ARCHIVED - Decision CRTC 2000-459

The Independent Film Channel Canada - a new specialty channel

On 24 November 2000, the Commission made a decision to issue a licence for a new national English-language Category 1 specialty television service to be called "The Independent Film Channel Canada" (IFCC). The Commission noted at that time that reasons, terms and conditions of the new licence would follow at a later date.

IFCC will offer a service dedicated to independent films, the film-making process and the world of film-makers. As noted in Public Notice CRTC 2000-171 issued today, the IFCC and 20 other new digital specialty services will be made available to subscribers by all distributors who offer programming to the public using digital technology and by some cable operators who serve smaller markets using analog technology. The licence, when issued, will expire 31 August 2007.

IFCC will bring unique programming and a new choice to the Canadian broadcasting system. It will make a significant contribution to the building of a vibrant Canadian independent film industry, and add diversity to the system as a whole by adding the first specialty service based in Atlantic Canada. In Public Notice 2000-171, the Commission discusses the general criteria for the approval of this and other applications for new specialty services.

IFCC will be almost entirely owned by Salter Street Films Limited, an established company with experience in producing high-quality, popular Canadian television programs. Salter Street is based in Atlantic Canada.

Terms and conditions of licence common to all of the new Category 1 specialty services are set out in an appendix to Public Notice 2000-171. Conditions specific to this application can be found in the appendix to this decision.

Programming

Nature of service

The IFCC stated that its programming proposals will be attractive and in great demand for those considering buying new digital services, thereby assisting the rollout of digital technology. It is evident that the IFCC concept is unique to the Canadian environment and will be attractive to advertisers as well as audiences. The IFCC will exhibit all films without commercial interruption, and seek instead sponsorship arrangements.

Contributions to diversity

There is currently no specialty television service in Canada dedicated to independent films and the process of making such films. The programming to be broadcast by the IFCC is currently under-represented in the system, although some services provide a limited amount of such films. The addition to the Canadian broadcasting landscape of a specialty service operating out of Atlantic Canada will also result in additional diversity available to Canadian television audiences.

Canadian content

The licensee made a commitment to broadcast, from 6 a.m. to midnight, a minimum of 40% Canadian content in the first two years of the licence term, 45% in the third, 50% in the fourth, 55% in the fifth, and 60% in both the sixth and seventh years of the licence term.

The IFCC will broadcast in prime time, from 6:00 p.m to midnight, a minimum of 40% Canadian content in the first three years of the licence term, 45% in the next three years, and 50% in the seventh year of the licence term. A condition of licence specifying the levels of Canadian content required each year is set out in the appendix to this decision.

The licensee further committed to broadcast at least 7 new, original Canadian programs in the first year of operation. Beginning in the third year of the licence term, IFCC will offer between 5 and 10 new feature-length Canadian films and between 10 and 20 short Canadian films each year. These commitments represent at least 120 hours of original Canadian programming in each year of the licence term.

Canadian programming expenditures

Beginning in the year following the first year of operation, IFCC will expend a yearly minimum of 37% of its gross advertising, infomercial and subscription revenues on Canadian programming for broadcast on the new service. The licensee estimates that, in accordance with this formula, it will spend over $17 million over the licence term, to acquire or produce Canadian programs. A formula for the calculation of the amounts required is set out in a condition of licence, found in the appendix to this decision.

Independent production

The IFCC will support independent producers by devoting at least 50% of its annual budget for acquired Canadian programming to such producers. All copyrights for acquired programming will remain with the independent producer. To protect this policy, Salter Street has proposed comprehensive safeguards to ensure equitable access to IFCC by independent producers. A "Fairness Access Committee", composed of two representatives of independent producers and one of Salter Street, will deal with any complaints. The Commission notes the licensee's commitments, and as set out in Public Notice 2000-171, all Category 1 services will be subject to a standard condition of licence in this regard.

Interactivity

The licensee's initial plans for interactivity are web-based. It envisions a community of independent film makers and film enthusiasts, part handbook, film makers' co-op, resource centre and promotional opportunity. The IFCC's website will link the film making community in a comprehensive and strategic way, with features that include:

• Information on both domestic and international financing,

• Information for emerging film makers,

• A catalogue of film releases,

• Information on short film and hand-held productions,

• "Pitch Me" — a section to present ideas for new films, and

• The do's and don'ts of deals.

The licensee's plans indicate that the website will be highly informative, intended to provide further information on a variety of topics, to new film makers. It will include links, glossaries, lists of useful organizations and publications, and a database of Canadian independent films. The interactive features of the website such as chat rooms and bulletin boards will encourage dialogue between new film makers, TV viewers and industry professionals. These features will create opportunities for the audience to make suggestions related to program topics and the overall focus of the channel.

Salter Street has been active in developing interactivity. It has established a separate operating unit focused on the creation and provision of new media content. As technology evolves, the IFCC will be well-positioned to move from web-based interactivity to true television interactivity accessed via set-top boxes.

Ownership and synergies

Filing requirements

This authority will only be effective and the Commission will only issue the licence when the applicant has clearly demonstrated that it is a "qualified corporation" as defined in the Direction to the CRTC (Ineligibility of non-Canadians) and is eligible to hold a licence. Consequently, the applicant is required to file all relative incorporation documents (certificate and articles, by-laws, etc.), copies of the programming supply agreement; unanimous Shareholders' Agreement, management agreement or any other pertinent agreement, for review and approval by the Commission.

Other matters

Rate

In its business plan, the licensee proposed an initial monthly wholesale rate of $0.37 per subscriber, decreasing throughout the licence term, to $0.35.

Service to the hearing-impaired

With respect to plans for service to the hearing-impaired, the licensee committed to install a TTY (teletypewriter), and to ensure that 50% of the programming on the IFCC will be closed captioned in the first year of operation. That level will increase gradually, and following the fifth year of the licence term, 90% of the programming will be closed captioned. The Commission notes these commitments, and expects the licensee to fulfil them.

Service to the visually-impaired

With respect to descriptive video service (DVS), the licensee indicated that it will work in conjunction with other broadcasters and the National Broadcast Reading Service to effect the implementation of more audio descriptions of programming. In particular, in negotiating acquisition arrangements, IFCC will request that all programming be audio-captioned.

The Commission requires the IFCC to be technically equipped to deliver described video programming and to fulfil the commitments included in the application. In addition, the Commission encourages the licensee to provide audio description of visual information wherever possible, and to provide described video programming as outlined in Public Notice 2000-171.

Employment equity

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 (Public Notice 1992-59).

Conclusion

The approval of this application brings a strong and experienced voice from Atlantic Canada to further enhance the ownership diversity in the Canadian specialty service landscape, and will provide an important new venue for the work of young and emerging Canadian film makers as well as more established film makers.

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 2000-459

The licence for the national English-language programming undertaking (specialty television service) known as The Independent Film Channel Canada will be subject to the following conditions, as well as those set out both in Public Notice CRTC 2000-171, and in the licence to be issued.

Nature of service

2. The programming must be drawn exclusively from the following categories, as set out in Schedule I to the Specialty Services Regulations, 1990:

Analysis and interpretation

Theatrical feature films aired on TV

Long-form documentary

Animated television programs and films

Formal education and pre-school

Other drama

Informal education/recreation and leisure

Interstitials

Specials, mini-series, made-for-TV feature films

Public service announcements

Infomercials, promotional and corporate videos

• No more than 25% of all programming broadcast during each broadcast week shall be drawn from category 2b.

• No more than 60% of all programming broadcast during each broadcast week shall be drawn from category 7d.

• All material drawn from category 7d shall be independent films, and shall be broadcast only after their pay television broadcast window has ended.

• No more than 5% of all films broadcast shall be produced, financed or distributed from a major Hollywood studio.

• No more than 10% of all foreign programming shall be supplied by the U.S.-based Independent Film Channel.

Exhibition of Canadian programs

Broadcast day

Evening broadcast period

40%

40%

40%

40%

45%

40%

50%

45%

55%

45%

60%

45%

60%

50%

Expenditures on Canadian programs

Definitions

The term "broadcast day" shall have the same meaning as that set out in the Television Broadcasting Regulations, 1987.

The term "major Hollywood studio" shall be described as including Warner Brothers, 20^th Century Fox, MGM, Columbia, Tri-Star, Paramount, Disney and Dreamworks.