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ARCHIVED - Broadcasting Decision CRTC 2004-467

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Broadcasting Decision CRTC 2004-467

  Ottawa, 25 October 2004
  TV5 Québec Canada
Across Canada
  Application 2003-1914-6
Broadcasting Public Notice CRTC 2004-26
23 April 2004
 

TV5 Québec Canada - Licence amendment

  The Commission approves the application by TV5 Québec Canada to amend the licence of the specialty programming undertaking TV5 Québec Canada. The Commission replaces the licensee's current condition of licence with respect to advertising material with a condition of licence that authorizes the licensee to distribute a maximum of 12 minutes of national advertising material during each clock hour.
 

The application

1.

The Commission received an application by TV5 Québec Canada (TV5) to amend the broadcasting licence for the specialty programming undertaking TV5 Québec Canada.

2.

TV5 requested an amendment to its condition of licence relating to the distribution of advertising material. The current condition of licence no. 4, as set out in Renewal for the licence of TV5 Québec Canada, Broadcasting Decision 2003-77, 27 February 2003 (Decision 2003-77), reads as follows:
 

4. The licensee shall not distribute any advertising material other than a maximum of 3 minutes during each clock hour of national sponsorship or institutional advertising, and material promoting the service or one of its programs.

 

Sponsorship advertising is not permitted in newscasts. Sponsorship messages shall only be placed at the beginning and/or end of programs. All sponsored programs must clearly identify the name of the sponsor.

 

Institutional advertising messages shall have no connection in terms of content with sponsored programs. Institutional advertising messages shall be permitted to interrupt only those programs that last at least two hours and have one or more natural breaks, such as an intermission in a play or concert. Institutional advertising is not permitted on behalf of companies whose primary products are drugs, alcoholic beverages or tobacco products.

 

For the purpose of this condition, the following definitions apply:

 

(i) Sponsorship advertising: Sponsorship advertising consists in the visual presentation, in exchange for a direct or indirect financial contribution to the program, of the name and distinctive signs or symbols of a firm, along with a sound accompaniment of the following type:

 

"This program has been made (was made) possible through the co- operation of (name of company)"; or "This program has been made (was made) possible through the co-operation of (name of company), maker of (product)"; or "This program has been (was) presented to you by (name of product)."

 

Sponsorship advertising does not include the promotion of the features of the goods and services produced and/or offered by the sponsoring firm.

 

(ii) Institutional advertising: Institutional advertising consists of an identification of the advertiser by name, corporate logo or distinguishing visual or sound symbol. While the accompanying text may include a musical background or an institutional slogan, institutional advertising does not include promotion of the range of products or services offered or the use of such products or services.

3.

TV5 stated that its subscription revenues are stagnant and that it is seeking new revenue sources. In TV5's view, advertising revenues would be the best solution. Accordingly, TV5 requested authorization to replace its current condition of licence no. 4 with the following condition of licence:
 

4.(a) The licensee shall not distribute more than 12 minutes of advertising material during each clock hour.

 

(b) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.

 

(c) For the purpose of this condition, advertising material does not include a promotion for a Canadian program to be broadcast by the licensee notwithstanding that a sponsor is identified in the title of the program or is identified as a sponsor of that program, where the identification is limited to the name of the sponsor only and does not include a description or representation of the products or services or any attributes of the sponsor's products or services.

 

(d) The licensee shall not distribute commercial messages during any program that has as its target audience children up to five years of age.

 

(e) The licensee shall not distribute any advertising material other than national advertising.

4.

In addition, TV5 made a commitment to devote a minimum of 10% of its total expenditures for the acquisition of Canadian programs, including expenditures for investment and broadcasting rights, to the acquisition of original, French-language programs that reflect the realities, achievements or aspirations of Canada's French-language communities in a minority environment or in the regions. According to TV5, this commitment would provide Francophone producers in minority communities or in the regions with the assurance of a permanent national broadcasting window for their programs. French-language communities in a minority environment or in the regions would have a French-language specialty television service where they would regularly find an active and dynamic reflection of their situation, their achievements and their aspirations. This commitment was contingent upon the Commission's approval of TV5's application.

5.

TV5, however, also requested the flexibility to apply this commitment on a multi-year basis to enable it to adjust its annual expenditures based on the number, quality and average budgets of projects submitted. Moreover, TV5 stated that, by the end of its licence term, these expenditures would represent at least 10% of its total expenditures to acquire Canadian programs for the period.

6.

TV5 affirmed that, based on its financial projections, more than $1.1 million would thus be added to its combined total for Canadian programming expenditures for the last four years of its licence term. The main beneficiary of this increase would be Canada's independent production industry, because most of the service's Canadian programming expenditures would be for the acquisition of independently produced original Canadian programming.

7.

TV5 also made a commitment to devote 1% of advertising revenue generated annually to the support and promotion of activities and events that reflect the ethno-cultural diversity of French-Canadian society. This support could be in the form of on-air sponsorships or promotions of French-Canadian activities and events. This commitment was also contingent upon the Commission's approval of TV5's application.

8.

In support of its application, TV5 stated that it had experienced almost stagnant growth in terms of subscription revenue from 1996 to 2003. According to TV5, this situation should continue until the end of its current licence term for the following reasons:
 
  • TV5 Québec Canada's monthly wholesale fee has not changed since 1989 and will remain static until the end of its current licence term;
 
  • the increase in direct-to-home (DTH) distribution, for which undertakings are not required to distribute TV5 Québec Canada as part of the basic service, has been to the detriment of terrestrial distribution;
 
  • TV5 Québec Canada is having difficulty remaining on Canadian English-language basic analog cable service.

9.

TV5 stated that it was aware of this established fact at the time it filed its licence renewal application, but acknowledged that it had not included the matter of seeking new revenues in that application because of a reorganization of its management team in March 2002. TV5 maintained that the new management team did not have sufficient time to study this issue to be able to include it in its licence renewal application.

10.

TV5 noted that it is administered on a break-even basis and is not required to make a profit. All of its revenue is used to carry out its activities. In the past, TV5 was required to rely on management savings, productivity gains and labour downsizing to make up for increases in the cost of living, production costs and fees for broadcasting rights. TV5 maintained that it has done as much as it can in this respect.

11.

TV5 emphasized that it had elected to seek access to advertising revenue rather than an increase in the wholesale fee to make up for the anticipated shortfall because this option is consistent with the Commission's policies and decisions as well as those of the TV5 international network.
 

Interventions

12.

The Commission received 60 interventions in connection with this application. Of these interventions, 51, including 36 circular letters, supported the application, eight opposed it and one commented on it. The interventions are discussed below.

13.

The Centre culturel francophone de Vancouver, the Société franco-manitobaine, the Association des producteurs de films et de télévision du Québec (APFTQ), the Association Amitiés Québec-Vénézuela, the Syndicat des employé(e)s de TV5 - CSN (CSN), the Alliance des producteurs francophones du Canada (APFC), the Alliance des radios communautaires du Canada (ARC du Canada), Coup de cour francophone, Vues d'Afrique, the Conseil de la vie française en Amérique, as well as Francophone producers Bellefeuille Production ltée, Constellations 2001 inc., Groupe ECP, Filmovie, and Télé.vision, all supported the application.

14.

The Centre culturel francophone de Vancouver stated that it has found TV5 Québec Canada to be a tireless ally of the Francophone community in British Columbia and of the intervener's organization through programs such as Les Arts et les autres, PassepArt, and 24 heures à Vancouver and through the service's support by means of promotional campaigns for Francophone cultural events in Vancouver. The intervener also stressed TV5 Québec Canada's boldness and imagination in supporting the development and vitality of Francophone cultural life in British Columbia and added that the quality of this support was first-rate. In the intervener's opinion, TV5 Québec Canada has become a key link in Francophone cultural revitalization across Canada.

15.

The Société franco-manitobaine, APFTQ, ARC du Canada, Groupe ECP and Filmovie noted TV5's commitment to devote a minimum of 10% of its total Canadian program acquisition expenditures to original French-language programs that reflect the realities and achievements of Canada's French-language minority communities and that would be produced by independent Canadian production companies outside Quebec or in the regions.

16.

APFC also noted this commitment, but added that it considered it insufficient and suggested that, without denying Quebec regions their fair share, the commitment of 10% should instead be devoted solely to production companies outside Quebec. APFC added that, as of this year, the Canadian Television Fund has allocated 10% of the Francophone production envelope to a fund earmarked for productions in Francophone minority regions.

17.

APFTQ stated that access to advertising revenue would enable TV5 Québec Canada to increase its Canadian programming expenditures by more than $1 million by the end of its licence term, thereby benefiting both the public and the French-language independent production community.

18.

The Association Amitiés Québec-Vénézuela stated that TV5 Québec Canada has put a great deal of emphasis on cultural communities through its program D'ici et d'ailleurs and played a key role in publicizing the various cultural communities and promoting their integration into Canadian society. Like Groupe ECP, Filmovie and Vues d'Afrique, the Association Amitiés Québec-Vénézuela noted the applicant's commitment to devote a minimum of 1% annual advertising revenue to support and promote activities and events that reflect the ethno-cultural diversity of French-Canadian society.

19.

Bellefeuille Production ltée noted the considerable effort made by TV5 Québec Canada to integrate Francophone Canada's vision into its programming as well as TV5 Québec Canada's great willingness to carry out projects from Francophone regions of Canada. According to Bellefeuille Production ltée, the approval of this application would allow TV5 Québec Canada to become the television beacon that Canada's Francophone minority communities have been seeking.

20.

Constellations 2001 inc. and CSN also supported the application. Constellations 2001 inc. added that TV5 Québec Canada has become a key partner in the broadcast of regional programs featuring regional artists, while CSN requested that the Commission impose a condition of licence to ensure that all management, sales and airing of advertising and sponsorships be done in-house.

21.

The opposing interventions and the comment were filed by TQS inc. (TQS), Groupe TVA inc. (Groupe TVA) and seven TV5 Québec Canada viewers.

22.

TQS opposed the application on the grounds that TV5 had already forecast the stagnation of its revenue in its licence renewal application and had submitted its economic model accordingly. In TQS's view, the stagnations of TV5's revenue was not a new development that could justify an amendment to its conditions of licence so soon after its licence renewal. According to TQS, TV5's concern over revenue stagnation is not sufficient grounds to justify the present application. TQS also noted that the March 2002 reorganization of TV5's management team was an internal management issue and should have been addressed at the time of TV5's licence renewal. TQS also indicated that increasing the amount of time for the distribution of advertising material was not advisable because the advertising market already accounted for a substantial amount of air time, a trend which has increased steadily over the past twenty years. The intervener further contended that, in terms of cost per thousand, the Montréal market is already undervalued compared to the Toronto and Vancouver markets and that approval of TV5's application would only exacerbate that imbalance.

23.

Groupe TVA also opposed the application on the grounds that market conditions had not changed significantly since TV5 Québec Canada's licence renewal. The intervener noted that, while TV5 had not requested to increase its subscription revenue or to amend the rules governing its access to advertising revenue at the time of its licence renewal, it did ask the Commission to clarify the requirements for distributors, such as Vidéotron and Cogéco, to distribute TV5's signal in both analog and digital format. In Decision 2003-77, the Commission confirmed the requirements for distributors in this respect. According to Groupe TVA, the requirements for distributors with respect to TV5 Québec Canada constitute a privilege and ensure the stabilization of TV5 Québec Canada's subscription revenue. Groupe TVA disagreed with TV5's claim that its subscription revenue would be stagnant if the application were denied. Groupe TVA further submitted that TV5 Québec Canada has benefited from its conditions of licence, from diversified sources of funding and from the support of governments, and that it would, therefore, not be appropriate for the Commission to grant TV5 Québec Canada access to the Quebec advertising market in the same way as it does for private, general-interest channels for whom advertising revenue is the sole source of revenue. Groupe TVA also noted that, since TV5's reorganization, private broadcasters were no longer part of the TV5 Québec Canada consortium. Groupe TVA noted that a mere mention of the 15% Canadian content offered by TV5 Québec Canada could not justify open access to the advertising market. In Groupe TVA's view, the Commission would be establishing a precedent that would encourage other specialty services to also request a reduction in their Canadian content requirements.

24.

The TV5 Québec Canada viewers stated that they value the service's programming. They specifically noted that TV5 Québec Canada does not air commercials and expressed the hope that this would continue to be the case. In their opinion, television stations, in general, air too much advertising.
 

TV5's response

25.

In response to APFC, TV5 stated that it was aware of the specific needs of Francophone producers outside Quebec and that it would endeavour, whenever possible, to direct up to 10% of its total expenditures for the acquisition of Canadian programs to them. TV5, however, did not make a commitment in this regard.

26.

TV5 stated that it appreciated CSN's support, but explained that it could not agree to the suggestion that it carry out these changes in-house rather than contracting out the sale of advertising to an existing advertising agency. In TV5's opinion, carrying out these functions in-house would involve disproportionate costs for infrastructure and staff in relation to the advertising revenue it expected to generate, thereby reducing the financial flexibility it was seeking. This flexibility is needed to enhance TV5 Québec Canada's Canadian programming, to strengthen its links with producers in the regions and outside Quebec, to provide its staff with improved research instruments, to improve the promotion of TV5 Québec Canada, both on-air and off-air, and to develop its audience relations service.

27.

TV5 pointed out that none of the French-language specialty services intervened in opposition to its application. According to TV5, this neutrality constitutes an implicit acknowledgement that granting it access to advertising revenues would not unduly affect the ability of other French-language specialty services to meet their obligations under the Broadcasting Act (the Act).

28.

In response to the comments by Groupe TVA and TQS that TV5 had not requested the proposed licence amendment at the time of its licence renewal, the applicant reiterated the arguments set out earlier in this decision.

29.

With respect to TV5 Québec Canada's distribution on basic service, the applicant emphasized that, contrary to Groupe TVA's comments, TV5 Québec Canada did not enjoy any privileges. It noted that the five French-language specialty services approved in 1987 were all distributed on basic service. TV5 stated that TV5 Québec Canada's distribution of basic service is due to the Commission's general policies, not from some privileged treatment given only to TV5 Québec Canada.

30.

The applicant added that, in its opinion, TQS and Groupe TVA failed to demonstrate that allowing an independent, not-for-profit specialty service, such as TV5 Québec Canada, to access advertising revenues could cause serious harm to the interveners and compromise their ability to fulfil their obligations under the Act.

31.

TV5 further noted that the cost per thousand in Montréal's traditional French-language television market has been lower than that in the Toronto and Vancouver English-language markets for decades, that there was no relationship between these cost-per-thousand variances and the introduction of specialty services. TV5 also stated that, over the past five years, the number of English-language specialty services has increased at a much steadier pace than the number of French-language specialty services. It added that, based on TQS's reasoning, the cost-per-thousand in English-language markets should therefore be in continuous decline and lower than that in French-language markets, given that the total number of advertising minutes is much higher. TV5 pointed out that the opposite is actually the case.

32.

In response to Groupe TVA's comment regarding TV5 Québec Canada's 15% Canadian content requirement, the applicant explained that this level was consistent with its original 1987 mission. The applicant also stated that its Canadian programming expenditure requirements are the most stringent of all the Canadian specialty services.

33.

With respect to the interventions submitted by viewers, TV5 stated that, if its application were approved, it would introduce advertising in a responsible fashion and with the utmost respect for content integrity. The applicant also made a commitment not to distribute commercial messages during any program whose target audience is children up to five years of age.

34.

Finally, the applicant invited the interveners to consider the benefits that would be derived from allowing TV5 Québec Canada access to advertising revenue in terms of the enhancement to the service's programming, its increased ability to broadcast live from major events, its reflection of French-Canadian diversity and improvement of its audience services.
 

The Commission's analysis and determination

35.

The Commission has examined the application carefully, taking into account the views of the applicant and the interveners. The Commission notes that the applicant's two commitments are related to its application to increase the amount of advertising material it distributes.

36.

The Commission notes the applicant's commitment to devote a minimum of 10% of its total expenditures for the acquisition of Canadian programs, including expenditures for investment and broadcasting rights, to the acquisition of original, French-language programs that reflect the realities, achievements or aspirations of Canada's French-language communities in a minority environment or in the regions. The Commission considers that this commitment is likely to ensure that French-language minority communities are reflected in TV5 Québec Canada's programming, and that this commitment falls within the scope of the Commission's policy to strengthen the focus on French-language minorities within the Canadian broadcasting system.

37.

In Achieving a better balance: Report on French-language broadcasting services in a minority environment, Public Notice CRTC 2001-25, 12 February 2001, the Commission emphasized, among other things, that TV5 now has a licence authorizing the national distribution of its service and that TV5 Québec Canada remained the second most distributed analog specialty service outside Quebec. The Commission also noted that the level of satisfaction with specialty services once they were known to Francophones living in minority communities was significant. The Commission added that, following the implementation of the digital distribution policy, TV5 Québec Canada would benefit from increased distribution. The Commission was therefore of the opinion that an examination should be conducted of how this licensee could ensure that French-language minorities are reflected at the time of its licence renewal.

38.

The Commission notes the unequivocal support for the present application by interveners in Francophone communities outside Quebec and in the regions, namely producers who benefit directly from these commitments. The Commission also notes the comment made by the APFC, which, while supporting the application, submitted that the 10% commitment is not enough.

39.

The Commission is of the opinion that the applicant's commitment with regard to expenditures for Canadian programming, as proposed, could result in the 10% being devoted exclusively to producers in the regions of Quebec, excluding Francophone producers outside Quebec, or vice versa. The Commission considers that TV5 Québec Canada's mandate, specifically with respect to reflecting Francophone communities outside Quebec, would be better served by increasing the 10% commitment made by the applicant. The Commission also considers that the following additional requirements imposed on TV5 Québec Canada are consistent with its condition of licence that defines its nature of service, namely that its Canadian programming reflect the diversity of Francophone Canada.

40.

Accordingly, the Commission is imposing the following condition of licence:
The licensee shall devote, in each year of the licence term, averaged over the broadcast year, a minimum of 10% of its total expenditures for the acquisition of Canadian programs, including expenditures for investment and broadcasting rights, to the acquisition of original, French-language programs that reflect the realities, achievements or aspirations of Canada's French-language communities in a minority environment or in the regions. These programs must be produced outside the census metropolitan area of Montréal as defined by Statistics Canada. At least 50% of this expenditure must be devoted to original productions from outside Quebec.

41.

In addition, the Commission considers that TV5's contribution could be increased in light of the amount of potential revenue it could gain from the ability to air more advertising material. Accordingly, the Commission expects that, by the end of its licence term, TV5 will increase from 10% to 15% the minimum amount of expenditures for the acquisition of original, French-language programs that reflect Francophone communities outside Quebec or in the regions, while at all times ensuring that a least 50% of these expenditures reflect Francophone communities outside Quebec.

42.

The Commission also notes TV5's commitment to devote 1% of the advertising revenue generated annually to the support and promotion of activities and events that reflect the ethno-cultural diversity of French-Canadian society. This support could be in the form of on-air sponsorships or promotions of French-Canadian activities and events. The Commission expects TV5 to abide by this commitment.

43.

Finally, the Commission has assessed the impact that allowing TV5 to access additional advertising revenue would have on TQS and Groupe TVA, and concluded that the impact on each network would be minimal. Based on the foregoing, the Commission approves the application byTV5 Québec Canada to amend the broadcasting licence of its specialty programming undertaking in order to replace the current condition of licence no. 4 with the following condition of licence:
 

4.(a) The licensee shall not distribute more than 12 minutes of advertising material during each clock hour.

 

(b) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.

 

(c) For the purpose of this condition, advertising material does not include a promotion for a Canadian program to be broadcast by the licensee notwithstanding that a sponsor is identified in the title of the program or is identified as a sponsor of that program, where the identification is limited to the name of the sponsor only and does not include a description or representation of the products or services or any attributes of the sponsor's products or services.

 

(d) The licensee shall not distribute commercial messages during any program that has as its target audience children up to five years of age.

 

(e) The licensee shall not distribute any advertising material other than national advertising.

  Secretary General
  This decision is to be appended to the licence. It is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca.

Date Modified: 2004-10-25

Date modified: