ARCHIVED -  Decision CRTC 97-85

Decision

Ottawa, 27 February 1997

Decision CRTC 97-85

TVA Regional Inc. (formerly 9023-3826 Quebec inc.) and Global Communications Limited, partners in the TVA CanWest Limited Partnership

Montréal, Sherbrooke and Québec, Quebec - 951879600 - 951878800 - 951880400

Acquisition of assets and licence amendments for CKMI-TV Québec - Approved

Following a Public Hearing in Montréal beginning on 2 December 1996, the Commission approves the application for authority to acquire the assets of the television programming undertaking CKMI-TV Québec from Télé-Métropole inc., and for a broadcasting licence to continue the operation of this undertaking. Amendments related to additional transmitters, local programming and CBC affiliation, which formed an integral part of the above-noted application, are also approved, and discussed in greater detail later in this decision.

Also as discussed later in this decision, the approvals granted herein are subject to the condition precedent that a CBC English-language service be otherwise provided at Québec prior to, or concurrently with, the implementation of the said approvals.

As a result of the various conditional approvals discussed below, CKMI-TV will become an English-language television service serving Quebec, similar in some respects to the one offered by the CanWest Global Communications Corp. (CanWest Global) system in Ontario. In that province, the television station CIII-TV specializes in programming of interest to the entire region, distributed by a series of transmitters to various communities throughout Ontario.

The Commission will issue a licence to the partners of TVA CanWest Limited Partnership, expiring 31 August 2002, upon surrender of the current licence. The licensees will be TVA Regional inc. (TVA) and Global Communications Limited (Global) (referred to as the applicant, the licensee, or TVA-CW). The licence will be subject to the same conditions as those in effect under the current licence, as well as to any other condition specified in this decision and in the licence to be issued. This licence will also reflect the amendments approved herein.

The licence term granted herein, while less than the maximum of seven years permitted under the Broadcasting Act, will enable the Commission to consider the renewal of this licence in accordance with the Commission's regional plan and to better distribute the workload within the Commission.

Ownership

TVA-CW is a limited partnership formed under the Civil Code of Quebec between TVA, as limited partner, and Global as the general partner. TVA is a wholly-owned subsidiary of Télé-Métropole inc., the current licensee of CKMI-TV, as well as of the TVA television network in Quebec. Télé-Métropole inc. is also the licensee of CFTM-TV Montréal, CFCM-TV Québec, CFER-TV Rimouski, CHEM-TV Trois-Rivières, CHLT-TV Sherbrooke and CJPM-TV Chicoutimi, as well as of the specialty television service known as "Le Canal Nouvelles".

Global is the licensee of television programming undertaking CIII-TV Paris, Ontario, which has transmitters in Toronto, Ottawa, Stevenson, Bancroft, Cornwall, Owen Sound, Midland, Peterborough and Oil Springs, Ontario. Global is ultimately controlled by Mr. I. A. Asper of Winnipeg, who also, through CanWest Global, controls television undertakings in British Columbia, Nova Scotia, New Brunswick, Manitoba and Saskatchewan. CanWest Global is also the licensee of the specialty television service known as "PrimeTV".

Currently, CanWest Global television stations serve approximately 74% of the English-language population of Canada. As a result of the approval of these applications, the potential reach of CanWest Global's programming will increase to approximately 78% of the English-speaking population of the country.

Modifications to the original application

At the public hearing, TVA-CW proposed two modifications to the applications being considered. First, the applicant proposed to increase the amount of regional programming per week from the amounts originally contained in its written application. Secondly, TVA-CW proposed, in addition to its other commitments, to expend over a seven-year period, a minimum of $3.6 million, to acquire entertainment programming from Quebec independent producers, for broadcast on other CanWest Global stations across the country. This matter is discussed in greater detail later in this decision.

CFCF Inc., (licensee of CFCF-TV, an English-language television programming undertaking serving Montréal), in addition to intervening in opposition to the actual application, objected to the above-noted modifications.

The Commission notes that TVA-CW did have ample opportunity to amend its application before it was published in the Canada Gazette, and, in any event, prior to the hearing. As experienced licensees, both TVA and Global should have been aware that last minute changes to applications have the potential to create unfair situations for interveners. In addition, it should be noted that such changes impair the Commission's ability to prepare for a public hearing.

The Commission is, however, of the opinion that in the present circumstances, the modifications proposed did not deprive interveners of a fair opportunity to participate in the public process, and that allowing these changes would otherwise be in the public interest. Accordingly, the modified proposals are accepted as part of the approved applications.

Acquisition of assets

The purchase price relating to this transaction is $4,900,000. Based on the evidence filed with the applications, the Commission has no concern with respect to the availability or the adequacy of the required financing.

Because the Commission does not solicit competing applications for authority to transfer effective control of broadcasting undertakings, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature. As a first test, the applicant must demonstrate that the proposed transfer will yield significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system as a whole, and that it is in the public interest.

In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others that may not easily be measured in terms of dollar value, are commensurate with the size of the transaction and take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.

The Commission has assessed the benefits package identified by the applicant as flowing from this transaction and, in general, is satisfied that it is significant and unequivocal, and that approval of the transaction is in the public interest.

According to TVA-CW, the intangible benefits to result from these applications include the overall enhancement of English-language broadcasting in Quebec, and the potential creation of 75 new jobs in the Quebec communication sector.

With respect to specific tangible benefits, the Commission notes the applicant's commitment to expend over a projected seven-year period, $9.64 million on additional programming to be acquired from third-party producers and program developers. This total will include $3.16 million to be spent on new Canadian entertainment programming for national distribution and $180,000 to be expended in new programming development investment. The licensee also proposes to expend $2.1 million to license and broadcast during the evening broadcast period on CKMI-TV, and on the entire CanWest Global system in circumstances that ensure national exposure, six one-hour special events programs produced by Quebec independent producers, during each year of the licence term. It also notes TVA-CW's commitment to acquire and broadcast during the evening broadcast period on CKMI-TV, a minimum of eight music and variety specials produced by Quebec independent producers, during each year of the licence term, at a projected cost of $2.8 million over seven years.

The applicant further committed to co-license with CanWest, in each year of the licence term, a "Movie of the Week", produced by a Quebec independent producer, to be broadcast in French on the TVA network, and in English on the entire CanWest Global system, including CKMI-TV. The Commission notes the applicant's commitment to expend $1.4 million in this regard over a seven-year period.

In addition to the benefits described above, the Commission notes TVA-CW's further commitment, made at the public hearing, to allocate $3.6 million over the licence term, from CanWest Global's existing Canadian expenditure budget, for the acquisition of entertainment programming from Quebec independent producers, for broadcast on various CanWest Global stations across Canada.

In addition to a condition of licence requiring the licensee to exhibit a specific number of hours of Canadian programming each week (set out in the appendix to this decision), the applicant indicated at the hearing that it would accept a further condition of licence requiring expenditures on Canadian programming, over the course of the licence term, of an amount no less than 35.2% of the total advertising revenues of CKMI-TV during that period.

The Commission is satisfied that approval of this application to provide a second English-language television service to Québec, Sherbrooke and Montréal will result in enhanced regional programming providing additional service to the anglophone community in Quebec, and additional viewing choices and diversity to the market in general. The Commission also notes the substantial commitment to the acquisition of programming from independent Quebec producers, and the commitment to broadcast such programming in various markets across Canada.

Amendments

At the 2 December public hearing, the Commission also considered applications by TVA-CW, contingent upon approval of the acquisition of assets of CKMI-TV, to amend the licence for CKMI-TV by deleting the existing condition of licence requiring that CKMI-TV be affiliated to the CBC network; adding transmitters at Sherbrooke and Montréal; and deleting the condition of licence requiring the licensee to provide 3 hours per week of local programming. The above-noted applications are approved, subject to the condition precedent that a CBC English-language television service be otherwise provided at Québec prior to, or concurrently with, the implementation of the said approvals.

New transmitters

The licensee is authorized to add a transmitter at Sherbrooke, operating on channel 11 with an effective radiated power of 12,900 watts, and one at Montréal, operating on channel 67B with an effective radiated power of 4,980 watts.

The authority for each of the new transmitters will only be effective and the licence will only be amended at such time as construction of a given transmitter is completed and it is prepared to commence operation. If the construction of one or both transmitters 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 with respect to the unconstructed transmitter. 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 of each transmitter and is prepared to commence operation from that transmitter.

Regional programming

TVA-CW's programming plans for CKMI-TV focus on the provision of programs of regional interest to the anglophone communities in Sherbrooke and Montréal as well as Québec. While the regional programming will originate in Québec, issues of interest to the entire region will be covered, reflecting the English-language communities of the entire area through a minimum of 6 hours per week of original regional news programming. The licensee's commitment to regional interest programming includes proposals to broadcast a weekly minimum of 12 hours 30 minutes of original regional programming (including news) in the first year of operation, increasing to 15 hours 30 minutes in the second year, and further increasing to 18 hours per week in the fourth year of operation. A condition of licence requiring the applicant to adhere to this commitment is set out in the appendix to this decision.

A number of interventions from local and regional groups expressed qualified support for the proposed replacement of local programming with an increased amount of regional programming. In general, the interveners considered that, while the loss of a small amount of purely local content was not in itself a positive result of such an approval, a net increase of regionally focused programming would be desirable. Some interveners expressed the belief that, with a much enhanced commitment to regional programming, the coverage of local Québec current affairs and news would be well represented.

In approving the application to delete the existing condition of licence which requires the licensee to broadcast a minimum of 3 hours per week of local programming, the Commission has taken into account the commitments made to broadcast specific amounts of regional programming, and a condition of licence requiring adherence to those commitments is set out in the appendix to this decision.

The Commission further notes the interventions submitted by various individuals and groups in the Québec area, their expectation that the new service would originate in Québec, and the applicant's commitment to ensure that the service would continue to be operated from Québec.

Impact on existing licensees

Interventions in opposition to the various applications herein approved were submitted by CFCF Inc., the CTV Television Network Inc., and the CBC, among others. The major concerns expressed related to the issue of competition. CFCF Inc., in particular, expressed the concern that another commercial English-language service available in Montréal would further fragment the anglophone market and negatively affect CFCF-TV's financial position. The interventions of both the CTV Television Network Inc. and the CBC expressed the concern that the regional programming proposed by the applicant would almost certainly be targeted mainly to Montréal audiences, leading to a loss of advertising revenues for Montréal undertakings.

The Commission has carefully considered the potential effects of the approval of these applications, and is satisfied that the advantages of licensing the new service outweigh any potential negative impact on existing undertakings, CFCF-TV and the CBC in particular. The Commission is of the opinion that the new service should have no undue impact on existing licensees.

With further respect to the impact of CKMI-TV through the approval of the new transmitters in Sherbrooke and Montréal, the Commission notes that, in discussions at the hearing the applicant expressed its willingness to accept a condition of licence which would prohibit the licensee from broadcasting local advertising in any of the locations to be served. A condition of licence to this effect is set out in the appendix to this decision.

While the CBC's intervention expressed opposition to these applications, it stated at the hearing that in the event of approval of the disaffiliation of CKMI-TV from the CBC, the CBC would endeavour to continue to deliver CBC network programming to Québec through the establishment of an additional transmitter. In discussions at the hearing, TVA-CW agreed that it would be appropriate for the Commission to ensure that over-the-air access to the English-language CBC service in Québec is in place before the TVA-CW service is launched. As noted above, approval of each of these applications is subject to the condition precedent that a CBC English-language television service be otherwise provided at Québec prior to, or concurrently with, the implementation of the said approvals.

Program Development

The Commission notes the applicant's commitment to allocate $25,000 annually for program development for CKMI-TV, and in aggregate for all CanWest Global stations in Canada, a minimum of $1 million per year on script and development projects.

Service to children and youth

The Commission expects the applicant to adhere to its commitment to broadcast on CKMI-TV an average of 20 hours 30 minutes per week of Canadian programming directed to children and youth.

Service to the deaf and hard of hearing

The Commission notes TVA-CW's commitment to, by the end of the third year of operation, close caption all children's programming, local, regional and national news programming, including live segments, using either real-time captioning or another method capable of captioning live programming.

The Commission also notes the commitment by the applicant to close caption not less than 95% of all programming during the broadcast day, by the end of the licence term. Notwithstanding the above, and consistent with its policy approach for closed captioning announced in Public Notice CRTC 1995-48, 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.

Employment equity

In Public Notice CRTC 1992-59, the Commission announced implementation of its employment equity policy. It advised licensees that, at the time of licence renewal or upon considering applications for authority to transfer ownership or control, it would review with applicants their practices and plans to ensure equitable employment. In keeping with the Commission's policy, it 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 and has considered all of the interventions submitted with respect to these applications, together with the applicant's responses thereto.

This decision is to be appended to the new licence.

Allan J. Darling
Secretary General

APPENDIX - Conditions of licence for CKMI-TV Québec

1.  a) The licensee shall expend on Canadian programming, over the course of the licence term, a minimum of 35.2% of the total advertising revenues earned by the licensee during that period.

 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.

b)  The licensee shall broadcast during the evening broadcast period the following minimum average number of hours per week of Canadian drama, music or variety programming (categories 7, 8 and 9) in each broadcast year of the licence term:

 From the commencement of operations until 31 August of that broadcast year 7:00 hours
 Second broadcast year 7:00 hours
 Third broadcast year 7:00 hours
 Fourth broadcast year 7:30 hours
 Fifth broadcast year 8:00 hours

 For the purpose of the above condition, the categories drama, music and variety are defined as set out in Schedule I of the Television Regulations, 1987.

2.  The licensee shall broadcast as a minimum, during each broadcast week, the following number of hours of original regional programming in each year of the licence term:

 From the commencement of operations until 31 August of that broadcast year 12:30 hours
 Second broadcast year 15:30 hours
 Third broadcast year 15:30 hours
 Fourth broadcast year 18:00 hours
 Fifth broadcast year 18:00 hours

3.  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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council (CBSC).

4.  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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.

5.  The licensee shall 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.

6.  The licensee shall not broadcast any local advertising.

7.  In addition to the 12 minutes of advertising material permitted by subsection 11(1) of the Television Broadcasting Regulations, 1987, the licensee may broadcast infomercials as defined in Public Notice CRTC 1994-139 and in accordance with the criteria contained in that public notice, as amended.