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Broadcasting Decision CRTC 2018-340

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References: 2017-365 and 2017-365-1

Ottawa, 31 August 2018

Aboriginal Peoples Television Network Incorporated
Across Canada

Application 2017-0641-7, received 28 July 2017
Public hearing in the National Capital Region
30 April 2018

APTN – Licence renewal and renewal of mandatory distribution order

The Commission renews the broadcasting licence for the national English- and French-language discretionary service APTN from 1 September 2018 to 31 August 2023. APTN provides programming in both official languages and in many Aboriginal languages and dialects that reflects the diverse perspectives of Aboriginal peoples and their lives and cultures.  

In addition, the Commission renews the order for mandatory distribution of this service on the digital basic service, pursuant to section 9(1)(h) of the Broadcasting Act and approves in part the applicant’s proposed increase in the regulated per subscriber monthly wholesale rate. The applicant proposed to increase the rate from $0.31 to $0.36. The Commission approves a new rate of $0.35, effective 1 September 2018.

The terms and conditions of licence are set out in the appendix to this decision.

 Application

  1. The Aboriginal Peoples Television Network Incorporated (APTN Inc.) filed an application to renew the broadcasting licence for its national English- and French-language specialty Category A service APTN, which expires 31 August 2018. APTN provides programming in both official languages and in many Aboriginal languages and dialects that reflects the diverse perspectives of Aboriginal peoples and their lives and cultures. APTN Inc. operates three regional feeds of its national service (APTN East, APTN West and APTN North) and one high definition (HD) feed (APTN HD).
  2. The Commission received a number of interventions supporting, opposing or commenting on the application. A large majority of the interventions were in support, including those from Aboriginal persons, organizations and production companies.

Issues

  1. After examining the application in light of applicable regulations and policies, the Commission considers that the issues to be addressed are the following:
    • mandatory distribution under section 9(1)(h) of the Broadcasting Act (the Act);
    • a proposed increase to APTN’s regulated per subscriber monthly wholesale rate from $0.31 to $0.36;
    • a proposed reduction in the requirements relating to the exhibition of Canadian programming from 75% to 70% of the broadcast year and evening broadcast period;
    • a proposed reduction in programming produced by independent production companies from 80% to 70%;
    • an expenditure requirement for Canadian programming;
    • conditions of licence applicable to each of APTN’s feeds;
    • a new requirement regarding the broadcast of news and current affairs; and
    • a proposed exemption from the standard condition of licence regarding the broadcast of professional sports.

Mandatory distribution

  1. The licensee requested continued mandatory distribution on the basic service of Canadian cable and satellite providers, pursuant to an order issued under section 9(1)(h) of the Act.
  2. APTN is the only Canadian television service dedicated primarily to programming that reflects and is produced by Aboriginal peoples. The programming that the service provides would not otherwise be available in the Canadian broadcasting system. In the Commission’s view, it is vitally important that this unique service continue to be available to all Canadians subscribing to a broadcasting distribution undertaking (BDU) service, consistent with the objectives of the Act. The Commission also recognizes the important role that APTN plays in supporting reconciliation by developing initiatives that inform and educate the Canadian public and connect Aboriginal and non-Aboriginal Canadians.
  3. More specifically, in furtherance of section 3(1)(d)(iii) of the Act, APTN serves the needs and interests, and reflects the circumstances and aspirations, of Canadian men, women and children. This includes equal rights, linguistic duality, the multicultural and multiracial nature of Canadian society, and the special place of Aboriginal peoples within that society. APTN also ensures, pursuant to section 3(1)(o) of the Act, that programming reflecting the Aboriginal cultures of Canada is provided within the Canadian broadcasting system as resources become available for that purpose.
  4. Accordingly, the Commission is satisfied that APTN’s service continues to meet the criteria for mandatory distribution on the digital basic service set out in paragraph 11 of Broadcasting Regulatory Policy 2010-629.
  5. The Commission therefore considers it appropriate to approves the licensee’s request for continued distribution on the basic service for a five-year term, pursuant to Broadcasting Order 2018-341 also issued today.

Rate increase

Licensee’s proposal
  1. APTN Inc. proposed a $0.05 increase to APTN’s per subscriber monthly wholesale rate. If approved, the rate would increase from $0.31 to $0.36.
  2. The licensee submitted that the rate increase is necessary for APTN to function as an effective national network serving the needs of Aboriginal peoples. The increase would serve to offset inflation and decreasing subscriber revenues due to a projected decline in subscribership to BDUs. The licensee further argued that the rate increase is necessary because of a decline in advertising revenues resulting from the introduction of competing digital advertising platforms.
  3. APTN Inc. further submitted that approval of the proposed rate increase would allow it to make improvements to the service’s programming, such as establishing news bureaus in Labrador, Northern British Columbia and Regina, and launching a new French-language weekly newscast. Further, it would be able to maintain spending on high-cost production and produce two new talk shows, one in English and one in French.
  4. If it were not granted a rate increase, APTN Inc. submitted that it would not be able to maintain the quality of its existing service. In that event, it would be forced to reduce investments in high quality programming, neglect capital upgrades, cut staff, close two bureaus and freeze salaries in order to avoid significant losses.
Interventions
  1. Members of the public, members of Aboriginal communities and independent producers supported the proposed rate increase. They generally believed that the increase would provide APTN with funding that is necessary to fulfil its mandate.
  2. Shaw, Cogeco and Quebecor generally opposed APTN’s proposed rate increase. They were concerned that BDUs would not be able to recover the increased cost because of the $25 per month price cap on the basic service package. They were also concerned that approval would lead to increases in costs to subscribers to first-tier packages, which could drive consumers to alternative forms of media. They pointed out that APTN’s wholesale rate increased by 25% at the last licence renewal and is the highest among the services with mandatory distribution.
  3. Shaw, Cogeco and Quebecor commissioned a market study by Giganomics Consulting which suggested that a rate increase of $0.01 would be sufficient to maintain APTN’s programming throughout the next licence term.
  4. The Public Interest Advocacy Centre (PIAC) also opposed the $0.05 increase. PIAC suggested that a smaller increase of $0.01 or $0.02 would account for inflation and increased programming costs and therefore be more reasonable.
Commission’s analysis
  1. The Commission considers that the current level of service and types of programming that APTN offers are of significant value and essential to the fulfillment of the objectives of the Act. It is for this reason, and as discussed in paragraphs 4 to 8 of this decision, that APTN has qualified for 9(1)(h) status. The Commission therefore considers that it is essential that APTN has the resources necessary to maintain the level and types of programming that it offers.
  2. APTN Inc. identified an increase of $0.04 as necessary to maintain operations at current levels. Taking into account historical trends in BDU subscriber numbers and programming costs, the Commission has examined the applicant’s financial projections and assumptions and agrees that a rate increase of $0.04 is sufficient for APTN to maintain its current programming and continue to contribute appropriately to the fulfilment of the objectives of the Act.
  3. Further, upon examination of APTN’s Inc.’s financial results for the current licence term, the Commission considers that resources available to APTN as a result of its net earnings over the current licence term would allow APTN Inc. to fund new programming initiatives without a further rate increase.
  4. In light of the above, the Commission approves in part the applicant’s proposed increase in its per subscriber monthly wholesale rate. The new rate for the next licence term will be $0.35.

Canadian programming exhibition requirement

Licensee’s proposal
  1. APTN’s current condition of licence regarding the exhibition of Canadian programming is as follows:

    The licensee shall devote at least 75% of the broadcast year and at least 75% of the evening broadcast period to the broadcast of Canadian programs.
  2. In its licence renewal application, APTN Inc. proposed to decrease the above-noted levels to 70% of the broadcast year and evening broadcast period.
  3. The licensee submitted that the proposed amendment would allow it to include a small amount of non-Canadian Indigenous programming in its schedule and would facilitate the acquisition and scheduling of international content while reducing the number of repeat Canadian programs that it airs.
  4. At the hearing, the Commission asked APTN Inc. if it would accept a condition of ensuring the reduction in Canadian programming would be replaced with international Indigenous programming. APTN Inc. stated that it was willing to accept such a requirement and submitted a proposed condition of licence to that effect.
Interventions
  1. The Canadian Media Producers Association (CMPA) and On Screen Manitoba opposed the reduction, arguing that its approval would mean a decreased commitment to Indegenous talent in Canada. The CMPA further argued that a reduction in Canadian programming in favour of international programing would be inconsistent with the exceptional contributions that a service with mandatory distribution must make to the fulfillment of the objectives of the Act. Finally, the CMPA submitted that, if the Commission approved the reduction, it should require APTN Inc. to file an annual report listing the non-Canadian Indigenous programs it broadcasts in order to ensure the licensee’s compliance with its condition of licence.
Commission’s analysis
  1. In Broadcasting Regulatory Policy 2010-629, the Commission set out the criteria to be used when assessing applications for mandatory distribution on the digital basic service. One of the criteria states that the applicant must “provide evidence that the service is making exceptional commitments to original first-run Canadian programming in terms of exhibition and expenditures. Specifically, the applicant must demonstrate that the commitments it intends to make to original, first-run Canadian programming through exhibition and expenditures justify its exceptional status under a 9(1)(h) order.”
  2. Moreover, in Broadcasting Regulatory Policy 2015-86, the Commission indicated that it would maintain all exhibition requirements for services benefitting from mandatory distribution under the Act.
  3. The Commission considers that a reduction in the amount of Canadian programming would not be consistent with the spirit of the criterion from Broadcasting Regulatory Policy 2010-629 cited above. A reduction in the level of Canadian programming would also be inconsistent with the determination set out in Broadcasting Regulatory Policy 2015-86.
  4. While APTN Inc.’s proposed condition of licence limiting the replaced Canadian programming to non-Canadian Indigenous programming would ensure that the new programming would align with APTN’s nature of service, it would still result in a reduction in the level of Canadian programming as well as lost opportunities for Canadian independent Indigenous producers.
  5. The Commission also notes that APTN generally surpasses its Canadian programming exhibition requirements. As a result, there is already room to replace some Canadian repeat programming with non-Canadian Indigenous programming while still meeting current requirements.
  6. In light of all the above, the Commission denies the licensee’s proposed reduction in requirements for the exhibition of Canadian content from 75% to 70% of the broadcast year and evening broadcast period, including APTN Inc.’s proposal that the replaced Canadian programming be limited to the broadcast of non-Canadian Indigenous programming.

Independent production requirement

Licensee’s proposal
  1. The licensee is currently required, by condition of licence, to ensure that at least 80% of the programming exhibited on the service other than news (program category 1), current affairs (program categories 2(a) and 3) and sports (program category 6) is produced by independent production companies not related to the licensee.
  2. In its licence renewal application, APTN Inc. proposed to reduce the minimum required level of programming produced by independent producers from 80% to 70%.
  3. In support of its proposal, APTN Inc. argued that it did not intend to diminish its commitment to independent producers but rather wished to gain flexibility to use its strengths to produce content, develop innovative production models and program financing, and distribute content on multiple platforms throughout the world. The licensee added that the primary impact of the proposed changes would be a reduction in repeat Canadian programming.
  4. APTN Inc. also proposed to add a new condition of licence requiring that at least 80% of expenditures on original programming other than news, current affairs and sports be made with independent producers, in the event that the Commission were to approve the increase to its wholesale rate. The licensee submitted that the proposed level was higher than the 75% level applicable to large ownership groups and that its requirement would apply to almost all program categories, excluding only news, current affairs and sports.
Interventions
  1. Several independent production companies opposed the reduction in the level of independent production noting that APTN has historically exceeded the requirement. They therefore considered that the status quo should be maintained.
  2. The CMPA considered that APTN Inc.’s approach would lead to a scenario in which APTN hires independent production companies to produce content it had developed itself – something that the CMPA considered inappropriate for a 9(1)(h) service. With respect to the proposed expenditure requirement, the CMPA considered that the existing exhibition requirement was more appropriate for a service with mandatory distribution. It added that, if the Commission were to impose a condition of licence relating to expenditures on independent production, the new requirement must be a subset of APTN`s required spending on Canadian programming and must preserve the licensee’s historical expenditures on independently produced programming.
Commission’s analysis
  1. The objective of the Commission’s criteria for determining whether a programming service merits mandatory distribution status is to decide whether the service contributes in an exceptional manner to the Canadian broadcasting system. In addition to a high level of Canadian programming, a service may achieve this exceptional status through the broadcast of programming produced by a variety of voices and sources that reflect various opinions, ideas, values and artistic creativity. This principle is directly related to the policy objective set out in section 3(1)(i)(v) of the Act, which stipulates that the Canadian broadcasting system should include a significant contribution from the Canadian independent production sector. 
  2. In the Commission’s view, a reduction in the amount of programming produced by independent producers to permit APTN Inc. to produce more in-house content would be contrary to the spirit of the 9(1)(h) criteria and would not further the achievement of the policy objective stated above. Given that the wording of the proposed condition of licence explicitly excludes news and current affairs programming, denial of the proposal would not hinder APTN’s capacity to produce and broadcast in-house news programming.
  3. Moreover, APTN is the primary window for programming from Indigenous producers in Canada. The Commission is concerned that a reduction in the exhibition requirement for independently produced programming could result in lost production and marketing opportunities for these independent producers.
  4. While the new spending requirement may ensure that the licensee would continue to invest in independently produced projects, a reduction in the exhibition requirement may reduce the number of projects that APTN Inc. approves for broadcast.  
  5. In light of the above, the Commission denies APTN Inc.’s proposed reduction in its exhibition requirement related to the broadcast of programming produced by independent production companies, as well as the associated condition of licence related to expenditures.

Canadian programming expenditure requirement

  1. Broadcasting Regulatory Policy 2015-86 states that all licensed services will be required to abide by a condition of licence regarding Canadian programming expenditures. APTN Inc. proposed to devote at least 55% of APTN’s previous year’s gross revenues to the acquisition of or investment in Canadian programming, a level that reflects its historical Canadian programming expenditures.
  2. The Commission approves the licensee’s proposed condition of licence on Canadian programming expenditures as set out above.

Conditions of licence applicable to each feed

  1. APTN currently broadcasts programming on four distinct feeds: APTN West, APTN East, APTN North and APTN HD. The licensee’s programming strategy for its APTN West, APTN East and APTN North feeds is tailored to meet the needs of the communities served by each feed. The programming broadcast on APTN HD is largely a combination of programs selected from the three APTN regional feeds. 
  2. As discussed with APTN Inc. at the public hearing, to ensure that the needs of the communities served by each feed are properly met, the Commission considers it appropriate to specify how certain conditions of licence regarding the broadcast of French- and Aboriginal-language programming apply to each feed. These new requirements will also assist the Commission in assessing compliance with the service’s requirements.

New conditions of licence

  1. The Commission approves the licensee’s proposal that at least 5 hours and 30 minutes of news or current affairs programming be broadcast on all feeds during each broadcast week.
  2. The Commission further approves the licensee’s proposal for a new condition of licence requiring, in each broadcast week, at least 17 hours of French-language programming be broadcast on the APTN HD feed.
  3. For the APTN East feed, the Commission is adding a new condition of licence requiring it to broadcast a weekly French-language newscast starting no later than the end of the first year of the new licence term. The Commission considers that this condition meets the policy objectives set out in sections 3(1)(d)(ii) and 3(1)(d)(iii) of the Act by ensuring that Indigenous Francophone communities have access to news and information relevant to their communities in their language. While production of this newscast would incur incremental costs, the Commission is of the view that the licensee has sufficient resources to meet them, even though its rate increase has been limited to $0.04 rather than the proposed $0.05.
  4. The Commission also approves the licensee’s proposal to broadcast at least 12 hours of programming in Aboriginal languages in each broadcast week on its APTN East feed.
  5. Finally, the Commission approves the licensee’s proposal to broadcast at least 12 hours of programming in Aboriginal languages in each broadcast week on its APTN West feed.

Revised conditions of licence

  1.  Additionally, the Commission approves APTN Inc.’s proposal to specify that APTN will broadcast at least 35 hours of Indigenous language programming during each broadcast week on its APTN North feed and at least 20 hours of French-language programming on its APTN East feed.

Exception to the standard conditions of licence regarding the broadcast of professional sports

  1.  The Commission denies APTN Inc.’s request to be exempt from the standard condition of licence 8for discretionary services that limits professional sports programming to a maximum of 10% of all programming broadcast each month. The Commission is of the view that APTN Inc. did not provide a compelling justification as to why this standard condition of licence should not apply to its service.

Publication of financial information

  1. The Commission’s general practice is to publish only partial financial information for services without distribution rights that are also not owned by vertically integrated entities. However, the services at issue in this decision are all 9(1)(h) services that have mandatory distribution and for which the Commission sets wholesale rates that are paid for by BDU subscribers. In order to ensure that services are transparent in the disbursement of the funds that are received, the Commission finds that the publication of complete financial information for these services is in the public interest. Accordingly, the Commission will continue to publish the same information for 9(1)(h) services as it had in the past, despite the changes to the type of licence these services hold. Additionally, the Commission will continue to publish the same information for audio programming 9(1)(h) services as it had for 9(1)(h) discretionary services in the past.

Conclusion

  1. In light of all of the above, the Commission approves the licensee’s request for continued mandatory distribution for a five-year term pursuant to Broadcasting Order 2018-341 also issued today. The Commission considers that the term of the distribution order should coincide with that of the licence.
  2. The mandatory distribution order associated with this service formerly contained a provision authorizing distribution licensees to increase the basic monthly fee to be paid by their subscribers by no more than the amount required under the order for the distribution of the service. However, since the Commission no longer regulates retail rates for BDU services except for basic service and since section 17.1 of the Broadcasting Distribution Regulations already addresses this matter, the Commission has not retained this provision in the renewed mandatory distribution order effective 1 September 2018.
  3. The Commission further renews the broadcasting licence for the national, English- and French-language discretionary service APTNFootnote 1 from 1 September 2018 to 31 August 2023. The terms and conditions of licence are set out in the appendix to this decision.

Secretary General

Related documents

*This decision is to be appended to the licence.

Appendix to Broadcasting Decision CRTC 2018-340

Terms and conditions of licence and for the national, English- and French-language discretionary service APTN

Terms

The licence will take effect 1 September 2018 and expire 31 August 2023.

Conditions of licence

Conditions of licence applicable to all APTN feeds
  1. The licensee shall adhere to the conditions of licence 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, with the exception of the general programming requirement set out in condition of licence 6, and condition of licence 19 relating to high-definition programming.
  2.  The licensee shall provide a high-quality, general-interest television service offering a broad range of programming that reflects the diverse perspectives of Aboriginal peoples, their lives and their cultures. The service will provide a positive window on Aboriginal life for all Canadians, whether living in northern or southern Canada. The schedule will include programming in English, French and various Aboriginal languages.
  3.  The licensee shall devote at least 75% of the broadcast year and at least 75% of the evening broadcast period to the broadcast of Canadian programs.
  4. The licensee shall broadcast at a minimum, an average of eight hours of Canadian programs between 7 p.m. and 11 p.m. in each broadcast week that are drawn from the following program categories set out in Item 6 of Schedule I to the Discretionary Services Regulations: 2(b) Long-form documentary, 7 Drama and comedy, 8(a) Music and dance, 9 Variety and 11(a) General entertainment and human interest, or that are Canadian regional productions.

    For the purpose of this condition of licence, “regional production” shall have the same meaning set out in Group-based licence renewals for English-language television groups – Introductory decision, Broadcasting Decision CRTC 2011-441, 27 July 2011.

  5. At least 80% of the programming broadcast on the service, other than news (program category 1), current affairs (program category 2 (a) and 3) and sports (program category 6) (see Item 6 of Schedule I to the Discretionary Services Regulations), shall be produced by independent production companies not related to the licensee. An “independent production company” is defined as a Canadian company that is carrying on business in Canada with a Canadian business address, that is owned and controlled by Canadians, whose business is in the production of film, videotape or live programs for distribution, and in which the licensee and any company related to the licensee owns or controls, directly or indirectly in the aggregate, less than 30% of the equity.
  6.  Subject to condition 7, the licensee shall, for each broadcast year, make sufficient expenditures such that the undertaking devotes at least 55% of the previous year’s gross revenues to the acquisition of or investment in Canadian programming.
  7.  In each broadcast year of the licence term, excluding the final year,
    1. 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 condition 6; in such case, the licensee shall ensure that the undertaking expends in the next broadcast year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year’s under-expenditure;
    2. where the licensee expends an amount for that year on Canadian programming that is greater than the minimum required expenditure calculated in accordance with condition 6, the licensee may deduct that amount from the total minimum required expenditure in one or more of the remaining years of the licence term.
  1. Notwithstanding conditions 7 a) and 7 b), during the licence term, the licensee shall ensure that the undertaking expends on Canadian programming, at a minimum, the total of the minimum required expenditures calculated in accordance with condition 6.
  2. On or before November 30 of each year, the licensee shall file with the Commission a report on its expenditures for and exhibition of Canadian programming in a manner and form prescribed by the Commission.
  3. The licensee shall have an adequate number of members on its Board of Directors to represent northern and southern Canada, and at least one member who is selected by the Aboriginal broadcasting societies that make up the Northern Native Broadcast Access Program. The licensee shall file, by no later than 30 November in each year, a report signed by a senior officer of the corporation attesting that APTN has met the requirements set out in the conditions of licence regarding the broadcast of programming in Aboriginal languages and in the French-language, as well as the requirement relating to the closed captioning of the English- and French-language programs during the previous broadcast year. This report shall include the following information:
    • weekly amount (time) of programming broadcast in Aboriginal languages on each feed, listed separately;
    • weekly and annual amount of French-language programming broadcast on each feed, listed separately;
    • annual amount of English-language programming broadcast on each feed, listed separately; and
    • annual amount of closed captioning of the French-language and the English-language programming broadcast on each feed, listed separately.
  1.  The licensee shall file, by no later than 30 November in each year, a report relating to its independent production activity that shall include:

For the purposes of these conditions of licence:

All time periods shall be calculated according to Eastern Standard Time. Further, the terms “broadcast year” and “evening broadcast period” shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987.

The term “broadcast week” shall have the same meaning as set out in the Radio Regulations, 1986.

Additional conditions of licence for APTN North
  1. The licensee shall broadcast a minimum of 35 hours of programming in Aboriginal languages in each broadcast week.
  2. The licensee shall broadcast at least 5 hours and 30 minutes of news or current affairs programming in each broadcast week.
Additional conditions of licence for APTN East
  1. The licensee shall broadcast a minimum of 12 hours of programming in Aboriginal languages in each broadcast week.
  2. Starting no later than the end of the first year of the licence term, the licensee shall broadcast a weekly French-language newscast.
  3. The licensee shall broadcast a minimum of 20 hours of French-language programming in each broadcast week.
  4. The licensee shall broadcast at least 5 hours and 30 minutes of news or current affairs programming in each broadcast week.
Additional conditions of licence for APTN West
  1. The licensee shall broadcast a minimum of 12 hours of programming in Aboriginal languages in each broadcast week.
  2. The licensee shall broadcast at least 5 hours and 30 minutes of news or current affairs programming in each broadcast week.
Additional conditions of licence for APTN HD
  1.  The licensee is authorized to make available for distribution a high definition version of its service, together with the standard definition regional feeds of its service, provided that 95% of the programs on the high definition version of its service are also broadcast on at least one standard definition regional feed of the service. Further, all of the programs making up the 5% allowance shall be provided in high definition. For the purposes of this condition, “program” has the same meaning as that set out in the Discretionary Services Regulations, or any successor regulations.
  2. The licensee shall broadcast at least 5 hours and 30 minutes of news or current affairs programming in each broadcast week which may be unique to the high definition version of the service and excluded from the calculation of programs taken from the standard definition feeds set out in condition 20.
  3. The licensee shall broadcast a minimum of 17 hours of French-language programming in each broadcast week.
  4. The licensee shall broadcast a minimum of 18 hours of programming in Aboriginal languages in each broadcast week. This programming may be taken from its standard feeds and may be offered at any time over a 24-hour broadcast day.
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