ARCHIVED -  Decision CRTC 98-234

Decision

See also: 98-234-1

Ottawa, 29 July 1998

Decision CRTC 98-234

Premier Choix Networks Inc.

Across Canada - 199710281

Licence renewal for Canal D; distribution of advertising - approved; other proposed amendments - denied

1.  Further to Public Notices CRTC 1998-20 and 1998-20-1 dated 9 and 16 March 1998, respectively, the Commission renews the broadcasting licence for the French-language specialty programming undertaking known as Canal D, from 1 September 1998 to 31 August 2005, subject to the conditions in effect under the current licence (except that relating to advertising and other adjustments), and to the conditions specified in the appendix to this decision and in the licence to be issued.

2.  The Commission licensed the operation of this service, initially known as Arts et Divertissement (A&D), in Decision CRTC 94-286 dated 6 June 1994. It was originally a regional service authorized for distribution in Quebec, Ontario and Atlantic Canada. In Decision CRTC 97-16 dated 20 January 1997, the Commission approved a licence amendment authorizing national distribution for the service.

3.  In its licence renewal application, the licensee proposed amendments to certain conditions and expectations currently attached to its licence. The licensee's proposals were as follows:

·  to amend the condition of licence on advertising material to allow the licensee to distribute a maximum of 12 minutes of advertising material during each clock hour;

 Conditional upon approval of this amendment, the licensee proposed to raise the level of Canadian content to 35% in Year 1, 40% in Years 2, 3 and 4, and 45% at the beginning of Year 5 of the new licence term;

·  to delete the following condition of licence:

 No feature films, other than documentaries, shall be distributed in prime time (6:00 p.m. to 11:00 p.m.),

 and replace it with one that would read as follows:

 During each broadcast semester, the service shall not distribute more than 13 feature films, other than documentaries, during prime time hours (6:00 p.m. to 11:00 p.m.);

·  to be relieved of the expectation that it devote at least 5% of its program schedule to cultural programs on the performing arts;

·  to be relieved of the following expectation:

While  the licensee may distribute recently-produced drama series originating outside of North America, the Commission expects Canal D not to compete with conventional French-language television broadcasters that also seek to acquire such productions.

4.  The Commission received a total of 45 interventions relating to this application. Of these, 37 were filed by organizations from the advertising and independent production sectors; all 37 were in favour of renewing the Canal D licence and granting the proposed amendment relating to advertising. They made no comment on the licensee's other proposals.

5.  The other interventions were filed by French-language television broadcasters, namely Société Radio-Canada (SRC), Groupe TVA inc. (TVA), TQS inc. (TQS), the Société de télédiffusion du Québec (Télé-Québec), and Radio Nord inc. (Radio Nord); and by the Association des câblodistributeurs du Québec (ACQ), the Association des producteurs de films et de télévision du Québec (APFTQ), and the Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ). While not opposed to the renewal of the Canal D licence, these interveners were opposed to, or expressed serious concerns regarding at least one of the amendments proposed by the licensee.

6.  In response to these interventions, the licensee withdrew its request to be relieved of the expectation that Canal D not compete with conventional French-language television broadcasters for the acquisition of recently-produced drama series originating outside North America. Accordingly, the licensee shall remain in compliance with this Commission expectation.

7.  With regard to the licensee's request for the inclusion of greater flexibility in the condition of licence prohibiting the distribution of feature films, other than documentaries, in prime time, and its request to be relieved of the expectation that it devote at least 5% of its program schedule to cultural programs on the performing arts, the licensee indicated that it was willing to continue to adhere to these expectations in the new licence term should the Commission not accept its arguments.

8.  Having carefully considered the arguments advanced by the licensee and the interveners, the Commission denies the two proposed amendments noted above for the reasons discussed below. The Commission approves the proposed amendment to the condition of licence on advertising material, thereby allowing the licensee to distribute a maximum of 12 minutes of advertising material during each clock hour.

Distribution of non-documentary feature films in prime time

9.  Under the existing conditions of licence, Canal D is not authorized to distribute feature films, other than documentaries, during prime time, i.e., between 6:00 p.m. and 11:00 p.m. The licensee proposed to distribute a maximum of 13 feature films other than documentaries in prime time during each broadcast semester.

10.  In their interventions, the French-language television broadcasters and the ACQ argued that conventional television services and some specialty services broadcasting in the French language already exhibit a considerable number of feature films in prime time, and that the licensee's proposal would not enhance diversity on French-language television. TVA and Télé-Québec further noted that competition for the rights to broadcast feature films is already very strong because more and more programming services carry them. SRC indicated that if Canal D distributed feature films other than documentaries during national listenership surveys, other existing services would clearly be affected.

11.  In reply to these interventions, the licensee stated that it would not create more competition for conventional French-language television services because it would adhere to its commitment to distribute at least 75% documentaries during prime time. It also indicated that it would accept renewal of the condition of licence requiring that all feature films distributed by Canal D, other than documentaries, be other than recent releases.

12.  In approving the operation of this service in 1994, the Commission noted that its primary role would be to offer a diverse range of documentaries, notably during prime time. The Commission's conditions of licence and expectations relating to the nature of the service offered by Canal D were intended to preserve its specific character and enhance its diversity, while minimizing its impact on other broadcasting undertakings. The Commission considers that the objectives established when the original licence was granted remain valid and, consequently, it renews the conditions of licence relating to the nature of the service (condition 1) as set out in the appendix. The Commission has therefore denied the proposed amendment.

Cultural programs on performing arts

13.  The licensee requested to be relieved of the Commission's expectation that Canal D devote at least 5% of its program schedule to cultural programs featuring the performing arts.

14.  SRC, TVA, TQS, Radio Nord, APFTQ and ADISQ opposed this request. They argued that Canal D is the only French-language specialty service that provides an exhibition window for the performing arts, and that this is a key element of the specific character of the service. It was also argued that, for several years, the cultural community has complained about the shortage of cultural programming on television, and that this provides Canal D the opportunity to expand its Canadian content.

15.  In reply, the licensee indicated that its intention in making the request was not to withdraw from this activity, but rather to enhance the distinctive nature of its service. Instead of rebroadcasting the type of variety programs and performances that are already available on other programming services, the licensee stated that it wishes to focus its resources on financing a series of original Canadian documentary programs on the performing arts. It considers that this kind of programming is more consistent with its image as a documentary service and with its subscribers' expectations.

16.  In Decision CRTC 94-286, the Commission noted that original programming focusing on the performing arts would enhance the diversity of the service; it therefore expected that at least 5% of the program schedule be devoted to this type of programming. The Commission notes that 5% of Canal D's program schedule represents about 8 hours 30 minutes per week. The Commission is satisfied that the licensee will be able to continue fulfilling this expectation, while expanding the documentary component of its performing arts programming. The Commission has therefore denied this proposal.

Distribution of advertising material

17.  The existing condition of licence prohibits the licensee from distributing any advertising material. The licensee proposed in future to distribute a maximum of 12 minutes of advertising material during each clock hour.

18.  Television broadcasters were concerned about this proposal. TVA stated that Canal D would be able to siphon $30 million in advertising revenues from French-language television broadcasters over seven years. These television broadcasters also cited a study conducted by Paul Martel inc. and commissioned jointly by TVA and TQS, projecting that between 85% and 90% of Canal D advertising revenues would come from conventional television services or other programming services. APFTQ indicated that it would be prepared to support the proposed amendment if Canal D increased its expenditures on Canadian programming accordingly.

19.  In reply to the interventions, the licensee indicated that its proposal had received the unanimous support of advertising agencies and independent producers, and that it was not opposed by any specialty programming service, by Télé-Québec or by the public. It stated that its intention is to provide Canal D with a source of financing that almost all specialty services already have, including those owned by conventional broadcasters. It added that this proposal is consistent with the Commission's overall expectations for French-language specialty services, and will allow it to increase its contribution to the creation and exhibition of Canadian programming.

20.  In the time since Canal D was authorized in 1994, four new French-language specialty programming services have entered the market. Three of them, Canal Vie, Musimax and Télétoon, are authorized to distribute a maximum of 12 minutes of advertising material per clock hour, and the fourth, Le Canal Nouvelles (LCN), is allowed up to 8 minutes. Within the same period, the Commission also authorized Réseau des sports (RDS) to increase its level of advertising material from 8 to 12 minutes per clock hour.

21.  In its Vision statement of October 1997, the Commission underscored the importance of the affordability and accessibility of services and fairness in competition. Other than Canal Famille, which, in accordance with section 248 of the Quebec Consumer Protection Act, is prohibited from distributing commercial messages directed to children under the age of 13, Canal D is the only French-language specialty service that is not authorized to distribute advertising. Currently, only Canal D relies exclusively on subscription revenues to provide a quality service in an increasingly competitive market.

22.  The Commission considers that approval of the licensee's proposal is consistent with its objective of fostering strong, competitive undertakings that are capable of offering a broad range of high-quality services. It also considers that the benefits of a strong, competitive industry apply equally to both the French-language and English-language market, even if resources in the former are comparatively limited.

23.  In approving the licensee's proposal, the Commission also took into consideration the benefits that approval will yield for Canadian programming. In its first licence term, the licensee has demonstrated that a program schedule containing quality French-language documentaries can be attractive and successful. According to the licensee, it has been able to devote approximately $1.4 million more than anticipated to investments in and acquisitions of Canadian programs during the current licence term. In addition, during the first three years of the current term, almost 65% of the licensee's expenditures on Canadian program acquisitions was devoted to first-run original programs, easily surpassing the projected level of 50%.

24.  As indicated earlier in this decision, as part of its proposal to distribute advertising, the licensee offered to increase Canadian content on Canal D to 35% in Year 1, 40% in Years 2, 3 and 4, and 45% at the beginning of Year 5 of the new licence term. It is a condition of licence that these commitments be honoured. The licensee also renewed its commitment to devote at least 40% of its gross annual revenues to investments in or acquisitions of Canadian programs. Adherence to this commitment is also a condition of licence. Further, the licensee reiterated its commitment to devote at least 50% of its expenditures on Canadian programming acquisitions to first-run original programs.

Requirement for a public hearing

25.  In their interventions, SRC, TVA, TQS and ADISQ submitted that the licence renewal application for Canal D should be examined at a public hearing in view of the issues raised by the proposed licence amendments. Télé-Québec and ACQ also stated that they would like to appear if the Commission decided to hold a public hearing.

26.  Section 18(2) of the Broadcasting Act requires that the Commission hold a public hearing in connection with the renewal of a licence "unless it is satisfied that such a hearing is not required in the public interest".

27.  The procedure implemented by the Commission for this proceeding, i.e. a public notice with an opportunity given for submission of written interventions, has allowed the interveners to submit detailed comments on the issues of concern to them. In its reply to the interventions, the licensee responded fully to the questions raised by the interveners. In this case, the Commission determined that it had all the information required to make an informed decision, and that the public interest would not be served better by holding a public hearing.

Other matters

29.  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.

30.  In accordance with subsection 22(1) of the Broadcasting Act (the Act), this renewal is subject to the issuance of a Broadcasting Certificate by the Department of Industry.

31.  The Commission draws the licensee's attention to subsection 22(4) of the Act which provides that any broadcasting licence issued, amended or renewed in contravention of section 22 of the Act is of no force or effect.

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 98-234

CONDITIONS OF LICENCE

Nature of the service

1.  (1) The licensee shall provide a national specialty service in the French language with at least 90% of its programming dedicated exclusively to programs drawn from the following categories as set out in Schedule I to the Specialty Services Regulations, 1990;

 Analysis and Interpretation (category 2);

 Drama (category 7);

 Music and dance other than a music video clip (category 8a);

 Variety (category 9); and

 Human Interest (category 11);

 (2) Documentaries shall account for at least 50% of the broadcast day (program logs must include identification of the documentaries);

 (3) Feature films distributed by the licensee, other than documentaries, shall not be recent releases, i.e., seven (7) years must have elapsed between the year of copyright and the year of exhibition (program logs must include identification of these dates);

 (4) No feature films, other than documentaries, shall be distributed in prime time (6:00 p.m. to 11:00 p.m.);

 (5) North American drama programs (other than subcategory 7d) that are distributed on the service shall be limited exclusively to non-recent productions, that is to say, a minimum of five (5) years must have elapsed between the year of copyright and the year of exhibition (program logs must include identification of these dates).

Exhibition of Canadian programs

2.  In each broadcast year, the licensee shall devote at least 35% of its programming to the distribution of Canadian programs during the broadcast day and during the evening broadcast period; this level shall increase to at least 40% in Year 2 and to at least 45% at the beginning of Year 5 of the licence term.

 Expenditures on Canadian programs

3 . (a) The licensee shall expend on the acquisition of or investment in Canadian programs in each year of the licence term, at least 40% of the gross revenues derived from the operation of this service in the preceding year;

(b)  In each broadcast year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming 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 year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underspending;

(c)  In any broadcast year of the licence term, including the final year, the licensee may expend an amount on Canadian programming that is greater than the minimum required expenditure for that year calculated in accordance with this condition; in such case, the licensee may deduct:

(i)  from the minimum required expenditure for the next year of the licence term, an amount not exceeding the amount of the previous year's overspending; and

(ii)  from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overspending and any amount deducted under paragraph (i) above;

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

Rate

4.  The licensee shall charge each exhibitor of this service a maximum wholesale rate of $0.65 per subscriber per month for distribution on the basic service.

Advertising

5.  (a) During each clock hour, the licensee shall broadcast not more than twelve minutes of commercial messages;

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

( c) 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;

( d) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may broadcast partisan political advertising during an election period;

( e) For the purpose of this condition, advertising material does not include a promotion for a Canadian program to be broadcast by the licensee, notwithstanding that a sponsor is identified in the title of the program or is identified as a sponsor of that program, where the identification is limited to the name of the sponsor only and does not include a description or representation of the products or services or any attributes of the sponsor's products or services.

Adherence to industry codes

6.  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.

7.  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.

8.  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.

Definitions

For the purpose of these conditions of licence, the terms "broadcast day", "broadcast year", "evening broadcast period" and "clock hour" shall have the same meanings 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.