Broadcasting Regulatory Policy CRTC 2013-734

PDF version

Route reference: 2013-394

Ottawa, 19 December 2013

Distribution of Canadian Category C national news specialty services

The Commission sets out a framework for the distribution of Canadian Category C national news specialty services. This framework, which the Commission has implemented in Broadcasting Order 2013-735, also issued today, includes a number of safeguards to ensure greater and more equitable access by these national news services to the Canadian broadcasting system and to provide all parties with the regulatory clarity they require to govern their commercial interactions. The framework will help ensure that Canadians have access to a healthy and diverse range of Canadian news programming.

Specifically, the Commission has required broadcasting distribution undertakings to make the programming services of CBC News Network, CTV News Channel, Le Canal Nouvelles, Le Réseau de l’information and Sun News Network available to their subscribers as of 19 March 2014. The Commission has also set out requirements relating to these services, including:

These requirements will take effect on 20 May 2014.

In addition, the Commission has provided a number of guidelines concerning the inclusion of these programming services in news neighbourhoods, where available.

Introduction

1. In Broadcasting Public Notice 2008-100, the Commission stated that programming services operating in the genre of mainstream national news, such as CBC News Network, CTV News Channel, Le Canal Nouvelles (LCN) and Le Réseau de l’information (RDI), were strong, healthy, highly popular and highly competitive. The Commission therefore determined that it would be appropriate to introduce competition between Canadian services operating in this genre.

2. The Commission also established rules that would apply to such services, including:

3. In a public proceeding initiated by Broadcasting Notice of Consultation 2013-19, the Commission heard applications for mandatory distribution on terrestrial and satellite broadcasting distribution undertakings (BDUs) pursuant to section 9(1)(h) of the Broadcasting Act (the Act). Over the course of that hearing, a number of issues and concerns were raised regarding the challenges faced by new entrants offering Canadian Category C national news specialty services, particularly with respect to the distribution of such services by BDUs.

4. Based on the record of the above-noted proceeding, in Broadcasting Regulatory Policy 2013-372, the Commission acknowledged the problems of access to the broadcasting system for new Category C national news specialty services such as Sun News Network and expressed the view that these problems were not unique to one service, but rather indicative of a larger, more systemic issue with respect to the distribution of Canadian national news services on fair and commercially reasonable terms. The Commission also indicated that these barriers constituted a significant obstacle to the exchange of ideas on matters of public concern and the overall democratic dialogue in Canada, principles that the Canadian broadcasting system has a duty to facilitate.

5. Accordingly, in Broadcasting Notice of Consultation 2013-394, the Commission set out its preliminary views on how to address issues such as access to distribution, negotiating power and incumbency so as to ensure that Canadians have access to a healthy and diverse range of Canadian news programming. The proposed framework included a number of safeguards to ensure greater and more equitable access for Category C national news specialty services and to provide all parties with the regulatory clarity they require to govern their commercial interactions.

6. In its notice of consultation, the Commission also signaled its intent to act swiftly on this matter and reminded parties that it has the authority under section 9(1)(h) of the Act to require any licensee who is authorized to carry on a distribution undertaking to carry programming services on such terms and conditions as it deems appropriate. Accordingly, the Commission stated that it could elect to implement the framework through an order of general application pursuant to section 9(1)(h) of the Act, rather than by an amendment to the Broadcasting Distribution Regulations. The Commission added that it did not intend to apply the framework to BDUs operating pursuant to an exemption order.

7. The Commission received a number of interventions in response to Broadcasting Notice of Consultation 2013-394, including interventions from a wide range of parties, such as individuals, public advocacy groups, broadcasters and distributors. The public record for this proceeding can be found on the Commission’s website at www.crtc.gc.ca under “Public Proceedings.”

Necessity and appropriateness of a “must-offer” framework for Canadian national news services

8. In Broadcasting Notice of Consultation 2013-394, the Commission stated its preliminary view that BDU licensees should be required to distribute all licensed Category C national news specialty services (i.e., these services must be made available to subscribers).

Interventions

9. Canadians who intervened in this process were almost evenly split between those opposing and supporting the proposed framework. Individuals opposed to the framework generally stated that they were either opposed to paying for unwanted services or opposed to any regulatory change that would require them to subscribe to a given news service to get access to other national news services. Individuals who supported the overall framework generally either commented favourably on the quality of the current Canadian news offering or argued for equal treatment for all Canadian news services or that Canadian news services should be given priority over non-Canadian news services.

10. BDUs affiliated with Category C national news specialty services, such as Bell[2] and quebecor media inc. (qmi),[3] supported the proposed framework. Other BDUs, however, generally opposed it, arguing that it was inconsistent with the Commission’s intention to lessen regulatory intervention and let market forces prevail, as well as with its current open-entry licensing approach for specialty Category C services. These BDUs also argued that the national news genre was only recently opened to competition and that it was still too early to determine if a systemic problem existed. They noted that Sun News Network subscriber numbers seemed to indicate that new Category C national news specialty services could be successful as these numbers were superior to those of other recently launched services. They also submitted that the current mechanisms available to these services, such as undue preference and dispute resolution provisions, were sufficient safeguards.

11. Further, some BDUs contested the average rates for news services included in Broadcasting Notice of Consultation 2013-394 and provided different rates based on their own calculations using weighted averages (i.e. taking into account penetration). For instance, Rogers Communications Partnership (Rogers) provided its own calculations of news services’ rates for its Toronto system, which showed that the rates it paid to Canadian news services were almost identical to those paid to non-Canadian news services.

12. For their part, programming services were generally in favour of the proposed initiative, arguing that the distribution of Canadian news services should be equivalent or superior to that of non-Canadian news services. However, they noted that a combination of the current open-entry licensing approach for Category C specialty services and a must-offer status could lead to a proliferation of news services that would exceed market demand. Therefore, a number of parties, including Bell, the Canadian Broadcasting Corporation (CBC) and Shaw Communications Inc. (Shaw), recommended establishing new, more stringent licensing criteria for Category C national news specialty services if the Commission decided to proceed with the framework.

Commission’s analysis and decision

13. Given the importance it places on news and information, the Commission has generally treated news services differently than other specialty services. More specifically, the Commission has expressed the view that national news services play a vital role in achieving the objectives of the Act by helping Canadians participate fully in the democratic, economic, social and cultural life of their country, their regions, their provinces and their neighbourhoods. Such services also contribute to meeting the objective set out in section 3(1)(i)(iv) of the Act to the effect that the broadcasting system must provide Canadians with a reasonable opportunity to be exposed to the expression of differing views on matters of public concern.

14. The Commission acknowledges that the use of weighted averages might be more representative of the market value of news services, as submitted by Rogers and other BDUs. However, the Commission considers that the evidence presented in the context of this proceeding and the hearing initiated by Broadcasting Notice of Consultation 2013-19 demonstrates that new Category C national news specialty services are generally disadvantaged when negotiating rates and other terms and conditions for the distribution of their services.

15. Moreover, the Commission notes that national news services are generally more expensive to operate than other types of specialty services because they usually require significant investments, including investments in reporting staff and regional bureaus, and have significant Canadian programming exhibition requirements relative to any other type of specialty services. As a result of such investments, the Commission considers that wide distribution of Category C national news specialty services on reasonable terms is necessary to provide these services with the financial means to meet their programming commitments.

16. All things considered, the Commission is of the view that the vital role played by news services in the broadcasting system and the significant costs of operation justify its intervention. Accordingly, in recognition of the vital role that Canadian national news services play in achieving the objectives of the Act and consistent with its intent to act swiftly on this matter, the Commission has today issued Broadcasting Order 2013-735, in which it has ordered licensed BDUs to make CBC News Network, CTV News Channel, LCN, RDI and Sun News Network available to Canadians.

17. The Commission acknowledges the arguments of those parties that maintained that in light of this change the current licensing criteria for Category C national news specialty services[4] might not be strict enough to ensure high-quality news programming. These parties proposed that the Commission impose further criteria to address this concern, including minimum thresholds for category 1 News programming, adherence to a journalistic code of ethics, reporters and news bureaus in a number of provinces and establishing an enhanced complaints process. Accordingly, the Commission intends to review the appropriateness of the licensing criteria for Category C national news specialty services as part of its upcoming consultation on the future of television.

18. With respect to new applications for Category C national news specialty services, the Commission considers that it would be inappropriate to process such applications until the revised criteria are put in place. Once the criteria are implemented, the Commission will be in a better position to assess such applications and to evaluate whether any newly licensed national news services should be added to the distribution order.

News neighbourhoods

19. In Broadcasting Notice of Consultation 2013-394, the Commission noted that the Federal Communications Commission (FCC) had ordered certain distributors to carry certain news channels adjacent to one another to create news neighbourhoods. The Commission expressed the view that positioning news services together offers viewers the ability to access their news and information on easily locatable channels and stated its preliminary view that BDU licensees should be required to place Canadian Category C national news specialty services on channels in close proximity to one another so as to create news neighbourhoods.

Interventions

20. BDUs generally argued that news neighbourhoods would be disruptive to subscribers since services would need to be moved to accommodate these neighbourhoods. Shaw explained that news services would likely be moved to a neighbourhood with very high channel numbers because of technological limitations and to minimize customer disruption. Shaw submitted that this would harm the news services, customers and BDUs. This concern was shared by the CBC, which also expressed concern that if news neighbourhoods were organized according to language, this might disrupt viewers’ habits and result in a loss of revenue for RDI, impairing its ability to fulfill its obligations.

21. Certain BDUs also argued that channel placement was no longer relevant in a digital environment, given the existence of technologies such as channel mapping and electronic programming guides. Further, several BDUs submitted that the Commission had mischaracterized the FCC’s use of news neighbourhood in that the FCC’s decision was only applicable to Comcast and only in situations where Comcast already offered news neighbourhoods. Bragg Communications Incorporated, carrying on business as Eastlink, added that the FCC’s decision was a case-by-case response to a specific complaint, not an industry-wide intervention.

22. Bell, however, was in favour of news neighbourhoods, while TELUS Communications Company did not take issue with the measure, stating that it already groups like services together. Similarly, Rogers proposed that each BDU be required to distribute in a news neighbourhood all Category C national news specialty services appropriate for its relevant linguistic market. Rogers added that it already has a news neighbourhood and that Sun News Network would be included in the neighbourhood as of 8 October 2013.

23. The concept of news neighbourhoods was also supported by the Conseil Provincial du secteur des Communications and the Public Interest Advocacy Centre (PIAC) on the condition that it not be used to increase rates or reduce consumer choice. The Syndicat des communications de Radio-Canada (SCRC) was also in favour of news neighbourhoods, but only if existing services such as RDI were not required to be moved to the “far end of the dial.”

24. For its part, the Commissioner of Official Languages argued that placing both English- and French-language national news services together would improve access to such services in official language minority communities (OLMCs). However, the Ministère de la culture et des communications du Québec was of the view that French-language news services should not be grouped with English-language services in the province of Quebec, but rather grouped with other French-language specialty services.

Commission’s analysis and decision

25. The Commission recognizes that new set-top box technologies offer consumers the option to customize their channel line-ups, which might reduce the effectiveness of news neighbourhoods or other channel placement solutions. However, there is no indication that a majority of subscribers make use of this option. Accordingly, the Commission considers that there is still merit to the idea of grouping like channels.

26. Nonetheless, the Commission also considers that creating news neighbourhoods could be disruptive to subscribers, BDUs and news services if the Commission were to require that news services be moved. Such a requirement would result in the loss of the current and familiar placement of these services and thus make it more difficult for viewers to locate their preferred news service. Accordingly, the Commission is of the view that it could be counterproductive to displace an existing news service when the intent of such news neighbourhoods is to give pride of place to news services.

27. In light of the above, the Commission considers that it would not be appropriate to require BDUs to create news neighborhoods if they do not already practice this kind of channel grouping. However, when a BDU elects to place some Category C national news specialty services on channels in close proximity to one another, the Commission expects that all Category C national news specialty services be grouped in such a manner. Failure to do so could be viewed as undue preference and may lead parties to file a complaint.

28. With respect to the inclusion of news services in both official languages in a news neighbourhood, the Commission considers that there is merit to the proposal. Placing English- and French-language news services together could help all Canadians, especially those living in OLMCs, easily navigate from one channel or language to another, thereby exposing them to services that they might not have discovered otherwise. The Commission considers that the CBC’s concern relating to the placement of RDI would be addressed by requiring news neighbourhoods only on a case-by-case basis where such groupings already exist.

29. For clarity, the Commission also finds it appropriate to provide the following guidelines regarding news neighbourhoods:

30. The Commission reiterates that the obligations regarding news neighborhoods in no way obligate Canadians to subscribe to a particular news service.

Packaging

31. In Broadcasting Notice of Consultation 2013-394, the Commission stated its preliminary view that BDU licensees should be required to make Category C national news specialty services available to subscribers in a package and on a stand-alone basis and that all of these services should be included in the best available package consistent with their genre and programming.

Interventions

32. BDUs argued that requiring the distribution of Category C national news specialty services in a package was counter to the Commission’s objectives of consumer choice and affordability. Since several BDUs already offer some news services on basic, they also submitted that the “best available package” requirement would either mean that all news services would be distributed on basic, limiting consumer choice and impacting the price of the basic service, or that BDUs would have to remove all news services currently offered on basic and move them to a discretionary package, which would potentially result in subscribers’ losing access to certain news services currently available.

33. BDUs also argued that they should have the ability to decide which package is better suited for a specific service. They submitted that the notion of “best available package” was subjective and difficult to implement and that it would need to be better defined to avoid multiple disputes. Canadian Cable Systems Alliance Inc. (CCSA) further noted that some of its affiliation agreements with Category C national news specialty services prohibit any changes to packaging or offering the service on a stand-alone basis.

34. For its part, the CBC argued that consumers should not be required to buy all Category C national news specialty services in a single package. Similarly, PIAC and Avaaz Foundation (Avaaz) opposed the proposal if it resulted in subscribers being forced to pay for services they do not want. In this respect, PIAC recommended that all Category C national news specialty services be offered on a stand-alone basis and not on basic. PIAC also opposed the inclusion of non-Canadian services in a news package.

35. Some individuals argued that the Commission should eliminate packages altogether, but supported offering services on a stand-alone basis. Individuals also stated that they would like the opportunity to opt out of a service when taking a package.

Commission’s analysis and decision

36. The Commission notes that there was limited opposition to the proposal to make BDUs offer national news services on a stand-alone basis.

37. Accordingly, the Commission considers that it would be appropriate to maintain the proposed requirement that BDUs offer Category C national news specialty services on a stand-alone basis as this will ensure their availability throughout the country while improving consumer choice and having a minimal impact on affordability.

38. However, some interveners questioned the appropriateness of mandating the distribution of a service in a package since this would seem contrary to the Commission’s intent to improve consumer choice and affordability. Further, other interveners submitted that the “best available package” requirement would either mean that all news services would be distributed on basic or that BDUs would have to remove all services from basic.

39. The Commission agrees that requiring all BDUs to offer Category C national news specialty services in a package could oblige BDUs to create packages, even when they elect to distribute discretionary services under a different business model, such as pick-and-pay or pick-a-pack. The Commission is of the view that imposing the creation of packages would not be in the best interest of subscribers, as it might limit consumer choice and impact affordability. Therefore, the Commission considers that any new packaging requirements should only apply to discretionary packages already offered by a distribution licensee.

40. With respect to the proposed “best available package” provision, the Commission notes that requiring that all national news services be distributed on basic could impact affordability, whereas requiring that all of these services be offered only in a discretionary package would result in a decrease in the availability of such services. Therefore, to avoid such consequences, the Commission considers that the “best available package” provision should only apply to discretionary packages.

41. Accordingly, when discretionary packages are offered by a BDU, the Commission is of the view that it would be appropriate to require the BDU to include each Category C national news specialty service in the best available discretionary package consistent with its genre and programming, unless the parties agree otherwise. The Commission notes that this measure will not impose the creation of packages for BDUs opting to distribute such services under a different business model and will have a positive impact on consumer choice as these services will be available both on a stand-alone basis and, where appropriate, in a package.

42. With respect to the concern raised by the CCSA as to whether the conditions included in its existing affiliation agreements would prevent it from implementing certain elements of the framework, the Commission notes that elements specifically addressed in the distribution order, such as those relating to packaging and the negotiation of rates, will supersede the relevant clauses in existing affiliation agreements. Other clauses will remain as agreed upon by the parties.

43. Accordingly, in Broadcasting Order 2013-735, also issued today, the Commission has set out terms and conditions for the distribution of existing Category C national news specialty services reflecting the preceding determinations. Further, the Commission encourages BDUs to offer bilingual packages of Category C national news specialty services in OLMCs.

44. The Commission notes that the proceeding initiated by Broadcasting Notice of Invitation 2013-563 will provide an opportunity for it to review various distribution issues, including packaging, the composition of the basic service, the level of choice enjoyed by subscribers and other related issues. This proceeding could therefore have an impact on the terms and conditions of distribution of specialty services, including those of Category C news services.

Filing of affiliation agreements, dispute resolution and factors to be considered in the negotiation of rates

45. In Broadcasting Notice of Consultation 2013-394, the Commission stated its preliminary view that BDU licensees should be required to file with the Commission all affiliation agreements to which they are a party with a Canadian Category C national news specialty service or a non-Canadian news service within five days following the execution of the agreement by the parties. The Commission also established provisions for dispute resolution where affiliation agreements are not renewed, as well as a list of factors that should be taken into account by BDUs negotiating a wholesale rate for a Category C national news specialty service based on fair market value.

Interventions

46. FreeHD Canada Inc. (FreeHD) was of the view that the proposed framework could lead to the Commission’s increasing involvement in determining rates for Category C national news specialty services through dispute resolution and essentially replacing negotiations, which would be inconsistent with the Commission’s intention to lessen regulation and let market forces prevail.

47. QMI opposed the filing of affiliation agreements, stating that there was no valid justification to require parties to file an affiliation agreement that was amicably negotiated in the normal course of business. QMI assumed that existing affiliation agreements would be annulled. It added that it believed that it should be entitled to seek the Commission’s intervention through dispute resolution prior to the implementation of the framework.

48. The CBC argued that Category C national news specialty services should have the opportunity to postpone dispute resolution given that some negotiations involve multiple services and that separating one service such as the news service for dispute resolution might not assist the overall negotiations.

49. The Fédération nationale des communications, PIAC and the SCRC recommended replacing “should” with “shall” in the wording of the proposals as it would make the provisions more binding.

50. Avaaz argued that all of the proposed safeguards (i.e., the filing of affiliation agreements, pre-expiry dispute resolution and factors for the negotiation of rates) were only ever applied in the BCE/Astral decision[5] and that the effectiveness of these mechanisms had not been tested.

51. The Canadian Association of Journalists proposed that the Commission establish a range of fairness for the rates of Category C national news specialty services based on the financial information presented by applicants. News services that fall outside of this range would have to renegotiate their rates.

Commission’s analysis and decision

52. The Commission notes that a limited number of interventions specifically addressed the above-noted safeguards.

53. The Commission further notes that some parties recommended replacing the word “should” with “shall” to make the relevant provisions more binding. The Commission considers that this change would be appropriate under the circumstances.

54. With respect to the filing of affiliation agreements, the Commission notes that it may already request affiliation agreements where it deems it necessary, as in the case of a dispute. However, the Commission considers that access to all affiliation agreements relating to Category C national news specialty services and non-Canadian news services could provide it with an additional monitoring tool for such services. Therefore, the Commission considers it appropriate to maintain its preliminary view that new affiliation agreements must be filed by BDUs within five days following the execution of the agreement by the parties.

55. In addition, the Commission directs all licensed BDUs to submit all existing affiliation agreements to which they are a party with a Canadian Category C national news specialty service or a non-Canadian news service before 20 January 2014.

56. Regarding the imposition of pre-expiry dispute resolution, the Commission notes that the CBC proposed that Category C national news specialty services should have the option of postponing the mandatory dispute resolution process since it may not always be in the programmer’s best interest to enter into a process 120 days prior to the agreement’s expiry date. The Commission acknowledges that the CBC’s argument may have merit as programmers operating multiple services typically negotiate agreements encompassing several services. In such situations, severing a news service from a negotiation by mandating pre-expiry dispute resolution only for this service could give less leverage to the programmer. To address this situation, the Commission considers it appropriate to revise the relevant requirement by adding the stipulation that it will apply only if the parties do not agree otherwise.

57. The Commission also notes that QMI assumed that existing affiliation agreements would be annulled by the new framework and argued that it should be entitled to request dispute resolution prior to the implementation of the framework. However, as noted above, the framework implemented through Broadcasting Order 2013-735 will not automatically result in the nullification of existing affiliation agreements but rather will only supersede those contractual clauses that conflict with the terms and conditions of the order. Further, although nothing prevents Category C national news specialty services from applying for dispute resolution, the Commission is of the view that the implementation period will provide parties with the opportunity to negotiate the distribution of services. In this respect, the Commission considers that a Category C national news specialty service would have to demonstrate that the negotiations have reached an impasse before the Commission would agree to accept the matter for dispute resolution.

58. With respect to the factors to be taken into account during the negotiation of rates, the Commission notes FreeHD’s concern that this proposal could lead to the Commission’s increasing involvement in determining rates for Category C national news specialty services through dispute resolution. However, the Commission is of the view that parties generally prefer commercial negotiations over Commission-established rates and conditions and that the above-noted proposal will not replace negotiations but merely serve to guide them and provide a tool to be used as a last resort if negotiations fail. Consequently, the Commission does not consider it appropriate to establish a range of fairness for the rates of Category C national news specialty services based on the financial information presented by applicants, as proposed by the Canadian Association of Journalists.

59. Accordingly, in Broadcasting Order 2013-735, the Commission has set out terms and conditions for the distribution of existing Category C national news specialty services reflecting the above determinations. The Commission notes that this order only applies to the distribution of licensed programming services by licensed BDUs. Therefore, all references to new programming services included in the Commission’s preliminary view as set out in Broadcasting Notice of Consultation 2013-394 have been removed from the conditions of the order.

Implementation period

60. In Broadcasting Notice of Consultation 2013-394, the Commission stated that should it elect to implement the proposed framework through an order pursuant to section 9(1)(h) of the Act, it would be its intention to make such an order effective within 90 days following the publication of the regulatory policy announcing the framework. The Commission considered that this would give BDUs sufficient time to negotiate appropriate agreements with the programming services, adjust their channel lineups and billing systems, and notify their customers of any changes to their cable or satellite packages.

Interventions

61. Several parties argued that the Commission’s intent to implement the proposed framework within 90 days was unreasonable. These parties noted that the Commission provided BDUs with close to five months to implement the determinations made in Broadcasting Regulatory Policy 2013-372 regarding applications for mandatory distribution under section 9(1)(h) of the Act.  

Commission’s analysis and decision

62. The Commission considers that the new framework may require BDUs to make significant changes to their offerings, including the addition of new national news services, changes in packaging and changes to the programming lineup, as well as to provide sufficient notice to subscribers of any changes.

63. In light of the above, the Commission considers that it would be preferable to allow more time (150 days) to implement most provisions of the proposed framework. Nonetheless, the Commission considers that the must-offer requirement should be made effective within 90 days of the publication of this regulatory policy as proposed. Further, the Commission expects BDUs to begin negotiating the new terms and conditions of distribution for the affected services as soon as possible.

64. Accordingly, in Broadcasting Order 2013-735, the Commission has made the must-offer requirement effective as of 19 March 2014 and the implementation for the other elements of the framework effective as of 20 May 2014.

Secretary General

Related documents

Footnotes

[1] RDI does not have access rights in French-language markets and CBC News Network does not have access rights in English-language markets. However, to ensure that a range of broadcasting services in English and in French is extended to all Canadians, the Commission has ordered that these services be distributed in their respective minority markets pursuant to section 9(1)(h) of the Broadcasting Act (see Appendices 8 and 9 to Broadcasting Decision 2013-263). This distribution is required at a lower wholesale rate than what these services have secured in their respective majority markets.

[2] Bell Aliant Inc., Bell Media Inc. and Bell ExpressVu Limited Partnership

[3] On behalf of Sun News General Partnership and its partners Sun Media Corporation and TVA Group Inc.

[4] The standard conditions of licence for Category C national news specialty services are set out in Appendix 2 to Broadcasting Regulatory Policy 2009-562-2.

[5] See Broadcasting Decision 2013-310.

Date modified: