ARCHIVED - Decision CRTC 2001-152

Decision CRTC 2001-152

Ottawa, 28 February 2001

Life Network Inc.
Across Canada 2000-0021-6,
2000-1378-0

Applications processed by Public Notices
CRTC 2000-69 dated 26 May 2000 
and 2000-137 dated 28 September 2000

Life Network

The licence for the specialty television service "Life Network" is renewed for a full term, with minor amendments. A proposal to decrease the amount the licensee spends on Canadian programming is denied.

The Commission renews the broadcasting licence issued to Life Network Inc. (Life) for the national English-language specialty television service known as "Life Network" from 1 March 2001 to 31 August 2007, subject to the conditions specified in this decision and in the licence to be issued.

The Commission notes that, during the current licence term, Life Network has complied with all conditions of its licence.

As part of its application, the licensee proposed three amendments to its licence. It requested Commission approval of the addition of Category 9 - Variety to the list of program categories that describes the programming to be offered by the service. Life also proposed to decrease its expenditures on Canadian programming, from 71% to 60% of the previous year's gross revenues. Finally, the licensee requested flexibility to acquire programming from its shareholder or its affiliates.

The addition of variety programs

As noted above, Life proposed to add a new program category to its nature of service condition, which would allow it to program material from the content category "Variety". Variety programs consist of more than 50% individual acts or performances of mixed character. The licensee stated that the addition of variety programs would be "a means by which to add both flexibility and diversity to (its) program offerings." Life suggested that the new type of program would include variety specials for Canada Day, New Year's Eve, Labour Day and other festive holidays. They might also include programs that would complement other scheduled programming. Life stated that it anticipated that variety programming would be "a small part of the schedule".

An intervention from Global Television Network (Global) expressed opposition to this proposal. Global noted that the proposed change would be significant, and argued that the licensee had not presented a compelling argument for the change. It further noted that the absence of variety programming was specifically noted in the original licensing decision for Life Network (Decision CRTC 94-279).

In response to the intervention, Life reiterated that the proposed change is minor, and referenced the Commission's Television Policy Framework which provided conventional broadcasters greater flexibility by expanding the definition of priority programming to include programs from the variety category.

In view of the fact that the licensee has proposed to use variety programming as only a small part of the schedule of Life Network, the Commission has approved the addition of Category 9 - Variety, to a maximum of 100 hours per year of such programming. The changes are set out in conditions of licence, found in the appendix to this decision.

Proposed decrease in Canadian programming expenditures

During the current licence term, the licensee was required, by condition of licence, to spend specific amounts on Canadian programming expenditures (CPE). The condition specified a base amount for the second year of the licence term, and two increases during the term. By the final year of the current term, the condition required Life to spend 71% of the previous year's gross revenues on the acquisition of and/or investment in Canadian programs for Life Network.

As noted above, the licensee proposed that for the new licence term, the percentage of gross revenues to be spent on Canadian programming should be decreased. Life proposed that 60% would be a more appropriate rate. The licensee stated that the current requirement of 71% is forcing it to spend more on Canadian programming than is necessary to meet its annual Canadian exhibition requirement. Life stated that, to meet its CPE requirement, it had to commission more hours of programming than its schedule could exhibit in a meaningful way. The licensee stated that "hours were often played fewer times than required to gain recognition and an audience".

Life is of the opinion that an expenditure rate of 60% of the previous year's gross revenues would still be one of the highest among all Canadian specialty services, and would allow the service to meet all of its conditions of licence and "to maintain a Canadian programming schedule of the highest quality." It argued further that a 60% CPE would have no negative effect on the operations or activities of Life Network. It noted that, with the extremely high Canadian content commitment of 82.5%, the projected reduction would result in a very small reduction of actual programming produced.

Interventions in opposition to the proposal were submitted by the Canadian Film and Television Production Association (CFTPA) and CHUM Limited.

In its intervention, the CFTPA expressed concern with the proposed decrease, and requested that the Commission require Life to maintain its CPE at previous levels.

In response to the CFTPA intervention, Life noted that, although it proposes to reduce the percentage of gross revenues spent on Canadian programming, the actual dollar value of the commitment would, in fact, increase over the term of licence, because Life Network's revenues are expected to increase.

CHUM Limited also opposed the amendment. It considers that Life committed to a 71% expenditure level in the context of a competitive hearing, and is projecting ongoing increases in advertising revenue, making any decrease inappropriate as well as unnecessary.

In response to the CHUM intervention, Life stated that structural changes to the industry since 1994 constitute a "fundamental change in circumstances", and that the proposed change would have no significant competitive impact, since Life Network's Canadian content commitment would remain the same, and a CPE requirement of 60% would still be very high, in comparison to most other English-language specialty services.

The Commission has considered the views of the licensee and of the interveners, and concludes that the licensee has not presented a compelling argument for a reduction in its Canadian programming expenditures.

The Commission is of the opinion that the high CPE and Canadian content levels originally committed to by the licensee remain consistent with and appropriate to Life Network's nature of service. Further, the Commission has examined the most current financial information available, and is satisfied that a CPE rate of 71% will not result in any undue negative financial impact on Life. For these reasons, the Commission denies the proposal to reduce the Canadian programming expenditures for Life Network. A condition of licence requiring that the licensee spend 71% of the previous year's gross revenues each year on Canadian programs is set out in the appendix to this decision.

Acquisition of programming from affiliates

The original licence to operate Life Network was granted in Decision CRTC 94-279. In that decision, the Commission noted a number of commitments made by the licensee to protect the position of independent producers. Included in these commitments was an undertaking that the service would not distribute programs produced by Atlantis Television Ventures Inc. (Atlantis), which was the original majority owner of the service. That commitment was reiterated in Decision CRTC 99-106, which approved applications by Alliance Atlantis Communications Inc. that resulted in Alliance Atlantis owning and controlling Life, as well as three other specialty services.

As part of the renewal application, Life proposed a revised commitment that, it stated, would ensure access to Life Network for independent producers, but which would also allow Life flexibility to use some programming produced by its affiliates or its affiliated production company. The licensee proposed that no more than 25% of all Canadian programming would be produced in-house or by broadcaster-owned producers affiliated to Life Network.

A number of interventions were submitted in opposition to, or expressing concerns with, the proposal. CHUM Limited stated that the proposed change would constitute a fundamental change to the conditions central to the licensing of Life Network. Global Television did not object in principle, but noted that other specialty services have been subject to conditions of licence that placed limits on self-produced or affiliate-produced programming.

In response to the concerns raised, Life stressed the dramatic changes in the filmed entertainment business, especially the growing consolidation and vertical integration of the industry. The licensee expressed the opinion that these changes will escalate, and that they represent a "fundamental change in circumstances".

Further, Life expressed its contention that the proposed 25% limit on the acquisition of programs from affiliates is "an adequate guarantee of significant access to Life Network for independent producers from every region".

The Commission has traditionally considered that participation by program producers in the ownership structure of programming undertakings raises concerns related to program supply and the potential for "gate-keeping" vis-à-vis other producers.

To allay these concerns, Life proposed to abide by a condition of licence requiring that 75% of all Canadian programming on Life Network be produced using independent producers. Such a condition would be intended to reduce the potential for gate-keeping, so long as the meaning of an independent producer is clear.

In light of the licensee's stated commitment to independent production, the Commission approves the amendment, by majority vote. In the appendix to this decision, a condition of licence is set out which requires a 75% level of independent production, and specifies that only those production companies of which Alliance Atlantis owns or controls, directly or indirectly, less than 30% of the equity will be considered independent producers.

In granting this flexibility to Life Network, the Commission expects that it will not undermine the licensee's responsibility to support Canadian independent producers nor Life Network's requirement to provide access to its specialty service for independent producers. The Commission further expects that Life Network will treat all Canadian producers and distributors equally and there will be no preference given to Alliance Atlantis in regard to the purchase of programs that are produced and/or distributed by that company or its affiliates. This approach is consistent with that taken in the case of Food Network Canada, also owned by Alliance Atlantis.

Other matters

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 CRTC 1992-59). The Commission notes the licensee's statement that it will develop a comprehensive Employment Equity plan, based on the practices adopted and enforced by Alliance Atlantis.

Cultural diversity

The licensee has stated that it will ensure that Life Network's programming is truly reflective of and relevant to its Canadian audience. The Commission notes the licensee's statement in this regard:

.all the original programming that has been produced for Life Network over the current licence term has been clearly Canadian in its focus, theme, perspective, attitude and context. The way Canadians choose to live their lives is, in many ways, the result of our unique cultural diversity, geography, climate and population density. With sensitivity to these factors, Life Network's programming has reflected those distinctly Canadian lifestyle choices back to its viewers.

In Public Notice CRTC 1999-97 entitled Building on success - A policy framework for Canadian television, the Commission expressed its confidence that the Canadian broadcasting system could "better reflect the presence of minority groups in Canadian society, and.portray them accurately and fairly." The Commission encourages the licensee to recognize, respect and actively promote diversity.

Script and concept development

The licensee stated that, over the current licence term, it has spent an average of $185,000 per year on script and concept development. The Commission notes the licensee's commitment to maintain an average annual expenditure of $200,000 for such initiatives, during the new licence term.

Service to the hearing-impaired

In the original licensing decision, the Commission noted the licensee's commitment to spend 1% of its annual gross revenues on closed captioning of original Canadian programs. In its renewal application, Life stated:

The Commission notes the licensee's commitment, and requires the licensee to caption 90% of all programming during the broadcast day, by the end of the licence term. The Commission expects that the increase to the 90% level will be achieved in an incremental manner over the entire licence term.

Revised program categories

Following additions and alterations to program category definitions set out in Public Notice CRTC 1999-205, the licensee filed an application to amend its condition of licence 1(a). The Commission has approved the changes as set out in Public Notice CRTC 2000-137. These changes do not reflect any significant alteration to Life Network's existing nature of service.

Interventions

In addition to the interventions discussed above, the Commission acknowledges and has considered all of the interventions submitted in support of this application.

Related CRTC documents

• Decision 2000-159 - Six-month administrative renewal for Life Network

• Decision 99-506 - Flexibility to broadcast infomercials for specialty services

• Decision 99-106 - Alliance Atlantis Communications Inc. granted authority for changes of ownership and control of Life Network Inc., among others

• Decision 94-279 - YOU: Your Channel - Approved

• Public Notice 1999-205 - Definitions for new types of priority programs; revisions to the definitions of television content categories; definitions of Canadian dramatic programs that will qualify for time credits towards priority programming requirements.

• Public Notice 1994-59 - Introductory statement - Licensing of new specialty and pay television services

. Public Notice 1992-59 -Implementation of an employment equity policy

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 2001-152

Conditions of licence for Life Network

1. (a) Life Network shall offer a national English-language lifestyle specialty programming undertaking consisting primarily of useful, reliable and entertaining information and documentary programming. 100% of the programming provided by the licensee shall be drawn from the following categories, as set out in Schedule I to the Specialty Services Regulations, 1990:

Category 2 (a) - Analysis and Interpretation,

Category 2(b) - Long-form documentary,

Category 5(b) - Informal education/recreation and leisure,

Category 9 - Variety,

Category 11 - General entertainment and human interest,

Category 12 - Interstitials,

Category 13 - Public service announcements, and

Category 14 - Infomercials, promotional and corporate videos.

(b) The licensee shall devote no more than 100 hours in each broadcast year to the broadcast of material drawn from Category 9 - Variety.

2. A minimum of 75% of all Canadian programs broadcast by the licensee shall be produced by independent production companies. For the purpose of this condition an "independent production company" is defined as a production company of which Alliance Atlantis Communications Inc. owns or controls, directly or indirectly, less than 30% of the equity.

3. The licensee shall devote not less than 82.5% of the broadcast year and not less than 82.5% of the evening broadcast period to the distribution of Canadian programs.

4. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1992-28, 1993-93 and 1993-174, except as amended below:

(a) In each broadcast year, the licensee shall expend on Canadian programs not less than 71% of the previous broadcast year's gross revenues;

(b) In each broadcast year excluding the final year, the licensee may expend an amount on Canadian programs that is up to five percent (5%) less than the minimum required expenditure for that year set out in or calculated in accordance with this condition; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;

(c) In each broadcast year of the licence term, where the licensee expends an amount on Canadian programs that is greater than the minimum required expenditure for that year set out in or calculated in accordance with this condition, the licensee may deduct:

(i) from the minimum required expenditure for the next year of the licence term, an amount not exceeding the amount of the previous year's overexpenditure; and

(ii) from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under paragraph (i) above.

(d) Notwithstanding paragraphs (b) and (c) above, during the licence term, the licensee shall expend on Canadian programs, at a minimum, the total of the minimum required expenditures set out in or calculated in accordance with the licensee's condition of licence.

5. (a) Subject to subsection (b) and (d), the licensee shall not distribute more than twelve minutes of advertising material during each clock hour.

(b) The licensee shall not distribute any paid advertising material other than paid national advertising.

(c) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.

(d) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may broadcast partisan political advertising during an election period.

6. The licensee shall charge each exhibitor of this service a maximum wholesale rate of $0.33 per subscriber per month, where the service is carried as part of the basic service.

7. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) Sex-role portrayal code for television and radio programming, as amended from time to time and approved by the Commission.

8. The licensee shall adhere to the provisions of the Broadcast code for advertising to children, published by the CAB, as amended from time to time and approved by the Commission.

9. The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the CAB's Voluntary code regarding violence in television programming, as amended from time to time and approved by the Commission.

For the purpose of these conditions, the terms "broadcast day", "broadcast month", "broadcast year," "clock hour" and "evening broadcast period" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987; and "paid national advertising" shall mean advertising that is purchased at a national rate and receives national distribution on the service.