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ARCHIVED - Decision CRTC 2000-370

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Decision CRTC 2000-370

Ottawa, 28 August 2000
Astral Television Networks Inc.
Eastern Canada – 200011411
Application processed by
Public Notice CRTC 2000-69
dated 26 May 2000

Licence renewal for MOVIEPIX

The Commission renews the licence for MOVIEPIX for a seven-year term. MOVIEPIX's condition of licence regarding the exhibition of Canadian programs remains identical to the one in effect during the current licence term.
The Commission approves amendments to MOVIEPIX's conditions of licence relating to the nature of its service, expenditures on Canadian programs and the definition of revenues.
The Commission accepts, as eligible Canadian program expenditures, up to $500,000 of Astral's contributions over the licence term to the preservation and restoration of Canadian films.
The Commission prohibits Astral from marketing or allowing MOVIEPIX to be distributed on unscrambled analog tiers of Class 1 broadcasting distribution undertakings, except for cable systems that were actually distributing the service in this manner, on or before 31 March 2000.

1.

The Commission renews the broadcasting licence to carry on the regional English-language general interest pay television service known as MOVIEPIX, from 1 September 2000 to 31 August 2007. The new licence will be subject to the conditions specified in the appendix to this decision and in the licence to be issued.

2.

The Commission has no concern with respect to Astral's compliance with its conditions of licence during MOVIEPIX's first licence term. MOVIEPIX's current condition regarding exhibition of Canadian programs will remain in effect during the new licence term.

Amendments to conditions of licence

3.

As part of its licence renewal application, Astral asked the Commission to amend its conditions of licence to:
  • describe more fully the nature of MOVIEPIX's service;
  • link its required expenditures on Canadian programming to the average number of subscribers in the previous broadcast year; and
  • revise the definition of "revenue" to include revenue from direct-to-home (DTH) satellite subscribers and any return on investments in programming.

4.

The Commission approves the amendments as proposed by the licensee. The revised conditions are set out in the appendix to this decision. They are discussed below.

Nature of service

5.

The Commission adds the following wording to the condition of licence describing the nature of MOVIEPIX's service:
  • theatrical feature films (subcategory 7 (d), Appendix I to Public Notice CRTC 1999-205, as amended from time to time and approved by the Commission) copyrighted at least five years prior to the broadcast year in which they are distributed by the Service and which, in respect of the non-Canadian titles, are predominantly mainstream theatrically released feature films that were listed within the top 100 films of Variety Magazine's annual list of top grossing films in the United States and Canada;
  • made-for-television feature films (subcategory 7(c)) copyrighted at least five years prior to the broadcast year in which they are distributed by the service; and
  • filler programming (Category 15) and other programs that are feature-film-related and intended to set in context the feature film or films they accompany in the schedule.

6.

In its intervention, CHUM Limited, licensee of a number of conventional television stations across Canada and national specialty television programming services, supported the amendments. CHUM agreed with Astral's arguments that the more detailed description of MOVIEPIX's service distinguishes it more clearly from other discretionary services. The intervener added that including older, made-for-television feature films in MOVIEPIX's service would not have a negative effect upon conventional television and specialty television programming services.

7.

CHUM's support, however, was conditional on MOVIEPIX remaining a fully discretionary service and that it not be distributed on unscrambled analog tiers of cable systems other than on those undertakings currently carrying the service in this manner. This issue is discussed later in this decision.

8.

The Commission is satisfied that these amendments provide a better tool to measure MOVIEPIX's compliance with the description of the nature of its service and more expressly distinguish it from other currently licensed discretionary programming services as well as services that may be licensed in the future.

Expenditures on Canadian programming

9.

Currently, Astral must spend at least 22% of its revenues for the previous broadcast year on Canadian programming. Under the revised condition approved in this decision, the licensee must spend, on acquiring or investing in Canadian programming, between 22% and 30% of its revenues for the previous year, based on the average number of subscribers in the previous broadcast year. The condition contains a table linking the percentage of revenues to the number of subscribers.

10.

The new condition ties Astral's required expenditures on Canadian programming to increases in revenues as it attracts new subscribers. According to the licensee, using this formula will increase its expenditures on Canadian programming to 25% of revenues by the sixth year of the new licence term. As a result, it will be able to acquire more Canadian movies, pay higher licence fees for Canadian movies, and offer on-air segments that reflect its role as a television broadcaster of classic movies.

Revised definition of "revenue"

11.

MOVIEPIX was originally licensed in 1994, before the launch of DTH services in Canada. The definition of "revenue" for the conditions of licence of discretionary services that have been licensed since then include revenue from DTH subscribers.

12.

In accordance with Astral's request, the Commission has added "revenue from DTH subscribers" to the definition of revenue for MOVIEPIX's conditions of licence. The Commission has also included "any return on an investment in programming." It is satisfied that the amended definition will serve to increase the level of MOVIEPIX's expenditures on Canadian programming.

Contributions to preserving and restoring Canadian films

13.

Astral made a commitment to spend $150,000 each year over the new licence term on conserving and restoring Canadian films. The licensee asked to be able to include these contributions in the calculations of its required expenditures on acquiring Canadian programming. It argued that funding for film preservation and restoration is comparable to investments in script and concept development, which are currently accepted as eligible Canadian program expenditures. In the same manner that other pay television services, which focus on first-run movies, invest in script and concept development to ensure the creation of original quality Canadian films, MOVIEPIX, as an exhibitor of classic Canadian movies, supports film preservation and restoration.

14.

Interventions from film production companies, film festivals and distribution companies commended Astral on its commitment to sponsor preservation and restoration of Canadian feature films. Several interveners noted that Astral is the only private Canadian broadcaster to support film preservation through its contributions to the AV Preservation Trust.

15.

The Commission recognizes the importance of restoring and preserving Canadian films to maintain and nurture the country's film heritage. At the same time, the licensee should not substantially reduce its direct expenditures on acquiring Canadian programming. The Commission will, therefore, permit Astral to count $500,000 of its contributions over the licence term to conserving and restoring Canadian films as eligible Canadian program expenditures. A condition of licence in this regard is set out in the appendix to this decision.

Carriage on unencrypted high-penetration tiers

16.

In 1999, the Commission received a complaint filed jointly by Alliance Atlantis Broadcasting, CHUM, Craig Broadcast Systems Inc. and Salter Street Films Limited. They asked the Commission to order MOVIEPIX to stop marketing or accepting distribution of its service on unscrambled high penetration tiers of broadcasting distribution undertakings.

17.

In a letter decision dated 2 March 2000, the Commission rejected Astral’s interpretation that MOVIEPIX's licensing decision allows distribution on high-penetration unencrypted tiers and required that Astral neither market nor permit MOVIEPIX to be distributed in this manner. The Commission indicated that it would address the issue further as part of MOVIEPIX's licence renewal. It would not, for the time being, require cable licensees already distributing MOVIEPIX on an unencrypted basis to cease doing so.

18.

In its licence renewal application, Astral asked the Commission to allow MOVIEPIX's current distribution arrangements to continue. Astral argued that MOVIEPIX is an integral component of the third tier of services offered by the cable systems presently carrying the service unscrambled. According to Astral, removing MOVIEPIX from this tier would have a negative impact on the remaining Canadian services, including recently licensed specialty services. Astral affirmed that it would not extend distribution of MOVIEPIX on unencrypted analog tiers beyond the"current number of systems" that carry it on this basis.

19.

Mountain Cablevision Ltd., Cocego Cable Inc. and Regional Cablesystems Inc., (cable licensees presently carrying MOVIEPIX on unencrypted analog tiers) submitted interventions supporting its continued distribution in this manner.

20.

For its part, CHUM expressed concern that MOVIEPIX could allow the service to be distributed on unscrambled analog tiers of cable undertakings later acquired by, or amalgamated with the systems that presently carry it on unencrypted tiers. The intervener asked the Commission to direct Astral not to market or permit MOVIEPIX to be distributed on unencrypted analog tiers of Class 1 broadcasting distribution undertakings, except for the systems actually doing so before 2 March 2000.

21.

Astral responded that CHUM's proposed direction does not accurately reflect MOVIEPIX's current distribution arrangements. In 1998, before submission of the complaint, the licensee concluded agreements with Regional Cablesystems Inc. to implement carriage of MOVIEPIX, on an unencrypted basis, on cable systems serving Sudbury and Timmins. MOVIEPIX's launch on these systems was delayed until 31 March 2000. For this reason, Astral proposed that the direction state "on or before 31 March 2000", rather than "prior to 2 March 2000".

22.

Having considered the matter, the Commission has determined that it is appropriate to impose the condition of licence proposed by Astral requiring that the licensee not market or permit MOVIEPIX to be distributed on unencrypted analog tiers by any Class 1 broadcasting distribution undertaking, with the exception of the specific systems that were actually distributing the service on unencrypted analog tiers, on or before 31 March 2000. A condition of licence to this effect is set out in the appendix to this decision.

Other matters

Employment equity

23.

The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996, and therefore files reports concerning employment equity with Human Resources Development Canada.

Service to the hearing impaired

24.

In its original licensing application, the licensee made commitments to ensure that all Canadian films distributed on its service are closed-captioned and to acquire the captioned version of non-Canadian movies, whenever available. The licensee also committed to spend a minimum of $95,000 on closed captioning of Canadian films in the first year of operation, rising to $104,000 in the fifth year.

25.

All of the Canadian films broadcast on MOVIEPIX during the current licence term were closed-captioned. Since they were captioned in-house, Astral's expenditures in this area were less than previously anticipated.

26.

Astral made a commitment as part of its licence renewal application to caption all non-Canadian films before the end of the new licence term.

Interventions

27.

The Commission acknowledges the interventions submitted concerning this application and has considered all of them in reaching its decision.

Related CRTC documents

• Letter dated 2 March 2000 - Re: Complaint concerning the marketing and distribution of MOVIEPIX and MOVIEMAX on high penetration unencrypted tiers
• Decision 98-99 – Licence amendment allowing the distribution of MOVIEPIX to various localities in the Northwest Territories
• Decision 95-739 – Licence amendment allowing the distribution of MOVIEPIX to Iqaluit
• Decision 94-278 – Approval of new pay television services
Secretary General
This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca

Appendix to Decision CRTC 2000-370

Conditions of licence for MOVIEPIX

Nature of service

1. The licensee shall provide a regional, English-language general interest pay television programming service in Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland.

The licensee may also provide its programming service to Iqaluit, Igloolik, Hall Beach, Pond Inlet, Arctic Bay, Resolute Bay and Grise Fiord, Northwest Territories. The authorization for the provision of service to these communities will cease when and if the satellite transponder configuration or the technology is adjusted to facilitate adequate signal reception of the MOVIEMAX service provided by MovieMax! Ltd.

2. The service shall consist of:

  • theatrical feature films (subcategory 7 (d) Appendix I to Public Notice CRTC 1999-205 as amended from time to time and approved by the Commission) copyrighted at least five years prior to the broadcast year in which they are distributed by the Service and which, in respect of the non-Canadian titles, are predominantly mainstream theatrically released feature films that were listed within the top 100 films of Variety Magazine's annual list of top grossing films in the United States and Canada;
  • made-for-television feature films (subcategory 7(c)) copyrighted at least five years prior to the broadcast year in which they are distributed by the Service; and
  • filler programming (Category 15) and other programs that are feature-film-related and intended to set in context the feature film or films they accompany in the schedule.

Other programming shall be limited to programs that are feature-film-related and intended to set in context the feature film or films they accompany in the schedule.

Exhibition of Canadian programs

3. The licensee shall devote to the exhibition of Canadian programming not less than:

a) 20% of the time from 6:00 p.m. to 11:00 p.m. (Eastern Time), and

b) 20% of the remainder of the time during which the service is in operation.

Expenditures on Canadian programming

4. The licensee shall expend on the acquisition or investment in Canadian programs, between 22% and 30% of its revenues for the previous broadcast year, based on the average number of subscribers in the previous broadcast year according to the following table:

Subscribers Percentage of revenues to be devoted to Canadian programming expenditures
699,000 or less 22.0%
700,000 – 799,999 22.5%
800,000 – 899,999 23.0%
900,000 – 999,999 23.5%
1,000,000 – 1,099,999 24.0%
1,100,000 – 1,199,999 24.5%
1,200,000 – 1,299,999 25.0%
1,300,000 – 1,399,999 25.5%
1,400,000 – 1,499,999 26.0%
1,500,000 – 1,599,999 26.5%
1,600,000 – 1,699,999 27.0%
1,700,000 – 1,799,999 27.5%
1,800,000 – 1,899,999 28.0%
1,900,000 – 1,999,999 28.5%
2,000,000 – 2,099,999 29.0%
2,100,000 – 2,199,999 29.5%
2,200,000 and greater 30.0%

5. The licensee may include over the licence term a maximum of $500,000 of its expenditures devoted to the preservation and restoration of Canadian films in its calculation of expenditures on acquisition of Canadian programming.

Carriage on unencrypted high penetration tiers

6. The licensee shall not market or permit MOVIEPIX to be distributed on unencrypted analog tiers of any Class 1 broadcasting distribution undertaking, with the exception of the specific systems operated by Mountain Cablevision Limited, Cogeco Cable Inc. and Regional Cablesystems Inc., and such other systems as they were configured and actually distributing MOVIEPIX on unencrypted analog tiers, on or before 31 March 2000.

Industry codes

7. 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.

8. 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.

Definitions

In these conditions:
  • broadcast year means the period from 1 September to 31 August and each twelve-month period thereafter beginning 1 September.
  • expend means actual cash outlay.
  • expend on acquisition means:
  • expend to acquire exhibition rights for the licensed territory, excluding overhead costs;
  • expend on script and concept development, excluding overhead costs;
  • expend on the production of filler programming, as defined in section 2 of the Pay Television Regulations, 1990, including direct overhead costs; or
  • expend on restoration and conservation of Canadian films; and
  • expenditure on acquisition has a comparable meaning.
  • expend on investment means expend for the purposes of an equity investment or an advance on account of an equity investment, but not overhead costs or interim financing by way of a loan; and expenditure on investment has a comparable meaning.
  • revenue means revenue from residential, bulk, SMATV and direct-to-home (DTH) satellite subscribers and any return on investments in programming.
  • semester means each six-month period beginning in September and March.
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