ARCHIVED - Decision CRTC 2001-731

Decision CRTC 2001-731

Ottawa, 29 November 2001

MovieMax! Ltd.
British Columbia, Alberta, Saskatchewan, Manitoba, Nunavut, the Yukon Territory and the Northwest Territories 2000-2294-7

19 June 2001 Public Hearing
National Capital Region

Licence renewal for MovieMax!

The licence for "MovieMax!" is renewed for a full term. During the new licence term, the licensee may broadcast made-for-television feature films copyrighted at least five years previously. The Commission has increased the amount the licensee must spend on Canadian programming in each broadcast year to at least 25% of the previous year's revenues. The definition of revenues will now include monies derived from direct-to-home satellite subscribers and any return on investment in programming.

The Commission renews the broadcasting licence issued to MovieMax! Ltd. for the regional English-language pay television service known as "MovieMax!", from 1 December 2001 to 31 August 2008, subject to the conditions specified in the appendix to this decision and in the licence to be issued.

The Commission has no concerns with respect to the licensee's compliance with its conditions of licence during the current licence term.

As part of its licence renewal application, the licensee proposed amendments to its conditions of licence on Canadian programming expenditures and the nature of service. These amendments are discussed below.

Expenditures on Canadian programming

4.

Under its current condition, the licensee must, in each broadcast year, spend on Canadian programming at least 22.75% of its revenues earned during the previous year. For the purpose of this condition, revenues means monies received from residential, bulk and satellite master antenna television (SMATV) subscribers, but does not include revenues from direct-to-home (DTH) satellite subscribers or any return on investment in programming.

5.

The licensee proposed to maintain the percentage of the previous year's revenues to be expended on Canadian programming at 22.75% for the new licence term. At the same time, the licensee asked the Commission to revise the definition of revenues attached to this condition to include monies derived from the distribution of its service by DTH satellite services and any return on investment in programming.

6.

The Commission notes that MovieMax! currently enjoys a high level of profitability. In 2000, its profit before interest and tax (PBIT) was 57%. The Commission considers that the licensee should devote a higher percentage of its revenues to expenditures on Canadian programming. Accordingly, and as discussed in correspondence with the licensee, the Commission will require the licensee to spend, in each broadcast year of the new licence term, 25% of its previous year's revenues on Canadian programming. In defining revenues for the purpose of this condition, the Commission will include monies received from DTH satellite subscribers and any return on investment in programming.

7.

The amended condition (set out in the appendix) will significantly increase the level of MovieMax!'s expenditures on Canadian programming and still allow the licensee to achieve a healthy PBIT margin.

Nature of service

8.

As requested by the licensee, the Commission has amended MovieMax!'s condition of licence describing its nature of service by adding the following to the categories of programming that it may broadcast:

· made-for-television feature films (subcategory 7c) copyrighted at least five years prior to the broadcast year in which they are distributed by the service.

9.

While subcategory 7c also includes specials and mini-series, the licensee indicated that it will only broadcast made-for-television feature films. The licensee also withdrew its original request to add subcategory 7e (animated television programs and films), indicating that it intends to air only "theatrically released" animated features which are already permitted under its current condition on the nature of service (subcategory 7d).

10.

The amended condition of licence is found in the appendix.

Rebranding of services

11.

The Commission notes that MovieMax! and certain other pay television licensees have adopted a thematic approach in programming the multiplexed channel feeds they make available to distributors. The Commission has no concerns about this approach provided the programming offered on each channel meets the Canadian content requirements for the service. Further, individual channels must not be offered on a stand-alone basis (i.e. the licensee and its distribution affiliates must ensure that all of the multiplexed channel feeds that make up the service are distributed to subscribers within a package).

12.

As discussed with the licensee, these two requirements are stipulated in conditions of licence set out in the appendix to this decision.

Cultural diversity

13.

The Commission expects MovieMax!, and all other specialty and pay television licensees, to contribute to a broadcasting system that accurately reflects the presence in Canada of cultural and racial minorities and Aboriginal peoples. The Commission further expects licensees to ensure that their on-screen portrayal of all such groups is accurate, fair and free of stereotypes. These expectations are fully in keeping with section 3(1)(d)(iii) of the Broadcasting Act, which states that the Canadian broadcasting system should, "through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of Aboriginal peoples within that society."

14.

In Public Notice CRTC 2001-88, Representation of cultural diversity on television - Creation of an industry/community task force, the Commission called upon the Canadian Association of Broadcasters to develop an action plan for a joint industry/community task force. The role of this task force is to sponsor research, identify "best practices", and help define the issues and present practical solutions to ensure that the Canadian broadcasting system reflects all Canadians. In its notice, the Commission emphasized the importance of having the participation of all sectors of the broadcasting industry, including pay television services. The Commission therefore expects Corus Entertainment Inc., MovieMax!'s owner, to contribute to the work of the task force.

15.

The Commission further expects the licensee to develop and implement a comprehensive corporate plan that explains how Corus intends to improve its representation of Canada's cultural diversity, and to file this plan with the Commission within three months of the date of this decision. The plan should include specific commitments to corporate accountability and to the reflection of diversity in programming, and should make provision for the gathering of feedback on the effectiveness of these commitments. The plan should also set goals for achieving the full, fair and consistent reflection of diversity in Canada.

16.

With respect to corporate accountability, the plan should address how Corus will create an environment that supports the cultural diversity objectives outlined above, by:

· creating a corporate culture that recognizes and supports Canada's cultural diversity;

· assigning accountability to a senior executive for corporate practices related to cultural diversity, and for ensuring that management becomes more reflective of Canada's multicultural reality;

· ensuring that managers receive proper training;

· ensuring that regular opportunities are provided for assessing progress towards attaining these objectives and for identifying future opportunities and challenges; and

· setting out plans for the hiring, retention and ongoing training of visible minorities and Aboriginal peoples.

17.

With respect to the reflection of diversity in programming, the plan should focus on how the licensee will ensure the presence and the fair, accurate and non-stereotypical portrayal of cultural minorities and Aboriginal peoples in the programming it produces or acquires. Specifically, the plan should include provisions for making certain that, wherever possible:

· on-air personalities reflect Canada's diversity; and

· programming obtained from independent producers reflects the presence of visible minorities and Aboriginal peoples in Canadian society and provides for their accurate portrayal.

18.

As for feedback, the corporate plan should describe the specific mechanisms Corus will put in place to ensure that it receives effective input from community groups concerning its performance in reflecting cultural diversity in programming.

On-air presence

19.

The Commission reminds the licensee that the expectations set out above with respect to cultural diversity are over and above the longstanding and more general expectations concerning employment equity in on-air presence. Specifically, the Commission expects the licensee to ensure that the on-air presence of members of the four designated groups (women, Aboriginal persons, disabled persons and members of visible minorities) is reflective of Canadian society, and that members of these groups are presented fairly and accurately.

Closed captioning

20.

The Commission is committed to improving service to television viewers who are deaf or hearing impaired. Over the period since the Commission announced its policy on closed captioning in Public Notice CRTC 1995-48, it has consistently encouraged broadcasters to increase the amount of captioned programming they provide. The Commission now requires the licensees of television, specialty and pay television undertakings to achieve a minimum level of captioned programming appropriate to the nature of the service that each provides. Generally, the specified minimum requirement is 90% of all programming.

21.

In the case of MovieMax!, the licensee stated that it would close caption 90% of all programming beginning in the sixth year of the licence term.

22.

Consistent with its policy approach described above and with the licensee's commitment, the Commission has decided to require the licensee, by condition of licence, to achieve a minimum captioning level of 90% for all programming aired during the broadcast year, beginning no later than  1 September 2006 and continuing throughout the remainder of the licence term.

23.

The 90% obligation is based on the recognition that requiring 100% captioning at all times may not be reasonable or appropriate. Thus, the obligation is designed to provide some flexibility to cover unforeseen circumstances (such as late delivery of captions, technical malfunctions, or the lack of availability of captions for programs acquired outside North America), or programming where captioning may not be feasible, such as third language programming.

24.

The Commission expects the licensee to focus on improving the quality, reliability and accuracy of closed captioning, and to work with representatives of the deaf and hard of hearing community to ensure that captioning continues to meet their needs.

Service to the visually impaired

25.

In decisions issued last December, the Commission encouraged the licensees of new Category 1 specialty services, over their licence terms, to provide increasing amounts of programming accompanied by audio or video description. More recently, in decisions issued in the summer of this year renewing the licences for the television stations owned by Global, CTV and TVA, the Commission imposed conditions of licence regarding the provision of increasing amounts of such programming.

26.

"Audio description" and "video description" or "described video" are methods of improving the service that television broadcasters provide to people who are visually impaired. Audio description involves the provision of basic voice-overs of textual or graphic information displayed on the screen. A broadcaster providing audio description will, for example, not simply display sports scores on the screen, but also read them aloud so that people who are visually impaired can receive the information.

27.

Video description, or described video as it is also known, consists of narrative descriptions of a program's key visual elements so that people who are visually impaired are able to form a mental picture of what is occurring on the screen. These descriptions can be provided on the Secondary Audio Programming (SAP) channel. Not all broadcasters are currently equipped to deliver a SAP signal. Thus, the introduction of described video via the SAP channel could require significant capital expenditures to upgrade a licensee's transmission facilities.

28.

The Commission notes the increasing amount of described programming available for acquisition, particularly from U.S. sources. It notes as well the encouragement given to the operators of the new Category 1 specialty services and the requirements it has placed on the television stations operated by CTV, Global and TVA concerning the provision of such programming. In correspondence with MovieMax!, the Commission requested the licensee's views on implementing audio description, video description or described video. The Commission considers it reasonable to expect the operators of the pay and specialty services whose licences are being renewed at this time to take steps to respond to the needs of viewers who are visually impaired.

29.

Accordingly, the Commission expects the licensee to:

· provide audio description (defined as the provision of basic voice-overs of textual or graphic information displayed on screen) wherever appropriate;

· undertake the necessary upgrades to permit the broadcast of described programming (for example, via the SAP channel);

· acquire and broadcast the described versions of a program wherever possible; and

· take the necessary steps to ensure that its customer service responds to the needs of visually impaired viewers.

30.

In addition, and consistent with the approach adopted for the new Category 1 services, the Commission encourages the licensee to provide, at a minimum, one hour per month of described programming in the period between 1 December 2001 and 31 August 2002, and to increase this monthly minimum by at least one hour in each subsequent broadcast year of the new licence term.

Compliance with industry codes

31.

In accordance with its usual practice, the Commission is imposing on the licensee conditions of licence requiring that it adhere to the industry codes related to violence in television programming and sex role portrayal. Application of the sex portrayal role code will be suspended so long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council. In addition, by condition of licence, the licensee must abide by the Pay television programming standards and practices code.

Interventions

32.

The Commission acknowledges all of the interventions submitted with regard to this application and has noted the licensee's response to the concerns expressed in some submissions.

Related CRTC documents

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 2001-731

Conditions of licence for MovieMax!

Nature of the service

(b)The service shall consist of:

· theatrical feature films aired on television (subcategory 7d) copyrighted at least five years prior to the year in which they are distributed by the service.

· made for-television feature films (subcategory 7c) copyrighted at least five years prior to the year in which they are distributed by the service.

· public service announcements (category 13).

· filler programming (category 15).

· other programming shall be limited to programs that are feature-film-related and intended to set in context the feature film or films they accompany in the schedule.

The subcategories are contained in item 6, Schedule I of the Pay Television Regulations, 1990.

Exhibition of Canadian programs

Expenditures on Canadian programming

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

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

Closed captioning

Multiplex channels

Industry codes

Definitions

In these conditions:

"broadcast year" means each twelve-month period beginning on 1 September in any year.

"expend" means actual cash outlay.

"expend on acquisition" means:

"expend on investment" means expend for the purposes of an equity investment or an advance on account of an equity investment, but not overhead costs or interim financing by way of a loan; and

"expenditure on investment" has a comparable meaning.

"revenue" means revenue from residential and bulk cable , SMATV and DTH satellite subscribers as well as any return on an investment in programming.

"semester" means each six-month period beginning in September and March.