ARCHIVED -  Decision CRTC 96-601

Decision

Ottawa, 4 September 1996

Decision CRTC 96-601

2952939 Canada Inc., carrying on business as S3 Regional Sports Service

Across Canada - 199600651

S3 - Approved

Following a Public Hearing held in the National Capital Region beginning on 6 May 1996, the Commission, by majority vote, approves the application by 2952939 Canada Inc., carrying on business as S3 Regional Sports Service (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 S3.

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 the licensee, and by condition of licence, the authorized maximum monthly wholesale rate shall be $0.78 per subscriber, in cases where S3 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.

In Public Notice CRTC 1996-120, the Commission outlined a licensing approach that grouped English-language services into two categories. The Access Rules will apply to the second group of services, to which S3 belongs, at the earliest of the following: the deployment of digital technology by the distributor, or 1 September 1999. The service of this programming undertaking must, by condition of licence, be in operation within 36 months of the date 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.

Ownership

The licensee, 2952939 Canada Inc. (2952939) is a corporation with four shareholders. The major shareholder is The CTV Television Network Ltd. (CTV) with 40%, and The Molson Companies Limited (Molson), Rogers Broadcasting Limited following the wind up of Rogers Programming Services Inc., and LMC International Inc. each own 20% of the shares. CTV controls the licensee company, subject to a voting trust agreement with Molson, reflected in the terms of the Shareholder's Agreement.

Programming

Nature of Service

S3 will provide coverage of live sports events and other sports-related programs, to be distributed in four distinct regional versions: "Pacific", "West", "Central" and "East". Conditions of licence related to specific programming categories to be broadcast on S3 are set out in the appendix to this decision.

The new service will tailor the coverage in each of the four regions to reflect local and regional team coverage in professional, semi-professional as well as amateur leagues. The licensee made a commitment that no more than 67% of the programs broadcast each broadcast week on each of the regional feeds shall be broadcast on any of the other feeds of the service. This commitment will be adhered to by condition of licence, as set out in the appendix to this decision. S3 will also take into account regional preferences in sports coverage.

The licensee plans a multi-tiered approach to sports coverage that will integrate local event coverage, amateur and university sports coverage and international sports. In this regard, the Commission notes the licensee's commitment to devote at least 27% of the programming on each feed to under-represented sports such as university and amateur sports as well as sports featuring the participation of women and children.

An intervention to this application was submitted by The Sports Network, licensee of the existing sports specialty service TSN. The intervener was also an applicant at the May 1996 hearing, requesting a licence for a specialty service to be known as "TSN Plus". The intervener argued that it would be difficult for S3 to operate its proposed service because TSN currently controls national cable rights for such events as NHL hockey, CFL football and CIAU university sports. In reply, the licensee indicated that it would be primarily interested in regional, rather than national rights and submitted a list of sports for which such rights are available. The Commission is satisfied that the licensee will be able to negotiate rights that are adequate for it to establish the service.

In its application, the licensee made a commitment that any material from programming category 7 (drama) will be limited to non-dramatic feature length films about sports and sports personalities. The licensee will adhere to this commitment by condition of licence.

Canadian Content

The licensee's plans for the exhibition of Canadian programs on S3 call for a level of 60% Canadian content during the broadcast day, and 50% during the evening broadcast period.

Canadian Programming Expenditures

Consistent with the approach outlined by the Commission in Public Notice CRTC 1996-120 with respect to requirements for Canadian programming expenditures, and as discussed with the licensee at the hearing, it is a condition of licence that the licensee shall expend on Canadian programs, in the broadcast year following the first year of operation, and in each subsequent broadcast year, a minimum of 54% of the previous year's gross revenues derived from the operation of this service. Some flexibility in the accounting of these 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 advertising material distributed on S3 shall be restricted to a maximum of 12 minutes per clock hour, with some flexibility for the placement of advertising material in longer programs. It is also a condition of licence that no local advertising be distributed on S3.

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 indicated that it would fully incorporate the CTV Employment Equity Policy and Plan into S3's service. The Commission encourages the licensee to consider equity issues in its hiring practices and in all other aspects of its management of human resources. 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 will review the licensee's performance in implementing its Employment Equity practices at the time of licence renewal.

Closed Captioning

Consistent with the policy announced in Public Notice CRTC 1996-120, the Commission requires the licensee to close caption not less than 90% of all programming during the broadcast day, by the end of the licence term.

Conclusion

The Commission is satisfied that S3 will provide attractive and varied programming for Canadian sports enthusiasts. It is of the opinion that the licensee's significant commitments to Canadian programming as well as its plans for distinct programming on the four separate regional feeds will greatly increase the diversity of sport-related programs available in all areas of the country.

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 S3

1. (a) The licensee shall provide a national English-language specialty service and shall draw programs exclusively from Category 1 (News), Category 3 (Reporting and Actualities), Category 5b (Education, Informal), Category 6 (Sports), Category 7 (Drama) and Category 11 (Human Interest), as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990.

(b) The licensee shall provide programs dedicated to all aspects of Sports, distributed using four discrete regional feeds.

(c) Notwithstanding the above, material from category 7 shall be limited to non-dramatic feature length films about sports and sports personalities.

(d) No more than 67% of the programs broadcast on each of the four regional feeds in each broadcast week shall be broadcast on any of the other feeds of the service.

2. The licensee shall devote to the distribution of Canadian programs not less than 60% of the broadcast year and not less than 50% of 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, and in each subsequent broadcast year, the licensee shall expend on Canadian programs not less than 54% of the previous broadcast year's gross revenues derived from the operation of this service.

(b) 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 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 underexpenditure.

(c) 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 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 overexpenditure; 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 (i) above;

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

4. (a) Subject to subsections (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) No local advertising shall be broadcast.

(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 $0.78 per subscriber per month, where the service is carried as part of the basic service.

6. The licensee may require access to distribution undertakings in accordance with the Access Rules contained in Public Notice CRTC 1996-60 at the earliest of the following:

a) at such time as the distribution undertaking makes use of digital technology for the delivery of programming to subscribers; or

b) 1 September 1999.

7. This undertaking shall be in operation within thirty-six (36) 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.

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 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.

10. 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 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; and "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.

Dissent of Commissioner Andrée Wylie

Commissioner Andrée Wylie dissents from this and from all of the other decisions issued today in respect of applications for licences to carry on new English-language specialty television programming undertakings whose services fall within the second category, namely those to whom the Access Rules will apply at the earliest of the following: the deployment of digital technology by the distributor, or 1 September 1999. The rationale underlying the Commissioner's dissent is presented at the conclusion of Public Notice CRTC 1996-120.