ARCHIVED -  Decision CRTC 97-283

Decision

Ottawa, 2 July 1997

Decision CRTC 97-283

The Partners of Canal Indigo, a general partnership

Across Canada - 199614475

New national video-on-demand service - Approved

1. Following a Public Hearing in the National Capital Region beginning on 17 March 1997, the Commission approves the application for a broadcasting licence for a national, digital, French-language video-on-demand (VOD) programming undertaking. The service will be delivered, via satellite or other links, to affiliated terrestrial distribution undertakings, and onwards to individual subscribers.

2. The Commission's policy objectives for this and four other VOD programming undertakings whose licence applications are approved today are set out in the accompanying Public Notice CRTC 1997-83.

3. Subject to the requirements of this decision, the Commission will issue a licence expiring 31 August 2003. This licence will be subject to the conditions specified in this decision and in the licence to be issued.

4. This authority will only be effective and the licence will only be issued at such time as the construction of the undertaking is completed and it is prepared to commence operation. If the construction is not completed within 18 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 licence will not be issued. The applicant is required to advise the Commission (before the expiry of the 18-month period or any extension thereof) in writing, once it has completed construction and is prepared to commence operation.

Ownership

5. Canal Indigo S.E.N.C. (Canal Indigo) is a general partnership of four Canadian broadcasting groups: the Partners of Viewer's Choice Canada (VCC), having a 40% partnership interest; and Cogeco Radio-Télévision inc. (Cogeco), Réseau de Télévision Quatre Saisons inc. (Quatre Saisons), and Télé-Métropole inc. (Télé-Métropole), each with a 20% partnership interest. The partners currently hold licences to carry on a national pay-per-view (PPV) and a national direct-to-home (DTH) PPV undertaking, both operating in the French language.

6. VCC is licensee of an English-language PPV and a DTH PPV undertaking serving Eastern Canada. Its application for a licence to carry on a national, English-language VOD service, also considered at the 17 March 1997 public hearing, is approved today in Decision CRTC 97-284 . VCC's majority partner (50.1%) is TMN Networks Inc./Réseau TMN inc. (TMN). TMN, licensee of two English-language general interest pay television undertakings operating in eastern Canada, is a wholly-owned subsidiary of Astral Broadcasting Group Inc. (Astral). Through TMN and other subsidiaries, Astral exercises effective control of, or holds a minority interest in, companies licensed to carry on six other pay television or specialty programming undertakings, operating variously in English or in French, and on a national or regional basis.

7. Each of the applicant's remaining partners, Cogeco, Quatre Saisons and Télé-Métropole, is active in the television broadcasting and cable distribution industries, principally in Quebec, but elsewhere in Canada as well.

Nature of service

8. The licensee shall, by condition of licence, adhere to the Pay Television Regulations, 1990 (the pay television regulations), with the exception of section 4, which relates to the keeping of logs and records. Rather than being subject to section 4 of the pay television regulations, the licensee is required, by condition of licence, to maintain for a period of one year, and to submit to the Commission, upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.

9. The licensee will provide a general interest VOD service featuring programming that will consist, for the most part, of feature films. It may also include programming from all categories set out in item 6 of Schedule I to the pay television regulations.

10. Consistent with the licensee's commitment, it is a condition of licence that the inventory available to subscribers contain, at all times, at least one Canadian feature film for each 12 non-Canadian feature films, including all suitable new French-language feature films, and all English-language feature films with French-language soundtracks. By condition of licence, the inventory shall also contain, at all times, an overall ratio of Canadian to non-Canadian titles of at least 1:10. In addition, it is a condition of licence that not less than 25% of the titles promoted each month on the licensee's barker channel be Canadian titles.

11. The Commission expects the licensee to adhere to its commitments to ensure that all Canadian titles are given treatment that is at least equal to that given comparable foreign product in the menu-based navigation system. It also expects the licensee to ensure that the exhibition window for Canadian films is at least equal to the minimum exhibition window given to non-Canadian films.

Contributions to Canadian programming

12. As stated in Public Notice CRTC 1997-83, the Commission has decided to require the licensee of all VOD programming undertakings to make contributions representing no less than 5% of their gross annual revenues to fund Canadian program production. In the interest of cost effectiveness and efficiency, the Commission requires that such contributions be made to an existing, independently-administered Canadian program production fund. In its application, the licensee made a commitment to make a contribution of 10% of its annual gross revenues, rather than the 5% noted above, to the Harold Greenberg Fund/Le Fonds Harold Greenberg for equity investment in Canadian films.

13. Accordingly, by condition of licence, the licensee shall contribute a minimum of 10% of the annual gross revenues earned by its VOD programming undertaking to the fund noted above.

14. By further condition of licence, the licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.

Distribution of programming produced by the licensee or a related person

15. Paragraphs 3(2)(e) and (f) of the pay television regulations prohibit a licensee from distributing programming, other than filler programming, that is produced by itself or a person related to the licensee. The applicant indicated at the oral public hearing, that it wished to be able to distribute programming produced by one or both of the licensee's partners, and therefore requested relief from the application of paragraphs 3(2)(e) and (f).

16. The Commission approves this request. Accordingly, by condition of licence, the licensee is authorized to distribute programming that is produced by itself or a person to whom it is related, provided that no more than 25% of the non-theatrical titles made available by the licensee over the broadcast year are produced by the licensee or a person related to the licensee.

Exclusivity and preferential rights

17. In Order-In-Council P.C. 1995-1106 dated 6 July 1995 (the Order), the Governor in Council required the Commission to prohibit, by appropriate means, DTH PPV programming undertakings "from acquiring exclusive or other preferential rights to pay-per-view distribution of feature films and other programming within Canada." In subsequent decisions approving applications for licences to carry on DTH PPV undertakings, the Commission imposed such a prohibition on applicants by condition of licence. The Commission is satisfied that a similar prohibition is warranted in the case of VOD undertakings. Accordingly, and consistent with the licensee's commitment, the licensee is prohibited, by condition of licence, from acquiring exclusive or other preferential rights to any programming exhibited as part of its service.

18. The term "preferential rights" is broad in scope and could be the subject of different interpretations in light of the particular circumstances at hand. For this reason, the Commission considers that, in dealing with complaints relating to the acquisition of preferential rights, it is preferable to allow the parties to frame the issues as they see fit, and to put forward their respective views as to what might constitute a breach of the condition of licence, on a case-by-case basis.

Non-proprietary rights

19. The Canadian Association of Film Distributors and Exporters submitted an intervention to this and other VOD applications, requesting that the Commission require all VOD licensees to purchase non-proprietary exhibition rights for feature films from Canadian distributors. This would include any production other than the exceptions specified in the current Investment Canada policy, which defines proprietary rights as those where the world-wide distribution rights to the program are owned by the licensor, or where the licensor has provided not less than one-half of the cost of the creation of the film.

20. The Commission considers that such a requirement would provide strong support for Canada's film distribution industry, which is an important element of the broadcasting system. The Commission has therefore decided to include this requirement as a condition of licence applicable to this and all other general interest VOD programming undertakings.

Closed captioning

21. The Commission expects the licensee to adhere to its commitment to ensure that all new Canadian and non-Canadian feature films it distributes, as well as virtually all other feature films, are closed captioned. The Commission also expects the licensee to publicize the availability of its telecommunication device for the deaf (TDD), and the telephone number used to access it.

Employment equity

22. Consistent with its Public Notice CRTC 1997-34, entitled Amendments to the Commission's Employment Equity Policy, 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.

Other matters

23. It is a condition of licence that the licensee adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission.

24. By condition of licence, the licensee shall adhere to the Pay Television Programming Standards and Practices Code, as amended from time to time and approved by the Commission.

25. Also by condition of licence, the licensee shall adhere to the Pay Television and Pay-Per-View Programming Code Regarding Violence, as amended from time to time and approved by the Commission.

26. The Commission acknowledges and has considered all of the interventions submitted in respect of this application.

This decision is to be appended to the licence.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.

Appendix to Decision CRTC 97-283

Conditions of Licence for the VOD Programming Undertaking operated by The Partners of Canal Indigo

1. The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of section 4 (logs and records).

2. The licensee shall maintain for a period of one year, and submit to the Commission upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.

3. Except as authorized by the Commission, the broadcasting undertaking licensed herein shall be operated in fact by the licensee itself.

4. The licensee shall ensure that the inventory available to subscribers contains at all times:

(a) a minimum of 1:12 ratio of Canadian to non-Canadian feature film titles, including all available new French-language feature films, and all English-language feature films with French-language soundtracks, that are suitable for VOD exhibition and which meet the Pay Television Programming Standards and Practices Code; and

(b) a minimum of 1:10 ratio of Canadian to non-Canadian titles overall.

5. The licensee shall contribute to The Harold Greenberg Fund/Le Fonds Harold Greenberg, for equity investment in Canadian films, a minimum of 10% of the gross annual revenues earned by its VOD programming. The licensee is required to remit its first contribution no later than 45 days following the end of the month in which it commences operations. Contributions made thereafter shall take the form of monthly instalments to be remitted within 45 days of month's end and representing a minimum of 10% of that month's gross revenue.

6. The licensee shall ensure that not less than 25% of the titles promoted each month on its barker channel are Canadian titles.

7. The licensee shall not enter into an affiliation agreement with the licensee of a distribution undertaking unless the agreement incorporates a prohibition against linkage of Canal Indigo's service with any non-Canadian discretionary service.

8. The licensee shall not acquire exclusive or other preferential rights to any programming exhibited as part of its service.

9. The licensee shall purchase non-proprietary exhibition rights for feature films from Canadian distributors. This includes any production other than the exceptions specified in Investment Canada's current policy which defines proprietary rights as those where the world-wide distribution rights to the program are owned by the licensor, or where the licensor has provided not less than one-half of the cost of the creation of the film.

10. The licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.

11. The licensee is authorized to distribute programming that is produced by the licensee or a person related to the licensee, provided that no more than 25% of the non-theatrical titles made available by the licensee over the broadcast year are produced by the licensee or a person related to the licensee.

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

13. The licensee shall adhere to the Pay Television Programming Standards and Practices Code, as amended from time to time and approved by the Commission.

14. The licensee shall adhere to the Pay Television and Pay-Per-View Programming Code Regarding Violence, as amended from time to time and approved by the Commission.

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