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Broadcasting Decision CRTC 2003-400
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Ottawa, 15 August 2003
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MusiquePlus Inc.
TVA Group Inc., Films Rozon inc. and BCE Media Inc. (OBCI)
TVA Group Inc., Publications Transcontinental Inc. and BCE
Media Inc. (OBCI)
TVA Group Inc., Global Television Network Inc. and Rogers
Broadcasting Limited (OBCI)
Le Réseau des sports (RDS) inc.
Across Canada
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Applications 2003-0810-8, 2003-0825-6, 2003-0826-4, 2003-0827-2, 2003-0828-0
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Third extension of implementation deadline
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1.
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The Commission received applications by the above licensees to extend the deadline for implementation of the national, digital, French-language, Category 1 specialty television services having the brand names "Perfecto, La Chaîne," "Télé Ha! Ha!," "LCN Affaires," "Canal Mystère" (previously known as "13ième Rue") and "Info-Sports" (previously known as "Réseau Info Sports"). These services were approved in Decisions CRTC 2000-465 (Info-Sports), 2000-466 (Perfecto, La Chaîne), 2000-467 (Télé Ha! Ha!), 2000-468 (LCN Affaires) and 2000-469 (Canal Mystère), 24 November and 14 December 2000. They were to begin operation no later than 24 November 2001, unless the Commission approved a request for an extension before that date.
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2.
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The Commission notes that these applications constitute the third in a series of applications by these licensees to extend the implementation deadline for their services. The first set of applications was approved in Extension of the implementation date to 30 September 2002, Decisions CRTC 2001-528, 28 August 2001 and 2001-639, 5 October 2001, which granted ten-month extensions. The second set of applications was approved in Deadline to commence operations, Broadcasting DecisionCRTC 2002-284, 11 September 2002 and Second deadline to commence operations, Broadcasting Decision CRTC 2002-414, 9 December 2002 (Decision 2002-414), which granted a further extension to 30 September 2003. In their third set of applications, the applicants now propose an extension to 30 September 2004.
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Reasons for a third extension
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3.
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In support of their proposals, the applicants have raised essentially the same arguments that they presented in their applications filed in 2001 and 2002. They submitted that the current climate is not conducive to the launch of new, digital, French-language, category 1 specialty services. They noted in this regard the limited success of the launch of digital English-language specialty services in the fall of 2001, and the fact that, some 18 months after commencing operation, few of the digital English-language specialty services had financial viability in sight. According to the applicants, because the Francophone market is smaller than the Anglophone market, a certain degree of prudence is required.
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4.
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The applicants also submitted that the number of digital decoders currently deployed in in the Francophone market is below the critical level required to ensure a successful launch for the French-language services. The applicants estimate that, of a total of some 3.6 million digital households across Canada, approximately 800,000 are in Quebec, and that 85% of these are Francophone households.
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5.
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The applicants also noted that negotiations with distribution undertakings to reach contractual agreements on pricing, conditions of distribution and projected penetration levels have been difficult and remain in their preliminary stages. They also noted the difficulties created by piracy and the illegal decoding of the signals distributed by direct broadcast satellite undertakings. Further, they noted that they would be unable to launch the services in the fall of 2003, and that the late summer/early fall period is generally considered as being the optimum time for launching new services.
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The Commission's analysis and conclusion
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6.
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The Commission approved the original applications proposing these services in November and December 2000, following a competitive process that included its consideration of other applications proposing new French-language services. Among the principal criteria used by the Commission in choosing among these competing applications were the "reasonableness of the business plan and ability to fulfil proposed commitments".
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7.
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When it granted the first extension to the implementation deadline, the Commission reminded the applicants that the extension did not exempt them from their obligation to commence operation of these specialty services as soon as possible. In Decision 2002-414 approving a second extension, the Commission expressed the view that the broadcasting environment of the day favoured the rapid deployment of these specialty services. It therefore expected the licensees to do everything in their power to commence operation of these services as soon as possible.
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8.
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In their applications filed in 2001 and 2002, the applicants had indicated that they hoped to obtain more data generated following the launch of the English-language services, and to benefit from the lessons of that experience, with a view to ensuring a more successful launch for the French-language specialty services. The Commission considers that, with the passage of more than three years, the licensees will have sufficient information to enable them to minimize the financial risks associated with the launch of their respective services.
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9.
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The business plans before the Commission at the time these services were first licensed had been based on digital subscriber projections confirmed by the Canadian Cable Television Association. The minimum number of francophone digital subscribers necessary to launch the services in the first years was to have been between approximately 150,000 and 500,000. As the applicants have noted in their current applications, the level of digital penetration in Quebec now stands at 800,000 households, over 600,000 of which are French-speaking. The Commission estimates that the current digital penetration levels approximate those set out in the year five projections filed initially by the licensees. The licensees should therefore take advantage of launch conditions that would allow them to avoid the deficit years that they had projected in their original business plans.
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10.
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The climate surrounding negotiations between programming and distribution undertakings appears to have improved since last year. In addition, the various measures that have been taken by specialty service operators, distributors and government and legal authorities to counter signal piracy will only serve to increase the number of potential French-language digital service subscribers.
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11.
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After taking into consideration all of the above factors and the arguments put forth by the applicants, the Commission approves the applications to extend the implementation date of the national, digital, French-language, Category 1 specialty television services "Perfecto, La Chaîne," "Télé Ha! Ha!," "LCN Affaires," "Canal Mystère" and "Info-Sports." The Commission grants a final extension to 30 September 2004.
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12.
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The licences will not be issued, unless the licensees have commenced operating their respective services by no later than 30 September 2004.
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Secretary General
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This decision is to be appended to each licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca
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Date Modified: 2003-08-15
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