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Broadcasting Decision CRTC 2017-148

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Reference: 2016-225

Ottawa, 15 May 2017

Various licensees
Across Canada

Public hearing in the National Capital Region
28 November 2016

Renewal of licences for the television services of large English-language ownership groups – Introductory decision

The broadcasting licences for the television services held by the large English-language ownership groups Bell Media Inc., Corus Entertainment Inc. and Rogers Media Inc. are being renewed for a new licence term starting on 1 September 2017. In this decision, the Commission addresses the role these groups will play in serving Canadians and contributing to the achievement of the objectives of the Broadcasting Act over that licence term.

Specifically, as part of this licence renewal process, the Commission sought to implement its group-based approach and local television policy with a view to ensuring that Canadians have access to a world-class communication system. These objectives will be achieved through continued support for compelling, diverse Canadian programming and local news that reflects Canadian attitudes, opinions, ideas, values and artistic creativity. This includes supporting the production of dramas, long-form documentaries and award shows, as well as local news and local programming.

The key determinations addressed in this decision are the following:

The Commission also addresses other issues, including a streamlined approach for the approval of changes to the contours and technical parameters of local television stations and transmitters as a result of the repurposing of the 600 MHz frequency band in Canada.

The determinations set out in this decision, along with other determinations specific to each of the ownership groups, are implemented in the individual licence renewal decisions for the groups, also issued today.

Introduction

  1. The broadcasting policy set out in the Broadcasting Act (the Act) states 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 (section 3(1)(d)(iii))

  2. Section 3(1)(s) of the Act further states that private networks and programming undertakings should, to an extent consistent with the financial and other resources available to them contribute significantly to the creation and presentation of Canadian programming and be responsive to the evolving demands of the public. 
  3. Finally, sections 3(1)(e), 3(1)(f) and 3(1)(d)(iv) of the Act state that each element of the broadcasting system shall contribute to the creation and presentation of quality Canadian programming by making predominant use of Canadian creative resources, all while being readily adaptable to technological change.
  4. To ensure continued financial support for the creation of compelling and diverse Canadian programming in the context of increasing consolidation within the Canadian broadcasting system, the Commission established the group-based licensing approach for private television services. As set out in Broadcasting Regulatory Policy 2010-167 (the group­-based policy), this approach focuses on expenditures on Canadian programming rather than on the broadcast of such programming. Specifically, to ensure stable support for the creation of Canadian programming, the Commission has imposed group requirements for Canadian programming expenditures (CPE), as well as for expenditures on programs of national interest (PNI), such as dramas, long-form documentaries and award shows, which are more costly to produce and the main vehicles for showcasing Canadians’ values and stories. The Commission has also introduced increased flexibility in the allocation and reporting of CPE, allowing the groups to focus on the quality of content provided.Footnote 1
  5. As noted in Broadcasting Decision 2011-441, the group-based approach was first applied to Bell Media Inc. (Bell), Shaw Media Inc. (Shaw) and Corus Entertainment Inc. (Corus) when their licences were renewed in 2011. It was then applied to Astral Media inc. (Astral) and Rogers Media Inc. (Rogers) in Broadcasting Decisions 2012-241 and 2014-399 respectively.
  6. In Broadcasting Regulatory Policy 2015-86, the Commission announced further measures to encourage the creation of compelling and diverse Canadian programming, while facilitating the transition to an increasingly on-demand environment. In particular, the Commission sought to provide broadcasters with the necessary means to develop creative programming strategies to make their programming more readily discoverable and accessible on multiple platforms and to better respond to consumer needs. It also sought to encourage broadcasters and the production sector to reinforce their partnerships so as to offer programming that can compete internationally.
  7. Some of the decisions set out in Broadcasting Regulatory Policy 2015-86, such as the elimination of genre protection, came into effect when it was published. However, the Commission stated that other decisions would come into force at licence renewal.
  8. Further, in Broadcasting Regulatory Policy 2016-224 (the Local TV Policy), the Commission announced regulatory measures to ensure that Canadians continue to have access to local programming that reflects their needs and interests.
  9. Accordingly, in Broadcasting Notice of Consultation 2016-225, the Commission announced that it would hold a public hearing from 28 November to 2 December 2016 and sought comments on the following:
    • the applications for the renewal of licences for the television services held by large English-language ownership groups;
    • the application of the group-based approach for these groups to the next licence term; and
    • the implementation of certain policy decisions set out in Broadcasting Regulatory Policy 2015-86 and the Local TV Policy.
  10. The Commission received numerous interventions both in support and in opposition to various aspects of the groups’ applications, as well as general comments. The public record for this proceeding can be found on the Commission’s website at www.crtc.gc.ca.
  11. In this decision, the Commission sets out its determinations on the key issues relating to the implementation of the group-based approach with respect to Bell, Corus and Rogers (the groups). The requirements imposed by the Commission as part of these licence renewals confer both obligations and related benefits on the individual licensees and their groups so that they have the flexibility they require to create compelling and diverse programming within an increasingly dynamic broadcasting system. Individual requirements cannot be viewed in isolation, but rather must be viewed as part of a whole, as the Commission might have come to a different set of determinations had a particular requirement been changed or removed. These requirements also operate within a larger set of regulatory obligations and related policies that, collectively, constitute a cohesive set of regulatory mechanisms meant to balance several objectives of the Act. 
  12. After examining the renewal applications in light of applicable regulations and policies and taking into account the interventions received and the licensees’ replies, the Commission considers that it must address the following issues: 
    • implementation of determinations made in Broadcasting Regulatory Policy 2015-86;
    • financing of Canadian programming;
    • implementation of the Local TV Policy;
    • access for underrepresented groups in the broadcasting system;
    • application of existing competitive safeguards in light of the Wholesale Code;Footnote 2 and
    • repurposing of the 600 MHz frequency band in Canada.
  13. In Broadcasting Decision 2017-143, also issued today, the Commission set out its determinations relating to the implementation of the group-based approach for large private French-language television ownership groups.

Implementation of determinations made in Broadcasting Regulatory Policy 2015-86

  1. Consistent with its determinations in Broadcasting Regulatory Policy 2015-86, the Commission has set out measures in the licence renewal decisions for the services held by the groups implementing new exhibition requirements, eliminating genre protection and applying new standard conditions of licence, which are set out in Broadcasting Regulatory Policy 2016-436.
  2. In Broadcasting Regulatory Policy 2015-86, the Commission indicated its intention to continue to apply the group-based approach and maintain existing expenditure levels. The Commission also expressed its intention to apply CPE requirements on all licensed discretionary services on a case-by-case basis based on historical levels. With respect to PNI, the Commission stated that it continued to be an appropriate tool for ensuring that Canadians have access to the maximum number of programs from program categories that are of national interest and that require continued regulatory support. As a result, the Commission decided to maintain its approach on PNI in the English-language market. The following sections reflect the Commission’s implementation of these determinations.

Financing of Canadian programming

  1. The Commission has considered the following financial issues:
    • CPE requirements;
    • PNI expenditure requirements; and
    • compliance verification for CPE and PNI requirements.

Canadian programming expenditures

  1. The creation of compelling, high-quality productions such as Canadians expect requires, among other things, financial investment. Investment in Canadian content of high quality that is widely available and well-promoted drives viewing and thereby generates revenues. These revenues can then be reinvested in producing future content. CPE requirements provide necessary incentives and flexibility, resulting in investments that are better tailored to the reality of broadcasters. These investments in turn lead to better quality productions that meet the needs and demands of Canadians. These requirements also aim to maintain the level of expenditures that broadcasters devote to Canadian programs.
  2. Moreover, such requirements are important tools that contribute to fulfilling the objectives of the Act. In particular, applying CPE requirements to all licensed programming services ensures that these elements of the broadcasting system contribute in an appropriate manner to the creation and presentation of Canadian programming. Setting such requirements at appropriate levels ensures that maximum and predominant use is made of Canadian resources to originate programming of high standard.
  3. In the group-based policy, the Commission introduced an aggregate group CPE requirement for each group. In the 2011 group-based licence renewals, this approach was implemented through conditions of licence imposing CPE requirements on each of the qualifying services belonging to a group, with the objective of attaining an aggregate CPE requirement of 30% of the group’s gross revenues. CPE requirements varied for each discretionary service since they were based on historical contribution levels and certain services had committed to higher CPE levels in return for their genre-protected, must-carry status within the system.
  4. The Commission also established flexibility provisions for CPE requirements. Under these provisions, discretionary servicesFootnote 3 were given the flexibility to attribute up to 100% of their CPE to any other qualifying service within their group. Stations were also allowed to share 100% of their CPE between themselves, as well as to count CPE from qualifying discretionary services within their group towards meeting up to 25% of their CPE requirements (the 25% cap).
Positions of parties
  1. In light of the regulatory changes announced in Broadcasting Regulatory Policy 2015-86, such as the elimination of the genre exclusivity policy and related protections for discretionary services, leading to a more competitive environment, many interveners raised the need for standardized CPE requirements.
  2. For example, Bell stated that setting CPE at historical levels could limit the ability of certain groups to consider new programming strategies or initiatives and create a competitive imbalance. Bell proposed standard CPE levels of 22% of previous year’s gross revenues for local television stations, 32% for discretionary services with more than one million subscribers and 10% for smaller services without prior CPE requirements.
  3. Corus, however, argued that due to each group’s different mix of services, applying a standard CPE requirement for local television and another for discretionary services would drive different aggregate group requirements that bear no resemblance to historical CPE requirements. Corus proposed an overall CPE requirement of 26% for its group. It also requested that the Commission remove the 25% cap.
  4. Rogers proposed a minimum 30% CPE requirement to be achieved by all groups wishing to be eligible for group licensing. Rogers added that if the Commission continued to use historical spending to establish CPE requirements, these requirements should be based on the group’s own historical spending, not that of its competitors as proposed by Bell.
  5. While supporting the idea that the same or similar CPE rate should apply to every group, the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) and the Canadian Media Production Association (CMPA) noted that implementing the CPE levels proposed by Corus and Bell would result in a significant reduction in spending on Canadian programming. For example, the CMPA submitted that if the Bell and Corus proposals were applied for the 2015-2016 broadcast year using the revenues of the 2014-2015 broadcast year, Bell’s required CPE would be $40.2 million less than required under its current CPE levels for individual services, while Corus’s group CPE would be $50.2 million less than required under a 30% group CPE level.
  6. ACTRA and the CMPA argued that seeking reductions in CPE levels is redundant given that CPE is calculated as a percentage of broadcasting revenues. ACTRA stated that maintaining the current CPE levels would result in a decrease in expenditures on Canadian programming and submitted that broadcasters could and should exceed their historical spending levels. The CMPA and the Friends of Canadian Broadcasting submitted that individual CPE levels for each service in each group should be set at 30%.
  7. Finally, other groups from the creative sector, such as the Directors Guild of Canada (DGC) and the Writers Guild of Canada (WGC), disagreed with a standardized approach for all discretionary services. Specifically, the DGC suggested that the existing CPE obligations of legacy discretionary services within each group should be maintained, while the CPE of smaller services newly brought into the groups (formerly known as Category B services with less than 1 million subscribers) should be established based on the last three years, with a 10% minimum. The WGC suggested that CPE requirements be based on historical spending of the previous three-year period, but that the overall group CPE should be set at 30% for each group, consistent with the group-based policy.
Commission’s analysis and decision
  1. In light of the new regulatory framework for television, in which discretionary services no longer benefit from genre protection and mandatory carriage, the Commission is of the view that a more standardized approach to CPE is warranted. Such an approach would be consistent with Broadcasting Regulatory Policy 2015-86 in that it would give the groups the ability to compete on an equal footing and to adapt in a more competitive marketplace.
  2. Moreover, since the last group-based renewals, the composition of the groups has changed, in some cases dramatically, due to ownership transactions and the launch of new services. As a result of these changes, the groups proposed by Bell, Corus and Rogers for this renewal differed in composition from those established in 2011, 2012 and 2014. Because of these differences and fluctuations in the revenues of individual services, the overall expenditure levels of the proposed groups varied relative to the 30% group target set out in the group-based policy.
  3. Accordingly, to avoid a situation in which fluctuations in the revenues of individual services and the group’s composition would affect the CPE requirement of the groups, the Commission considers that a standard 30% CPE level for each group and every service within the groups is appropriate. In the Commission’s view, such a requirement will ensure that the group collectively contributes to the creation of Canadian programming at an appropriate level. Moreover, such a requirement will not have an undue impact on the groups, while providing them with the flexibility to remain competitive. Accordingly, the Commission has adopted a standard 30% CPE requirement for every service being renewed within the groups.
  4. Finally, with respect to Corus’s request that the Commission remove the 25% cap, the Commission notes that this limit was established to help ensure that sufficient funds are allocated to local programming, local news and other Canadian programming on local television stations. The Commission is of the view that Corus has not provided sufficient rationale to alleviate the concerns that led to the imposition of this maximum. Accordingly, the Commission considers it appropriate to maintain this cap.

Expenditures on programs of national interest

  1. In the group-based policy, the Commission introduced the concept of a PNI expenditure requirement to encourage spending on specific types of programs, namely dramas, documentaries and award shows.
  2. Following the group-based policy, the Commission established PNI expenditure requirements of 16% of revenues for Astral, 5% for Bell and Shaw, 9% for Corus and 5% for Rogers. Since then, Bell has acquired the assets of Astral, and Corus has acquired the assets of Shaw. Contrary to CPE requirements, the same PNI requirement applied to every service within a group. However, qualifying services were given the flexibility to allocate 100% of their required PNI expenditures to any other qualifying service within the same group.
  3. In Broadcasting Regulatory Policy 2015-86, the Commission determined that PNI expenditure requirements continue to be an appropriate tool for ensuring that Canadians have access to the maximum number of programs from program categories that are of national interest and that require regulatory support. Accordingly, it stated that current PNI requirements would be maintained.
  4. The Commission was also of the view that the requirement that at least 75% of PNI expenditures be allocated to independently produced programs is one of the means by which the Act’s objective relating to the independent production sector is fulfilled and should therefore be maintained.
Positions of parties
  1. Bell and Corus submitted that PNI levels should be standardized as a result of the elimination of genre protection and proposed a 5% PNI expenditure requirement, emphasizing that this would represent a floor, not a ceiling. Bell explained that broadcasters need the flexibility to innovate and stay relevant and that higher levels of PNI spending mean fewer resources for other types of Canadian programming. Corus stated that it would exceed the proposed PNI expenditure level if it continued to play in spaces that warrant higher PNI spending due to audience demand.
  2. For its part, Rogers agreed that all groups should be required to meet standard PNI expenditure obligations, but argued that no group should be required to exceed its historical PNI expenditure levels.
  3. Members of the creative sector, including ACTRA, the CMPA, the Documentary Organization of Canada (DOC), the DGC and the WGC, argued that the Bell/Corus proposals should be rejected because they represented an insufficient investment. The DGC, for example, submitted that these proposals would result in significant losses to the system.
  4. The CMPA, the DGC and the WGC noted that the Bell and Corus groups had averaged an 8% PNI expenditure level from the 2011-2012 to 2014-2015 broadcast years. The DGC submitted that existing spending should be maintained and proposed that the PNI expenditure requirement for all three groups be set at 9%, while ACTRA proposed that it be initially set at 8% and increased annually over the next licence term.
  5. Interveners generally agreed that at least 75% of all PNI expenditures should continue to be allocated to independently produced programming. However, some interveners suggested that the Commission impose similar requirements for non-PNI programming.
Commission’s analysis and decision
  1. In light of the streamlining of its approach to discretionary services, the Commission considers that establishing a standard 5% PNI expenditure requirement as a floor for all services would allow the groups and their services to compete on an equal footing and give them the flexibility to adapt in a more competitive marketplace, consistent with its determinations in the Let’s Talk TV proceeding and the group-based policy. The Commission is also satisfied that this would represent an appropriate floor to ensure that this type of programming is available within the system. The Commission encourages the groups to exceed the minimum requirement.
  2. Accordingly, the Commission is adopting a 5% PNI expenditure requirement for all services within the groups. At least 75% of such PNI expenditures must be allocated to independently produced programming.

Compliance verification for CPE and PNI requirements

  1. As discussed with the parties in the context of this proceeding, given the nature of group-based licensing and the flexibility associated with this approach, compliance can only be fully assessed after the end of the licence term. In particular, expenditure requirements for both CPE and PNI can be allocated among services that are part of the group. The groups themselves are entitled to expend an amount that is up to 5% less than the minimum required expenditure and can carry over this amount to the next year. Licensees are required to make up any shortfall before the end of the licence term.
  2. Given that the licensees that form part of the group have until the end of the licence term to meet their overall CPE and PNI expenditure requirements, the Commission is imposing conditions of licence to verify and ensure licensees’ compliance for up to two years after the end of the previous licence term. The requirements are as follows:
    • for two years following the end of the previous licence term, each licensee shall be required to report and respond to any Commission enquiries regarding the CPE and PNI expenditures of the licensee and its group made during the previous licence term; and
    • each licensee shall be responsible for any shortfall relative to the CPE and PNI requirements that occurred during the previous licence term.
  3. In the Commission’s view, such requirements would be appropriate for all services, including those that are not part of one of the groups.

Local programming

  1. Local programming, particularly local news, is of great importance to Canadians and continues to be a primary source of news and information. Moreover, news and analysis produced and distributed through the broadcasting system are essential components of the Canadian democratic system and contribute to the trust that Canadians place in it. The privileges granted to local television stations to have their signal distributed on the basic service, to solicit local advertising and to request simultaneous substitution come with the responsibility to offer local programming, much of which consists of news and analysis.
  2. The Commission has considered the following issues relating to local programming:
    • exhibition requirements for local programming and locally reflective news and information, as well as monitoring of these regulatory levels;
    • expenditure requirements for locally reflective news and information programming;
    • measures to address the possible future closure of television stations; and
    • other proposals relating to local programming.

Exhibition requirements for local programming and locally reflective news and information

  1. In the Local TV Policy, the Commission established the following measures to ensure that commercial English-language local television stations maintain historical exhibition levels for local programming and locally reflective news and information:
    • these stations will continue to be required to broadcast at least 7 hours of local programming per week in non-metropolitan markets and at least 14 hours per week in metropolitan markets;Footnote 4
    • these stations will be required to broadcast a minimum level of locally reflective news and information, with the exhibition levels to be determined at licence renewal based on historical levels; and
    • to better monitor exhibition and expenditure levels for locally relevant and reflective programming, the Commission will require licensees to report on the amount of locally relevant and reflective programming produced or acquired for each program category, as well as the associated revenues and expenses.
Positions of parties
  1. Bell, Corus and Rogers proposed to maintain the current local programming requirements for non-metropolitan and metropolitan markets. They also proposed the following commitments for the exhibition of locally reflective news and information, to be imposed as conditions of licence for most stations:
    • 6 hours per week for metropolitan markets; and
    • 3 hours per week for non-metropolitan markets.
  2. Other interveners did not specifically comment on these levels, but CITY and OMNI’s unionized employees in Vancouver, the Syndicat des employé(e)s de CFCM-DT Québec, the Conseil provincial du secteur des communications (CPSC) and UNIFOR requested various amendments to the measures set out in the Local TV Policy that they felt would ensure that employees in local stations are better protected. Some of these interveners also requested amendments to clarify the definition of local programming and locally reflective news set out in that policy.
  3. With respect to monitoring compliance, the groups submitted that it would be difficult to measure locally reflective news segments separately from news segments that are relevant to the local community. They argued that a logging requirement to this effect would create a substantial administrative burden and would therefore divert local resources that could be used to produce news. Instead, the groups proposed a hybrid monitoring system that would combine the submission of logs with samples of news segments to prove that the stations are providing the required amount of locally reflective news.
Commission’s analysis and decision
  1. Consistent with the Local TV Policy, the Commission is generally maintaining the current standard local programming requirement for local television stations of at least 7 hours per week in non-metropolitan markets and at least 14 hours per week in metropolitan markets.
  2. Further, the Commission is of the view that there is merit to the argument made by the groups that locally reflective news requirements should be similarly standardized for all stations. Otherwise, it would be imposing higher requirements for those broadcasters who have maintained their commitment to local news, while rewarding those who have cut back in this area.
  3. Accordingly, the Commission considers it appropriate to impose the following standard minimum requirements for the broadcast of locally reflective news and information:
    • 6 hours per week for metropolitan markets; and
    • 3 hours per week for non-metropolitan markets.
  4. In addition, in light of the comments received as regards monitoring compliance with these new regulatory levels, the Commission finds it appropriate to require licensees to file sample-based reports rather than to require them to provide details on locally reflective news segments in their logs. Accordingly, the Commission will begin in the 2017-2018 broadcast year to randomly select and require licensees to submit reports for certain broadcast weeks providing detailed information on locally reflective news segments. The Commission may request, if necessary, that audiovisual recordings of those programs be submitted to verify the information contained in the reports.

Expenditure requirements for locally reflective news and information

  1. In the Local TV Policy, the Commission announced that all licensees would be required to allocate a percentage of their previous year’s revenues to locally reflective news, with the expenditure levels to be determined at licence renewal based on historical levels.
Positions of parties
  1. All three English-language groups proposed to commit 11% of the previous year’s revenues of their local television stations to locally reflective news. Bell estimated that all of the money spent producing news in local stations was dedicated to creating locally reflective news segments. In support of their proposal, the groups submitted data relating to their expenditures on locally reflective news programming over a three-week period (from 30 October to 18 November 2016).
  2. Interveners did not specifically address expenditure levels for locally reflective news, but the CPSC proposed that the amounts to be spent on local news be established solely on the basis of local advertising revenues to shield these expenditures from fluctuations in national advertising revenues.
Commission’s analysis and decision
  1. Based on the information relating to expenditures provided by the groups, which the Commission deems to be commensurate with their historical spending, the Commission considers it appropriate to set the locally reflective news expenditure (LNE) requirement at 11% of the previous year’s revenues of each television station in the group. Moreover, to allow the groups to create this programming and to ensure that resources are allocated to meet the needs and interests of each location served, the Commission also considers it appropriate to provide stations belonging to the group with flexibility in meeting their LNE requirements. Specifically, stations within a group will be allowed to share 100% of their LNE, and the same rules will govern LNE as those applicable to CPE in terms of annual overspending and underspending.
  2. Additionally, for the purposes of fulfilling LNE requirements, television stations will be allowed to count local expression contributions received from broadcasting distribution undertakings (BDUs) for the production of local news pursuant to the Local TV Policy, so long as these contributions are allocated to locally reflective news programming and the group maintains the operation of all its television stations. This will provide the groups with a significant level of financial support without imposing additional expenditure requirements.
  3. Finally, licensees of local television stations will be required to file information on LNE and the broadcast of locally reflective news programs and segments as part of their annual returns so that the Commission and other parties can assess the effectiveness of these measures over the course of the licence term.

Measures to address the possible future closure of television stations

  1. Over the course of the hearing, the Commission expressed concern over the possibility that certain licensees might consider shutting down their television stations during the upcoming licence term and the impact of such a decision on Canadians and their access to local news and information. The Commission proposed conditions of licence to address this concern.
Positions of parties
  1. Bell stated that closing local stations was an avenue of last resort, but that a five-year licence term was a long time in today’s environment and it would like to maintain as much flexibility as possible. Further, while conceding that the Commission has created a strong financial incentive through its Local TV Policy to keep local television stations open, Bell opposed a condition of licence that would prohibit it from closing stations during the licence term or that would require it to consult before closing stations.
  2. Corus agreed that a public process might be worthwhile prior to shutting down a local television station and did not specifically object to a requirement in this regard.
  3. Rogers stated that closing down an asset was not something that it would take lightly and that the public reaction would already have been considered prior to such a decision. Rogers added that it would take it upon itself to explain the closure of a local television station to Canadians without the need for a regulatory process.
  4. In a joint submission, the Canadian Ethnocultural Council (CEC), the Consumers’ Association of Canada (CAC), the Council of Senior Citizens’ Organizations of B.C. (COSCO), the National Pensioners Federation (NPF) and the Public Interest Advocacy Centre (PIAC) supported the idea of imposing a condition of licence requiring licensees planning to close a station to undertake a regulatory process so as to give the public the opportunity to comment.
  5. Finally, the Forum for Research and Policy in Communications (FRPC) argued that vertically integrated broadcasters that choose to abandon the communities they serve by closing television stations should lose the associated benefits they receive from the Commission, including but not limited to those set out in the group-based policy.
Commission’s analysis and decision
  1. The Commission has adopted a series of regulatory measures in recognition of the difficult environment in which stations operate. For example, the Commission has provided licensees with the ability to allocate their CPE and PNI expenditures across their respective local television stations and discretionary services and is allowing stations to allocate their LNE across stations. As part of the Local TV Policy, the Commission authorized affiliated BDUs to redirect funding previously allocated to the operation of community channels to finance local programming. These regulatory measures are meant to provide licensees with the regulatory and financial flexibility to continue providing local and locally reflective programming to Canadians.
  2. Along with these beneficial regulatory measures comes the licensee’s reciprocal duty to provide the service for which it holds a licence. Consequently, in the Local TV Policy, the Commission stated that ownership groups operating both BDUs and television stations would be required to maintain the operation of all of their television stations over their licence term to benefit from the flexibility being granted.
  3. Consistent with previous policies, the Commission wishes to ensure that licensees that benefit from various regulatory measures can be held accountable if they opt to no longer provide programming that is valuable to Canadians. It therefore considers it appropriate to ensure that stakeholders and members of the public can voice their concerns through a public process in the event that one of the groups wishes to close down a station.
  4. Specifically, each licensee of a television station belonging to the groups will be required to:
    • operate the station as part of the designated group for the duration of the licence term; and
    • in the event that it wishes to be relieved of the above obligation, file an application with the Commission to remove the station from the group list at least 120 days prior to ceasing operations.
  5. Related obligations will be imposed by condition of licence on all other licensees belonging to the same group, requiring them to ensure that the list of services that form part of the group is accurate at all times. This requirement will apply not only when a licensee decides to shut down a station, but also when groups are modified as a result of an ownership transaction.
  6. To ensure greater transparency with respect to the services that comprise the groups and to provide Canadians with current information in this regard, the Commission is listing the services that belong to each group in the licence renewal decisions.

Other proposals relating to local programming

  1. With respect to the other proposals made by parties, including revising the definitions of local programming and locally reflective news, creating a requirement concerning local presence, requiring that a minimum number of employees be employed at each station and requiring that a percentage of local programming be drawn from categories other than news, the Commission finds that these proposals are out of the scope of this proceeding as its aim is to apply the determinations made in the Local TV Policy, not revisit those policy decisions.

Access for underrepresented groups in the broadcasting system

  1. Interveners commented on the need for additional measures to support Indigenous and official language minority community (OLMC) production, as well as women’s access to key leadership positions in the broadcasting industry.
  2. Section 3(1)(o) of the Act states that “programming that reflects the aboriginal cultures of Canada should be provided within the Canadian broadcasting system as resources become available for the purpose.”
  3. As an outcome of the Truth and Reconciliation Commission of Canada, the Government of Canada has stated that it wants to ensure the protection and promotion of Indigenous culture. The Canadian broadcasting system plays an important role in the reconciliation of Indigenous peoples with Canadian society. In the past, the Commission has raised the immediate need to serve the Indigenous community as a whole since vital questions of importance to Indigenous peoples are not completely covered, or not covered at all, by non-Indigenous media.
  4. Further, as a federal institution, the Commission must take into consideration the objectives set out in section 41 of the Official Languages Act when examining and applying existing policies.
  5. Finally, the Commission considers that the Canadian broadcasting system should also serve the needs and interests and reflect the circumstances and aspirations of women, consistent with section 3(1)(d)(iii) of the Act.
  6. Accordingly, the Commission has considered the following issues:
    • reflection of Indigenous peoples;
    • reflection of OLMCs;
    • women’s access to key leadership positions; and
    • reporting on Canadian productions.

Reflection of Indigenous peoples

Positions of parties
  1. The FRPC was critical of the fact that none of the applicants clearly discussed their role and the steps taken to achieve the objectives of the Act.
  2. On Screen Manitoba stated that Indigenous production companies should have greater access to the public via the groups.
  3. Jeremy Torrie, an Indigenous producer, submitted that a clear definition of what constitutes “Aboriginal content” and data about the volume of Aboriginal content broadcast by licensees was needed before discussing solutions.
  4. For their part, the groups made no firm commitments regarding Indigenous reflection. However, Corus suggested that CPE or time credits for Indigenous productions are another way to encourage major broadcasters to turn to Indigenous producers for content. It also noted that industry meetings are an excellent opportunity to organize information sessions for Indigenous producers. Corus offered to collaborate with the industry to plan these sessions and proposed the creation of online toolkits.
Commission’s analysis and decision
  1. Currently, programming reflecting the Indigenous peoples of Canada is only offered by a small number of programming services. The Commission considers that the large private broadcasters can play an important role in providing access to such programming.
  2. Accordingly, in light of the pressing need to serve the Indigenous community, the Commission considers it appropriate to adopt an incentive to encourage the reflection of Indigenous peoples within the system. Specifically, the designated groups will receive a 50% credit towards their CPE requirements for expenditures on Canadian programming produced by Indigenous producers,Footnote 5 up to a maximum (expenses plus credit) of 10% of the group’s overall CPE requirement when combined with the credit discussed in the following section on OLMC reflection. Only programming costs counting towards CPE as defined in Public Notice 1993-93 will be considered eligible for the credit. Conditions of licence to this effect are set out in the licence renewal decisions for each group, also published today.
  3. The Commission intends to monitor and assess the effectiveness of these measures by requiring the groups to provide the following information on a yearly basis: the number of Indigenous producers they meet with each year, a list of projects commissioned from Indigenous producers that are in development, in production and completed, their budgets and the total CPE devoted to such projects. This additional data will allow the Commission and the public to better gauge Indigenous production within the system.
  4. Further, groups and interveners who made proposals at the hearing are encouraged to pursue collaborative efforts in this regard.

Reflection of official language minority communities

Positions of parties
  1. English-language OLMCs requested that 10% of the groups’ PNI expenditures be devoted to independent producers from OLMCs and that the Commission require the groups to file detailed reports so that OLMCs can follow changes in minority-language programming over time.
  2. Generally speaking, the groups were firmly opposed to the imposition of a specific requirement. However, Corus suggested that CPE or time credits for OLMC productions would be a way to encourage major broadcasters to turn to OLMCs for content. It also noted that industry meetings are an excellent opportunity to organize information sessions for OLMC producers. Corus offered to collaborate with the industry to plan these sessions and proposed the creation of online toolkits.
Commission’s analysis and decision
  1. Over the last few years, the Commission has adopted positive measures to ensure support for OLMC producers. For example, as part of the tangible benefits associated with the purchase of Astral, Bell committed to devote 10% of its English-language PNI expenditures to OLMC producers. Subsequent to the imposition of these measures, English-language OLMCs requested that all licensees be subject to standard expenditure requirements.
  2. However, the Commission is of the view that incentives would serve to foster more sustainable relationships between OLMC producers and the groups than would new expenditure requirements. Consequently, to encourage OLMC productions, the designated groups will receive a 25% credit against their CPE requirements for expenditures on Canadian programming produced by OLMC producers, up to a maximum (expenses plus credit) of 10% of the group’s overall CPE requirement when combined with the credit discussed in the preceding section on Indigenous reflection. Only programming costs counting towards CPE as defined in Public Notice 1993-93 will be considered eligible for the credit. Further, the OLMC producer must be an independent producer as defined by the Commission and (i) if in the province of Quebec, the original language of the production must be English or (ii) if outside of the province of Quebec, the original language of the production must be French.
  3. The Commission intends to monitor and assess the effectiveness of these measures by requiring the groups to provide the following information on a yearly basis: the number of OLMC producers they meet with each year, a list of projects commissioned from OLMC producers that are in development, in production and completed, their budgets and the total CPE devoted to such projects. This will allow the Commission to monitor the effect of the new incentive on OLMC producers, as well as permit the groups representing OLMCs to obtain relevant information not currently available and thus more fully participate in Commission proceedings.

Women’s access to key leadership positions

Positions of parties
  1. Women in Film and Television Vancouver (WIFTV) proposed that the Commission impose an annual reporting obligation on large ownership groups to assess the role of women in certain key roles, including producer, director, writer, cinematographer and editor.
  2. In support of its position, WIFTV cited a 2013 report by the Canadian Unions for Equality on Screen, which found that men progressed up decision-making levels and income brackets at much higher rates than women, particularly in some of the key creative positions that define Canadian content. The report concluded:

    The women working behind the scenes in Canadian media are facing systemic barriers to career advancement into the highest creative and decision-making ranks. This is both an employment equity issue, as well as a social, political and cultural issue. A gender imbalance behind the screen shapes the stories we see on the screen.

  3. None of the groups made specific commitments on this issue. However, Bell noted that it employed several women at very senior levels, such as president of the news division and independent production. Bell also noted that its productions include a number of women in production and direction roles. Similarly, Corus cited the number of women in senior or executive positions within its company. Corus also stated that many of its services produce programming created by and for women. Finally, Rogers confirmed that it had taken steps to ensure fair representation of women within the company.
Commission’s analysis and decision
  1. Although women have access to management positions within the broadcasting system, they still face barriers to entry with respect to key positions within the creative and production sectors. Section 3(1)(d)(iii) of the Act states 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 Commission considers that women’s access to key leadership positions is an important issue and that intervention by the Commission is necessary to further the achievement of this objective of the Act.
  2. Accordingly, in order to engage all interested parties in a wider discussion on this issue, the Commission considers it appropriate to initiate an event on women in production, with particular emphasis on women in leadership positions.
  3. In addition, to address the concerns of certain stakeholders regarding the lack of data, the Commission intends to monitor broadcasters’ efforts in this area by requiring the groups to provide information on a yearly basis regarding the employment of women in key leadership creative positions in the productions they broadcast. This will allow the Commission and the public to better identify women’s challenges in the television industry prior to the next renewal process.

Reporting on Canadian productions

  1. Several interveners submitted that the groups’ reporting of expenditures on original, first-run programming is inconsistent and difficult to track. Other interveners argued that the groups should clearly identify their spending on original, first-run programming versus library or acquired programming.
  2. To address these concerns while limiting the administrative burden on licensees, the Commission will revise the PNI Report and annual return forms that licensees must file in order to identify their spending on original, first-run programming and other content, including that produced by OLMC and Indigenous producers. Questions will also be added to measure broadcasters’ efforts to commission programming made by women occupying the roles of producer, director, writer, cinematographer and editor.
  3. The revised forms and reports will be implemented in the new licence term and will first be filed with the Commission by 30 November 2018 to reflect the 2017-2018 broadcast year.
  4. In addition, in the near future, the Commission will publish an information bulletin relating to the new forms with a view to eliminating variances in reporting.

Application of existing competitive safeguards in light of the Wholesale Code

  1. In Broadcasting Regulatory Policy 2015-438, the Commission set out the Wholesale Code, which governs certain aspects of the commercial arrangements between BDUs, programming undertakings and exempt digital media undertakings. Under Broadcasting Order 2015-439 issued pursuant to section 9(1)(h) of the Act, licensed BDUs are required to abide by the Wholesale Code and may only distribute a licensed programming undertaking if:
    • both parties have entered into an affiliation agreement that complies with the Wholesale Code and includes a clause requiring the licensed programming undertaking to abide by the Wholesale Code, or
    • the licensed programming undertaking is subject to a condition of licence requiring adherence to the Wholesale Code.
  2. The standard conditions of licencefor discretionary services set out in Broadcasting Regulatory Policy 2016-436 include a condition requiring adherence to the Wholesale Code.
  3. Prior to the implementation of the Wholesale Code, a number of conditions of licence were imposed on services in ownership transactions or as part of licence renewals as safeguards against anti-competitive behaviour.Footnote 6 For instance, in response to the change in the effective control of the broadcasting undertakings of Astral to Bell, the Commission put in place significant safeguards to ensure a continued dynamic marketplace, thus acknowledging the concerns raised by interveners over the impact of the transaction on competition, ownership concentration, vertical integration and the exercise of market power. In the French-language market, Bell and Corus services are subject to these safeguards.
  4. Most of the competitive safeguards imposed on the services overlap with provisions in the Wholesale Code, with the exception of two conditions of licence related to the launch of programming services.

Positions of parties

  1. With a few unrelated exceptions, Bell indicated that it was prepared to accept the standard conditions of licenceset out in Broadcasting Regulatory Policy 2016-436. However, in light of its court challenge of the Wholesale Code,Footnote 7 Bell argued that existing conditions of licence that duplicate the requirements found in the Wholesale Code should be deleted.
  2. The Canadian Broadcasting Corporation, on the other hand, argued that deleting the existing conditions of licence would be contrary to the Commission’s decision to impose conditions of licence on vertically integrated entities to limit the potential for anti-competitive behaviour. Bragg Communications Inc., carrying on business as Eastlink, similarly argued that the conditions of licence that Bell is seeking to delete were a condition of the Commission’s approval of its acquisition of Astral and that they should not be deleted as long as Bell retains ownership of those assets.
  3. Cogeco Communications inc. (Cogeco) and TELUS Communications Company (TELUS) submitted that there was no harm in maintaining existing conditions of licence while the legal challenge is pending. Cogeco noted that Bell’s appeal did not challenge the Commission’s authority to impose such conditions. Cogeco and TELUS also submitted that suspensive conditions of licence were not a good alternative, arguing, among other things, that duplication and redundancy would cause no harm. TELUS added that concerns regarding enforcement of the Wholesale Code would be resolved by adopting a condition of licence stipulating that the programming service agrees to dispute resolution in relation to the carriage of its service, in accordance with the Wholesale Code.
  4. For its part, Rogers submitted that retaining existing conditions superseded by the Wholesale Code would be contrary to the objective of streamlining regulatory obligations, would create difficulty in determining compliance and would impose obligations on Rogers that other programmers and distributors are not required to meet. Rogers further argued that maintaining the standard condition of licence that requires adherence to the provisions in the Wholesale Code would address the issue regarding the potential impact of removing these conditions in the event that the appeal of the Wholesale Code was successful. However, when asked about the possibility of existing conditions of licence being applied in suspense, Rogers accepted the proposal, with the caveat that the conditions be reframed so that they use the same language as that found in the Wholesale Code.
  5. Finally, the Canadian Cable Systems Alliance (CCSA) advocated for additional conditions of licence with respect to access to programming and multiplatform rights, arguing that prescriptive rules were needed to alleviate the burden of going through the Commission’s dispute resolution process. The CCSA also argued in favour of retaining the existing condition of licence requiring mandatory dispute resolution, stating that there would otherwise be more gamesmanship and delays in mediation processes. Generally, the CCSA argued that the Commission’s staff-assisted mediation process needs to be quicker and more efficient.

Commission’s analysis and decisions

  1. The Commission considers that the record of this proceeding justifies maintaining the existing conditions of licence that overlap with the Wholesale Code while rendering them suspensive. The conditions of licence at issue stem from past decisions in which the Commission sought to address concerns over the exercise of market power and the impact of consolidation within the system. Noting the concerns of interveners in the current licence renewal proceeding, the Commission considers that the underlying issues that these requirements sought to address remain relevant.
  2. Accordingly, in the renewal decisions for the groups issued today, the Commission has retained existing conditions of licence that overlap with the Wholesale Code, while stipulating that their application is suspended as long as the Wholesale Code is in effect. This will provide licensees with the regulatory consistency and simplicity they require in their commercial relationships with BDUs, while retaining the Commission’s oversight into the commercial dealings of the licensees at the wholesale level.
  3. Further, the following conditions of licence, which do not overlap with the Wholesale Code, will be re-imposed:

    The licensee shall not include or enforce any provision in or in connection with an affiliation agreement that is designed to prevent, or is designed to create incentives that would effectively prevent, another programming undertaking or broadcasting distribution undertaking from launching or distributing another licensed programming service.

    The licensee shall provide a minimum of 90 days written notice of the impending launch of a new programming service to all broadcasting distribution undertakings. Such notice shall be accompanied by an offer that sets out the general terms of carriage of the programming service to be launched.

  4. With respect to the various requests for additional competitive safeguards and changes to the dispute resolution process, the Commission is of the view that this licence renewal proceeding is not the correct forum to be requesting requirements beyond those recently established in the Wholesale Code, nor to propose changes to the Commission’s dispute resolution regime. The Commission also considers that the dispute resolution regime, which contains both informal and formal processes and a number of regulatory protections in addition to those found in the Wholesale Code, is well equipped to ensure that a broad range of commercial issues may be brought before the Commission for resolution.
  5. Finally, as set out in Broadcasting and Telecom Information Bulletin 2013-637, Commission staff works with parties to establish timelines within the context of staff-assisted mediation, noting that it is generally in the best interest of the parties to advance in a timely manner towards resolving the dispute. Where retroactive payments may be a concern in a given case, a party at mediation should raise it with Commission staff so that it may inform the setting of timelines.

Repurposing initiative for the 600 MHz frequency band in Canada

  1. The licences held by the large English- and French-language ownership groups include licences for over-the-air television stations, many of which use the 600 MHz spectrum band. However, the use of this band is now subject to a joint effort by Canada and the U.S. to repurpose some spectrum for mobile services, such as mobile phones. This initiative is being led in Canada by the Department of Industry (the Department).
  2. This initiative will result in a new digital television (DTV) allotment plan for both countries that could impact Canadian over-the-air television broadcasters. Specifically, the new DTV allotment plan could require many television transmitters to change channel (i.e. their frequency of operation) and/or convert to digital.
  3. Licensees would ordinarily need to apply to the Commission for approval of any changes to the contours and technical parameters of their television stations and transmitters. Given the potentially high volume of technical change applications and tight timelines associated with the initiative repurposing, the Commission proposed, in Broadcasting Notice of Consultation 2016-225-3, a condition of licence that would permit the large ownership groups’ stations and transmitters to operate at revised technical parameters approved by the Department without requiring prior Commission approval. Consequently, the condition of licence would eliminate the need for licensees to file individual applications requesting Commission approval of technical changes resulting from the 600 MHz repack repurposing initiative. Under this approach, there would be no change to the carriage of television stations by BDUs since the stations would be deemed to be operating under their current parameters.

Positions of parties

  1. Both Bell and PIAC, on behalf of the CEC, the CAC, the COSCO and the NPF, supported the proposed approach.

Commission’s analysis and decisions

  1. The technical changes required for the repurposing of the 600 MHz frequency band are unlikely to result in significant changes in coverage for the affected transmitters. Adopting the proposed approach creates efficiencies and allows broadcasters to keep pace with the transition timelines associated with this initative. It also maintains existing carriage rights by deeming licensees to be operating at their current technical parameters for the purpose of determining eligibility for carriage by BDUs.
  2. For new stations or other changes not associated with the repurposing initiative, such as new rebroadcasting transmitters, broadcasters will need to apply for a new licence or a technical amendment.
  3. In light of the above, for each group’s television stations, the Commission imposes the following condition of licence:
    1. The licensee is authorized to operate the television station and transmitters according to contours and  technical parameters that differ from those approved in its most recent application and/or listed on its licence, to the extent that these new contours and technical parameters have been approved by the Department of Industry (the Department) as a result of the Department’s repurposing initiative of the 600 MHz frequency band as described in Decision on Repurposing the 600 MHz Band, SLPB-004-15, 14 August 2015 and its April 2017 Digital Television (DTV) Allotment Plan, Digital Television (DTV) Transition Schedule and the Broadcasting Procedures and Rules entitled BPR-11 – Broadcasting Television Application Procedures During the 600 MHz Transition.
    2. For the purpose of the Broadcasting Distribution Regulations, the licensee is deemed to be operating its television station(s) (and transmitters) under the contours and technical parameters approved by the Commission and in effect on 15 May 2017.
    3. The above authorizations are valid only if the Commission receives confirmation from the Minister of Industry that the revised contours and technical parameters resulting from the Department’s repurposing initiative of the 600 MHz frequency band satisfy the requirements of the Radiocommunication Act and the regulations made thereunder, and that a broadcasting certificate has been or will be issued to the licensee in respect of the revised parameters.
  4. Television stations operated by independent ownership groups (including community television stations) and the CBC may wish to avail themselves of this authorization prior to the renewal of their licences given that they may also be affected by the repurposing initiative. Accordingly, the licensees of these stations are invited to apply to the Commission for the condition of licence. Their applications will be processed using the administrative approach described in Broadcasting Information Bulletin 2010-960.

Secretary General

Related documents

This decision is to be appended to the licence for each of the services for which the licences are being renewed in this proceeding.

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