ARCHIVED -  Decision CRTC 96-599

Decision

Ottawa, 4 September 1996

Decision CRTC 96-599

Alliance Communications Corporation, on behalf of a company to be incorporated

Across Canada - 199600818

The History and Entertainment Network - Approved

Following a Public Hearing beginning on 6 May 1996 in the National Capital Region, the Commission approves the application by Alliance Communications Corporation (Alliance), on behalf of a company to be incorporated (the licensee), for a broadcasting licence to carry on a national, English-language programming undertaking (Specialty Television Service). The new service will be known as The History and Entertainment Network (H&E).

This service will be available via satellite to all broadcasting distribution undertakings across the country. In the case of those distribution undertakings that are subject to the Commission's distribution and linkage requirements, it will be available on a modified dual status basis, as explained in Public Notice CRTC 1996-120, which introduces this and other decisions released today, and in accordance with the provisions set out in the distribution and linkage public notice also issued today (Public Notice CRTC 1996-121).

As proposed by H&E, and by condition of licence, the authorized maximum monthly wholesale rate shall be $0.25 per subscriber, in cases where H&E is distributed as part of the basic service.

The Commission will issue a licence expiring 31 August 2003, subject to the conditions specified in the appendix to this decision and in the licence to be issued.

Since the Access Rules will have immediate application to H&E, the service of the programming undertaking must, by condition of licence, be in operation within 12 months of this decision unless the service provider, prior to the expiry of this period, applies for and receives an extension of time within which to commence operations.

This authority will only be effective and the licence will only be issued at such time as the Commission receives documentation establishing that an eligible Canadian corporation has been incorporated in accordance with the application in all material respects, and that it may be issued a licence.

Ownership

A total of 88% of the voting securities in the capital of the company to be incorporated will be owned by Alliance. Alliance is one of Canada's most successful independent program producers and distributors, and owns 55% of another company licensed to carry on a specialty television undertaking (Showcase Television Inc.). The remaining 12% of the company to be incorporated will be owned by CTV Television Network Ltd. (CTV).

Programming

Nature of service

H&E will provide a national English-language specialty service consisting of documentaries, movies, mini-series and other programs that embrace both current and historical events. The service will give special emphasis to documentary and dramatic programming relating to Canada's past. The licensee proposed to devote 100% of its programs to the following categories, as set out in item 6 of Schedule I to the Specialty Services Regulations, 1990: 2 (Analysis and interpretation), 3 (Reporting and actualities) and 7 (Drama). A condition of licence requiring H&E to preserve the nature of the service, as described above, is set out in the appendix to this decision.

With respect to programming in the drama category, H&E committed at the hearing to broadcast no more than 56 hours of feature films in each broadcast week, with all feature films to be based on historical themes. The licensee stated:

... we intend to show these films with wrap-around programming before and after each showing that gives them a context and provides a commentary on their place in history. In short, this is not a movie service; it will be a history service.

The licensee stated further:

We are prepared to commit that on average no more than one film will be run during the evening hours each day.

The Commission notes these commitments, and has required the licensee to adhere to them by condition of licence.

Canadian content

The licensee committed to provide a minimum level of Canadian content of 30%, increasing to 40% upon attaining 4 million subscribers, and increasing further to 50% when its subscribership reaches 5 million. According to the licensee's projections, provided the service is distributed by cable companies on analog channels within a third tier, its subscribership should approach the level of 5 million by the end of the licence term. The licensee further committed to a minimum Canadian content level of 33 1/3% during the evening broadcast period. Conditions of licence requiring adherence to these commitments are contained in the appendix to this decision.

The licensee committed at the hearing to air a minimum of 180 hours of independently-produced Canadian programs in the history genre each year, increasing to 215 hours per year of such programs by the end of the licence term. The Commission expects the licensee to adhere to this commitment.

There were concerns expressed at the hearing regarding the access that independent producers would have to the service, given the interests and activities of H&E's own shareholders in program
production. The Commission therefore notes the licensee's statement that programming originally produced by Alliance and CTV (excluding the archival or primary source material in CTV's archives which may be used by independent producers to produce programs for the service) would account for less than 5% of the programming on the service. The licensee also indicated that copyright ownership of the programs it commissions from independent producers would remain with these producers, except for programs whose entire cost of production has been met through network licence fees. The Commission notes further in this regard the licensee's statement that all programming decisions:

...will be made entirely by the management of the service, who will act entirely independent of the shareholders. All Canadian distributors will be treated fairly and equitably and there will be no preference given to Alliance in regard to the purchase of programs that happen to be distributed by that company or its affiliates.

Canadian programming expenditures

Consistent with the approach outlined by the Commission in Public Notice CRTC 1996-120 concerning requirements for Canadian programming expenditures, and as discussed with the licensee at the hearing, it is a condition of licence that the licensee expend on Canadian programs a minimum of $5.7 million in the broadcast year following the first year of operation, and a minimum of 34% of the previous year's gross revenues in each subsequent year.

Some flexibility in the accounting of Canadian programming expenditures is provided for in the conditions of licence attached to this decision.

Advertising

Consistent with the licensee's commitments, it is a condition of licence that all paid advertising material distributed on H&E shall be national paid advertising, and shall be restricted to 12 minutes per hour, with some flexibility for the placement of advertising material in longer programs.

In its written application, the licensee contemplated the distribution of infomercials. At the hearing, however, the licensee indicated that it was not requesting an exception to the Commission's policy prohibiting the distribution of infomercials by the licensees of specialty services. Accordingly, the Commission considers the licensee to have withdrawn this aspect of its application.

Other Matters

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. In its application, the licensee stated that it had not yet adopted a plan in this regard, but that it expected to use the program followed by Showcase Television Inc. as a model. The Commission expects the licensee to develop and implement a plan in this regard within six months of the date of this decision. In particular, the Commission encourages the licensee to promote equitable representation in on-air staff positions and in voice-overs of station-produced commercial messages. The Commission further encourages the licensee to consider the equity issues in its hiring practices and in all other aspects of its management of human resources. The Commission will review the licensee's performance in this regard at the time of licence renewal.

Closed captioning

In accordance with the policy announced in Public Notice CRTC 1996-120, the Commission requires the licensee to provide a minimum of 90% of closed captioning over the broadcast day by the end of the licence term.

Conclusion

The Commission is satisfied that this new service, operating under the effective ownership and control of an experienced independent Canadian producer, and enhanced by its partnership with CTV, will benefit the broadcasting system and contribute to diversity through its offering of distinctive and attractive Canadian programming in a genre that is relatively under-represented on Canadian television screens.

The Commission acknowledges and has considered the interventions submitted with respect to this application.

This decision is to be appended to the licence.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

Conditions of licence for H&E

1. (a) The licensee shall provide a national English-language specialty service consisting of historical documentaries, movies, mini-series and history programs which embrace both current events and past history, with a special emphasis on documentary and dramatic programs relating to Canada's past. The licensee shall draw programming exclusively from category 2 (Analysis and interpretation), category 3 (Reporting and actualities), and category 7 (Drama), as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990.

(b) The licensee shall not broadcast more than 56 hours of feature films, all of which are to be based on historical themes, each broadcast week.

(c) The licensee shall not broadcast more than one two-hour movie during the evening broadcast period.

2. The licensee shall devote to the distribution of Canadian programs:

(a) not less than 30% of the broadcast year, increasing to not less than a minimum of 40% in the broadcast year following that in which the average subscribership is in excess of 4 million, and increasing further to not less than 50% of the broadcast year following that in which the average subcribership is in excess of 5 million.

(b) not less than 33 1/3% during the evening broadcast period.

3. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1992-28, 1993-93 and 1993-174:

(a) In the broadcast year following the first year of operation, the licensee shall expend on Canadian programs not less than $5,700,000.

(b) In each subsequent broadcast year, the licensee shall expend on Canadian programs not less than 34% of the previous broadcast year's gross revenues derived from the operation of this service.

(c) In the broadcast year following the first year of operation and in each subsequent broadcast year, 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 set out in or calculated in accordance with this condition; in such case, the licensee shall expend in the next broadcast year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underspending.

(d) In the broadcast year following the first year of operation, and in each subsequent broadcast year where the licensee expends an amount on Canadian programs that is greater
than the minimum required expenditure for that year set out in or calculated in accordance with this condition, 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 broadcast year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under paragraph (i) above.

(e) Notwithstanding the above, during the licence term, the licensee shall expend on Canadian programs, at a minimum, the total of the minimum required expenditures set out in or calculated in accordance with the licensee's conditions of licence.

4. (a) Subject to subsection (b) and (d), the licensee shall not distribute more than twelve (12) minutes of advertising material during each clock hour.

(b) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may distribute, during each clock hour, a maximum of 30 seconds of additional advertising material that consists of unpaid public service announcements.

(c) The licensee shall not distribute any paid advertising material other than national paid advertising.

(d) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.

5. From the date of commencement of service, the licensee shall charge each exhibitor of this service a maximum wholesale rate of $0.25 per subscriber per month, where the service is carried as part of the basic service.

6. This undertaking shall be in operation within twelve (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 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.

7. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB's) "Sex-Role Portrayal Code for Television and Radio
Programming", as amended from time to time and approved by the Commission.

8. The licensee shall adhere to the provisions of the "Broadcast Code for Advertising to Children", published by the CAB, as amended from time to time and approved by the Commission.

9. The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the CAB's "Voluntary Code Regarding Violence in Television Programming", as amended from time to time and approved by the Commission.

For the purpose of these conditions of licence, the terms "broadcast day", "broadcast year", "evening broadcast period" and "clock hour" shall have the same meaning as those set out in the Television Broadcasting Regulations, 1987; "broadcast week" shall have the same meaning as that set out in the Radio Regulations, 1986; "first year of operation" shall mean the first broadcast year in which the licensee is in operation for a period exceeding 90 days, excluding any free trial period; and "national paid advertising" shall mean advertising material as defined in the Specialty Services Regulations, 1990 and that is purchased at a national rate and receives national distribution on the service.