ARCHIVED -  Decision CRTC 99-106

Decision

Ottawa, 20 May 1999

Decision CRTC 99-106

Alliance Atlantis Communications Inc.

Across Canada - 199811641 - 199811659 - 199811625 - 199811633 - 199811667

Applications processed by
Public Notice CRTC 1999-48
dated 19 March 1999

Summary

The Commission approves the applications by Alliance Atlantis Communications Inc. (Alliance Atlantis), on behalf of History Television Inc. (History), Showcase Television Inc. (Showcase), Life Network Inc./Réseau Life Inc. (Life), and HGTV Canada Inc. (HGTV) as well as Alliance Communications Corporation and Shaw Communications Inc., on behalf of a general partnership (Alliance/Shaw VOD Partnership). The applications requested authority to effect changes of ownership and control of the broadcasting undertakings of Alliance Communications Corporation (Alliance) and Atlantis Communications Inc. (Atlantis).

Discussion

1. Alliance currently owns and controls History and Showcase and has a partnership interest in the Alliance/Shaw VOD Partnership. Atlantis currently owns and controls Life and HGTV. As a result of the transactions approved herein, Alliance Atlantis will own and control all four specialty services and will have a partnership interest in the video-on-demand service.

2. Following the transaction approved herein, Alliance Atlantis plans to merge the licensees of Showcase, HGTV, Life and History under one company to be known as Alliance Atlantis Broadcasting Inc. This subsequent reorganization will not affect the ultimate ownership or control of the licensees.

3. As part of its applications, Alliance Atlantis made a commitment to invest $12.2 million, over seven years, in benefits to the Canadian broadcasting system. Specifically, Alliance Atlantis stated that Showcase and History will spend at least $8 million on a combined basis, over and above their current licence requirements, on original Canadian productions in the under-represented categories (including documentaries). These productions will be produced by Canadian independent producers at arms-length from Alliance Atlantis, or its subsidiaries. Alliance Atlantis indicated that it would file additional financial information as a supplement to the annual returns of these licensees to disclose the amount and nature of the expenditure related to the benefit. The Commission expects Alliance Atlantis to file this information.

4. For the remainder of the $12.2 million in benefits, Alliance Atlantis will also contribute at least $2.4 million to key film and television production industry organizations and at least $1.8 million to a new institution, the Canadian Broadcast and Production Executive Training Program. This $4.2 million in benefits does not relate to any one licensed service, but is "corporate" in nature. In accordance with the applicant's statement that it would file the required financial information related to this benefit, the Commission expects to receive each year, over the next seven years, Alliance Atlantis' audited consolidated financial statements together with the necessary additional information to disclose the quantity and nature of spending attributable to the $4.2 million in benefits.

5. The Commission notes that the existing licensees are subject to conditions of licence that are intended to prevent the possibility of vertical integration that could be harmful to the independent production sector. Furthermore, Alliance and Atlantis made commitments, as part of their existing licences, to protect the position of independent producers. The commitments are set out in Appendix I to this decision. The conditions of licence are listed in Appendices II to VI.

The Commission's decision

6. In the Commission's view, the proposed reorganization will enhance the production of high quality Canadian programming. Moreover, the Commission considers that the proposed tangible benefits of $12.2 million are commensurate with the size and nature of the proposed transaction. Accordingly, the Commission is satisfied that approval of these applications will benefit the Canadian broadcasting system. Furthermore, the Commission is satisfied that the existing conditions of licence and commitments as well as Alliance Atlantis' additional financial contributions are sufficient to ensure that Canadian producers are treated fairly and equitably. The Commission expects Alliance Atlantis and the subsequent new amalgamated entity, Alliance Atlantis Broadcasting Inc., to continue to adhere to the licensees' existing commitments, statements and conditions of licence as set out in the appendices to this decision. All current references to Alliance and Atlantis individually and to specific commitments and statements regarding safeguards to protect the position of independent producers will apply to Alliance Atlantis and the subsequent amalgamated company.

Interventions

7. The Commission acknowledges the interventions submitted by the Canadian Film and Television Production Association, the Canadian Association of Broadcasters and the Saskatchewan Motion Picture Association in support of these applications.

Secretary General

This decision is to be appended to the licences. It is available in alternative format upon request, and may also be viewed at the following Internet site:http://www.crtc.gc.ca

Appendix I to Decision CRTC 99-106

Commitments under existing licences to protect the position of independent producers

Showcase Television Inc. (Showcase)

Decision CRTC 94-280 notes the following commitments made by Alliance Communications Corporation (Alliance):

· to licence all suitable Canadian drama made by independent producers since 1984 that has been or will be seen on pay and conventional television;

· to set up a management team to operate the service on a stand-alone basis from its investors;

· to establish a Fairness and Access Committee to set guidelines for Showcase management on the acquisition of programming and on the payment of licence fees;

· to ensure, throughout the licence term, that a minimum of five of the Fairness and Access Committee's nine members will be Canadian independent producers who are not Showcase shareholders and that the Committee's recommendations regarding the formulae for setting licence fees will be binding upon management; and

· not to air first-run broadcasts of programs produced by a Showcase shareholder.

History Television Inc.

Decision CRTC 96-599 notes the following commitments made by Alliance that:

· it will air a minimum of 180 hours of independently-produced Canadian programs in the history genre each year, increasing to 215 hours per year of such programs by the end of the licence term;

· programming originally produced by Alliance and CTV (excluding the archival or primary source material in CTV's archives which may be used by independent producers to produce programs for the service) will account for less than 5% of the programming on the services;

· copyright of the programs Alliance commissions from independent producers will remain with these producers, except for programs whose entire cost of production has been met through network licence fees; and

· all programming decisions will be made entirely by the management of the service, which will act entirely independently of the shareholders. All Canadian distributors will be treated fairly and equitably and there will be no preference given to Alliance regarding the purchase of programs that are distributed by that company or its affiliates.

Life Network Inc./Réseau Life inc.

Decision CRTC 94-279 notes the following commitments made by Atlantis Communications Inc. (Atlantis) that:

· it will distribute 390 hours of original, first-run Canadian programming from independent producers in the first year of operation and increase this amount over the licence term. The licensee's commitments to these amounts of original programming will result in a total of approximately $100 million flowing to independent producers over the licence term.

· No Atlantis productions will be distributed by the new service.

· All of the original Canadian content on the service in the first term of licence will be produced by Canadian independent producers.

HGTV Canada Inc. (HGTV)

Although Atlantis did not make specific commitments regarding independent producers, Decision CRTC 96-607 notes the licensee's statements that it:

· does not currently produce in-house programming featuring themes related to homes and gardens;

· has not produced or supplied programming for the Life Network, nor does it intend to provide programming for HGTV; and

· does not participate in decisions respecting the acquisition of specific programs.

Appendix II to Decision CRTC 99-106

Conditions of licence for Showcase

1. (a) A minimum of 95% of all programming broadcast by Showcase shall be from category 7 (drama) as defined in the Specialty Services Regulations, 1990.

(b) 90% of the programming broadcast by Showcase shall have been produced outside the United States.

2. (a) The licensee shall devote not less than 60% of the broadcast year and not less than 60% of the evening broadcast period to the distribution of Canadian programs.

(b) Over the broadcast year, the licensee shall devote not less than 100% of the broadcast period between 7 p.m. and 10 p.m. to the distribution of Canadian programs.

3. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1993-93 and 1993-174, the licensee shall:

(a) from 1 September 1995 to 31 August 1996, expend on the acquisition of, or investment in Canadian programs not less than $10,081,000;
and

(b) from 1 September 1996 to 31 August 1997, and in each subsequent broadcast year,expend not less than 42% of its gross revenues for the previous year on the acquisition of, or investment in, Canadian programs.

(c) 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 set out in or 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.

(d) 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 set out 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 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.

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

4. The licensee shall expend, over the licence term, no less than $3.75 million on licence fees to independent producers who are not Showcase shareholders for the production of 15 or more original Canadian drama programs.

5. (a) Subject to subsections (b) and (d), the licensee shall not distribute more than twelve 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) The licensee shall not distribute any paid advertising material other than paid national advertising.

(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.

(e) 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.

6. From the date of commencement of service, the licensee shall charge each exhibitor of this service, the wholesale rate of $0.32 per subscriber per month for exhibition on the basic service in Anglophone markets, and $0.11 per subscriber per month for exhibition on the basic service in Francophone markets, as defined in section 18(4) of the Broadcasting Distribution Regulations.

7. 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. 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).

8. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.

9. 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 approved 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.

For the purpose of these conditions of licence, the terms "broadcast day", "broadcast month", "broadcast year", "clock hour" and "evening broadcast period" shall have the same meaning as those set out in the Television Broadcasting Regulations, 1987; and "paid national advertising" shall mean advertising that is purchased at a national rate and receives national distribution on the service.

Appendix III to Decision CRTC 99-106

Conditions of licence for The History and Entertainment Network

1. (a) The licensee shall provide a national English-language specialty service consisting of historical documentaries, movies, mini-series and history programs which embrace both current events and past history, with a special emphasis on documentary and dramatic programs relating to Canada's past. The licensee shall draw programming exclusively from category 2 (Analysis and interpretation), category 3 (Reporting and actualities), and category 7 (Drama), as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990.

(b) The licensee shall not broadcast more than 56 hours of feature films, all of which are to be based on historical themes, each broadcast week.

(c) The licensee shall not broadcast more than one two-hour movie during the evening broadcast period.

2. The licensee shall devote to the distribution of Canadian programs:

(a) not less than 30% of the broadcast year, increasing to not less than a minimum of 40% in the broadcast year following that in which the average subscribership is in excess of 4 million, and increasing further to not less than 50% of the broadcast year following that in which the average subcribership is in excess of 5 million.

(b) not less than 33 1/3% during 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, the licensee shall expend on Canadian programs not less than $5,700,000.

(b) In each subsequent broadcast year, the licensee shall expend on Canadian programs not less than 34% of the previous broadcast year's gross revenues derived from the operation of this service.

(c) 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 set out in or 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 underspending.

d) 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 set out in or 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 overspending; 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 paragraph (i) above.

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

4. (a) Subject to subsection (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) The licensee shall not distribute any paid advertising material other than national paid advertising.

(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.

(e) In addition to the twelve minutes of advertising material referred to in subsection 4(a), the licensee may broadcast partisan political advertising during an election period.

5. From the date of commencement of service, the licensee shall charge each exhibitor of this service a maximum wholesale rate of $0.25 per subscriber per month, where the service is carried as part of the basic service.

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

7. 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.

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 approved 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.

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; "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; and "national paid advertising" shall mean advertising material as defined in the Specialty Services Regulations, 1990 and that is purchased at a national rate and receives national distribution on the service.

Appendix IV to Decision CRTC 99-106

Conditions of licence for HGTV-TV Canada (Home and Garden Television)

1. The licensee shall provide a national English-language specialty service dedicated solely to advice and instruction about homes and gardens and shall draw programs exclusively from category 2 (Analysis and interpretation); category 3 (Reporting and actualities); category 5(b) (Education - informal); category 9 (Variety); and category 11 (Human interest), as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990.

2. The licensee shall devote to the distribution of Canadian programs not less than 50% 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 50% of the previous broadcast year's gross revenues derived from the operation of the 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 underspending.

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, 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, 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 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 subsection (b) and (d), the licensee shall not distribute more than twelve 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) The licensee shall not distribute any paid advertising material other than national paid advertising.

(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. 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. 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.

8. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission.

9. 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 approved by the Commission.

10. The licensee shall not remit any program development funds to its shareholders or affiliated corporations.

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; "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; and "national paid advertising" shall mean advertising material as defined in the Specialty Services Regulations, 1990 and that is purchased at a national rate and receives national distribution on the service.

Appendix V to Decision CRTC 99-106

Conditions of licence for Life Network

1. 100% of the programming provided by the licensee shall be drawn from Category 2 - Analysis and Interpretation, Category 5(b) - Informal Education, and Category 11 - Human Interest.

2. From the date of commencement of service until 31 August 1995, the licensee shall devote not less than 70% of the broadcast year and not less than 70% of the evening broadcast period to the distribution of Canadian programs. In each subsequent broadcast year, the Canadian content for the year and for the evening broadcast period shall increase by a 2.5% increment, reaching a level of 82.5% in the sixth year of operation, both for the year and for the evening broadcast period.

3. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notice CRTC 1993-93 and 1993-174, the licensee shall:

(a) from 1 September 1995 to 31 August 1996, expend on the acquisition of and/or investment in Canadian programs not less than $16,008,000;

(b) from 1 September 1996 to 31 August 1997, and in each of the two subsequent broadcast years, expend on the acquisition of and/or investment in Canadian programs not less than 65% of the previous year's gross revenues; and

(c) from 1 September 1999 to 31 August 2000, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than 71% of the previous year's gross revenues.

(d) During the broadcast year commencing 1 September 1995 and in each subsequent broadcast year 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 set out in or calculated in accordance with this condition; in such case, the licensee shall expend in the next year of the license term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underspending.

(e) In any 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 set out 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.

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

4. (a) Subject to subsections (b) and (d), the licensee shall not distribute more than twelve 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) The licensee shall not distribute any paid advertising material other than paid national advertising.

(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.

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

5. (a) From the date of commencement of service until 31 August 1999, the licensee shall charge each exhibitor of this service the wholesale rate of $0.30 per subscriber per month, where the service is carried as part of the basic service.

(b) From 1 September 1999 until 31 August 2000, the licensee shall charge each exhibitor of this service the wholesale rate of $0.33 per subscriber per month, where the service is carried as part of the basic service.

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 approved by the Commission.

7. 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.

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 approved by the Commission.

For the purpose of these conditions, the terms "broadcast day", "broadcast month", "broadcast year", "clock hour" and "evening broadcast period" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987; and "paid national advertising" shall mean advertising that is purchased at a national rate and receives national distribution on the service.

Appendix VI to Decision CRTC 99-106

Conditions of licence for the VOD programming undertaking operated by Alliance Communications Corporation and Shaw Communications Inc., on behalf of a general partnership

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 1:20 ratio of Canadian to non-Canadian feature film titles, including all available new Canadian feature films in both French and English, that are suitable for VOD exhibition, and which meet the Pay Television Programming Standards and Practices Code; and

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

5. The licensee shall contribute a minimum of 5% of the annual gross revenues earned by its VOD programming undertaking to an existing Canadian program production fund administered independently of the undertaking. The licensee is also required to report to the Commission, before the service commences operations, identifying the name of the existing fund or funds to which it will remit its contributions. The licensee is further 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 5% of that month's gross revenues.

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 is authorized to distribute programming that is produced by the licensee or by 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.

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

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

10. 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.

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

12. The licensee shall operate its undertaking in a manner that is independent of and separate and distinct from the operations of both Alliance Communications Corporation and Shaw Communications Inc. and all companies or entities controlled directly or indirectly by these two companies.

13. The licensee shall not disclose information, other than publicly available information, to any representative of Alliance Communications Corporation or Shaw Communications Inc. or their affiliates.

14. 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.

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

16. 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.