ARCHIVED -  Decision CRTC 96-731

Decision

Ottawa, 1 November 1996

Decision CRTC 96-731

Craig Broadcast Systems Inc., on behalf of a company to be incorporated (A - Channel Inc.) Calgary and Lethbridge - 199606414; Edmonton and Red Deer, Alberta - 199606422

CanWest Alberta Television Inc. Calgary and Lethbridge - 952788800; Edmonton and Red Deer, Alberta - 952924900

Applications by Craig Broadcast Systems Inc. proposing new, independent, English-language television services in Alberta - Approved; competing applications by CanWest Alberta Television Inc. - Denied

Following a Public Hearing commencing 15 July 1996 in Calgary, the Commission approves the applications by Craig Broadcast Systems Inc. (CBSI), on behalf of a company to be incorporated (A - Channel Inc./ A - Channel), for broadcasting licences to carry on new, independent, English-language (television) programming undertakings in Alberta.

Subject to the requirements of this decision, the Commission will issue licences to A - Channel for two new television programming undertakings. One will operate at Calgary on channel 5 with an effective radiated power of 33,600 watts, and will have a transmitter at Lethbridge on channel 2 with an effective radiated power of 51,500 watts. The other undertaking will operate at Edmonton on channel 51 with an effective radiated power of 602,000 watts, and will have a transmitter at Red Deer on channel 20 with an effective radiated power of 368,000 watts.

The licences will expire 31 August 2003, and will be subject to the conditions specified in this decision and in the licences to be issued. These authorities will only be effective and the licences will only be issued at such time as:

a)  the Commission receives documentation establishing that an eligible Canadian corporation has been incorporated in accordance with the applications in all material respects and that it may be issued the licences; and

b)  construction of both undertakings is completed and they are prepared to commence operation.

If such construction is not completed within twelve months of the date of this decision or, where the applicant 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 licences will not be issued. The applicant 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.

In other applications considered at the Calgary hearing, CanWest Alberta Television Inc. (CanWest), also sought licences to carry on new television undertakings at Calgary and Edmonton, with associated transmitters at Lethbridge and Red Deer, respectively. These applications are mutually exclusive with those by A - Channel on marketing grounds and, in the case of the application for Calgary and Lethbridge, on technical grounds as well. They are, accordingly, denied.

Background

A-Channel will be indirectly controlled (60%) by Mr. A. Stuart Craig of Brandon through CBSI. CBSI is licensee of independent station CHMI-TV Portage la Prairie and CBC affiliate CKX-TV Brandon, as well as of five radio stations in Manitoba and Saskatchewan. It also owns 100% of the company licensed to operate CIRK-FM Edmonton; and owns 100% of Skycable Inc., licensee of a multipoint distribution system (MDS) undertaking authorized to serve various communities in Manitoba.

CanWest is ultimately controlled by Mr. I.A. Asper of Winnipeg through CanWest Global Communications Corp. (CanWest Global). Mr. Asper holds an indirect controlling interest in CIII-TV Paris and its various transmitters in Ontario, and in other independent television undertakings serving Vancouver, Regina, Saskatoon, Winnipeg, Saint John and Halifax.

Applications for licences to serve Calgary, Edmonton and other Alberta communities, and filed by companies controlled by the same two principals as those involved in the current applications, were denied by the Commission, by majority vote, in Decision CRTC 94-288 dated 6 June 1994. The majority's determination, was that the introduction of a fourth commercial television service to Alberta, at that time, would have a "...significant impact on the audiences and revenues of existing television and radio broadcasters." The Commission went on to state:

Having examined the programming plans and commitments put forward by both applicants, the Commission has concluded that neither would offer a service that would respond to any demonstrated demand particularly with regard to local news and information programming. More importantly, neither service would possess the overall quality, distinctiveness or diversity necessary to offset the risk that its impact might unduly affect the ability of existing broadcasters to make their expected contributions to the Canadian broadcasting system and fulfil their obligations under the Act.

The current applications by CanWest were filed with the Commission in November 1995. In keeping with its usual procedure, the Commission issued a call for applications from other parties wishing to obtain broadcasting licences to serve the Alberta television markets of Calgary, Lethbridge, Edmonton and Red Deer (Public Notice CRTC 1996-18 dated 7 February 1996, as corrected by Public Notice CRTC 1996-18-1 dated 20 February 1996).

In its call, the Commission identified a number of issues that should be addressed by applicants. These included the contribution that their proposed services would make to achieving the objectives of the Broadcasting Act and, in particular, to the production of local and regional programming; and the potential impact that the proposed services would have on the audiences and revenues of existing television and radio undertakings.

The applications by A - Channel were the only proposals received in response to the Commission's call. These and the competing applications by CanWest were considered by the Commission at the 15 July 1996 hearing against the background of the concerns noted in Decision CRTC 94-288, taking into account as well the applicants' responses to the various issues identified in the call.

Procedural issues

CanWest Global is a participant in applications currently on file with the Commission for authority, among other things, to acquire the assets of CKMI-TV Québec, and to add transmitters to rebroadcast that station's programming at Montréal and Sherbrooke. These applications are scheduled for consideration at a public hearing in Montréal commencing 2 December 1996. As part of the Alberta and CKMI-TV applications, and contingent on their approval, commitments were made with respect to various programming initiatives associated with the establishment of a proposed third, national, English-language television system consisting of stations either controlled by CanWest Global or in which it holds an ownership interest.

In responding to interventions prior to the 15 July 1996 hearing, representatives of CanWest Global proposed to amend the Alberta television applications, so that the commitments related to the implementation of a third national system would be contingent on approval of the Alberta applications only. In its replies to interventions, CanWest also extended "invitations" to the Commission, indicating that it would be willing to accept conditions of licence for the proposed Alberta television undertakings requiring adherence to its commitment to allot $7 million to an Alberta production fund, and further conditions of licence for these and other CanWest Global television undertakings governing expenditures on Canadian programming in the underrepresented categories of drama, music and variety (categories 7, 8 and 9). Such expenditures would be tied to a formula based on forecast expenditures on such programming. Only CanWest Global's Television undertaking in Ontario is currently subject to such a condition of licence.

A - Channel and CHUM Limited, in their capacity as interveners to CanWest's applications at the 15 July 1996 hearing, raised objections to the proposed amendment and to one or both of the invitations described above.

Given that the substance of the benefits proffered by CanWest Global have not been altered in any material fashion, and that the only true change would be with respect to the identity of the specific applications whose approval would precipitate them, the Commission has decided to allow the proposed amendment and to accept the submission by CanWest of the invitations described above. It has given each of these due consideration in its deliberations.

Potential market impact

With respect to the potential impact of new, commercial television stations on existing local broadcasting services in Alberta, the available evidence demonstrates to the Commission's satisfaction that the markets in each of the communities to be served are healthy enough to support a new entrant without affecting the ability of existing privately-owned television stations to provide high quality service and without threatening the economic viability of existing radio services. Although the projections of the two applicants with respect to advertising revenues are reasonable in magnitude, both appear to have overestimated the revenues to be earned through repatriation of audiences from non-Canadian stations and, consequently, may have underestimated the impact on local television and radio stations. Nevertheless, the Alberta television market remains considerably stronger than the national average, and the financial circumstances of Alberta radio stations have improved since 1993. In addition, based on the arguments presented by interveners and its own analysis, the Commission is unable to conclude that the location of transmitters of a new service at Lethbridge and Red Deer should not be authorized on the grounds of undue impact on audiences and revenues.

Assessment of the applications

Based on its assessment of the applications and of all other available evidence, the Commission is convinced that the applications by A - Channel are superior to those by CanWest. Specifically, the Commission considers that A - Channel's proposals respond in a more complete and satisfactory manner to the various issues and concerns noted in the call for applications. It also considers that the advantages of approving A - Channel's applications, both to Alberta residents and to the system as a whole, are greater than the advantages of approving CanWest's applications. This conclusion takes into account the national benefits put forward by CanWest in connection with its proposed new television undertakings in Alberta. Further, the Commission considers that A - Channel's plans adequately address the specific programming concerns raised by the earlier CBSI applications for television licences to serve Alberta, as noted by the Commission in Decision CRTC 94-288 denying those applications.

A -  Channel 's program plans and commitments

a)  Local reflection

On 24 March 1995, the Commission issued Public Notice CRTC 1995-48 in conjunction with the release of decisions renewing the licences of privately-owned, English-language television stations in British Columbia, Ontario and Quebec. In that public notice, the Commission reiterated the importance of the principle of local reflection and reminded television licensees that they have a special responsibility to serve the public within the particular geographic areas they are licensed to serve.

As part of its contribution to local reflection, A - Channel has committed to provide 31 hours 30 minutes per broadcast week of local programming on each of its Edmonton and Calgary stations. In each case, 17 of these hours will be news programming, 13 hours 15 minutes will be other information programming, and 1 hour 15 minutes will be in the form of variety programming.

The applicant indicated that its news programming will be focused "on the urban market as opposed to... the rural and regional market". The applicant added that it will schedule its news programming so as to complement other local newscasts, thus "...making local news available to large groups of viewers missed by the current schedules of the incumbent stations" and contributing to diversity.

The Commission notes these plans and expects the applicant to adhere to its commitment to broadcast, at a minimum, an average of 17 hours of first play local news during each broadcast week, throughout the licence term, on each of the Edmonton and Calgary stations. The Commission expects the applicant to further reflect local interests and concerns by broadcasting on each station an average of 14 hours 30 minutes per week of local programming in categories other than news.

b)  Exhibition of programming in under-represented categories

Consistent with the applicant's commitments, and in accordance with the Commission's policy announced in Public Notice CRTC 1995-48, it is a condition of licence applicable to each undertaking that A - Channel broadcast during the evening broadcast period, as minimum weekly averages: 6 hours of Canadian drama, music or variety programming throughout the 1998 and 1999 broadcast years; 6 hours 30 minutes of such programming throughout the 2000 and 2001 broadcast years; and 7 hours of such programming throughout the 2002 and 2003 broadcast years.

In Decision CRTC 94-288, the Commission expressed concern that the proposed prime time schedule submitted with the CBSI applications included no regularly-scheduled Canadian drama series, other than reruns of series previously aired in Alberta.

In the current applications, A - Channel has proposed to schedule, in each broadcast week throughout the licence term, 4 hours 30 minutes of Canadian drama programming, including 3 hours of series drama and 1 hour 30 minutes of long-form drama. The applicant described its "formula" for drama programming in prime time as drawing upon material "...that will be new and fresh for the market". The Commission notes in this regard that A - Channel intends to broadcast a total of 26 original Canadian long-form drama productions in each broadcast year.

A concern noted by the Commission in its 1994 decision denying the CBSI applications was the proposal to broadcast as many as eight foreign feature films per week, six of them commencing between the hours of 8:00 p.m. and 11:00 p.m. The Commission expressed doubt that this reliance on acquired foreign product during peak viewing hours would add significantly to the overall quality of foreign films already available on Alberta television stations.

The Commission therefore notes A - Channel's statement at the 15 July 1996 hearing that only six foreign films will be aired each week, and that only three of these will be scheduled during peak viewing hours.

The Commission expects the applicant to adhere to its commitment to broadcast a minimum weekly average of 4 hours 30 minutes of Canadian drama programming throughout the licence term. The Commission is satisfied that the applicant's commitments to Canadian drama programming, coupled with the reduced reliance on foreign film product noted above, adequately address the concerns regarding these matters noted by the Commission in Decision CRTC 94-288.

c)  Canadian programming expenditures

According to the applicant's projections, it will spend on Canadian programming an average of 38% of all advertising revenues, calculated over a seven-year period. This percentage compares favourably to an industry average of 31% attained in 1995.

Consistent with the applicant's commitment, it is a condition of licence that A - Channel, over the course of the licence term, contribute a minimum of $14,070,000 to a fund in support of independent program production in Alberta, and to ensure that $11,835,000 of this amount is directed to independent Alberta producers for the production of entertainment programming in the categories of drama, music and variety. As part of this condition of licence, A - Channel shall submit annual reports to the Commission, setting out details concerning the fund's receipts and disbursements; the reports shall be filed along with the licensee's annual returns, beginning with the annual returns submitted in respect of the 1998 broadcast year.

In the interest of public accountability, the reports will be placed on the licensee's public file for examination by independent producers and by other interested parties.

Other matters

It is a condition of licence that the licensee 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.

It is a condition of licence that the licensee 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.

It is also a condition of licence that the licensee adhere to the provisions of the CAB's "Broadcast Code for Advertising to Children", as amended from time to time and accepted by the Commission.

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.

The Commission acknowledges the interventions submitted with respect to the applications by A - Channel and CanWest.

This decision is to be appended to the licences.

Allan J. Darling
Secretary General