ARCHIVED - Decision CRTC 2000-462

Connect - 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 "Connect". The Commission noted at that time that reasons, terms and conditions of the new licence would follow at a later date.

Connect will provide a service with programming targeted primarily to teens aged 12-17, as well as to young persons between 18 and 24. As noted in Public Notice CRTC 2000-171 issued today, Connect 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.

Connect will bring added diversity to the Canadian broadcasting system with a service targeted to a currently underserved group. According to the licensee, the audience for Connect is too old for most children's programming, and not generally well served by the programming aimed at adults. In Public Notice 2000-171, the Commission discusses the general criteria for the approval of this and other applications for new specialty services.

The licensee of Connect will be a company to be incorporated to be known as Connect TV Inc. It will be owned by Craig Specialty Inc. (a company to be incorporated) which, in turn will be owned by Craig Broadcast Systems Inc. (Craig), and TD Capital Group Ltd. Craig has radio and television interests in Manitoba and Alberta, and is the owner of wireless distribution undertakings in Manitoba and British Columbia.

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

Connect stated that it will offer a safe haven from which teens can explore the world, without undue exposure to violence, racism or sex role stereotyping. A Code of Ethics developed for the new service sets out the intention to offer well paced, high energy entertainment and information programming, that will not promote stereotypes, contain excessive violence, gratuitous sex or profanity. It will not reinforce cultural, ethnic, linguistic or gender biases, trivialize issues of importance to teens, or employ shock value to frighten or scandalize audiences. With the participation of the Connect Council, the licensee will establish ground rules that will serve as the guiding principles for Connect's programming.

Contributions to diversity

The primary market for Connect is teens, aged 12-17, with a secondary market in the 18-24 age group. Connect stated that it will not be directly competitive with any existing television services in Canada because there is a lack of teen-directed programming in Canada, and no service currently focuses on the teen age group. Connect plans an "alternative" channel that places youth at the forefront of program creation and feedback. Regional, ethnic and programming diversity will be brought to the Canadian broadcasting system through the creation of the Connect Council. Connect will acquire program rights from Aboriginal producers and has made a commitment to include First Nation teenagers when developing digital technology internship programs. Connect will also allocate specific funds as they become available, for Aboriginal teens to receive training grants and bursaries for advanced education related to broadcasting and new media production. All programming on the new service will reflect the ethnic diversity of Canada and introduce positive role models from a range of ethnic and cultural groups.

Canadian content

The licensee made a commitment to broadcast a minimum of 50% Canadian content from 6 a.m. to midnight, in each of the first two years of the licence term, increasing gradually over the term to a maximum of 60% in the final year of the term. A minimum of 50% Canadian content will be featured from 6 p.m. to midnight, throughout the licence term. Conditions of licence related to these commitments are set out in the appendix to this decision.

Following discussions at the hearing, the licensee further committed to broadcast a minimum of 580 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, the licensee will expend a yearly minimum of 43% of its gross advertising, infomercial and subscription revenues on Canadian programming for broadcast on Connect. The licensee estimates that, in accordance with this formula, it will spend over $29 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 licensee estimates that at least $16.8 million will be spent over the licence term, to acquire Canadian programming from independent producers. Connect estimates that it will direct $5 million to create a "Connect Priority Program" fund, through which it will "green-light" new Canadian productions, and will also spend $800,000 over the licence term to develop new program concepts, interactive multimedia projects and support skills training for young Canadians interested in pursuing careers in digital broadcasting and new media. 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 initial plans for interactivity related to Connect will focus on a web-based portal service for Canadian teens, so that they may access innovative and interesting teen content in a safe online environment. The website will encourage, promote and showcase Canadian content for teens. The content will provide information and entertainment related services for teen viewers and Internet users. The website will include presentations on upcoming events, contests and material that will relate to and enhance the programming content on Connect. As noted above, the licensee plans to distribute 1,000 web cameras free of charge to teens across Canada, to encourage viewer participation and feedback through both the television service and the Internet website. The website will also be used to encourage members of the community such as teachers, doctors, psychologists and parents, to comment on and participate in both the website and the television service.

As technology permits, Connect plans to phase in true television interactivity for Connect. Craig is establishing a new, wholly-owned subsidiary to be called Craig New Media (CNM), to develop e-business initiatives for the Craig group of companies. It will eventually create a forum for the testing of interactive television content, and work with advertisers to create interactive advertising for the teen audience.

Ownership and synergies

The licensee of the new service will be a company to be incorporated under the name of Connect TV Inc. Connect TV Inc. will be owned by Craig Specialty Inc. (a company to be incorporated) (100%), which will in turn be owned by Craig Broadcast Systems Inc. (Craig) (66.7%) and TD Capital Group Ltd. (33.3%). Craig owns radio and television services in Manitoba and Alberta, and wireless cable distribution undertakings in Manitoba and British Columbia. Craig will provide consulting and management services to Connect.

The new service will benefit from synergies as a result of its relationship with Craig. Connect's technical operating will be integrated into one of Craig's existing A-Channel digital facilities. The new service will have access to Craig's marketing and promotional expertise, as well as its radio and television holdings, to build interest in digital services in general and Connect in particular. The service will also benefit from its relationship with Skycable, a fully digital distribution system.

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 Shareholders' Agreement, management agreement or any other pertinent agreement, for review and approval by the Commission.

Other matters

Rate

The licensee proposed a monthly wholesale rate of $0.30 per subscriber over the entire licence term, and a two-month free trial period in the first year of operation.

Service to the hearing-impaired

The licensee will install a TTY (teletypewriter) for the convenience of viewers with hearing impairment, and has made a commitment to ensure that at least 60% of all programming in the first year of the licence term will be closed captioned. That commitment will increase by 5% each year, until, in the seventh year of the licence term, at least 90% of all programming on Connect will be captioned. The Commission notes the licensee's commitments, and expects the licensee to fulfil them.

Service to the visually-impaired

With respect to descriptive video service (DVS), the licensee is committed to working with the National Broadcast Reading Service Inc. and others, to seek the development of industry-wide co-operative solutions to the concerns of blind or vision-restricted Canadians.

The Commission requires Connect 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 notes that this licensee will be subject to the Employment Equity Act that came into effect on 24 October 1996 and therefore will file reports concerning employment equity with Human Resources Development Canada.

Conclusion

The licensing of Connect will add to the diversity of programming and of ownership in the Canadian broadcasting system. Craig's experience in both digital distribution and conventional program production and broadcasting will ensure the stability and success of the new service, and the comprehensive nature of the licensee's Code of Ethics will ensure that Connect's programming will be suitable for an impressionable age group. The age group targeted by this application is the first group of children to grow up "online", and the addition of a television service devoted to the needs and interests of this group will promote the rollout of digital 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 2000-462

The licence for the national English-language programming undertaking (specialty television service) known as Connect 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:

News

Animated television programs and films

Analysis and interpretation

Programs of comedy sketches, improvisation, unscripted works, stand-up comedy

Long-form documentary

Other drama

Reporting and actualities

Music and dance other than music video programs or clips

Religion

Music video clips

Formal education and pre-school

Music video programs

Informal education/recreation and leisure

Variety

Professional sports

Game shows

Amateur sports

General entertainment and human interest

Ongoing dramatic series

Interstitials

Ongoing comedy series (sitcoms)

Public service announcements

Theatrical feature films aired on TV

• Not less than 15% of all programming broadcast during each broadcast week shall be devoted to material drawn from category 5b.

• No more than 10% of all programming broadcast during each broadcast week shall be devoted to material drawn from category 8b.

• No more than 15% of all programming broadcast during each broadcast week shall be devoted to material drawn from category 7e.

• No more than 15% of all programming broadcast during each broadcast week and no more than 15% of the evening broadcast period shall be devoted to material drawn from category 7d.

• No more than 10% of all programming broadcast during each broadcast week shall be devoted to material drawn from categories 6a and 6b.

• Not less than 75% of all programming shall be directed to youth aged 12-17 and no more than 25% of all programming shall be directed to the age group 18-24.
  

Exhibition of Canadian programs

Broadcast day

Evening broadcast period

50%

50%

50%

50%

52%

50%

54%

50%

56%

50%

58%

50%

60%

50%

Expenditures on Canadian programs

Definition

The term "broadcast day" be defined as a 24 hour period beginning at 6:00 a.m. each day.