ARCHIVED - Broadcasting Decision CRTC 2002-349

Broadcasting Decision CRTC 2002-349

Ottawa, 6 November 2002

LS Movie Channel Limited
Across Canada

Application 2001-1070-1
Public Hearing at Québec, Quebec
18 February 2002

Movie Express - Category 2 specialty service

In this decision, the Commission denies the application for a licence to operate a new Category 2 specialty television service.

1.

The Commission received an application by LS Movie Channel Limited for a broadcasting licence to operate an ethnic Category 2¹ specialty television service to be known as Movie Express.

2.

The applicant proposed a programming service focused on Asian-language movies with no less than 90% of the programming in the Cantonese, Mandarin, Korean, Japanese, Vietnamese and other Asian languages.

Intervention

3.

Fairchild Television Ltd. (Fairchild) filed an intervention opposing this application. The intervener is the licensee of two national ethnic specialty programming undertakings: Fairchild TV, a predominately Cantonese-language service, and Talentvision,a predominately Mandarin-language service.

4.

Fairchild submitted that the applicant's current proposal is essentially identical to its earlier application for a Category 2 specialty television service to broadcast movies in Cantonese and Mandarin (the Chinese languages) that was denied in Applications for licences for Category 1 and Category 2 specialty television services - Denied, Decision CRTC 2000-739, 24 November 2000. The Commission denied that application because it was determined to be competitive with existing services. The intervener argued that the applicant still intends to offer programming primarily in the Chinese languages and that its proposed service would, therefore, be directly competitive with Fairchild TV and Talentvision.

5.

In support of its claim, Fairchild pointed out that, since the applicant had not quantified the amount of programming that would be offered in each language, it would not be prohibited from broadcasting almost exclusively in the Chinese languages. Furthermore, Fairchild stated that, based on its own experience, it considered that the proposed service could only be viable if the applicant directed its programming principally to the Chinese-language community because that market has the largest advertising and subscriber base and generates the most revenues. According to the intervener, the fact that the applicant, through its affiliates, currently operates as a distributor of Chinese-language movies in Canada, with at least 80% of the distribution market share for movies from Hong Kong, also indicates that the proposed service would be predominately Chinese-language.

6.

Fairchild also expressed concern regarding the overall availability of programming in this genre, given that the applicant planned to draw a substantial amount of programming from the same program categories as those used by Fairchild TV and Talentvision, namely Category 2b (Long-form documentary), Category 7 (Drama and comedy) and Category 11 (General entertainment and human interest). Moreover, the intervener noted that, currently, there are very few suppliers of Chinese-language programming in Canada and considered that the applicant would have little incentive to continue supplying its own inventory to its competitors. Fairchild further argued that the proposed service would directly compete for the acquisition of programming, thereby increasing the cost of such acquisitions and negatively affecting the intervener's overall revenues.

The applicant's response

7.

In response, the applicant stated that it intended to offer a niche service that would focus on movie programming and that at least 90% of the programming would be drawn from program subcategories 7c (Specials, mini-series, and made-for-TV feature films) and 7d (Theatrical feature films aired on television). The applicant maintained that its proposed service would not be directly competitive with either Fairchild TV or Talentvision, both of which provide general interest services that offer a significant amount of news, information and dramatic series but very little movie programming. In addition, the applicant reiterated that it would offer programming in several different languages, namely Cantonese, Mandarin, Japanese, Korean, Vietnamese and others, and serve many different ethnic groups.

The Commission's analysis and conclusion

8.

As stated in Licensing framework policy for new digital pay and specialty services, Public Notice CRTC 2000-6, 13 January 2000, the Commission has implemented a competitive, open-entry approach to licensing Category 2 services. While the Commission does not consider the impact that a new Category 2 service might have on an existing Category 2 service, it does seek to ensure that newly licensed Category 2 services do not compete directly with any existing pay or specialty television service, including any new Category 1 digital service.

9.

As stated in Public Notice 2000-171, in determining whether a proposed Category 2 service should be considered directly competitive with existing services, the Commission has adopted a case-by-case approach. The Commission has not set any rule or threshold to determine when a service is directly competitive. Instead, the Commission examines each application in detail, taking into consideration the proposed nature of service and the unique circumstances of the genre in question.

10.

With respect to analog ethnic services, the Commission recognizes that they face considerable challenges due to their more limited access rights and their smaller subscriber base. In the Commission's view, broadcasters operating in the ethnic television market need more support to survive than do television broadcasters serving larger, non-ethnic audiences.

11.

In the present case, the Commission determines that the proposed Movie Express service would target the same audience as that currently served by Fairchild TV and Talentvision and would significantly affect the advertising base of the intervener's services. The Commission's analysis of Fairchild-TV's profit before interest and tax for 2001 reveals a decrease of revenues of 3.36% and Talentvision's financial summary indicates a 4.07% decrease in revenues for 2001. Given the limited number of potential viewers and advertising revenues in the ethnic market, the Commission considers that the intervener's services would be particularly vulnerable to the impact of the proposed service.

12.

Based on the foregoing, the Commission concludes that the proposed Category 2 service would compete directly with the existing analog specialty television services of Fairchild TV and Talentvision. Accordingly, the Commission denies the application by LS Movie Channel for a licence to operate the Movie Express programming service.

Secretary General