ARCHIVED - Decision CRTC 2001-665

Decision CRTC 2001-665

Ottawa, 29 October 2001

Corus Entertainment Inc.
Across Canada 2001-0535-5 

Application processed by
Public Notice CRTC 2001-86
dated 26 July 2001

Ownership change for Telelatino

The Commission approves the application by Corus Entertainment Inc. (Corus) on behalf of Telelatino Network Inc. (TLN) to acquire effective control of TLN by acquiring an additional 30.5% of TLN's voting shares. As a result of this transaction, Corus' holdings in TLN will increase from 20% to 50.5%.

TLN is the licensee of the national specialty programming undertaking known as Telelatino. Telelatino broadcasts ethnic programs directed to Italian and Hispanic/Spanish audiences.

As well, TLN controls eleven recently approved category 2 digital specialty television services. These services, which have all been authorized to provide ethnic programming, are Ana Canada, Caribe Canada, HTV Canada, Network Italia, NRT Canada, PSN Canada, Sitcom Canada, Telemundo Canada, TV Chile Canada, TV Italy, and Video Italia. None of the eleven digital specialty services are yet in operation.

Benefits

The Commission's television policy set out in Public Notice CRTC 1999-97 indicates that applicants acquiring specialty services must make commitments to clear and unequivocal tangible benefits representing a financial contribution of 10% of the value of the transaction, as accepted by the Commission.

The total purchase price of the voting interests to be acquired by Corus amounts to approximately $10.5 million. Corus proposed a tangible benefits package of $1.1 million to be spent over a seven-year period. The benefits will be distributed in "licence fee top-up funding" for the production of programs directed to Canada's Italian and Hispanic communities. The applicant considers that this package will assist independent producers of ethnic programming, and increase the library of programming available to TLN.

The Commission accepts the benefits package that Corus has proposed. It notes, however, that funding from the benefits package will not be counted toward the fulfilment of TLN's existing condition of licence related to Canadian programming expenditures. The Commission reminds Corus that it should submit a report upon completion of the seven-year period of the benefits package that sets out details concerning how the $1.1 million was spent.

Position of interveners and the applicant's reply

Interventions in full support

The Commission received 104 interventions fully supporting the application. Some interveners were of the view that Corus' leadership, expertise and investment in TLN have already made a major contribution to the service that Telelatino provides. Others considered that Corus' expertise, knowledge, as well as its extensive research and analytical resources will strengthen and sustain TLN's competitive position.

There was also widespread support for the $1.1 million dollar benefits package that Corus proposed. Interveners considered that this initiative would lend significant support to independent producers, writers, technicians and artists from different cultural backgrounds.

Interventions raising concerns

Four interveners, while not specifically opposing the application, raised concerns.

The Canadian Hispanic Congress considered that there had been a reduction in the amount of Spanish programming on Telelatino since Corus became involved in TLN. It recommended that conditions be imposed with respect to the amount of Spanish programming broadcast, production and broadcast of Canadian programming in Spanish, and involvement of members of the Hispanic community in decision making positions at TLN.

Three interveners, COM.IT.ES, Comitato Tricolore Italiani Nel Mondo (Comitato), and Consiglio Generale degli Italiani all'Estero raised concerns about programming in Italian. These interveners were of the view that, following approval of this application, Corus would have a monopoly on the Italian television programming distributed by Canadian specialty services and were concerned that the amount and quality of such programming not be reduced. Two of the interveners suggested that this application should be heard at the same time as TLN's licence renewal in order that matters related to programming could be addressed more effectively.

Concern was also expressed that such a monopoly situation might limit the future growth and independence of services to the Italian community. One other intervener, Sergio Bugiani, opposed the application because of his concerns over Corus' potential monopoly over Italian programming services.

The applicant's reply

In its reply to interveners, the applicant addressed the concerns that the interveners had raised with respect to the Spanish and Italian programming broadcast on Telelatino.

Corus indicated that it would consult with TLN's management with a view to finding constructive solutions to the concerns about Spanish programming raised by The Canadian Hispanic Congress. The applicant further noted that its benefits package would apply to the Hispanic as well as to the Italian elements of the service.

Corus further indicated that it would seek to improve the quality of TLN's Italian programming and remain responsive to the needs of the Italian community.

The applicant indicated that, as a leading provider of specialty television services, Corus would, as the controlling shareholder of TLN, be in a position to use its resources and expertise to further TLN's development. In addition to its $1.1 million commitment to support independent producers, Corus indicated that it also planned to make YTV's state-of-the art production facilities and mobile unit available to TLN to enhance and increase the programming that is produced for the service.

Further, Corus indicated that it would encourage TLN's management to maintain and strengthen its ties with the Italian and Hispanic communities to ensure that the service and its programming are fully responsive to their needs.

The applicant did not consider that the Commission should postpone consideration of this application until the time of Telelatino's next licence renewal as COM.IT.ES and Comitato suggested. Corus noted that the Telelatino renewal would not be heard until the early part of 2002. It considered that such a delay was unwarrented and would be unfair to the TLN shareholders who wished to conclude the share transactions as soon as possible.

The Commission's determination

The Commission considers that Corus's increased participation will allow for the further development of the service that Telelatino provides. The Commission notes the commitment made by Corus to encourage TLN to maintain and strengthen its ties with both the Italian and Hispanic communities, as well as Corus' intention to work with TLN management to find solutions to the various programming concerns that interveners have raised.

The Commission considers that it would be inappropriate to delay consideration of this application until the licence renewal for Telelatino is considered since this would delay the implementation of the programming benefits that Corus has proposed. The Commission, however, will be willing to explore any remaining programming concerns raised by interveners in the context of Telelatino's licence renewal, which will likely be considered in the spring of 2002.

The Commission notes the concerns raised about the concentration, under Corus' control, of specialty services that provide Italian and Hispanic programming. Telelatino is the only analog specialty service that is authorized to provide such programming. TLN also controls eleven Category 2 specialty services, with all but three designed for Italian and Hispanic audiences. Corus holds interests in only two ethnic specialty services -- an Italian service called RAI Canada, and Teletoon Multi, which provides programming in four languages including Italian and Spanish. The remaining Category 2 ethnic services are divided largely between the Fairchild Media Group and Asian Television Network International Limited. None of these services will target Italian or Hispanic audiences. As a result of this decision, Corus will therefore control the currently licensed Italian and Hispanic specialty services.

The Commission notes, however, that the licensing process for Category 2 services is different from that of other specialty services. Category 2 services are generally approved with much less regulatory scrutiny than for other services, provided that they meet certain basic criteria. The carriage of Category 2 services by distributors is not guaranteed, and the number that may be licensed is not limited, making it possible for the Commission to license additional services in the future. The Commission further notes that none of the Category 2 specialty services licensed to TLN have yet launched.

The Commission notes that TLN is a company related to Shaw Communications Inc. Under the terms of the Broadcasting Distribution Regulations, any Shaw distribution system would have to carry the services of at least five unrelated Category 2 services for every TLN Category 2 service that it distributes, except as otherwise provided by condition of licence. Therefore, this requirement would appear to alleviate undue preference concerns, as raised by COM.IT.ES.

In light of the above, the Commission considers that concerns with respect to the concentration of ownership of Italian and Hispanic services do not outweigh the advantages of approving the application. Such approval will allow TLN to improve its financial performance, its competitive position in the broadcasting system, and to provide additional support to independent program producers through the benefits package that Corus has put forward.

Secretary General