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ARCHIVED - Decision CRTC 2001-288

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Decision CRTC 2001-288

 

Ottawa, 28 May 2001

 

Canadian Satellite Communications Inc.
Across Canada 2000-0644-6

 

Star Choice Television Network Incorporated
Across Canada 2000-0672-7

 

Applications processed by
Public Notice CRTC 2000-176
dated 21 December 2000

 

Short-term licence renewals for the satellite relay distribution undertakings operated by Cancom and Star Choice

 

The Commission renews the licences issued to Cancom and Star Choice, to carry on national SRDUs, for a short term of licence. The short term is in response to the Commission's findings that conditions of licence have been breached.

1. 9;

The Commission renews the licences for the national satellite relay distribution undertakings (SRDUs) operated by Canadian Satellite Communications Inc. (Cancom) and Star Choice Television Network Inc. (Star Choice), from 1 June 2001 to 31 August 2003. The licences are subject to the conditions specified in this decision and in the licences to be issued.

2. 9;

As part of this proceeding, the licensees had requested licence terms expiring on 31 August 2005, to coincide with the expiry date of the licence for a national SRDU currently issued to Bell ExpressVu Limited Partnership. However, in light of the Commission's serious concerns regarding non-compliance discussed below, it has renewed the Cancom and Star Choice licences for a term of just over two years.

3. 9;

Cancom and Star Choice operate SRDUs that deliver programming services to terrestrial broadcasting distribution undertakings. Cancom holds indirect ownership of 100% of Star Choice. Cancom, in turn, is a wholly owned subsidiary of Shaw Communications Inc. (Shaw). Shaw is also the owner of numerous cable distribution undertakings across Canada.

4. 9;

In this decision, the Commission sets out its determination that conditions of licence have been breached with respect to the maintenance of structural separation between these two SRDU licensees, on the one hand, and Shaw, their owner, on the other.

 

Structural separation

5. 9;

In Decision CRTC 99-169, the Commission approved a merger of the Cancom and Star Choice SRDUs. In that decision, the Commission imposed conditions requiring that both Cancom and Star Choice maintain complete structural separation from Shaw. The Commission stated at that time that the objective of such conditions is to prevent the possibility of undue preference and disadvantage that Shaw could confer, due to its dominant position in the cable distribution sector, as well as its vertically- and horizontally-integrated corporate structure, which includes both programming and cable distribution arms.

6. 9;

An intervention to the Cancom and Star Choice renewal applications was submitted by the Canadian Association of Broadcasters (CAB) on 26 January 2001. The CAB claimed that Cancom and Star Choice were in breach of their structural separation conditions of licence, in three separate areas of concern:

 

1) a letter received by members of the CAB regarding the level of affiliation fees paid by Star Choice;

 

2) the election of Mr. Harold Roozen to the Shaw board of directors; and

 

3) the appointment of Mr. Peter R. Classon as President of Cancom.

7. 9;

With respect to the first issue above, the CAB noted that, on 12 October 2000, Cancom sent a letter to CAB members, requesting confirmation that the per-subscriber affiliation fee paid by Star Choice is equal to the rate established with Shaw for the same service. The CAB expressed the view that the letter shows that Shaw is exercising control over the relationships between Star Choice and its affiliates.

8. 9;

In response to the concern raised by the CAB, Cancom stated that the practice noted above is a normal way of doing business. It stated that some of Shaw's agreements with signal suppliers contemplated volume discounts, and that some rates would be extended to all subscribers of Shaw and its subsidiaries. Cancom further noted that the purpose of the letter was to ensure that it could take advantage of the synergies and economies of scale afforded by its corporate affiliation with Shaw. Star Choice's ability to take advantage of lower wholesale rates improves the service it can offer to customers, and has no effect on Star Choice's ability to continue operating independently from Shaw.

9. 9;

The Commission is satisfied that the letter received by CAB members was an attempt to seek volume discounts, and as such, is a normal business practice. The Commission notes, however, that affiliation fees paid by Star Choice should not be adjusted without the consent of the signal providers.

10. 9;

With respect to the second issue in the CAB intervention, the election of Mr. Harold Roozen to the Shaw board of directors, the CAB referred to a January 5, 2001 Circular, listing Mr. Roozen as a Director of Shaw, as well as Chairman of Cancom. The CAB claims that this is contrary to the Cancom and Star Choice condition of licence requiring that each undertaking "ensure that members of their Board of Directors are not members of the Board of Directors of Shaw, or any of its subsidiaries, affiliates or related companies".

11. 9;

In response to this concern, Cancom confirmed that Mr. Roozen was a member of both the Cancom and Shaw boards, at the time of the CAB's intervention. However, it points out that the CAB was aware of Mr. Roozen's intent to leave the Cancom board and join the Shaw board, upon completion of Shaw's acquisition of all outstanding Cancom shares. Cancom added that Mr. Roozen did not participate in any Shaw board meetings or undertake any business as a Shaw board member during that transition period, and that he resigned as a Cancom director on 31 January 2001.

12. 9;

The third point of the CAB intervention referred to Mr. Peter Classon, Senior Vice President of Shaw, acting as President of Cancom, until a new president could be elected. The CAB expressed the view that this appointment was also contrary to Cancom and Star Choice's condition of licence, which states that "no employee of Cancom's SRDU operation, or any individual providing services on a contractual basis to the SRDU operation, shall, at the same time, be employed by Shaw or any of its subsidiaries, affiliates or related companies".

13. 9;

In its response to the CAB, Cancom confirmed that Mr. Classon was both Senior Vice-President of Shaw and President of Cancom at the time of the CAB intervention. Mr. Classon's appointment as interim President began on 18 September 2000, and was expected to continue until the end of January 2001. When it became apparent that the appointment of an interim President would continue beyond that date, it was determined that it would be appropriate for Mr. Classon to resign as an officer of Shaw, which he did on 31 January 2001.

14. 9;

According to Cancom, so as to ensure that Mr. Classon's appointment would not offend the purpose of the structural separation conditions, it was agreed that Mr. Classon would have no direct responsibilities to Shaw during the period of his appointment, and that, for practical purposes he would not be an employee of Shaw during that period.

15. 9;

Cancom expressed the view that, for the reasons attributed to it above, the circumstances surrounding the appointments of Messrs. Roozen and Classon constitute no breach of conditions of licence related to structural separation.

16. 9;

The Commission disagrees. The conditions related to structural separation, quoted above, are very clear. The concurrent appointment of a person to the boards of Shaw and Cancom, or the sharing of employees between these companies, even on an interim basis, is not appropriate under any circumstances. The Commission finds that both Shaw and Cancom should have known that the appointments of Mr. Roozen and Mr. Classon would be in direct contravention of the conditions of licence related to structural separation from Shaw.

17. 9;

The Commission views with great concern the contravention of these conditions and reiterates the importance of them by imposing a short-term licence renewal. The original conditions of licence remain in place for both Cancom and Star Choice, as set out in the appendices attached to this decision.

 

Retransmission of Radio-France Outre-Mer (RFO) by Cancom

18. 9;

During the term of licence that is coming to a close, the Commission received numerous letters and complaints that have been placed on Cancom's public file, including those from RFO and organizations representing French rights holders. The Commission also heard an intervention from Télévision française 1 (TF1) during its public hearing concerning new digital specialty services on 14 August 2000. TF1 indicated that the retransmission by Cancom of the RFO signal in Canada was seriously detrimental to broadcasters and French rights holders. It considered that this signal should be removed from the list of eligible satellite services.

19. 9;

An intervention in opposition to the Cancom renewal application was also submitted by TF1, a French broadcasting undertaking with a mandate under French law to authorize its programs to be distributed to French overseas departments and territories abroad. RFO ensures the distribution of these programs in these departments and territories. The signal of RFO is broadcast in the French territory of St. Pierre et Miquelon. Through geographic proximity, RFO's signal can be received off-air in Canada.

20. 9;

In its intervention, TF1 states that Cancom has never concluded a contractual arrangement with either itself or RFO for the distribution of its signals in Canada, and, despite opposition from French broadcasters who provide signals to RFO, continues to distribute the RFO signal. According to TF1, this situation creates copyright problems and program suppliers have indicated that they are unable to continue to supply their programs to TF1 if these programs continue to be retransmitted in Canada without their authorization.

21. 9;

TF1 bases its request that the Commission require Cancom to enter into contractual arrangements with its signal providers on two factors:

 

· in previous renewals, the Commission requested that Cancom enter into such arrangements with signal providers, and

 

· RFO's signal is marked by an asterisk on the Commission's Lists of Eligible Satellite Services (the Lists). TF1 interprets this as meaning that SRDUs carrying the RFO signal are subject to the obligation to obtain prior approval from signal originators.

22. 9;

In response to the TF1 intervention, Cancom states that its carriage of RFO's signal is not an infringement of copyright. Cancom notes that, under section 31 of the Copyright Act, any television signal that originates as a free, over-the-air signal may be retransmitted in Canada, provided that any royalties fixed by the Copyright Board are paid by the cable systems and other retransmitters of such signals. Cancom maintains that under this regime, the consent of the originating broadcaster or underlying rights holder is not required.

23. 9;

With respect to the Commission's requirements for contractual agreement with service providers, Cancom stated that the Commission made those statements in Decisions CRTC 81-252 and 85-423 because at the time, the issue of copyright infringement was under study by Parliament, and was resolved by the adoption of the Copyright Act in 1988.

24. 9;

With respect to the significance of the asterisks used on the Lists, Cancom expressed its understanding that BDUs that choose to distribute an asterisked service received from an SRDU must first enter into the necessary arrangements with that SRDU.

25. 9;

Concerning RFO's comments respecting the program rights holders' territorial exclusivity, Cancom states that the implications for RFO's program suppliers of the retransmission of RFO in Canada are no different than those experienced by program suppliers to the U.S. 4+1 signals that are distributed by Cancom in Canada.

26. 9;

The Commission agrees with Cancom's assessment of the scope of the Copyright Act in this instance. Since RFO's signal is a free signal that can be received off-air in Canada, the retransmission of it is covered under section 31 of that Act. The Commission also confirms that concerns expressed in 1981 and 1985 were made prior to the enactment of the Copyright Act, and have not been expressed since that time.

27. 9;

The Commission further confirms that asterisked items on the Lists indicate that distribution of those signals received from an SRDU is contingent upon an agreement between the distributor and the SRDU, not the program originator.

28. 9;

Considering the precedent that accepting the request of TF1 and others opposing the retransmission in Canada of the signal of RFO would create, and given that service providers are eligible for compensation for the distribution of their signals under the Copyright Act, the Commission will not impose such a requirement on Cancom. It also considers that the request of the opposing interveners might be best dealt with by means other than those available to the Commission, and notes that the Copyright Board deals specifically with such issues.

 

Secretary General

 

This decision is to be appended to each licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca 

 

Appendix 1 to Decision CRTC 2001-288

 

Terms and conditions for the licence issued to Canadian Satellite Communications Inc. for authority to carry on a national satellite relay distribution undertaking (SRDU)

 

Terms

 

The licence will expire on 31 August 2003.

 

Conditions of licence

 

1. The SRDU shall remain at all times an entity that is independent of, and legally separate and distinct from Shaw Communications Inc. (Shaw) and all companies or other entities controlled directly or indirectly by Shaw.

 

2. None of the licensee's board of directors shall be persons who are members of the board of directors of Shaw or any company or other entity controlled directly or indirectly by Shaw.

 

3. No employee of the SRDU licensee, or any individual providing services on a contractual basis to the SRDU licensee, shall, at the same time, be employed by any BDU (including a DTH BDU) that is controlled, directly or indirectly, by Shaw, or by any company or other entity controlled directly or indirectly by Shaw.

 

4. To the extent the licensee is entitled to information in the possession of a BDU, pursuant to an affiliation agreement, and such information is not available on the public record, the licensee shall retain an independent third-party auditor to access such information and to ensure that only aggregate information and recommendations regarding the SRDU's compliance with the terms of the DTH/SRDU signal supply agreement are transmitted to the licensee.

 

5. The licensee shall adhere to the provisions of section 4 of the Broadcasting Distribution Regulations, in respect of any transfers of ownership or control.

 

6. The licensee is authorized to distribute via satellite to its affiliates the television signals of any of the services listed in Appendix 3 to this decision, subject to the following requirement:

 

a) the licensee shall ensure that a majority of the television signals it distributes are of Canadian services.

 

For the purpose of this condition, non-Canadian services of the same network affiliation will be counted as a single service.

 

7. The licensee is authorized to distribute to its affiliates via satellite the signals of any of the radio services set out in Appendix 3.

 

8. The licensee must provide its service to all of the following undertakings whose operators are willing to enter into affiliation agreements with it:

 

i) terrestrial BDUs that are licensed by the Commission or operating in accordance with an exemption from licensing granted by the Commission; and,

 

ii) licensed DTH distribution undertakings (for retransmission to DTH subscribers only).

 

9. The licensee shall not delete, curtail or alter the programming services which it distributes to BDUs in any manner from the form in which they are transmitted for public reception by the originating broadcasters, except such alterations as are incidental to the transmission of the services using digital video compression technology and except as may be authorized or required by the Commission in writing.

 

10. The licensee is required to contribute a minimum of 5% of its annual gross revenues derived from broadcasting activities to the creation and presentation of Canadian programming.

 

11. The licensee is required to file a report for the Commission's approval, within three months of the date of this decision, identifying the recipient(s) of its contributions to the creation and presentation of Canadian programming, as well as the projected annual amounts that the licensee intends to allocate to each and the timing of such contributions, if the contribution is to a recipient other than a production fund. Contributions directed to a production fund are required to be made on a monthly basis, within 45 days of each month's end. As a matter of policy applicable to any licensed SRDU, the Commission has decided that funds allocated to subsidize the provision of decoder equipment to BDUs are not eligible contributions.

 

12. The licensee shall not give an undue preference to any person, including itself, or subject any person to an undue disadvantage.

 

13. If there is a dispute between the licensee and a distribution undertaking, whether operating by licence or by exemption order, concerning the terms under which programming services are or may be provided, then the licensee shall submit to a dispute resolution process, if the Commission so requires.

 

Appendix 2 to Decision CRTC 2001-288

 

Terms and conditions for the licence issued to Star Choice Television Network Inc., for authority to carry on a national satellite relay distibution undertaking (SRDU)

 

Terms

 

The licence will expire on 31 August 2003.

 

Conditions of licence

 

1. The SRDU shall remain at all times an entity that is independent of, and legally separate and distinct from Shaw Communications Inc. (Shaw) and all companies or other entities controlled directly or indirectly by Shaw.

 

2. None of the licensee's board of directors shall be persons who are members of the board of directors of Shaw or any company or other entity controlled directly or indirectly by Shaw.

 

3. No employee of the SRDU licensee, or any individual providing services on a contractual basis to the SRDU licensee, shall, at the same time, be employed by any BDU (including a DTH BDU) that is controlled, directly or indirectly, by Shaw, or by any company or other entity controlled directly or indirectly by Shaw.

 

4. To the extent the licensee is entitled to information in the possession of a BDU, pursuant to an affiliation agreement, and such information is not available on the public record, the licensee shall retain an independent third-party auditor to access such information and to ensure that only aggregate information and recommendations regarding the SRDU's compliance with the terms of the DTH/SRDU signal supply agreement are transmitted to the licensee.

 

5. The licensee shall adhere to the provisions of section 4 of the Broadcasting Distribution Regulations, in respect of any transfers of ownership or control.

 

6. The licensee is authorized to distribute via satellite to its affiliates, the television signals of any of the services listed in Appendix 4 to this decision, subject to the following requirements:

 

a) the licensee shall ensure that a majority of the television signals it distributes are Canadian services, and;

 

b) the licensee shall distribute the signals of all conventional, Canadian, French-language television services that purchase national program rights. These services exclude the French-language television network service of the Canadian Broadcasting Corporation (CBC).

 

For the purpose of this condition, non-Canadian services of the same affiliation will be counted as a single service.

 

7. The licensee is authorized to distribute to its affiliates via satellite the signals of any of the radio services set out in Appendix 4.

 

8. The licensee must provide its service to all of the following undertakings whose operators are willing to enter into affiliation agreements with it:

 

i) terrestrial BDUs that are licensed by the Commission or operating in accordance with an exemption from licensing granted by the Commission; and,

 

ii) licensed DTH distribution undertakings (for retransmission to DTH subscribers only).

 

9. The licensee shall not delete, curtail or alter the programming services which it distributes to BDUs in any manner from the form in which they are transmitted for public reception by the originating broadcasters, except such alterations as are incidental to the transmission of the services using digital video compression technology and except as may be authorized or required by the Commission in writing.

 

10. The licensee is required to contribute a minimum of 5% of its annual gross revenues derived from broadcasting activities to the creation and presentation of Canadian programming.

 

11. The licensee is required to file a report for the Commission's approval, within three months of the date of this decision, identifying the recipient(s) of its contributions to the creation and presentation of Canadian programming, as well as the projected annual amounts that the licensee intends to allocate to each and the timing of such contributions, if the contribution is to a recipient other than a production fund. Contributions directed to a production fund are required to be made on a monthly basis, within 45 days of each month's end. As a matter of policy applicable to any licensed SRDU, the Commission has decided that funds allocated to subsidize the provision of decoder equipment to BDUs are not eligible contributions.

 

12. The licensee shall not give an undue preference to any person, including itself, or subject any person to an undue disadvantage.

 

13. If there is a dispute between the licensee and a distribution undertaking, whether operating by licence or by exemption order, concerning the terms under which programming services are or may be provided, then the licensee shall submit to a dispute resolution process, if the Commission so requires.

 

Appendix 3 to Decision CRTC 2001-288

 

Signals authorized for distribution by Canadian Satellite Communications Inc.

 

Canadian television services

 

CHAN-TV* (CTV) Vancouver
CKVU-TV (IND) Vancouver
CHBC-TV (CBC) Kelowna
CBXFT (SRC) Edmonton
CFRN-TV (CTV) Edmonton
CITV-TV (IND) Edmonton
CBRT (CBC) Calgary
CBLT (CBC) Toronto
CFMT-TV (IND) Toronto
CIII-TV (GLOBAL) Toronto
CITY-TV (IND) Toronto
CFTO-TV (CTV) Toronto
TVOntario (TVO and TFO) Toronto
CHCH-TV* (IND) Hamilton
Ontario Legislative Assembly Proceedings
CPAC (IND) Ottawa
CJOH-TV (CTV) Ottawa
CFCF-TV (CTV) Montréal
CFJP-TV (TQS) Montréal
CFTM-TV (TVA) Montréal
CBFT (SRC) Montréal
CFTU-TV (IND) Montréal
CJNT-TV (IND) Montréal
Télé-Québec (STQ) Montréal
Quebec National Assembly Proceedings
Atlantic Satellite Network (ASN) Halifax
CBHT (CBC) Halifax
CJCH-TV (CTV) Halifax
CJON-TV (CTV) St. John's

 

Foreign television services

 

WDIV (NBC) Detroit
WWJ (CBS) Detroit
WTVS (PBS) Detroit
WXYZ-TV (ABC) Detroit
WUHF (FOX) Rochester
WKBW-TV (ABC) Buffalo
WIVB-TV (CBS) Buffalo
WGRZ-TV (NBC) Buffalo
WUTV (FOX) Buffalo
WNED-TV (PBS) Buffalo
WHDH-TV (NBC) Boston
WGBH-TV (PBS) Boston
WBZ-TV (CBS) Boston
WCVB-TV (ABC) Boston
KARE (NBC) Minneapolis
WCCO-TV (CBS) Minneapolis
KSTP-TV (ABC) Minneapolis
WFTC (FOX) Minneapolis
KING-TV (NBC) Seattle
KCTS-TV (PBS) Seattle
KOMO-TV (ABC) Seattle
KIRO-TV (CBS) Seattle
KSTW (IND) Tacoma/Seattle
KCPQ (FOX) Tacoma/Seattle
KSPS-TV (PBS) Spokane
KXLY-TV (ABC) Spokane
KREM-TV (CBS) Spokane
KHQ-TV (NBC) Spokane
KAYU-TV (FOX) Spokane
Radio-France outre-mer (RF01) Saint-Pierre and Miquelon

 

* Native-produced television programs, on a part-time basis, on satellite channels used for the distribution of these services.

 

Canadian radio services

 

CKRW Whitehorse
CHON-FM Whitehorse
CKNM-FM Yellowknife
CFMI-FM Vancouver
CFUN Vancouver
CJJR-FM Vancouver
CKNW Vancouver
CBU-FM Vancouver
CISL Richmond
CIRK-FM Edmonton
CISN-FM Edmonton
CJCA Edmonton
CING-FM Burlington
CHFI-FM Toronto
CISS-FM Toronto
CHIN Toronto
CHIN-FM Toronto
CHOG Toronto
CJRT-FM Toronto
CILQ-FM Toronto
CFMX-FM Cobourg
CKAC Montréal
CITE-FM Montréal
CKOI-FM Montréal
CKVL Montréal
CBF Montréal
CBF-FM Montréal
CFGL-FM Montréal
VOCM St. John's

 

Non-Canadian radio services

 

KMBI-FM Spokane
KXLY-FM Spokane
KISC-FM Spokane
KDRK-FM Spokane
KEZE-FM Spokane
KZZU-FM Spokane
KPBX-FM Spokane

 

Appendix 4 to Decision CRTC 2001-288

 

Signals authorized for distribution by Star Choice Television Network Incorporated

 

Canadian television services

 

CHAN-TV (CTV)Vancouver
CKVU-TV (IND) Vancouver
CHBC-TV (CBC) Kelowna
CBXFT (SRC) Edmonton
CFRN-TV (CTV) Edmonton
CKEM-TV (IND) Edmonton
CITV-TV (IND) Edmonton
CBRT (CBC) Calgary
CKAL-TV (IND) Calgary
CICT-TV (IND) Calgary
CBLT (CBC) Toronto
CFMT-TV (IND) Toronto
CIII-TV (GLOBAL) Toronto
CITY-TV (IND) Toronto
CFTO-TV (CTV) Toronto
TVOntario (TVO and TFO) Toronto
CHCH-TV (IND) Hamilton
Ontario Legislative Assembly Proceedings
CPAC (IND) Ottawa
CJOH-TV (CTV) Ottawa
CFCF-TV (CTV) Montréal
CFJP-TV (TQS) Montréal
CFTM-TV (TVA) Montréal
CBFT (SRC) Montréal
CFTU-TV (IND) Montréal
CJNT-TV (IND) Montréal
Télé-Québec (STQ) Montréal
Quebec National Assembly Proceedings
Atlantic Satellite Network (ASN) Halifax
CBHT (CBC) Halifax
CJCH-TV (CTV) Halifax
CJON-TV (CTV) St. John's
CJCB-TV (CTV) Sydney
CKLT-TV (CTV) Saint John
CKCW-TV (CTV) Moncton

 

U.S. television services (4+1)

 

WKBW-TV (ABC) Buffalo
WIVB-TV (CBS) Buffalo
WGRZ-TV (NBC) Buffalo
WUTV (FOX) Buffalo
WNED-TV (PBS) Buffalo
KXLY-TV (ABC) Spokane
KREM-TV (CBS) Spokane
KHQ-TV (NBC) Spokane
KAYU-TV (FOX) Spokane
KSPS-TV (PBS) Spokane

 

Canadian radio services

 

CKRW Whitehorse
CHON-FM Whitehorse
CKNM-FM Yellowknife
CFMI-FM Vancouver
CFUN Vancouver
CJJR-FM Vancouver
CKNW Vancouver
CBU-FM Vancouver
CISL Richmond
CIRK-FM Edmonton
CISN-FM Edmonton
CJCA Edmonton
CING-FM Burlington
CHFI-FM Toronto
CISS-FM Toronto
CHIN Toronto
CHIN-FM Toronto
CHOG Toronto
CJRT-FM Toronto
CILQ-FM Toronto
CFMX-FM Cobourg
CKAC Montréal
CITE-FM Montréal
CKOI-FM Montréal
CKVL Montréal
CBF Montréal
CBF-FM Montréal
CFGL-FM Montréal
VOCM St. John's

 

Non-Canadian radio services

 

KMBI-FM Spokane
KXLY-FM Spokane
KISC-FM Spokane
KDRK-FM Spokane
KEZE-FM Spokane
KZZU-FM Spokane
KPBX-FM Spokane

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