ARCHIVED -  Decision CRTC 96-542

Decision

Ottawa, 28 August 1996

Decision CRTC 96-542

BBS Ontario Incorporated

Ottawa and Pembroke, Ontario - 952237600 - 952236800 - 952238400

Disaffiliation of CHRO-TV Pembroke from the CTV Television Network; Addition of a transmitter of CHRO-TV at Ottawa and addition of a transmitter of CJOH-TV Ottawa at Pembroke - Approved

Following a Public Hearing in the National Capital Region beginning on 15 April 1996, the Commission approves the applications submitted by BBS Ontario Incorporated (BBS Ontario) to amend the broadcasting licence for CHRO-TV Pembroke by deleting the condition of licence requiring the licensee to operate as an affiliate of the network operated by the CTV Television Network Ltd. (CTV) and by authorizing the licensee to add a transmitter at Ottawa, operating on channel 43 with an effective radiated power of 231,000 watts.

The Department of Industry has advised the Commission that implementation of the proposed technical parameters is conditional upon Radio Nord inc. relocating CHOT-TV, channel 40, to a new authorized site near Limoges, Ontario. Accordingly, the authority granted in this decision can only be exercised once the Department of Industry has advised the Commission that a Broadcasting Certificate has been issued for the proposed operation.

The Commission also approves BBS Ontario's application to amend the broadcasting licence for CJOH-TV Ottawa by authorizing the licensee to add a transmitter at Pembroke, operating on channel 47 with an effective radiated power of 253,000 watts.

Upon disaffiliation from CTV, CHRO-TV will operate as an independent station authorized to provide a local service to Pembroke and Ottawa and the surrounding Ottawa Valley. While some local productions will originate from and reflect Ottawa and environs, the Commission is satisfied that the applicant's programming plans and commitments will be effective in ensuring that much of CHRO-TV's focus and orientation will remain on Renfrew County and the upper Ottawa Valley.

The addition of a CJOH-TV transmitter at Pembroke will ensure that viewers in that city and surrounding area will continue to have access to CTV's national service.

Background

BBS Ontario is a wholly-owned subsidiary of Baton Broadcasting Incorporated (Baton). For its part, Baton is one of Canada's largest operators of private television stations. Baton is effectively controlled by members of the Eaton family of Toronto through their indirect ownership of a majority of Baton's voting shares.

Through its wholly-owned subsidiary, *Nation's Capital Television Incorporated, Baton acquired the assets of CJOH-TV in 1988 (Decision CRTC 88-275 dated 8 April 1988). Subsequently, in 1990 Baton acquired effective control of CHRO-TV (Decision CRTC 90-1074 dated 22 October 1990). Pembroke is located approximately 100 kilometres west of Ottawa.

Baton's ownership of two English-language television stations having such proximity to each other constituted an exception to the Commission's longstanding policy which prohibits the common ownership of two broadcasting undertakings of the same type and language in the same market. In Decision CRTC 90-1074, the Commission granted this exception by approving Baton's application to acquire effective control of CHRO-TV. The Commission acknowledged that:

while the official Grade B signal contours of CJOH-TV and CHRO-TV overlap significantly, there is no overlap of the stations' Grade A contours. The CHRO-TV signal is extended to the Ottawa area via cable and over the years, the Commission has required Ottawa area cable operators to distribute CHRO-TV as part of their basic services because it was dependent on the Ottawa market for financial stability.

 *On 1 September 1994, Nation's Capital Television Incorporated amalgamated with CFTO-TV Limited, South Western Broadcasting Incorporated and Mid-Canada Communications (Canada) Corp. The resulting entity continued as BBS Ontario Incorporated./
  *Le 1er septembre 1994, la Nation's Capital Television Incorporated, la CFTO-TV Limited, la South Western Broadcasting Incorporated et la Mid-Canada Communications (Canada) Corp. ont fusionné pour devenir la BBS Ontario Incorporated.

The Current Applications

In filing its present applications, BBS Ontario acknowledged that approval of these proposals would significantly alter the relationship between CJOH-TV and CHRO-TV. Recognizing that this change might raise questions as to whether the exemption to the Commission's common ownership policy granted in Decision CRTC 90-1074 is still warranted, BBS Ontario asked the Commission to reaffirm this exemption.

In support of its request, BBS Ontario pointed out that the Commission, in previous decisions, has recognized that CHRO-TV needs access to the Ottawa market to be financially viable. BBS Ontario further argued that, in recent years, increased competition in the Ottawa market from new conventional television services, including a new conventional U.S. service, as well as from new specialty services, has eroded CHRO-TV's audience share in Ottawa. According to BBS Ontario, CHRO-TV's decline in popularity in Ottawa has been exacerbated by the relocation, in January 1995, of the station's signal on Ottawa cable systems from channel 6 to channel 20. BBS Ontario claimed that, as long as CHRO-TV is available only on cable in Ottawa, its audience share will be affected by relocations on the channel dial.

BBS Ontario further pointed out that, at the same proceeding, the Commission was also considering requests by existing conventional television broadcasters to establish rebroadcasters in Ottawa. As well, BBS Ontario noted that in Notices of Public Hearing CRTC 1995-29 and 1995-205, the Commission issued a call for applications for new Canadian specialty television services. Citing these factors, BBS Ontario claimed that the introduction of another new television service in Ottawa would force it to convert CHRO-TV into a rebroadcaster of CJOH-TV.

In its applications to establish CHRO-TV as an independent station with a rebroadcaster at Ottawa, BBS Ontario made a strong commitment that the station will continue to reflect the character of the communities located throughout the Ottawa Valley, particularly in its local news and public affairs programming. At the hearing, BBS Ontario stated that, since 1961, CHRO-TV has provided viewers in the Ottawa Valley with "information about events and activities in their backyard, in Renfrew County and in Pontiac County" and that the station has "an obligation" to continue to provide this kind of programming.

As an example of its strong commitment to local reflection, BBS Ontario stated that its microwave truck, which will be headquartered at Pembroke, will be dedicated for the "exclusive" use of CHRO-TV. BBS Ontario stated that the microwave truck will give CHRO-TV's staff the ability "to go to live activities and events as they happen".

With regard to local news, BBS Ontario made a commitment to preserve CHRO-TV's existing news service, and to continue to broadcast, at a minimum, an average of 12 hours of original, local news each week focused on Renfrew County and the upper Ottawa Valley. BBS Ontario will expand the current noon-time newscast by a half-hour daily, while the late afternoon newscast, presently scheduled at 6:00 p.m., will be broadcast instead at 5:30 p.m. At the hearing, BBS Ontario stated that it:

will maintain a strict and clear separation between the news operations of CHRO and CJOH, including separate news staff and news directors for each station.

BBS Ontario will increase the amount of local, original programming, other than news, broadcast on CHRO-TV, from 1 hour 30 minutes each week to 11 hours 30 minutes weekly, excluding coverage of live sports events. At the hearing, the applicant made a commitment that weekly local productions will include at least 5 hours 30 minutes each week of programming provided by independent producers.

BBS Ontario also made a commitment to increase Canadian entertainment programming (categories 7, 8 and 9) during the evening broadcast period, from 6 p.m. to midnight, from 2 hours to 4 hours each week.

At the hearing, BBS Ontario stated that it plans to "counter-program" CHRO-TV with U.S. stations available in the market. By simulcasting on CHRO-TV popular shows that are being aired at the same time on U.S. stations, BBS Ontario hopes to repatriate Canadian viewers back to a Canadian station.

The Commission's Findings

In view of CHRO-TV's recent ratings and financial record, the Commission considers that ensuring that the station remains in operation as a viable undertaking offering a valued, local service, outweighs any concerns with regard to the common ownership of CHRO-TV and CJOH-TV. In particular, the Commission has taken into consideration the applicant's commitment to maintain the scale and focus of CHRO-TV's existing news service. The Commission notes, in this regard, that it received hundreds of interventions asking it to preserve CHRO-TV's service. Accordingly, in the case of CHRO-TV and CJOH-TV, the Commission has decided to continue to allow this exception to its general policy prohibiting the common ownership of two undertakings in the same language, class and market.

The Commission is also satisfied that approval of these applications will increase the diversity of television programming services available to viewers in Ottawa, Pembroke and the surrounding Ottawa Valley. Currently, viewers who receive both CHRO-TV and CJOH-TV receive duplicate CTV service. As an independent station, CHRO-TV will introduce new programming to replace the hours in its schedule now occupied by CTV network programming. This new programming will include a significant increase in local programming throughout the broadcast day directed to the entire coverage area as well as additional hours of Canadian entertainment programming during the prime-time, evening broadcast period. The Commission encourages BBS Ontario to air more Canadian programming on CHRO-TV during the prime-time, evening broadcast period, including programs originating with independent producers.

CHRO-TV's Expenditures on Canadian Programming

In Decision CRTC 95-585 dated 23 August 1995, which last renewed CHRO-TV's licence, the Commission expected the licensee to expend in 1995-1996, the first year of the licence term, at a minimum, $2,694,736, increased or decreased in accordance with the prescribed formula linked to the station's advertising revenues and network payments. In each subsequent year, the Commission expected the licensee's expenditures on Canadian programming to be adjusted in accordance with the Commission's formula.

At the time of CHRO-TV's licence renewal, in accordance with the policy set out in Public Notice CRTC 1989-27 dated 6 April 1989, the Commission calculated the first year base amount using BBS Ontario's projected advertising revenue growth of $10,124,000 for 1994-1995. At the April hearing, BBS Ontario advised the Commission that its actual advertising revenues for 1994-1995 were $8,018,000. Consequently, BBS Ontario asked the Commission to revise the 1996 base amount for calculating its expected Canadian programming expenditures to $2,477,000. In addition, BBS Ontario indicated that, starting in 1997, it would add enhancements to its Canadian programming expenditures, totalling $1,730,000 annually over the remainder of the licence term, to fund additional investments in news and human interest programs and town hall meetings. Acknowledging that CHRO-TV's total advertising revenues will be in excess of $10 million, BBS Ontario also proposed that this expectation should become a condition of licence.

The Commission agrees with BBS Ontario's proposal. Accordingly, for the broadcast years ending 31 August 1997, 1998 and 1999, the licensee is required to spend, at a minimum, the 1996 base amount of $2,477,000 adjusted in each broadcast year through the revenue growth formula applied in a seamless fashion plus the BBS Ontario enhancements of $1,730,000. For the broadcast years ending 31 August 2000, 2001 and 2002, the revenue growth formula will apply on the total of the adjusted base amount as calculated for the year ending on 31 August 1999 plus the BBS Ontario enhancements mentioned above. A condition of licence on CHRO-TV's Canadian programming expenditures is set out in the appendix to this decision.

Other Matters

This authority will only be effective and the licence will only be amended at such time as construction of the transmitter is completed and the licensee has advised the Commission that it is prepared to commence operation. If the construction is not completed within twelve 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 construction and commence operation before the expiry of this period, and that an extension of time is in the public interest, within such further periods of time as are approved in writing by the Commission, the licence will not be amended. The licensee is required to advise the Commission (before the expiry of the twelve-month period or any extension thereof) in writing, once it has completed construction and is prepared to commence operation.

The Commission acknowledges the numerous interventions submitted in support of these applications. The Commission has considered the concerns expressed in the opposing intervention submitted by the Canadian Broadcasting Corporation and is satisfied with BBS Ontario's response thereto.

This decision is to be appended to the licence.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

Condition of licence for CHRO-TV Pembroke on Canadian programming expenditures

1. The licensee shall expend on Canadian programming, at a minimum,

(i)  In the years ending 31 August 1997, 1998 and 1999:

a) the  minimum required level of expenditures in the year ending 31 August 1996 (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the 3 previous years; and

b) the  enhancements of $1,730,000 to the Canadian programming expenditures;

(ii) In the years ending 31 August 2000, 2001 and 2002, an amount calculated in accordance with the following formula: the amount of the previous year's required expenditures including the $1,730,000 enhancements (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the
total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the 3 previous years;

(iii) In any year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programs that is up to five percent (5%) less than the minimum required expenditure for that year as set out or calculated in accordance with paragraphs (i) and/or (ii) above; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;

(iv) In any year of the licence term, excluding the final year, where the licensee expends an amount on Canadian programming that is greater than the minimum required expenditure for that year, as set out or calculated in accordance with paragraphs (i) and/or (ii) above, the licensee may deduct:

a) from  the minimum required expenditure for the next year of the licence term an amount not exceeding the amount of the previous year's overexpenditures; and

b)  from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under a) above;

(v) Notwithstanding paragraphs (iii) and (iv) 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 in or calculated in accordance with paragraphs (i) and/or (ii) above.

For the purpose of the above condition, "expend on Canadian programming" shall have the same meaning as that set out in Public Notices CRTC 1993-93 and 1993-174 dated 22 June and 10 December 1993, respectively.

For the purpose of the above condition, the licensee is not permitted to credit any overexpenditure made in the previous licence term towards Canadian programming expenditures in any year or years of this licence term.