Broadcasting Decision CRTC 2017-156

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Reference: 2016-225

Ottawa, 15 May 2017

Telelatino Network Inc.
Across Canada

Application 2016-0405-9, received 27 April 2016
Public hearing in the National Capital Region
28 November 2016

Telelatino – Licence renewal

The Commission renews the broadcasting licence for the discretionary service Telelatino from 1 September 2017 to 31 August 2022.

The application

1. Telelatino Network Inc. (TLN) filed an application to renew the broadcasting licences for the discretionary services Telelatino and TGCOM24 (formerly known as SkyTG 24). The Commission did not receive any interventions regarding this application.
2. TLN agreed to adhere to the new standard requirements for discretionary services set out in Appendix 2 to Broadcasting Regulatory Policy 2016-436.
3. Further, in accordance with Broadcasting Regulatory Policy 2015-86 and other policies stemming from the Let’s Talk TV proceeding, TLN requested the deletion of several of the services’ conditions of licence, including those relating to nature of service, the exhibition of Canadian programming and terms of trade.
4. TLN proposed that Telelatino continue to devote at least 23% of its previous year’s gross revenues to Canadian programming expenditures (CPE) and requested that its current exception with respect to the broadcast of local advertising^{Footnote 1} be maintained. TLN further proposed to devote 35% of the broadcast day to the exhibition of Canadian programs.

Commission’s analysis and decisions

5. Having examined the application in light of applicable policies and regulations, the Commission considers that it must address the following issues:
   • non-compliance with Telelatino’s CPE requirements;
   • CPE requirements for Telelatino;
   • request relating to local advertising for Telelatino; and
   • exemption from licensing of TGCOM24.

Non-compliance

6. TLN is required by condition of licence to devote 23% of the previous year’s gross revenues of Telelatino to the acquisition of or investment in Canadian programming.
7. Based on the information provided by the licensee, Telelatino underspent by 13.5% and 8.7% respectively in the 2011-2012 and 2012-2013 broadcast years. Telelatino confirmed that it would make the appropriate expenditures by 31 August 2017, the end of the current licence term.
8. The Commission finds the licensee in non-compliance with its condition of licence relating to CPE for the current licence term.
9. The Commission notes that the licensee is entitled to expend an amount on CPE that is up to 5% less than the minimum required expenditure and can carry over this amount until the next year. The licensee is required to make up any shortfall before the end of the licence term. Given that the licensee has until the end of the licence term to meet its overall CPE expenditure requirements, the Commission is imposing a condition of licence that will require TLN to report and respond to any enquiries made by the Commission relating to the licensee’s reported CPE in the two years following the end of the licence term ending 31 August 2017. Moreover, the licensee shall be responsible for any failure to comply with the CPE requirements reported by the licensee for that licence term.

Canadian programming expenditure requirements

10. In Broadcasting Regulatory Policy 2015-86, the Commission determined that the genre exclusivity policy was no longer needed and that going forward programming diversity will be governed by market forces to the greatest extent possible. Telelatino will therefore lose its Category A status, as well as its mandatory carriage.
11. Despite the under-expenditures in CPE noted above, Telelatino proposed a minimum CPE requirement of 23% of revenues for its upcoming licence term.
12. The Commission finds it appropriate to maintain Telelatino’s current minimum CPE requirement of 23% of revenues for its next licence term. A condition of licence to this effect is set out in the appendix to this decision.

Local advertising

13. Like other discretionary services, Telelatino is subject to a condition of licence restricting the amount of advertising material that it may broadcast to twelve minutes per clock hour. However, unlike other discretionary services, which are limited to national advertising, the Commission has generally authorized third-language discretionary services, including Telelatino, to offer up to six minutes per hour of local advertising within that twelve minutes.
14. In Broadcasting Regulatory Policy 2015-86, the Commission eliminated the genre exclusivity policy as it was no longer needed to ensure programming diversity between services. As a result of this policy, Telelatino is no longer held to a specific genre or language. Nevertheless, the Commission considers that the authorization concerning local advertising has always been tied to the unique circumstances of third-language discretionary services such as Telelatino. Consequently, the Commission considers it appropriate to make this authorization conditional on the broadcast of at least 75% of programming in a language other than English or French. This will ensure that Telelatino does not rebrand itself into an English- or French-language service while retaining the ability to offer local advertising and thus benefit from a competitive advantage relative to other services. Moreover, this level of third-language programming is reflective of the current circumstances and regulatory requirements for Telelatino. A condition of licence to this effect is set out in the appendix to this decision.

Exemption from licensing of TGCOM24

15. According to the Commission’s records and evidence filed by the applicant in this proceeding, TGCOM24 is eligible to operate as an exempt discretionary service pursuant to Broadcasting Order 2015-88. The licensee has indicated, however, that it would prefer to operate as a licensed service.
16. In Broadcasting Regulatory Policy 2015-86, the Commission announced measures to reduce regulatory and administrative burden. One of these measures was the merging and expansion of existing exemption orders for discretionary services in Broadcasting Order 2015-88. The Commission indicated that the consolidated order would permit a greater number of services to register as exempt services, simplifying the application and renewal process and reducing regulatory burden for broadcasters.
17. In the same policy, the Commission noted that in the past services that preferred to operate under a broadcasting licence rather than as exempt undertakings were sometimes granted licences, despite being eligible to operate under an exemption order. However, the Commission clearly indicated that going forward it would no longer grant licences to services eligible to operate under Broadcasting Order 2015-88.
18. Accordingly, the broadcasting licence for TGCOM24 will not be renewed. Beginning on 1 September 2017, TGCOM24 may continue to operate pursuant to Broadcasting Order 2015-88. TLN is reminded that it must operate TGCOM24 in compliance with this order at all times.

Conclusion

19. The Commission renews the broadcasting licence for the discretionary service Telelatino from 1 September 2017 to 31 August 2022. The terms and conditions of licence are set out in the appendix to this decision.

Secretary General

Related documents

• Standard requirements for television stations, discretionary services, and on-demand services, Broadcasting Regulatory Policy CRTC 2016-436, 2 November 2016
• Exemption order respecting discretionary television programming undertakings serving fewer than 200,000 subscribers, Broadcasting Order CRTC 2015-88, 12 March 2015
• Let’s Talk TV – The way forward – Creating compelling and diverse Canadian programming, Broadcasting Regulatory Policy CRTC 2015-86, 12 March 2015

This decision is to be appended to the licence.

Appendix to Broadcasting Decision CRTC 2017-156

Terms and conditions of licence for the discretionary service Telelatino

Terms

The licence will take effect 1 September 2017 and expire 31 August 2022.

Conditions of licence

1. The licensee shall adhere to the standard conditions of licence, expectations and encouragements for discretionary services set out in Appendix 2 to Standard requirements for television stations, discretionary services and on-demand services, Broadcasting Regulatory Policy CRTC 2016-436, 2 November 2016, except for conditions 17 and 18 which are replaced by the following:

   17. The licensee shall, by 1 September 2019, provide described video for all English- and French-language programming that is broadcast during prime time (i.e., from 7 p.m. to 11 p.m.), and that is drawn from program categories 2(b) Long-form documentary, 7 Drama and comedy, 9 Variety, 11(a) General entertainment and human interest and 11(b) Reality television, and/or is programming targeting preschool children (0-5 years of age) and children (6-12 years of age).

   18. As regards the broadcast of advertising material:

   1. Except as otherwise provided in subparagraphs b) and c), the licensee shall not broadcast more than twelve minutes of advertising material during each clock hour, no more than six minutes of which may consist of local advertising. 
   2. Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour.
   3. In addition to the 12 minutes of advertising material referred to in subparagraph a), the licensee may broadcast partisan political advertising during an election period.
   4. The licensee is authorized to broadcast local advertising in accordance with subparagraph a) provided that at least 75% of the programming broadcast by licensee consists of programming in a language other than English or French.

   For the purposes of this condition of licence, “local advertising” is advertising other than national and regional advertising – that is, advertising on behalf of persons who provide goods or services in more than one market and/or province.

2. In each broadcast year, the licensee shall devote at least 35% of the broadcast day to the exhibition of Canadian programs.
3. (a)  In each broadcast year, the licensee shall devote 23% of the previous year’s gross revenues of the undertaking to the acquisition of or investment in Canadian programming.

   (b)  In each broadcast year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming that is up to 5% less than the minimum required expenditure for that year calculated in accordance with this condition; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year’s under-spending.

   (c)  In any broadcast year of the licence term, including the final year, the licensee may expend an amount on Canadian programming that is greater than the minimum required expenditure for that year calculated in accordance with this condition; in such case, the licensee may deduct:

   1. From the minimum required expenditure for the next year of the licence term, an amount not exceeding the amount of the previous year’s over-spending; and
   2. From the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the over-spending and any amount deducted under paragraph (i) above.

   (d)  Notwithstanding the above, during the licence term, the licensee shall expend on Canadian programming, at a minimum, the total of the minimum required expenditures calculated in accordance with this condition of licence.

4. In the two years following the end of the previous licence term, the licensee shall report and respond to any Commission enquiries relating to the expenditures on Canadian programming reported by the licensee for that term.
5. The licensee shall be responsible for any failure to comply with the requirements regarding Canadian programming expenditures that occurred during the previous licence term.
6. 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.
7. 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.
8. The licensee shall not:
   1. require an unreasonable rate (e.g., not based on fair market value);
   2. require a party with which it is contracting to accept terms or conditions for the distribution of programming on a traditional or ancillary platform that are commercially unreasonable;
   3. require an excessive activation fee or minimum subscription guarantee;
   4. impose, on an independent party, a most favoured nation (MFN) clause or any other condition that imposes obligations on that independent party by virtue of a vertically integrated entity or an affiliate thereof entering into an agreement with any vertically integrated entity or any affiliate thereof, including its own.

      The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

9. When negotiating a wholesale rate for a programming service based on fair market value, the licensee shall take into consideration the following factors:
   1. historical rates;
   2. penetration levels and volume discounts;
   3. the packaging of the service;
   4. rates paid by unaffiliated broadcasting distributors for a programming service;
   5. rates paid for programming services of similar value to consumers;
   6. the number of subscribers that subscribe to a package in part or in whole due to the inclusion of the programming service in that package;
   7. the retail rate charged for the service on a stand-alone basis;
   8. the retail rate for any packages in which the service is included.

   
   The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

10. If the licensee has not renewed an affiliation agreement that it signed with a licensed or exempted Canadian television programming undertaking or a broadcasting distribution undertaking within 120 days preceding the expiry of the agreement and if the other party has confirmed its intention to renew the agreement, the licensee shall submit the matter to the Commission for dispute resolution pursuant to sections 12 to 15 of the Broadcasting Distribution Regulations.

    The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

11. The licensee shall not:
    1. require minimum penetration or revenue levels that force distribution of a service on the basic tier or in a package that is inconsistent with the service’s theme or price point;
    2. refuse to make programming services available on a stand-alone basis (i.e., requiring the acquisition of a program or service in order to obtain another program or service);
    3. impose terms that prevent an unrelated distributor from providing a differentiated offer to consumers.

    
    The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

12. The licensee shall not refuse to make available or condition the availability of or carriage terms for any of its licensed programming services to any broadcasting distribution undertaking (BDU) on whether that BDU agrees to carry any other separately licensed programming service, provided that this condition does not prevent or limit the right or ability of the licensee to offer BDUs multiservice or other discounts, promotions, rebates or similar programs.

    
    The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

13. The licensee shall negotiate with broadcasting distribution undertakings (BDUs) for non-linear multiplatform rights to the content broadcast on the licensee’s programming service at the same time as linear rights for its programming service and provide those rights to BDUs on a timely basis and on commercially reasonable terms. For certainty, nothing in this condition of licence shall prevent or otherwise restrict the licensee from requesting compensation in exchange for making such non-linear rights available to BDUs.

    
    The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

14. The licensee shall file with the Commission all affiliation agreements to which it is a party with a television programming undertaking or broadcasting distribution undertaking within five days following the execution of the agreement by the parties.

    
    The application of the foregoing condition of licence is suspended so long as the Wholesale Code set out in the appendix to The Wholesale Code, Broadcasting Regulatory Policy CRTC 2015-438, 24 September 2015, is in effect.

Definitions

For the purpose of these conditions, the terms “broadcast day,” “broadcast year” and “clock hour” shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987. 

Date modified:

2017-05-15