ARCHIVED - Broadcasting Decision CRTC 2002-351

Broadcasting Decision CRTC 2002-351

Ottawa, 6 November 2002

Fairchild Television Ltd.
Across Canada

Application 2001-0701-2
Public Notice CRTC 2002-6
6 February 2002

Proposal to broadcast separate local programming in Vancouver and Toronto

In this decision, the Commission denies an application by Fairchild Television Ltd. for an amendment to the licence for Fairchild Television to authorize it to broadcast separate local programming in Vancouver and Toronto.

The Commission finds, however, that it is not necessary for national specialty services to obtain prior Commission authorization to time-shift the release of an identical program schedule to different parts of the country in order to take different time zones into account.

The Commission further finds that the current condition of licence for Fairchild Television authorizes it to broadcast up to six minutes per hour of separate local commercial messages.

The application

1.

On 15 June 2001, the Commission received an application by Fairchild Television Ltd. (Fairchild) to amend the licence for the national ethnic specialty service known as Fairchild Television to authorize it to broadcast separate local programming in Vancouver and Toronto. This local programming would comprise a maximum of 10% of each broadcast month. Fairchild considered that approval of its application would permit Fairchild Television to include coverage of local news, elections, fundraisers, telethons and similar charitable events in its programming.

2.

Fairchild Television is currently licensed as a national ethnic specialty service that offers Cantonese-language programming consisting of news, comedy, drama, travel and variety shows. Fairchild is also the licensee of Talentvision, a national ethnic specialty service that provides programming in the Mandarin, Vietnamese and Korean languages. The Commission has also approved applications by Fairchild for seven digital Category 2 ethnic specialty services.

3.

In Public Notice CRTC 2002-6, 6 February 2002, the Commission announced that it had received the current application, and set 13 March 2002 as the deadline for receipt of interventions.

Interventions

4.

The Commission received 1194 interventions in support of Fairchild's application from various community groups and charities, as well as from individual viewers. Many community groups and charities submitted that coverage provided by Fairchild Television contributed greatly to their fundraising efforts. Viewers submitted that local news was very important to them, while news relating to other cities was of little or no interest.

5.

Four broadcasters, CFMT-TV, Multivan Broadcast Corporation (Multivan), Global Television Network Inc. (Global) and LS Movie Channel Limited (LS), intervened in opposition to the application.

6.

Each of the broadcasters that submitted an intervention is involved in ethnic broadcasting. CFMT-TV, which is owned by Rogers Broadcasting Limited (Rogers), is an ethnic television station in Toronto that has operated for many years. In New multilingual ethnic television station to serve Toronto, Broadcasting Decision CRTC 2002-82, 8 April 2002 (Decision 2002-82), the Commission licensed Rogers to operate a second ethnic television station in Toronto. The new Toronto station began broadcasting on 16 September 2002. Since that date, the two Rogers stations have been known as OMNI.1 and OMNI.2.

7.

Multivan was licensed to operate a new ethnic station in Vancouver in New multilingual ethnic station to serve Vancouver, Broadcasting Decision CRTC 2002-39, 14 February 2002 (Decision 2002-39).

8.

Global operates CJNT-TV, an ethnic television station in Montréal.

9.

LS applied to the Commission for a new Category 2 ethnic specialty service. The application was denied in Movie Express - Category 2 specialty service, Broadcasting Decision CRTC 2002-349, 6 November 2002.

10.

Two individuals, Mr. Mathew Mung of Calgary, Alberta and Mr. Jason Leung of Markham, Ontario also submitted interventions in opposition to Fairchild's proposal. Fairchild submitted letters replying to the opposing interveners.

Issues

11.

The Commission considers that there are two main issues to be determined in its consideration of this application:

• Whether Fairchild Television is currently operating in compliance with the conditions of its licence.

• Whether approval of the application could have a negative financial impact on local ethnic television stations in Vancouver and Toronto.

Compliance

Background

12.

On 2 November 2000, CFMT-TV filed a complaint with the Commission alleging that Fairchild Television was providing, via split-feed, both an east and west service and thus was operating in contravention of the condition of its licence that specified that Fairchild Television must provide a national specialty programming undertaking (emphasis added).

13.

The Commission rendered its decision on CFMT-TV's complaint in Complaint resolution - CFMT-TV vs Fairchild Television - Unauthorized operation of Fairchild Television specialty service as two regional feeds, Decision CRTC 2001-271, 18 May 2001 (Decision 2001-271). In this decision, the Commission stated:

. the Commission's review of the Fairchild Television licence shows that it is absent of any condition of licence or authority permitting the distribution of the service as two separate feeds. Based on the foregoing, the Commission hereby directs Fairchild to immediately resume the distribution of its authorized Fairchild Television service as a single national feed. In addition, the Commission directs Fairchild to notify the Commission by letter (with a copy to CFMT-TV), upon the execution of this direction.

14.

The Commission further stated:

With respect to CFMT-TV's concern regarding Fairchild's practice of broadcasting separate local commercials, we note that Fairchild Television's renewal application (Decision CRTC 97-535) set out this authority by condition of licence: "During any clock hour, the licensee shall broadcast not more than eight minutes of commercial messages of which no more than four minutes shall be local commercial messages." This condition was subsequently amended in Decision CRTC 98-138 to ". not more than twelve minutes of commercial messages of which no more than six minutes shall be local commercial messages."

15.

On 31 May 2001, Fairchild submitted a letter in response to Decision 2001-271. In the letter, Fairchild indicated that it had to address certain technical matters before it could achieve full compliance with Decision 2001-271. Fairchild explained that "since its days as Chinavision, the [Fairchild Television] service has distributed separate western and eastern programming. This has been done via separate feeds from two playback centres - one in Toronto and one in Vancouver." Fairchild noted that "in order to implement a single, national feed for programming while retaining the ability to insert local commercials, Fairchild needs to reconstruct its two playback centres so that one acts as a master centre." Fairchild committed to a level of 90% compliance with Decision 2001-271 by 2 July 2001, followed by 100% compliance by 23 July 2001.

Concerns of interveners

16.

CFMT-TV submitted that Fairchild was distributing Fairchild Television using two separate time-shifted feeds without authority from the Commission. CFMT-TV noted that, although some specialty services split their program feeds so that they can offer a single national program schedule on a time-shifted basis, these services have received specific approval from the Commission to do so.

17.

CFMT-TV further claimed that Fairchild Television was not in compliance because it offered different local and national commercial messages on each of its feeds. CFMT-TV and Global submitted that, because Fairchild was authorized to provide a single national service, all viewers should see the same commercial messages regardless of where they lived.

18.

CFMT-TV also submitted that Fairchild Television was not in compliance with the terms of its conditions of licence and Decision 2001-271 because the programming content of each of its time-shifted feeds was not identical. CFMT-TV was of the view that some of the community bulletins, promotional material and other segments offered on one of the Fairchild Television feeds were different from those offered on the other.

The applicant's reply

19.

The applicant addressed the concerns of interveners with respect to time-shifting, the provision of separate commercial messages, and the broadcast of separate local programming for Vancouver and Toronto by Fairchild Television.

20.

Fairchild indicated that it time-shifted its programming schedule between Toronto and Vancouver by three hours. Fairchild stated that time-shifting allowed Fairchild Television to provide a relevant program schedule in both parts of the country, and enabled it to ensure that programming not suitable for children was broadcast after 9 p.m. in each community. Fairchild stated that "it is our understanding that Commission authorization is not required to do a time-shift where the programming schedule is identical."

21.

Fairchild disagreed with the position of CFMT-TV and Global that it was not authorized to broadcast separate local advertising in Toronto and Vancouver. It considered that this matter had been resolved in Decision 2001-271 when the Commission noted that Fairchild Television had been authorized, by condition of licence, to broadcast "not more than twelve minutes of commercial messages of which no more than six minutes shall be local commercial messages." Fairchild admitted, however, that it had sometimes distributed separate national advertising in error, but that the problem had been rectified.

22.

Fairchild further addressed Roger's concern that Fairchild Television was offering different programming on its time-shifted feeds. It indicated that, while it had been distributing separate community bulletins in Toronto and Vancouver, it was now airing identical community bulletins in both areas. Fairchild submitted that any other different programming between the two feeds occurred when the number of local commercial messages in a particular clock hour was different in Vancouver than in Toronto. In those cases, the applicant stated that Fairchild Television broadcasts filler and promotional material of less than one minute in length to make up the difference.

The Commission's determination

23.

The Commission notes that time-shifting an entire program schedule is a common practice among specialty services that are licensed to serve a national audience. This practice is useful to both the licensee and viewers in that it allows programming to be distributed in a manner that takes Canada's different regions and time zones into account. As Fairchild indicated, time-shifting also allows broadcasters to ensure that programming intended for adult audiences is broadcast after 9 p.m. The Commission finds that it is not necessary for national specialty services to obtain prior Commission authorization to time-shift the release of an identical program schedule to different parts of the country in order to take different time zones into account.

24.

With respect to concerns expressed about the broadcast of separate advertising, the Commission notes again the following statement set out in Decision 2001-271:

With respect to CFMT-TV's concern regarding Fairchild's practice of broadcasting separate local commercials, we note that Fairchild Television's renewal application (Decision CRTC 97-535) set out this authority by condition of licence: "During any clock hour, the licensee shall broadcast not more than eight minutes of commercial messages of which no more than four minutes shall be local commercial messages." This condition was subsequently amended in Decision CRTC 98-138 to ".not more than twelve minutes of commercial messages of which no more than six minutes shall be local commercial messages."

25.

In light of the above, the Commission considers that Fairchild Television's condition of licence grants it authority to broadcast up to six minutes per hour of separate local commercial messages. The Commission notes, however, that this condition of licence does not grant Fairchild Television authority to broadcast separate national commercial messages.

26.

Interveners also expressed concern about the broadcast by Fairchild of separate programming, other than local commercial messages, in Vancouver and Toronto. Fairchild agreed that it broadcasts such programming, but only when it was necessary to fill time when the length of the local commercial messages broadcast in one area was shorter than those broadcast in the other.

27.

The Commission notes that in Licence renewal, Decision CRTC 97-535, 29 August 1997, the Commission imposed a condition of licence authorizing Fairchild Television as a "national discretionary specialty service."

28.

Decision 2001-2 71 discussed the issue of separate feeds by Fairchild as follows:

. the Commission's review of the Fairchild Television licence shows that it is absent of any condition of licence or authority permitting the distribution of the service as two separate feeds. Based on the foregoing, the Commission hereby directs Fairchild to immediately resume the distribution of its authorized Fairchild Television service as a single national feed.

29.

In light of the decision set out above, the Commission finds that Fairchild does not have authority to broadcast separate programming on its service, other than six minutes per hour of local commercial messages.

30.

The Commission finds that Fairchild Television's practice of broadcasting filler and promotional material of less than one minute in length to make up the difference when the number of local commercial messages is different in Vancouver than in Toronto is contrary to Fairchild Television's condition of licence.

Competition with over-the-air ethnic stations

Concerns of interveners

31.

LS, CFMT-TV and Global were concerned that the combination of time-shifting and the broadcast of separate local programming in Toronto and Vancouver would allow Fairchild Television to operate, not as a national service, but as a national network with local affiliates in Vancouver and Toronto. As such, Fairchild Television would compete with local ethnic stations in those communities.

32.

Global further submitted that, given the size and economic importance of the Chinese -language programming market in the country, approval of the application would have a significant impact on local ethnic stations, with particularly severe consequences for the new Multivan ethnic station in Vancouver. Global noted that, if the application were approved, Fairchild Television would have access to both advertising revenues and subscription revenues, as well as the ability to offer an entire programming schedule in Chinese that included both local and non-local elements. As such, it would be in a favourable position to compete with over-the-air ethnic stations that do not have access to subscription revenues and must, by condition of licence, offer programming in many languages for a variety of ethnic groups. Multivan argued that approval of the application would have a "material and negative impact" on the ethnic station that it is preparing to launch in Vancouver.

Applicant's reply

33.

Fairchild stated that LS, CFMT-TV and Global's characterization of the application as a proposal to operate a national service with local affiliates in Vancouver and Toronto was a serious distortion of its intent. Fairchild submitted that the purpose of the application was to allow it to add "a modest amount of local insertions to its service."

34.

The applicant indicated that its intention was to "provide within our one-hour news program, a 15 minute local insert of Toronto news for our subscribers in Toronto, and a separate 15-minute insert of Vancouver news for our subscribers in Vancouver. In this way, our subscribers would have news which is relevant and of interest to them." Fairchild noted that, because it offered a single national feed, Vancouver viewers received a Toronto news segment that was of little interest to them; and Toronto viewers watched a Vancouver news segment which, likewise, was of little interest to them. The applicant further considered that approving the application would allow Fairchild Television to provide timely updates to its Vancouver news.

35.

Fairchild noted that it had proposed to offer local programming inserts to a maximum of 10% of the broadcast month. However, the applicant stated that, if the Commission were to decide that a 7% level of local programming in a broadcast month would be preferable, this level would be acceptable to Fairchild and sufficient to meet the local programming needs of Fairchild Television's viewers.

36.

With respect to concerns about the impact that approval of the application would have on existing local ethnic broadcasters, the applicant indicated that it was proposing no change with respect to the amount of local advertising that it would offer. Fairchild noted that it was already subject to a condition of licence that permitted it to broadcast no more than twelve minutes of commercial messages during each clock hour, of which no more than six minutes may be local commercial messages. Since Fairchild already receives local advertising and subscriber revenues, the applicant considered that approval would not result in any shift in the marketplace since it was not proposing any change to its revenue structure.

The Commission's determination

37.

The Commission is concerned about the possible effects of approving this application very shortly after the licensing of new ethnic stations in Vancouver and Toronto. It notes that, under the terms of Decision 2002-39, the new ethnic station in Vancouver licensed to Multivan must, by condition of licence, direct its programming to at least 22 ethnic groups using a minimum of 22 distinct languages. Further, under the terms of Decision 2002-82, the new ethnic station in Toronto licensed to Rogers must, by condition of licence, broadcast programming directed to at least 22 ethnic groups using a minimum of 18 distinct languages.

38.

As Global noted, ethnic stations must operate solely on advertising revenue while specialty services such as Fairchild Television benefit from both advertising revenue and subscriber fees. The Commission further notes that Fairchild Television already has access to local advertising revenues in Toronto and Vancouver. The Commission is concerned that the re-introduction of local programming on Fairchild Television could have a negative impact on the new local ethnic television stations in Vancouver and Toronto at a time when they are just coming on the air and seeking to find an audience.

Conclusion

39.

The Commission considers that the introduction of separate local programming for Vancouver and Toronto on Fairchild Television could have a negative impact on the new local ethnic stations in those communities that are just coming to air and seeking an audience. The Commission further notes that, unlike Fairchild Television, over-the-air ethnic stations must provide service to a variety of ethnic groups in many different languages.

40.

The Commission considers that it would be more appropriate to consider such an application when the licence renewal for Fairchild Television is next considered, and the new ethnic stations in Toronto and Vancouver have had an opportunity to establish themselves in their respective markets. The Commission notes that Fairchild Television's licence expires on 31 August 2004. In light of the above the Commission denies the application by Fairchild.

Secretary General