ARCHIVED - Decision CRTC 99-85
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Decision CRTC 99-85 |
| Ottawa, 13 April 1999 |
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Westman Media Co-Operative Ltd. Brandon, Manitoba -- 199801337 |
| Application processed by Public Notice CRTC 1998-92 dated 24 August 1998 |
| Summary |
| The Commission, by majority vote, approves the application by Westman Media Co-operative Ltd. (Westman) for relief from the requirements of section 29 of the Broadcasting Distribution Regulations (the regulations). |
| The Commission considers that the not-for-profit nature of the undertaking, the fact that Westman's Brandon system funds the only local television programming in several communities, and the negative effect that application of section 29 of the regulations could have on community programming, taken together, are enough to warrant an exception to the regulations. |
| The licensee may, under a condition of licence set out later in this decision, devote 5% of gross revenues derived from broadcasting activities to local expression in the form of its community channel, on an annual basis. If funding is so directed to the community channel, it will not be required to contribute to recognized Canadian production funds as section 29 of the regulations provides. |
| Discussion |
| The requirements of section 29 |
| 1. Section 29 of the regulations provides that Class 1 broadcasting distribution undertakings (BDUs) must contribute at least 5% of their gross revenues derived from broadcasting activities to Canadian programming, unless a condition of licence provides otherwise. BDUs may use a portion of this contribution to support local expression, such as the community channel, if they elect to provide such a service. The balance of the 5% contribution must be paid to funds that support the production of Canadian programming. The specific split between the amount of money that supports local expression and the amount of money to be directed to production funds varies according to the class of the undertaking and the number of subscribers. |
| 2. In Brandon, Westman operates a Class 1 cable system with fewer than 20,000 subscribers. Pursuant to section 29 of the regulations, it must make an annual contribution to funds that support the production of Canadian programming that is not less than the greater of: |
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| 3. Accordingly, section 29 states that if Westman elects to operate a community channel, it may deduct up to 3.5% of gross revenues derived from broadcasting activities from the total 5% contribution it would otherwise be required to make. In such a case, it must contribute a minimum of 1.5% of gross revenues derived from broadcasting activities to funds supporting the production of Canadian programming. |
| 4. In Public Notice CRTC 1997-150, which was issued with the revised regulations, the Commission stated that it would allow exceptions to section 29 of the regulations on a case-by-case basis related to the special circumstances of a licensee’s operations. The regulations provide that such exceptions may be granted by condition of licence. |
| The applicant’s position |
| 5. Westman considered that, for its Brandon system, it should be permitted to commit 5% of its gross revenues from broadcasting activities to community programming, with no requirement to contribute to production funds. |
| 6. The applicant noted that it is a not-for-profit organization that operates a Class 1 system in Brandon, a Class 2 system in Dauphin and 33 small Class 3 systems in various rural Manitoba communities. Twenty of these systems currently offer community channels. The community channels for the Class 3 systems are financed using revenues received from the larger systems in Brandon and Dauphin. Westman therefore indicated that any funding reductions for community programming in Brandon could lead to the closure of the community channels of the Class 3 systems. |
| 7. Westman noted that Brandon is the only community it serves that receives local television programming from a conventional station. Closure of the community channels would, therefore, silence the only local television voice in other communities that Westman serves. |
| 8. Westman also noted that it had been operating in a competitive environment since the launch of SkyCable in Western Manitoba. SkyCable is a multi-point distribution system (MDS) that provides packages of television services to subscribers. This has meant that Westman has had to reduce costs and staff while, at the same time, rebuilding its systems in Brandon and eight rural communities. Westman considered that it should be granted an exception to section 29 in order that it might maintain community programming in this more competitive environment. |
| The Commission’s decision |
| 9. Section 3(1)(e) of the Broadcasting Act (the Act) stipulates that "each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming." The regulations provide that all distributors should contribute a minimum of 5% of their gross annual revenues derived from broadcasting activities to achieve this fundamental objective, unless a condition of licence provides otherwise. |
| 10. The Commission notes that this 5% requirement applies not only to cable systems but to all distributors, including MDS systems such as SkyCable. This initiative was developed precisely for a competitive environment such as that in which Westman operates. The Commission does not, therefore, consider that the presence of a competitor is a valid reason to exempt a licensee from the requirement of section 29. |
| 11. The Commission explored, during an extensive public process that resulted in the adoption of the regulations, the appropriate split between the amount of money that may be allocated to local expression and money that would be contributed to production funds to support Canadian programming at a national and regional level. |
| 12. The Commission appreciates the important service that community channels provide, especially in areas where they are the only source of local television programming. That is why section 29 of the regulations allows smaller cable systems to reduce their contributions to production funds if they operate community channels. The Commission further notes comments in a number of interventions supporting the application which address the importance of Westman’s community channels to subscribers in Manitoba. |
| 13. The Commission, however, continues to believe that contributions by broadcasting distribution undertakings to independent production funds provide essential support for the production of Canadian programming. Such support is necessary if Canadian programming is to continue to have a strong presence in a more competitive broadcasting environment. The Commission considers that subscribers will benefit from higher quality Canadian programming on the services offered by BDUs as a result of these contributions. It therefore wants to ensure that production funds receive broad support from BDUs. |
| 14. On the other hand, the Commission recognizes that Westman is different from most cable systems in that it is operated by a not-for-profit organization rather than on a profit-making basis, as are most cable systems. As such, Westman's systems are more highly oriented to the local communities they serve. The Commission considers that failure to grant the licensee's request could, in the circumstances of Westman, have a significant negative effect on the amount and quality of community programming available. |
| 15. The Commission therefore considers that the not-for-profit nature of the undertaking, the fact that Westman's Brandon system funds the only local television programming in several communities, and the negative effect that application of section 29 of the regulations could have on community programming, taken together, are enough to warrant an exception to the regulations. Therefore, the Commission amends the licence for Westman by adding the following condition of licence: |
| 16. It is a condition of licence that the licensee make a contribution to Canadian programming in the broadcast year ending 31 August 1999, and in each broadcast year thereafter, of an amount not less than 5% of its gross revenues derived from broadcasting activities in that year, less any contribution to its community channel made by the licensee in that year. |
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Related CRTC document
• Public Notice 1997-150 dated 22 December 1997: Broadcasting Distribution Regulations |
| Secretary General |
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This decision is to be appended to the licence. It is available in alternative format upon request, and may also be viewed at the following Internet site:
www.crtc.gc.ca |
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