the terms of the above-noted commitment form part of any contractual agreement entered into with Sega for the provision of video games programming services and will consider the licensee accountable to the Commission for its fulfilment.

In view of the interconnection authorized herein, this approval is consistent with the authority granted to Western in Decision CRTC 95-920.

Employment equity

In Public Notice CRTC 1992-59, the Commission announced implementation of its employment equity policy. It advised licensees that, at the time of licence renewal or upon considering applications for authority to transfer ownership or control, it would review with applicants their practices and plans to ensure equitable employment. The Commission notes that Western has indicated its intention to extend its corporate employment equity policy to the Halton undertakings. In keeping with the Commission's policy, it encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

This decision is to be appended to each licence.

 Allan J. Darling
 Secretary General