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Broadcasting Decision CRTC 2003-132
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Ottawa, 30 April 2003
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Shaw Pay-Per-View Ltd. (formerly Corus VC Ltd.)
British Columbia, Alberta, Saskatchewan, Manitoba,
Yukon Territory, Nunavut and Northwest Territories
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Application 2002-0407-4
Public Hearing at St. John's, Newfoundland and Labrador
10 December 2002
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Licence renewal for Viewer's Choice direct-to-home pay-per-view television service
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1.
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The Commission received an application by Shaw Pay-Per-View Ltd. (Shaw) (formerly Corus VC Ltd.) for the renewal of the licence for the regional English-language general interest direct-to-home (DTH) pay-per-view (PPV) television service, known as Viewer's Choice. The service is distributed exclusively by licensed DTH satellite distribution undertakings to subscribers in British Columbia, Alberta, Saskatchewan, Manitoba, the Yukon Territory, Nunavut and the Northwest Territories.
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2.
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The Commission has reviewed the licensee's performance over the current licence term, and is satisfied that it has met the expectations and complied with each of the conditions set out in the current licence. The Commission renews the licence for Viewer's Choice, from 1 September 2003 to 31 August 2010. The licence will be subject to the conditions set out in the appendix to this decision.
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3.
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The Commission has deleted the current conditions of licence no. 2 and no. 3 regarding commercial messages as well as no.11, which prohibits the licensee from acquiring exclusive or any other preferential rights to pay-per-view programming exhibited as part of its service. The provisions of these conditions of licence are now incorporated in the Pay Television Regulations, 1990 (the Pay Television Regulations).
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4.
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As announced in Broadcasting Notice of Public Hearing 2002-11, 4 October 2002, Shaw, in its licence renewal application, proposed to amend the methodology used for calculating its minimum annual contribution to Canadian independent program production. The Alberta Motion Picture Industries Association (AMPIA) submitted an intervention that, while supporting Viewer's Choice licence renewal, expressed concern regarding the licensee's proposal to change the manner in which its contributions to independent program production would be calculated. This issue is discussed below.
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Contributions to Canadian independent program production
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The proposal
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5.
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Under its current condition of licence, Shaw must contribute a minimum of 5% of its gross annual revenues to an independent Canadian production fund for the support of independently produced Canadian programming. For the purpose of this condition, the licensee's gross annual revenues are deemed to be the total retail revenues received from customers.
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6.
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As part of its licence renewal application, Shaw proposed that, for the purpose of this condition of licence during the new licence term, its gross revenues be deemed to be 50% of total retail revenues received from customers. In support of its proposal, the licensee pointed out that its DTH PPV undertaking is integrated with the DTH broadcasting distribution undertaking (BDU) operated by Star Choice Television Network Inc. Shaw submitted that the proposed amendment to its condition of licence would be consistent with the Commission's treatment of video-on-demand (VOD) undertakings that are integrated with BDUs, as set out in Introductory statement to Decisions CRTC 2000-733 to 2000-738: Licensing of new video-on-demand and pay-per-view services, Public Notice CRTC 2000-172, 14 December 2000 (Public Notice 2000-172).
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7.
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The Commission asked Shaw to submit documentation comparing the level of contributions to Canadian independent production that would be required over a seven-year licence term under the current condition of licence with the level of contributions that would be required over the same period if the proposed amendment were approved. Shaw's response indicated that its total contributions under the proposed condition of licence would be approximately $1 million less, i.e. 14% less, over the new licence term than what would be required under the current condition of licence.
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Intervention
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8.
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In its intervention, the AMPIA contended that the documentation filed by Shaw in response to the Commission's request revealed that there would be a "disturbing reduction of funding for Canadian programming" over the new licence term if the proposal were approved. AMPIA considered that the integration of the licensee's DTH PPV service with Star Choice's DTH BDU should not result in a substantial decrease in the licensee's financial contributions to the production of Canadian programming. The intervener argued that the current condition of licence should be maintained for the new licence term.
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The licensee's response
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9.
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In response, Shaw reiterated that the proposed change in the methodology for calculating its contributions to Canadian independent program production would be consistent with the Commission's treatment of integrated VOD and BDU undertakings.
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The Commission's analysis and determination
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10.
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The Commission notes that the methodology contained in the licensee's current condition of licence for calculating its contributions to Canadian independent program production is consistent with the Commission's treatment of other DTH PPV licensees.
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11.
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The Commission's analysis of the documentation submitted by Shaw indicates that, under the proposed condition of licence, the decrease in the total contributions to Canadian independent program production over the new seven-year licence term would be even greater than the amount envisaged by the licensee. Specifically, the Commission finds that the decrease in total contributions would be $1.65 million lower, i.e. 21% lower, than under the current condition of licence. At the same time, the Commission notes that Viewer's Choice has generated profits since its launch in 1998 and that, according to the licensee's financial summary filed with its application, profits have grown in excess of 50% in each year since 1999 with a profit before interest and tax of just over $1.7 million in 2001.
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12.
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The Commission considers that approval of the licensee's request would result in a significant reduction in the level of its contributions to Canadian independent program production. Furthermore, in the Commission's view, the licensee has not demonstrated that any financial harm will result from maintaining the existing condition of licence.
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13.
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For these reasons, the Commission denies the licensee's request to amend its condition of licence with respect to its contributions to Canadian independent program production and will maintain the current condition of licence for the new licence term. The condition is set out in the appendix to this decision.
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Programming
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Adult programming
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14.
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The Commission expects the licensee to adhere to its internal policy on adult programming to ensure that such programming complies with provincial film classification and Canadian legislation.
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15.
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In August 2001, the Commission asked the industry to develop a new code in order to more effectively address the broadcast of adult programming on pay, PPV and VOD services. On 6 March 2003, the Commission approved and announced the new code in Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, Broadcasting Public Notice CRTC 2003-10.
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Offering programs in packages
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16.
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Consistent with Public Notice 2000-172, the Commission expects that, with the exception of the events programming identified in the paragraph below, the licensee will only offer programming packages where the total period during which the programming is to be viewed does not exceed one week.
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17.
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The Commission recognizes that some packages of events programming, such as seasonal sports or a Christmas concert series, make attractive programming packages that naturally continue longer than one week and that such programming is particularly appropriate for PPV television services. For this reason, the Commission will not apply the limitation of one week to packages that are exclusively comprised of events. The Commission, nevertheless, expects that the events programming will be limited to the events themselves and not include "wrap-around" programming that would tend to give the package the characteristics of a specialty service.
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Cultural diversity
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Section 3(1)(d)(iii) of the Broadcasting Act stipulates 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."
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19.
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The Commission expects the licensee to:
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- contribute to a broadcasting system that accurately reflects the presence in Canada of cultural and racial minorities and Aboriginal peoples; and
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- ensure that the on-screen portrayal of such groups is accurate, fair and free of stereotypes.
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Service to persons with hearing impairments
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20.
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The Commission is committed to improving service to viewers who are deaf or hard of hearing, and has consistently encouraged broadcasters to increase the amount of closed captioned programming they broadcast. The Commission generally requires all broadcasters to offer a minimum percentage of closed captioned programs consistent with the nature of their services.
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21.
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In the present case, the licensee made a commitment to close caption most of the first run feature films and events as well as all acquired feature films aired on its service during each broadcast year of the new licence term.
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22.
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The Commission notes that other PPV television services are subject to a condition of licence requiring that they close caption 90% of all their programming. The Commission considers that it is reasonable to require the licensee to close caption 90% of all of the programming broadcast on Viewer's Choice during each broadcast year of the new licence term. A condition of licence to that effect is set out in the appendix to this decision.
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23.
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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.
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24.
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The Commission expects the licensee to focus on improving the quality, reliability and accuracy of its closed captioning, and to work with representatives of the deaf and hard of hearing community to ensure that captioning continues to meet their needs.
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Service to persons with visual impairments
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25.
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The Commission is also committed to improving service to viewers who have visual impairments. Described video and audio description are methods of providing service that meets the needs of these viewers.
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26.
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Described video, or video description as it is also known, consists of narrative descriptions of a program's key visual elements so that people who have visual impairments are able to form a mental picture of what is occurring on the screen. These descriptions are most often provided in a closed format, delivered by the secondary audio programming (SAP) channel, that is audible only to people who have selected that option.
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27.
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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 persons who have visual impairments can receive the information.
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28.
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The licensee stated that, given the make of its customers' set-top box, technical difficulties currently constrain its ability to provide described video and SAP programming. According to the licensee, with its system of digital delivery, reception of described video and access to the SAP channel are not available at this time.
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29.
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The Commission notes that, while the closed format is the preferred option for most broadcasters, described video can also be provided in an open format that is delivered as part of the original broadcast signal and is audible to all audiences. Accordingly, the Commission encourages the licensee to offer open description of its programs, where available, until such time as the technical difficulties associated with providing described video in a closed format are resolved.
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30.
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The Commission expects the licensee to work with BDUs to eliminate the impediments to providing described video in a closed format. Once a solution has been achieved, the Commission expects the licensee to acquire and broadcast the described versions of programs, wherever possible.
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31.
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The Commission also expects the licensee to provide audio description of any information presented in alphanumeric format, for example, that offered on the barker channel.
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32.
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The Commission further expects the licensee to take the necessary steps to ensure that its customer service responds to the needs of viewers with visual impairments.
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Compliance with industry codes
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33.
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In accordance with its usual practice for pay television services, the Commission is imposing a condition of licence on Viewer's Choice requiring the licensee to adhere to the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services.
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34.
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The Commission is also imposing conditions of licence requiring the licensee to adhere to industry codes related to violence and sex-role portrayal.
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Employment equity
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35.
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Because this licensee is subject to the Employment Equity Act and files reports concerning employment equity with Human Resources Development Canada, its employment equity practices are not examined by the Commission.
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Secretary General
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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: http://www.crtc.gc.ca
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Appendix to Broadcasting Decision CRTC 2003-132
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Regional English-language general interest direct-to-home (DTH) pay-per-view (PPV) television service known as Viewer's Choice
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Conditions of licence
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1. The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of paragraphs 3(2) (e) and (f). The definition of "licensee" contained in subsection 2(1) is not applicable.
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2. Except as may otherwise be authorized by the Commission upon application, the licensee shall not distribute programming, other than filler programming, that is produced by the licensee after today's date, or that is produced by a person related to the licensee after the later of today's date and the day on which the person becomes related to the licensee.
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3. The licensee shall not enter into an affiliation agreement with the licensee of a DTH distribution undertaking, unless the agreement incorporates a prohibition against the linkage of the licensee's service with any non-Canadian discretionary service.
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4. The licensee shall, through its agreements with the licensees of DTH distribution undertakings, ensure that, in each broadcast year, the following are made available by these licensees to their pay-per-view subscribers:
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a) a minimum of 12 Canadian feature films (including all new Canadian feature films that are suitable for pay-per-view exhibition and meet the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services);
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b) a minimum of four Canadian-based events;
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c) a minimum 1:20 ratio of Canadian to non-Canadian first-run film titles; and
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d) a minimum 1:7 ratio of Canadian to non-Canadian events.
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5. The licensee shall remit to the rights holders of all Canadian films, 100% of the revenues earned by the licensee from the exhibition of these films.
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6. The licensee shall contribute a minimum of 5% of its gross annual revenues derived from its DTH pay-per-view broadcasting activities to independently administered Canadian funds, to support the development of Canadian programming. As part of this condition, the licensee is required to report to the Commission, naming the authorized fund to which it will make its contributions. Contributions shall take the form of monthly instalments, remitted within 45 days of month's end and representing a minimum of 5% of that month's gross revenues. For the purposes of this condition of licence, the gross annual revenues are deemed to be the total retail revenues received from customers.
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7. The licensee shall caption at least 90% of all programs that it airs in each broadcast year of the licence term.
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8. The licensee shall adhere to the guidelines on gender portrayal, set out in the Canadian Association of Broadcasters' Sex-role portrayal code for television and radio programming, as amended from time to time and accepted by the Commission.
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9. The licensee shall adhere to the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, as amended from time to time and accepted by the Commission.
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10. The licensee shall adhere to the Pay television and pay-per-view programming code regarding violence, as amended from time to time and accepted by the Commission.
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For the purpose of the above conditions of licence, "broadcast year" means the period between 1 September in any year and terminating the following 31 August.
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Date Modified: 2003-04-30