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Broadcasting Public Notice CRTC 2005-42
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Ottawa, 29 April 2005
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Call for comments on a proposal to accord confidentiality to the detailed financial information provided to the Commission in the annual returns of pay and specialty programming services
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The Commission invites comments with respect to a proposal to accord confidentiality to the detailed financial information provided to the Commission in the annual returns of pay and specialty programming services. Comments must be submitted on or before 30 May 2005.
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Introduction
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1.
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In Call for comments on possible requirements for the provision of notice to programming services by distributors of their plans to change packages, Broadcasting Public Notice CRTC 2004-64, 25 August 2004 (Public Notice 2004-64), the Commission invited comments regarding possible measures to ensure that negotiations between broadcasting distribution undertakings (BDUs) and programming undertakings (programmers) are conducted in accordance with good commercial practices. The Commission recently announced its determinations with respect to those matters in Good commercial practices, Broadcasting Public Notice CRTC 2005-35, 18 April 2005.
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2.
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One of the measures proposed in the comments filed in response to Public Notice 2004-64 was that the Commission accord confidentiality to the detailed financial information contained in the annual returns of pay and specialty programming services as a way to reduce a perceived imbalance in bargaining power in favour of BDUs vis à vis programmers. It was suggested that this disparity does not promote the conduct of negotiations between the parties in accordance with good commercial practices.
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3.
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More specifically, CTV Inc. (CTV) submitted that the Commission's treatment of the financial and operating data contained in the annual returns of BDUs varies considerably from its treatment of such data contained in the annual returns of specialty services. It noted in this regard that the financial and operating data of BDUs, whose rates are now largely deregulated, are granted confidential treatment, while the financial and operating data of analog specialty services, almost all of which have regulated wholesale fees, are available on the public file. According to CTV, this puts a specialty service programmer at a competitive disadvantage in its negotiations with a BDU concerning the rates for the discretionary carriage of the service, as the financial status of the service is available for public scrutiny, while the financial status of the BDU is largely obscured. CTV maintained that this disparity in negotiating power between distributors and programmers is not conducive to effective commercial negotiations. The Canadian Association of Broadcasters (CAB), in its submission, supported the views of CTV, as described above.
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4.
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Accordingly, both the CAB and CTV requested that the Commission ensure that its requirements for financial disclosure are applied equitably to both BDUs and programmers. Specifically, they submitted that confidentiality should generally be accorded to the detailed financial information in the annual returns of specialty and pay programming services, and that, if such information is publicly disclosed, this should only be done in a manner that would ensure that another party to commercial negotiations remains unable to determine the revenue and expense patterns of individual programming services.
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5.
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In order to ensure that all interested parties have an opportunity to comment on the proposal by CTV and the CAB, and given the importance of this issue to programmers, distributors and other parties, the Commission has decided to issue a call for comments on the questions set out below. Pending the outcome of this process, the individual financial results of pay and specialty services licensees for 2004 will be kept confidential. Only the aggregate financial data has been published.
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Context
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6.
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CRTC Circular No. 429 of 19 August 1998 sets out the Commission's Guidelines respecting the confidential treatment of annual returns and material or information filed in support of a broadcasting application before the Commission.
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7.
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In that circular, the Commission stated, in part, that:
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- All broadcasting undertakings are required to file annual returns (as set out in Circular No. 404 dated 23 August 1994), including financial statements, on or before 30 November of each year for the broadcast year ending on the previous 31 August.
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- The annual returns and financial statements for an individual broadcasting distribution undertaking whose basic monthly subscriber fee is not regulated under the Broadcasting Distribution Regulations will be treated as confidential. Consistent with past practice, however, the annual returns and financial statements for a broadcasting distribution undertaking whose basic monthly subscriber fee is regulated will continue to be made available on the public file and will only be treated as confidential commencing with the broadcast year during which the undertaking's basic monthly subscriber fee is no longer regulated. As in the past, aggregate industry statistics will continue to be released.
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- In cases where the annual return and financial statements include both rate regulated and non-rate regulated broadcasting undertakings (e.g. multi-system operators), the financial statements and only that portion of the annual return that relates to the non-rate regulated undertaking will be kept confidential.
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- Consistent with current Commission practice, the annual returns and financial statements for those specialty services that have a monthly subscriber fee set by the Commission or that are carried as part of the basic service package will continue to be placed on the public file. For all other specialty services, only that portion of the annual return and financial statements, down to and including profit before interest and taxes (PBIT), will be placed on the public file. Any portion of the annual return or financial statements that would lead to the disclosure of an undertaking's net income or loss, such as information below PBIT, or detailed information on shareholders' equity, will be treated on a confidential basis.
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- Consistent with current Commission practice, that portion of the annual return and financial statements of pay television undertakings, down to and including PBIT, will continue to be placed on the public file. As in the case of specialty services, any portion of the annual return or financial statements that would lead to the disclosure of an undertaking's net income or loss will be treated as confidential.
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- Notwithstanding the above, for a licensee that is a public company or whose financial statements are otherwise publicly available, the Commission will continue to place these statements on the licensee's public file.
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8.
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Further, section 20 of the CRTC Rules of Procedure stipulates, among other things, that the financial statements of an applicant who holds a licence may be treated as confidential "if in the opinion of the Commission the public interest will best be served by so doing."
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9.
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With this and the excerpts from CRTC Circular No. 429 as context, the Commission invites detailed comments with respect to the following questions:
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- Would the public interest best be served by generally according confidentiality to the annual returns of all pay and specialty services? If so, why?
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- If the public interest would not best be served by generally according such confidentiality, under what circumstances should an annual return be made available to the public? In such circumstances, should the entire annual return be placed on the public file or only certain information within it? If only certain, specific information should be made public, what information would that be, and why?
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Call for comments
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10.
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The Commission invites comments that address the issues and questions set out in this notice. The Commission will accept comments that it receives on or before 30 May 2005.
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11.
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The Commission will not formally acknowledge comments. It will, however, fully consider all comments and they will form part of the public record of the proceeding, provided that the procedures for filing set out below have been followed.
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Procedures for filing comments
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12.
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Interested parties can file their comments to the Secretary General of the Commission:
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by usingthe
Broadcasting Intervention/Comments Form
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OR
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by mail to
CRTC, Ottawa, Ontario K1A 0N2
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OR
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13.
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Submissions longer than five pages should include a summary.
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14.
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Please number each paragraph of your submission. In addition, please enter the line ***End of document*** following the last paragraph. This will help the Commission verify that the document has not been damaged during transmission.
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15.
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The Commission will make comments filed in electronic form available on its web site at www.crtc.gc.ca but only in the official language and format in which they are submitted. Such comments may be accessed in the Public Proceedings section of the CRTC web site. Copies of all comments, whether filed on paper or in electronic form, will also be placed on the public examination file.
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16.
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The Commission encourages interested parties to monitor the public examination file and the Commission's web site for additional information that they may find useful when preparing their comments.
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Examination of public comments and related documents at the following Commission offices during normal business hours
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Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Gatineau, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
Fax: (819) 994-0218
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Metropolitan Place
99 Wyse Road
Suite 1410
Dartmouth, Nova Scotia B3A 4S5
Tel: (902) 426-7997 - TDD: 426-6997
Fax: (902) 426-2721
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205 Viger Avenue West
Suite 504
Montréal, Quebec H2Z 1G2
Tel: (514) 283-6607
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55 St. Clair Avenue East
Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
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Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317
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Cornwall Professional Building
2125 - 11th Avenue
Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
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10405 Jasper Avenue
Suite 520
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
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530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322
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Date Modified: 2005-04-29