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ARCHIVED -  Broadcast - Commission Letter - Complaint by TSN Concerning Distribution of Multiple Feeds of CTV Sportsnet by DTH Distributors

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Letter

Ottawa, 7 May 1999

Our file: 4667-086
Ref.: 981130CC301Lb

Via Facsimile
(416) 595-9614

Ms. Suzanne Steeves
Senior-Vice President, CTV Sports
CTV SportsNet
P.O. Box 9, Station O
Toronto, Ontario
M4A 2M9

Re: Complaint by TSN Concerning Distribution of Multiple Feeds
      of CTV SportsNet by Direct-to-Home (DTH) Distributors     

Dear Ms. Steeves:

On 23 November 1998, the Commission received a complaint from The Sports Network (TSN), alleging that CTV SportsNet (SportsNet) is providing multiple feeds of its service to Bell ExpressVu (ExpressVu) and Star Choice Communications Inc. (Star Choice), contrary to its licence. TSN requested that the Commission order SportsNet and the DTH distributors to cease this unauthorized practice immediately.

SportsNet, ExpressVu and Star Choice filed answers to TSN's complaint on 4 January 1999. TSN filed reply comments on 14 January 1999. The present letter is the Commission’s determination of this complaint.

Summary

In this determination, the Commission states that it considers that, in providing multiple feeds of its service, SportsNet is not operating within the intended scope of its licence. It was licensed as a "regionally-oriented" service, meant to provide programming that would be complementary to TSN’s programming. The Commission views with concern the activities of SportsNet which depart from this notion of complementarity.

Positions of Parties

  1. TSN argued that SportsNet was licensed under Decision CRTC 96-601 as a single service authorized to supply discrete programming feeds to different regions of the country. According to TSN, the Decision did not authorize the provision of more than one such service to any given subscriber. TSN noted that ExpressVu is distributing all four SportsNet regional feeds, while Star Choice is distributing the two Eastern regional feeds to its Eastern subscribers and the two Western regional feeds to its Western subscribers. TSN submitted that, if allowed to continue, this distribution, which in effect creates three more unlicensed specialty television services, will have a negative impact on all Canadian broadcasters and confers an inappropriate advantage on SportsNet.
  2. TSN further noted that SportsNet is limited by condition of licence to distributing not more than 12 minutes of advertising material during each clock hour. According to TSN, the distribution of multiple services on a national basis contravenes this condition by allowing SportsNet, in effect, to provide up to 48 minutes of advertising per hour where all four feeds are being delivered to one locality.
  3. In response to TSN's complaint, SportsNet submitted that its conditions of licence do not expressly prohibit the distribution of multiple regional feeds within one region via DTH or any other mode of distribution. SportsNet further argued that the delivery of all four regional feeds represents a net benefit to the Canadian broadcasting system. In helping to differentiate DTH from incumbent analog cable distributors, it furthers the public policy objective of dynamic competition between new entrants and incumbents. SportsNet added that it intended to provide multiple feeds to digital cable systems, thereby assisting in the policy objective of rolling out digital cable.
  4. With respect to the allegation that it is essentially providing three "unlicensed" services, SportsNet noted that a significant amount of the sports programming for which it has region specific rights is blacked out outside the region in which it originates. SportsNet added that its conditions of licence provide that up to 67% of its programming can be broadcast on all four feeds. When feature programming is broadcast across all four feeds, SportsNet argued that it cannot be said that it is programming four different networks.
  5. With respect to TSN's claim that distribution of multiple feeds results in SportsNet providing up to 48 minutes of advertising per hour, SportsNet noted that this is not the case for a number of reasons: 1) an individual viewer can only watch one feed at any given time; 2) up to 67% of the programming can be common across each region; and 3) of the non-common programming, significant amounts are blacked out due to rights restrictions.
  6. Finally, SportsNet noted that TSN's complaint is inconsistent with its own practices in the marketplace. According to SportsNet, TSN currently offers two different feeds on ExpressVu in Ontario and runs separate advertising on each feed.
  7. ExpressVu noted that 92% of its English language subscribers and almost 130,000 customers have been watching all four feeds of SportsNet since October 1998. ExpressVu argued that the additional choice and variety provided by the multiple feeds provides it with a point of product differentiation from analog cable TV.
  8. In ExpressVu's submission, there is no licensing or regulatory impediment constraining the distribution of multiple feeds of SportsNet. ExpressVu suggested that this is an issue that should have been raised at the licensing hearing. By raising this issue at this time, ExpressVu stated that TSN raises the specter of the removal of three sports channels that subscribers have been enjoying since last fall. According to ExpressVu, removing these popular Canadian regional sports feeds when they do not appear to contravene public policy or regulation will undermine customer confidence in the DTH industry, reduce its competitiveness and detract from the development of sustainable competition in the broadcasting distribution undertaking (BDU) sector.
  9. Star Choice noted that SportsNet's two feeds have been available on its DTH system since launch and argued that it would create significant subscriber disruption if it were no longer able to offer both feeds. Star Choice echoed ExpressVu's comments that the distribution of multiple SportsNet feeds on DTH assists in the rollout of digital distribution systems, furthers competition and offers more choice and diversity to subscribers.
  10. In reply, TSN argued that SportsNet has created four national program services through one licence. While TSN supports added diversity and choice of programming services for all Canadians, SportsNet is usurping the authority of the Commission and circumventing the required licensing procedure for specialty programming services.
  11. TSN also took issue with the argument that DTH operators need to be allowed to distribute multiple feeds in order to more effectively compete with cable operators. According to TSN, under the provisions of the Directions to the CRTC (Direct-to-Home (DTH) Satellite Distribution Undertakings) Order, dated 6 July 1995, DTH operators cannot offer different programming services from those authorized for cable distributors. TSN further suggested that regulating distributors using digital technology differently from those using analog technology is not supported by the current Broadcasting Act (the Act), which is intended to be technology neutral.

Commission Determination

  1. In Decision CRTC 96-601, the Commission granted SportsNet a broadcasting licence to carry on "a national English language programming undertaking." In describing the nature of the service, the Commission noted that:

    [SportsNet] will provide coverage of live sports events and other sports-related programs, to be distributed in four distinct regional versions: "Pacific, "West", "Central" and "East" … The new service will tailor the coverage in each of the four regions to reflect local and regional team coverage in professional, semi-professional as well as amateur leagues.
  2. The Commission noted that the licensee made a commitment that no more than 67% of the programs broadcast each broadcast week on each of the regional feeds would be broadcast on any of the other feeds of the service. This commitment was made a condition of licence. SportsNet also indicated that it was primarily interested in acquiring regional, rather than national rights, and would take into account regional preferences in sports coverage.
  3. In light of SportsNet's commitments and the Commission's determinations, the Commission imposed, among others, the following conditions of licence:

    1. (b) The licensee shall provide programs dedicated to all aspects of sports, distributed using four discrete regional feeds.

    (d) No more than 67% of the programs broadcast on each of the four regional feeds in each broadcast week shall be broadcast on any of the other feeds of the service.
  4. The Commission notes that its intention at the time of licensing SportsNet was that it would be primarily one service with four separate regional feeds, not four distinct services provided on four separate channels. In its letter of 15 December 1998, the Commission addressed SportsNet’s request for clarification of TSN’s ability to compete for the broadcast rights to regional sports programming. In that letter, the Commission noted that underlying its decision to license SportsNet was the fact that, "as SportsNet itself acknowledged, it would be a "primarily" regionally-oriented service". The Commission concluded as follows:

    TSN is a nationally oriented sports specialty service with a limited capacity to broadcast sports programming on more than one feed, and SportsNet is a regional sports specialty service "primarily" focused on catering to the special interests of the "four distinct regional versions". This national versus regional distinction should guide their respective distribution and content activities.

    Based on the above understanding, complementarity between TSN and SportsNet, as reflected in each licensee’s conditions of licence, should be seen to apply to broadcast programming distribution, and should not be construed as inhibiting programming acquisitions. The Commission will view with concern any future distribution activities by either TSN or SportsNet that depart from this notion of complementarity. [emphasis in original]
  5. In light of the above, the Commission considers that SportsNet is not operating within the intended scope of its licence. SportsNet was licensed as a "regionally-oriented" service, and was meant to provide programming that would be complementary to TSN's programming. As expressed in its 15 December 1998 letter, the Commission views with concern the activities of SportsNet which depart from this notion of complementarity.
  6. The Commission notes that in Structural Public Hearing, Public Notice CRTC 1993-74, 3 June 1993, the Commission decided that no special authorizations to multiplex their programming on separate channels would be required for licensees of pay television services. However, licenses of other types of services would be required to obtain such authorizations – particularly in light of the potential impact of multiplex channels on the capacity limitations of some BDUs. Thus, licensees of specialty services should obtain explicit authorizations to multiplex their services.
  7. The ability of DTH providers to offer multiple feeds on a digital basis would provide BDU competitors with the ability to distinguish themselves from analog cable providers; this could provide incentive to such cable providers to implement digital capacity more quickly. The Commission considers that the Act does not prohibit it from providing incentives for BDUs to carry digital content. In that context, the Commission would be prepared to consider an application from SportsNet (filed forthwith), seeking authorization to carry multiple feeds in a single region on a digital basis only.

Subsequent Correspondence

  1. It is to be noted that, in a letter dated 9 March 1999, ExpressVu stated that CTV SportsNet has acquired control of TSN, subject to prior Commission approval. ExpressVu stated that given the potential common ownership of TSN and CTV SportsNet and the negative effect upon subscribers of a reduction in CTV SportsNet feeds to DTH customers should TSN’s position prevail, ExpressVu requested that consideration of this complaint be suspended until the Commission’s decision on the consolidation of ownership of these two specialty sports services.
  2. Although the Commission has noted press reports about the proposed consolidation of ownership, this letter was received after the close of the record of the present complaint, and was not taken into consideration in the present determination.

Sincerely,

Secretary General

cc:  Mr. Chris Frank, Bell ExpressVu
      Mr. Paul Brown, NetStar Communications
      Mr. David Lewis, Star Choice

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