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Broadcasting Decision CRTC 2023-416

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References: Part 1 licence renewal applications posted on 21 March 2023

Ottawa, 18 December 2023

MusiquePlus inc.
Across Canada

Public record: 2022-0770-4 and 2022-0767-0

ELLE Fictions and MAX – Licence renewals and amendments to conditions of service

Summary

The Commission renews the broadcasting licences for MusiquePlus inc.’s (MusiquePlus) French-language discretionary services ELLE Fictions and MAX from 1 January 2024 to 31 August 2027. This short-term licence renewal will allow for an earlier review of the licensee’s compliance with regulatory requirements.

The Commission also approves MusiquePlus’s request to no longer avail itself of the group-based approach.

In addition, the Commission denies the transfer, to the next licence term, of the balance of Canadian programming expenditures not used by Groupe V Média inc. allocated to MusiquePlus as part of the Bell/V transaction. 

Background

  1. In Broadcasting Decision 2017-146, in which the Commission renewed the broadcasting licences for Groupe V Média inc. (Groupe V)’s conventional stations and discretionary services, the Commission considered that Groupe V’s request to avail itself of the group-based approach was appropriate. This approach allows ownership groups to allocate their expenditures for the support of Canadian programming to the various services in their group.
  2. In Broadcasting Decision 2020-116, the Commission approved the acquisition of Groupe V’s conventional stations by Bell Media Inc. (Bell). Following the transaction, Groupe V was dissolved, and a new designated group called “Groupe MusiquePlus” was created under the same effective control as that of the former Groupe V. The group only includes the two discretionary services ELLE Fictions and MAX.
  3. The new licences issued to Groupe MusiquePlus in 2020 included, at the licensee’s request, the same terms and conditions as those imposed on Groupe V in 2017. In this regard, the Commission expressed concerns about the ability of Groupe MusiquePlus to meet its expenditure requirements without the synergies of Groupe V’s stations. However, the Commission noted that MusiquePlus had been granted a part of the Canadian programming expenditure (CPE) surpluses accumulated by Groupe V as part of the transaction, that the licensee could use these surpluses in order to meet its requirements during the current licence term, and that these obligations would be reviewed and modified if necessary during the next licence renewal.
  4. MusiquePlus is currently one of the only private independent licensees with discretionary services without mandatory distribution as part of the basic service in the French-language market.

Applications

  1. The Commission has the authority, pursuant to subsections 9(1), 9.1(1) and 11.1(2) of the Broadcasting Act, to issue and renew licences and to make orders imposing conditions on the carrying on of a broadcasting undertaking that it considers appropriate for the implementation of the broadcasting policy set out in subsection 3(1) of the Broadcasting Act, and to make orders respecting expenditures.
  2. MusiquePlus filed applications to renew the broadcasting licences for the French-language discretionary services ELLE Fictions (application 2022-0770-4) and MAX (application 2022-0767-0), which expire on 31 December 2023.Footnote 1
  3. In its renewal applications, MusiquePlus stated that it could no longer adhere to its current conditions of service,Footnote 2 formerly assumed by Groupe V. Given that MusiquePlus only has two discretionary services, it requested that the less-relevant group-based approach cease to apply. It also requested several amendments to reduce its requirements, as well as changes to the wording of its conditions of service to reflect the removal of the group-based approach. Specifically, MusiquePlus requested that the Commission:
    • transfer to the next licence term the CPE surpluses accumulated by Groupe V and allotted to MusiquePlus in 2020 as part of the Bell/V transaction;
    • reduce the CPE threshold (currently set at 35% for the group) to 12% for ELLE Fictions and 10% for MAX;
    • remove expenditure requirements for original French-language programming (OFLP);
    • remove expenditure requirements for programs of national interest (PNI), including the portion allocated to independent production companies (IPC);
    • remove the temporary requirement for the contribution to Musicaction;
    • ensure that the requested changes to expenditure requirements (CPE/PNI/IPC/OFLP) take effect retroactively, i.e., from 1 September 2022; and
    • renew the licence for five years.
  4. MusiquePlus stated that these amendments were necessary to adapt its requirements to its resources and its reality as a licensee of independent services in the French-language market.
  5. The Commission received two interventions from the Association québécoise de l’industrie du disque, du spectacle et de la vidéo (ADISQ) and the Association québécoise de la production médiatique (AQPM), to which MusiquePlus replied.

Issues

  1. After examining the record for this application in light of applicable regulations and policies, the Commission considers that it must address the following issues:
    • the removal of the group-based approach;
    • CPE thresholds;
    • PNI requirements;
    • OFLP expenditures;
    • the requirement for contributions to Musicaction;
    • the transfer of CPE surpluses to the next licence term;
    • the request for retroactivity for the proposed amendments;
    • the licensee’s apparent non-compliance regarding PNI expenditures;
    • the licensee’s apparent non-compliance regarding the contributions to Musicaction;
    • the licensee’s shortfall in regard to the broadcast of Canadian content;
    • the licensee’s apparent non-compliance regarding the filing of a report on programming broadcast;
    • the licensee’s apparent non-compliance in regard to the filing of annual returns;
    • the licence term; and
    • the balance of tangible benefits.

Removal of the group-based approach

  1. Under the group-based approach set out in Broadcasting Regulatory Policy 2010-167, large private ownership groups can allocate their expenditures supporting Canadian programming (CPE/PNI) among various services in their group to give them sufficient flexibility to adjust to market fluctuations, in exchange for generally more supported expenditure requirements. For example, PNI expenditures generally only apply to groups and modified groups, such as Blue Ant Group and Wildbrain/DHX Group, and CPE thresholds are higher for groups than for independent licensees.
  2. In its application, MusiquePlus indicated that it no longer wishes to avail itself of the group-based approach and instead requested to renew the licences of its two discretionary services ELLE Fictions and MAX individually. MusiquePlus stated that it had largely underestimated the impact of the departure of the V stations and the resulting synergies from their presence. It also argued that it could no longer meet its current requirements, which were formerly applicable to the entire Group V. 
  3. Furthermore, MusiquePlus requested that conditions of service 6, 10 and 13 be removed, which specify the terms for the counting and sharing of CPE and PNI (conditions only applicable to groups). It also proposed minor changes to the wording of conditions 7 and 8 (CPE credits), condition 12 (requirement relating to the reporting of programs broadcast), condition 14 (over-/under-expenditures) and condition 15 (information on CPE to be provided to the Commission upon request), to remove any reference to “MusiquePlus Group.”Footnote 3
Position of parties
  1. The AQPM argued that the request to no longer avail itself of the group-based approach is only intended to reduce the regulatory requirements for the ELLE Fictions and MAX services.
  2. In its reply, MusiquePlus stated that the negative repercussions of the approach outweigh the benefits of the flexibility on sharing expenditures. It considered that the increased obligations to which groups are subject are unreasonable and unattainable for small, independent services such as its own.
Commission’s analysis
  1. Generally, large ownership groups are companies that possess greater resources and numerous services. These groups are also vertically integrated, which greatly fosters synergies and opportunities to support Canadian programming.
  2. Given that MusiquePlus operates only two services independently of all other broadcasting undertakings in the French-language market, the Commission considers that the benefit of the flexibility gained from sharing expenditures as part of the group-based approach is negligible in its case. Furthermore, the Commission is of the view that the licensee has neither the financial resources nor the size of vertically integrated undertakings to take on the more rigorous spending and reporting requirements usually reserved for large groups (such as requirements relating to PNI, OFLP and the filing of certain additional programming reports).
  3. Finally, the Commission notes that removing the group-based approach does not mean withdrawing CPE requirements. As independent services, ELLE Fictions and MAX would continue to contribute to Canadian programming in a way that better corresponds to the resources and context of MusiquePlus. Consequently, the Commission considers that it would be appropriate to approve MusiquePlus’s request to remove the group-based approach. Thus, ELLE Fictions and MAX would be considered as individual services.
  4. In regard to MusiquePlus’s request to amend its condition of service 12 with respect to the annual filing of a detailed programming report, the Commission notes that, with the exception of MusiquePlus, this condition of service only applies to large groups and to services with mandatory distribution as part of the basic service. The information collected, which is less relevant to the Commission in the case of MusiquePlus, represents an unjustified administrative burden on this licensee.Accordingly, although MusiquePlus is only requesting an amendment to condition of service 12 to remove the reference to “Groupe MusiquePlus” and PNI, the Commission considers that it is appropriate to remove this condition entirely.
  5. In light of the above, the Commission approves MusiquePlus’s request to remove the group-based approach. In addition, the Commission approves the request by MusiquePlus to remove conditions of service 6, 10 and 13, which specify the terms for counting and sharing of CPE. Finally, the Commission removes condition of service 12 in regard to the filing of a detailed programming report and approves the licensee’s request to amend the conditions of service to remove any reference to “Groupe MusiquePlus.”
  6. Accordingly, pursuant to subsections 9.1(1) and 11.1(2) of the Broadcasting Act, the Commission orders the amendment of conditions of service 7, 8, 14 and 15, as set out in Appendix 2 of Broadcasting Decision 2020-158, by removing any reference to “Groupe MusiquePlus.” The specifics of these conditions of service are set out in the appendix to this decision.

Canadian programming expenditures

  1. In Broadcasting Regulatory Policy 2015-86, the Commission indicated that it would establish CPE requirements for independent licensees at the time of licence renewal on a case-by-case basis and based on their historical levels of expenditure. The Commission also established the minimum CPE threshold for discretionary services at 10%.
  2. MusiquePlus requested that the current CPE threshold of 35% for the group be changed to 12% for ELLE Fictions and 10% for MAX.
  3. The licensee indicated that, as an independent player, it could no longer meet the CPE thresholds required for the former Group V. It estimated that its real capacity to contribute to CPE is below the minimum threshold required for ELLE Fictions and MAX. However, the licensee considered that it can meet the proposed CPE thresholds (12% and 10%) if the Commission approves its request for the transfer of CPE surpluses and the removal of its current PNI and OFLP requirements.
Positions of parties
  1. The AQPM opposed the CPE thresholds proposed by MusiquePlus and noted that Corus Group, which also has French-language services, and TV5 Québec Canada (TV5), which is an independent licensee, have higher CPE thresholds (26% and 55%, respectively). The ADISQ considered that the approval of the proposed CPE thresholds, along with the requested removal of OFLP expenditure requirements, would represent a loss for local creation and the diversity of voices and would run counter to subsection 3(1) of the Broadcasting Act.
  2. In its reply, MusiquePlus stated that the proposed CPE thresholds are appropriate in order for it to be subject to conditions better adapted to its new reality. It stated that the comparison made by the AQPM between its proposed CPE thresholds and those of TV5 cannot be made, as TV5 benefits from mandatory distribution as part of the basic service, and in return, must make an exceptional contribution to the broadcasting system.
Commission’s analysis
  1. The Commission notes that all licensed discretionary services are subject to the minimum 10% threshold set by the Commission. Moreover, although MusiquePlus had the opportunity to comment on the potential implications should certain requested regulatory flexibility be denied, it did not propose any other potential CPE thresholds, nor did it request any exceptions to the Commission’s policy.
  2. The Commission notes that during its current licence term, MusiquePlus has met its CPE requirement of 35%, mainly as a result of Groupe V’s CPE surpluses and its use of surplus inventory of original programming produced by Groupe V that was allocated to it at the time of the Bell/V transaction. MusiquePlus’s average direct historical CPE since the two services were no longer part of Groupe V have been much lower.
  3. Nevertheless, MusiquePlus indicated that the broadcast rights associated with the inventory surpluses of Groupe V largely expired in 2022. It will therefore need to invest more intensively in CPE over the next licence term in order to complete its Canadian programming inventories. As such, MusiquePlus’s direct CPE investments are not only likely to be higher during the next licence term, but will more accurately represent its real capacity to invest in Canadian programming.
  4. According to the Commission’s analyses based on the licensee’s financial projections, the CPE thresholds proposed by MusiquePlus (10% for MAX and 12% for ELLE Fictions) would be achievable, and their imposition would not have a significant impact on the viability of the services. The Commission considers that these thresholds constitute the best balance between the licensee’s financial resources and its contribution to the support of Canadian programming. 
  5. In light of the above, the Commission approves MusiquePlus’s request to amend its condition of service with respect to CPE. Pursuant to subsection 11.1(2) of the Broadcasting Act, the Commission orders MusiquePlus, by condition of service, to devote in each broadcast year at least 12% of the previous year’s gross revenues for ELLE Fictions, and 10% for MAX to CPE. The specifics of this condition of service are set out in the appendix to this decision.

Requirements relating to programs of national interest

  1. MusiquePlus requested the removal of conditions of service 9 and 11, which read as follows:

    9.  The licensee shall in each broadcast year devote to the acquisition of or investment in programs of national interest at least 10% of the previous year’s gross revenues of the undertaking.

    11.  At least 75% of the expenditures in condition 9 must be made to an independent production company.

  2. PNI include diverse categoriesFootnote 4 of programming. PNI expenditures are a subcategory of CPE and apply to large and modified groups such as Blue Ant Group and Wildbrain/DHX Group, since they are typically more costly to achieve. Moreover, the portion of expenditures for IPCs is intended to ensure that large groups include a significant contribution to independent producers.Footnote 5
  3. MusiquePlus noted that these requirements are now neither realistic nor achievable since its separation from Groupe V, which was responsible for a significant level of original PNI productions.
Positions of parties
  1. The ADISQ and AQPM strongly opposed the removal of expenditure requirements for PNI and independent producers. According to the AQPM, PNI include a diversity of genres compatible with all types of broadcasters. The AQPM indicated that documentaries, which are becoming increasingly popular, are less costly than other types of PNI.
  2. Moreover, according to the AQPM, there is no guarantee that MusiquePlus will devote a minimum portion of its expenditures to IPCs. Without making a specific proposal, the interveners asked the Commission to impose minimum requirements on MusiquePlus regarding PNI and independent production.
  3. In its reply, MusiquePlus noted its position as an independent player to justify the removal of its requirements, indicating that PNI are costly in relation to its financial capacities and that it constitute a group requirement. It indicated that it will continue to expend PNI in line with its capacities, and to turn to independent producers.
Commission’s analysis
  1. MusiquePlus offers series and film niche programming. Furthermore, more than half of the programming broadcast by MusiquePlus is non-Canadian and does not correspond to the program categories included in PNI. Although PNI expenditures help to provide a variety of programming in program categories that, in the absence of regulatory support, might not otherwise be produced, they are often high-cost programs.
  2. As such, the Commission usually imposes PNI expenditure requirements on broadcasters who have a mandate to reach a large audience and who benefit from a strong financial capacity or synergies because they are part of a large group under the group-based approach. In addition, the requirement to devote a significant portion (75%) of investments in PNI to IPCs is intended to ensure that the large groups, which have the capacity to make such investments, continue to turn to Canadian independent producers for the production of their programs.
  3. MusiquePlus will not be part of a group during the next licence term, is not vertically integrated and does not benefit from mandatory distribution. For these reasons, the Commission considers that it is appropriate not to impose PNI expenditure requirements on ELLE Fictions and MAX during the next licence term.
  4. In regard to IPCs, MusiquePlus no longer produces in-house programming. Accordingly, as an independent player, it has no choice but to make extensive use of IPCs to acquire Canadian programming. In addition, MusiquePlus stated that, as the broadcast rights acquired from Groupe V largely expired during 2022, it will need to invest more intensively in IPCs to complete its inventory of Canadian programming (other than PNI) during the next licence term. Accordingly, the Commission finds that it is not necessary to regulate MusiquePlus’s investments in IPCs, as it will inevitably have to turn to independent producers to meet its CPE requirements, unless it produces its own in-house programming.
  5. In light of the above, the Commission approves MusiquePlus’s request to remove the requirements set out in conditions of service 9 and 11 with respect to investments in PNI and in IPCs. In addition, the Commission is amending the remaining conditions of service to remove any reference to PNI.
  6. Pursuant to subsections 9.1(1) and 11.1(2) of the Broadcasting Act, the Commission orders the amendment of conditions of service 14, 15 and 16, as set out in Appendix 2 of Broadcasting Decision 2020-158, by removing any reference to PNI. The specifics of these conditions of service are set out in the appendix to this decision.

Expenditures on original French-language programming

  1. In Broadcasting Decision 2018-334, the Commission found that, in an increasingly competitive environment where some broadcasters were considering reducing their spending on OFLP to offset their decreased revenues, imposing an expenditure requirement for OFLP would help to maintain such spending. The Commission then required the French-language groups (Bell Media Group, Corus Group, Groupe V and TVA Group) to allocate 75%Footnote 6 of their CPE to OFLP (i.e., a program broadcast for the first time in the French-language market, which excludes dubbed Canadian programs) for the duration of their respective licence terms.
  2. MusiquePlus stated that it no longer wishes to be subject to this requirement. It argued that the requirement, which is applicable to large groups, is impossible to achieve without the synergies of Groupe V’s conventional stations.
  3. Although it wished to invest in OFLP, MusiquePlus noted that its two services need to retain a certain flexibility to complete their programming schedules according to the broadcast rights that are available from one year to the next, and at a cost appropriate for their programming budgets. MusiquePlus is of the view that imposing a fixed annual percentage for this requirement could easily exceed its financial capabilities in any given year. It stated that it does not have the capacity to achieve a sufficient volume of OFLP to have recurring and predictable access to performance envelopes from the Canada Media Fund (CMF).
  4. MusiquePlus also stated that, as an independent player with no in-house production, it will inevitably make use of IPCs for any original productions. It therefore proposed to be subject to an expectation that at least 75% of its OFLP expenditures be made to an IPC.
Positions of parties
  1. The ADISQ and AQPM opposed the removal of the OFLP expenditure requirement. The AQPM disagreed with MusiquePlus’s argument that the inventory of OFLP broadcast rights is not sufficient to complete its programming schedule, noting that every year, some 30 fiction feature films, roughly 170 documentary series, and between 200 and 250 French-language fiction/variety/magazine programs are produced in Quebec. The AQPM noted that in 2020-2021, MusiquePlus had access to a performance envelope from the CMF, and that other envelopes are also available from the CMF to help broadcasters that are the size of MusiquePlus.
  2. In its reply, MusiquePlus indicated that the costs of original productions are constantly rising (e.g., it stated that in 2020-2021, according to the Observatoire de l’audiovisuel’s report,Footnote 7 these costs jumped from 15.9% to 48.8%, depending on the type of program produced). MusiquePlus added that, although it is unable to maintain a fixed annual OFLP threshold, it will continue to exhibit such programs to the extent of its capabilities.
Commission’s analysis
  1. The Commission considers that original first-run Canadian productions add greater value to the Canadian broadcasting system and better meet the objectives of the Broadcasting Act than repeat programming and the use of dubbed programs. MusiquePlus currently broadcasts a negligible amount of OFLP (less than 1%), and the programming of ELLE Fictions and MAX during the 2021-2022 broadcast year was characterized by a high rate of repeat programming (93% for ELLE Fictions and 92% for MAX).
  2. The Commission considers production of, and investment in, OFLP to be important in the French-language market. However, it notes that imposing such requirements on two independent services with modest market shares in a market where two large private ownership groups share the bulk of the ratings is not the most appropriate approach to achieving the objectives of the Broadcasting Act in a context where requirements to support Canadian creators and programming, be they financial or otherwise, must be equitable given the size and nature of broadcasting undertakings.
  3. Moreover, the Commission notes that broadcasters of all sizes can access CMF funding to pay for a portion of their programming costs. However, MusiquePlus only meets to a very limited extent the performance factors used by the CMF to award funding through the Performance Envelope Program, particularly with respect to its audience.
  4. In light of the above, the Commission approves MusiquePlus’s request to remove condition of service 4 requiring the licensee to allocate 75% of its CPE to OFLP.
  5. In regard to MusiquePlus’s proposed expectation that 75% of its OFLP expenditures should be for IPCs, the Commission considers it irrelevant. As the licensee itself noted, it will have no choice but to make use of IPCs for any original production, since it does not produce any in-house programming. Accordingly, the Commission considers that it is inappropriate to set such an expectation for MusiquePlus’s services.
  6. However, in accordance with MusiquePlus’s intention to continue broadcasting OFLP in a way that reflects its means, the Commission expects the ELLE Fictions and MAX services to allocate a share of their CPE to OFLP each year.

Requirements for contributions to Musicaction

  1. With the elimination of genre protection,Footnote 8 certain discretionary services were no longer required to produce or fund music programming and music video clips. To offset the effects of the loss of funding for the music industry, the Commission required, in Broadcasting Decisions 2018-334 and 2018-335, that all large groups annually allocate 0.17% of their total revenues to Musicaction or to FACTOR, from 1 September 2018 until 31 August 2022, the end of their licence term.
  2. MusiquePlus requested that condition of service 5, which reads as follows, not be renewed for the next licence term:

    5. For the 2018-2019 broadcast year and until the end of the licence term, the licensee shall allocate in each broadcast year 0.17% of the previous broadcast year’s gross revenues of the undertaking to Musicaction. These expenditures can be counted by the licensee for the purpose of fulfilling its Canadian programming expenditure requirement, which includes expenditures on programs of national interest.

Positions of parties
  1. The ADISQ and AQPM opposed the removal of this obligation. The ADISQ was concerned about the loss of funding that this would represent for the music industry. For example, the ADISQ argued that in 2020-2021, the contribution of French-language groups represented some $850,000 for Musicaction, making it possible to support roughly 60 music videos.
  2. In its reply, MusiquePlus noted the temporary nature of this condition of service and stated that the loss of revenues also affects the broadcasting industry.
Commission’s analysis
  1. The wording of condition of service 5 specified that the obligation to contribute to Musicaction had been in effect from the 2018-2019 broadcast year until the end of the licence term. Although the condition did not specify the expiration date of this requirement, the two Commission decisions in question clearly and unequivocally indicated that the condition of service ended on 31 August 2022. The Commission indicated that this expenditure requirement was a temporary measure, providing the music industry with the time to adapt. Furthermore, the Commission reiterated that this condition of service was temporary in Broadcasting Decision 2021-274.
  2. As such, the Commission considers that this contribution requirement effectively ended on 31 August 2022.
  3. In light of the above, the Commission approves the request by MusiquePlus to remove condition of service 5 with respect to the requirement of contributing to Musicaction.

Transfer of CPE surpluses to the next licence term

  1. To enable broadcasters to better manage their CPE, particularly when production costs extend over more than one broadcast year, the Commission has traditionally granted them a certain level of flexibility in counting CPE. Thus, as a general rule, licensees with CPE and PNI expenditure requirements are authorized, by condition of service, to spend up to 5% less than the minimum required expenditure for a given broadcast year, provided that this shortfall is made up in the following year, in addition to the minimum amount required in that year. Moreover, licensees must compensate any shortfall incurred during a licence term before the end of the licence term.
  2. However, licensees must fulfill all required CPE in the last year of the licence term, and any CPE surpluses cannot be transferred to the subsequent licence term.
  3. The flexibility granted within one licence term allows the Commission to strike a balance between the needs of broadcasters to adapt to market fluctuations and to spread certain higher production costs over several years, and the needs of creators and producers of Canadian content, for whom stable funding is essential.
  4. In 2020, as part of the Bell/V transaction, a portion of the CPE/PNI surpluses accumulated by Groupe V were allocated to MusiquePlus. MusiquePlus requested the transfer, to the next licence term, of the portion of CPE surplusesFootnote 9 that have not been used during the current licence term.
  5. MusiquePlus considered that it was unrealistic to expect that the entire surplus could be used during such a short licence term (initially two years, from 2020-2021 to 2021-2022 but extended due to administrative renewals).
  6. MusiquePlus stated that a denial to transfer the surpluses to the next licence term would decrease the value of the assets paid by Groupe MusiquePlus during the transaction. It also stated that the transfer of the surpluses would help bring it back into compliance, and that the extended use of the surpluses is in line with the extended payment period granted by the Commission in Broadcasting Decision 2021-274, when it allowed licensees to benefit from an extended payment period for shortfalls incurred as of 31 August 2020 with respect to CPE and PNI due to the impacts of the COVID-19 pandemic.
Commission’s analysis
  1. In regard to MusiquePlus’s argument that the transfer of the surplus would help bring it back in compliance, the Commission notes that MusiquePlus has already used all of the available surplus PNI expenditures. As for the CPE surpluses, MusiquePlus used part of these during the current licence term to meet its regulatory requirements. As such, the Commission is not convinced that it should approve the licensee’s request to transfer these surpluses outside the licence term during which they were granted.
  2. The Commission considers that a change to its general practice would not be appropriate. Specifically, if the Commission indicates that it is open to such a practice, it could mean that, for one or more years, the proportion of gross revenues actually invested in CPE by broadcasters would be very low, since surpluses from previous licence terms would be used cumulatively to meet requirements over several years.
  3. In regard to MusiquePlus’s argument that a denial to transfer its surplus balance to the next licence term would decrease the value of the assets paid by Groupe MusiquePlus during the Bell/V transaction, the Commission notes that Bell and MusiquePlus negotiated the agreement and the sharing of surpluses knowing that the regulatory framework in place does not permit the transfer of surpluses from one licence term to the next. Moreover, the Commission was clear in Broadcasting Decision 2020-158, indicating that MusiquePlus could “use a portion of the CPE and PNI expenditure surpluses accumulated by Groupe V to meet its regulatory requirements by the end of the current licence period.” Consequently, the Commission considers that MusiquePlus’s argument is unfounded.
  4. MusiquePlus also argued that its transfer request was in line with the extended payment period granted by the Commission in Broadcasting Decision 2021-274. Although the Commission acknowledges that the extended payment period was spread over the licence terms of some licensees, those were for shortfalls, not surpluses.
  5. In light of the above, the Commission denies the transfer, to the next licence term, of the balance of unused CPE surpluses allocated to MusiquePlus by Group V as part of the Bell/V transaction.

Retroactive amendments to licences

  1. MusiquePlus indicated that the administrative renewal of MAX’s and ELLE Fiction’s broadcast licences for the 2022-2023 broadcast year was detrimental to its services, which must comply with the conditions of service applicable to large ownership groups for an additional year. According to the licensee, this would result in a non-compliance due to its commercial situation.
  2. MusiquePlus requested that the requested amendments to the following conditions of service take effect for the 2022-2023 broadcast year:
    • conditions 4, 9, 10 and 11 – with respect to OFLP and PNI expenditure requirements, including the portion allocated to IPCs; and
    • conditions 15 and 16 – with respect to requirements to account for and remedy any shortfalls in CPE and PNI expenditures identified during the previous licence term.
Commission’s analysis
  1. When MusiquePlus Group was created in Broadcasting Decision 2020-158, the Commission noted that it was possible that the loss of certain synergies on which ELLE Fictions and MAX could rely on would have a negative impact on the financial performance of the new group. The Commission also noted that it would assess the requirements imposed on Groupe MusiquePlus and could modify them if necessary as part of the next renewal of the group’s licences, which were due to expire on 31 August 2022.
  2. Although MusiquePlus indicated that it may have suffered certain disadvantages due to the administrative renewal of its services’ licences, the Commission notes that it has also benefited from certain advantages resulting from the administrative renewal in regard to its CPE obligations. MusiquePlus was able to use, for an additional broadcast year, Groupe V’s CPE surpluses that had been allocated to it as part of the Bell/V transaction, which would not have been the case had the Commission renewed its licence on 31 August 2022 with new regulatory requirements.
  3. Furthermore, the Commission has no general practice regarding retroactive regulatory amendments. In any event, the licensee has not explained how the Commission could attempt to have such power. Even if the Commission was able to amend the conditions retroactively, the assessment of licensees’ compliance and the possibility of imposing appropriate measures in the event of non-compliance would consequently become much more complex.
  4. The Commission reiterates that all licensees are required to meet their regulatory obligations at all times, including MusiquePlus during the 2022-2023 broadcast year. However, each instance of non-compliance is evaluated in its context and in light of the factors such as the quantity, recurrence and seriousness of the non-compliance. The Commission has the latitude to choose from a range of appropriate measures or even not to impose additional measures for any non-compliance discovered during the administrative renewal period (2022-2023), according to the particular circumstances.
  5. In light of the above, the Commission finds it not appropriate to retroactively amend the requirements of MusiquePlus. Accordingly, the Commission denies MusiquePlus’s request for relief from conditions of service 4, 9, 10, 11, 15 and 16 for the 2022-2023 broadcast year.

Apparent non-compliances

PNI expenditure requirements (conditions of service 9 and 11)
  1. According to an analysis of MusiquePlus’s financial data, MusiquePlus has accumulated a total shortfall of $1,402,567 for PNI for the 2020-2021 and 2021-2022 broadcast years. It also accumulated a total shortfall of $546,869 in IPC expenditures for the same broadcast years. Any shortfalls for the 2022-2023 broadcast year, if applicable, will only be discovered after a thorough analysis of the annual returns.Footnote 10.
  2. MusiquePlus noted that the non-compliance is not an error, but is a result of its inability to meet this group requirement, which is too costly for the resources at its disposal.
  3. In light of the above, the Commission finds that MusiquePlus is in non-compliance with its conditions of service 9 and 11 set out in the appendix to Broadcasting Decision 2020-158 for the 2020-2021 and 2021-2022 broadcast years. In addition, the licensee’s compliance with conditions of service 9 and 11 for the 2022-2023 broadcast year will be assessed following a thorough analysis of the annual returns, and the Commission may impose any measures deemed appropriate if non-compliance with these requirements is observed.
  4. As for any non-compliance for the 2020-2021 and 2021-2022 broadcast years, the licensee must make up these shortfalls to ensure that the broadcasting system is not deprived of these funds. However, given the licensee’s current financial situation, it would be appropriate to allow MusiquePlus to pay the shortfalls over an extended period.
  5. As noted in paragraphs 40 to 43 of this decision, the Commission considers that MusiquePlus does not have the capacity to invest in PNI, given its more modest financial resources and the very high costs of this type of programming. Accordingly, the Commission approved the request by MusiquePlus to remove conditions of service 9 and 11 relating to investments in PNI and IPCs. Consequently, any shortfall relating to PNI and IPCs will have to be paid by the licensee. Furthermore, more rigorous monitoring of the licensee’s compliance will be appropriate in the future.
  6. Pursuant to subsection 11.1(2) of the Broadcasting Act, the Commission orders MusiquePlus, by condition of service, to contribute at least $1,402,567 by 31 August 2027 to the acquisition of or investment in Canadian programming to make up any shortfall in PNI incurred during the 2020-2021 and 2021-2022 broadcast years. Of this amount, the licensee must contribute at least $546,869 to an independent production company by 31 August 2027. At least 45% of the required amount must be invested by MAX, and at least 55% of this amount must be invested by ELLE Fictions.
Requirement for contributions to Musicaction
  1. As set out in paragraph 56 above, condition of service 5 requires the licensee to allocate 0.17% of the previous broadcast year’s gross revenues of the undertaking to Musicaction.
  2. According to Commission records, MusiquePlus accumulated shortfalls in regard to this requirement for the 2021-2022 broadcast year, and during the previous licence term, for the 2018-2019 broadcast year.
  3. MusiquePlus had indicated that these shortfalls were the result of an erroneous calculation and had committed to pay the amounts to Musicaction no later than 31 March 2023. MusiquePlus has since filed proof of payment with the Commission, demonstrating that the entire shortfall was paid within the specified deadline.
  4. In light of the above, the Commission finds that MusiquePlus is in non-compliance with condition of service 5 set out in the appendix to Broadcasting Decision 2020-158 for the 2021-2022 broadcast year. Given that the shortfalls have been paid, the Commission considers that no further measure is warranted.
Broadcast requirements (condition of service 2)
  1. Paragraph 3(1)(e) of the Broadcasting Act declares that each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming. The old Broadcasting Act also provided that private networks and programming undertakings should, to an extent consistent with the financial resources available to them, contribute significantly to the creation and presentation of Canadian programming (paragraph 3(1)(s)(i) of the old Broadcasting Act).
  2. Pursuant to the authority granted in subsection 9(1) of the old Broadcasting Act, and consistent with the provisions set out in paragraph 3(1)(e) and former paragraph 3(1)(s)(i), in Broadcasting Decision 2020-158, the Commission imposed the following condition on MusiquePlus: 

    2. In each broadcast year, the licensee shall devote at least 35% of the broadcast day to the broadcast of Canadian programs.

  1. Based on an examination of the programming broadcast by MAX, during the 2019-2020 broadcast year, an average of 30.46% of the broadcast day was devoted to Canadian programs.
  2. MusiquePlus indicated that it was a human error that occurred while MAX was being operated within Groupe V. The licensee stated that it rectified the situation by checking its seasonal programming schedules more systematically. It noted that it has since surpassed the required levels of Canadian content.
  3. In regard to the licensee’s deviation from the regulatory requirement, the Commission notes that this situation arose during the previous licence term when the service was part of Groupe V. However, the Commission also notes that MusiquePlus has since rectified the situation and exceeded the requirements during the current licence term, with the observed thresholds for Canadian content at 37.5% and 42.8% for MAX for the 2020-2021 and 2021-2022 broadcast years, respectively. Accordingly, the Commission considers that no additional measures are warranted. However, more rigorous monitoring of the licensee’s compliance will be appropriate in the future.
Reporting of programs broadcast (condition of service 12)
  1. MusiquePlus is subject to the following condition of service:

    12. The licensee shall, by 30 November of each year, provide for the previous broadcast year a report in a form acceptable to the Commission that contains information on the programs that were broadcast by all undertakings of the MusiquePlus Group in regard to:

    • programs of national interest;
    • the use of Indigenous and official language minority community producers, specifying notably for each: the number of producers they meet with each year; the projects commissioned, including projects in development, in production and completed; the budgets and the total Canadian programming expenditures devoted to such projects; and any other information the Commission requires to this effect; and
    • access that women have to key leadership positions, by providing information regarding the employment of women in key creative leadership positions in the productions broadcast, as well as any other information the Commission requires to this effect.
  2. According to Commission records, the report for the 2020-2021 broadcast year was filed eight months late.
  3. The licensee stated that several changes have occurred in the programming team and that it has hired a regulatory affairs consultant to rectify the situation.
  4. The Commission notes the licensee’s explanations and that the report was filed on time for the 2021-2022 broadcast year. As noted in paragraphs 19 and 20 above, this reporting requirement only applies to large groups and to services with mandatory distribution as part of the basic service, and the Commission has approved MusiquePlus’s request to remove this condition for the next licence term.
  5. In light of the above, the Commission finds that MusiquePlus is in non-compliance with condition of service 12 set out in the appendix to Broadcasting Decision 2020-158 for the 2020-2021 broadcast year, but that no additional measures are warranted.
Annual returns
  1. Paragraph 10(1)(i) of the old Broadcasting Act, which was in effect while the licensee’s application was being considered, granted the Commission the authority, in furtherance of its objects, to make regulations requiring licensees to submit to the Commission such information regarding their programs and financial affairs or otherwise relating to the conduct and management of their affairs as the regulations may specify.
  2. Pursuant to this authority, the Commission made subsection 9(1) of the Discretionary Services Regulations (the Regulations), which requires to file an annual return, including financial statements, by no later than 30 November of given year for the broadcast year ending on the previous 31 August.
  3. Subsection 49(2) of the Online Streaming Act, which made a certain number of amendments to the Broadcasting Act when it came into force on 27 April 2023, stipulates that any regulation made under paragraph 10(1)(i) of the old Broadcasting Act is deemed to be an order made under section 9.1 of the new Broadcasting Act. Accordingly, subsection 9(1) of the Regulations is considered to be a condition of service pursuant to paragraph 9.1(1)(o) of the new Broadcasting Act, and licensees continue to be subject to this requirement.
  4. According to Commission records, the Reporting Entity Profile Form – Broadcasting (REP-B) was filed eight days late for the 2020-2021 broadcast year for ELLE Fictions and MAX.
  5. The licensee stated that the delay in filing the REP-B form was caused by a one-time human error.
  6. The Commission finds that MusiquePlus is in non-compliance with subsection 9(1) of the Regulations for the 2020-2021 broadcast year. Furthermore, as the licensee’s explanations are satisfactory and this is a minor, one-time incident, the Commission considers that no further measure is warranted. However, more rigorous monitoring of the licensee’s compliance will be appropriate in the future.

Licence term

  1. The Commission’s traditional approach to television services has generally been to grant a five-year licence term to licensees of discretionary services with no major non-compliance issues.
  2. The current licence renewal applications for MusiquePlus’s services involve significant amendments to the licensee’s conditions of service, particularly in regard to Canadian Programming Expenditure requirements. Furthermore, pursuant to the Commission’s determination in paragraph 20 of this decision, ELLE Fictions and MAX will now be considered as individual, independent services.
  3. The Commission considers that it would be appropriate to give MusiquePlus sufficient time to adapt to its new regulatory framework. However, the Commission notes that MusiquePlus’s non-compliances, while occasional and mostly of minor severity, are numerous.
  4. In regard to the non-compliances relating to programming expenditures, these have an impact on Canadian creators and producers and, as such, are of greater severity. To make up the shortfalls by 31 August 2027, the licensee will have to invest $1,402,567 in PNI (in the form of CPE) and allocate $546,869 of its CPE to IPCs.
  5. In light of the above, more rigorous monitoring of the licensee’s compliance will be appropriate in the future. Accordingly, the Commission considers that a short-term licence renewal until 31 August 2027 is appropriate for MusiquePlus’s ELLE Fictions and MAX services.

Tangible benefits

  1. In Broadcasting Decision 2020-158, the Commission reminded MusiquePlus that it had a balance of tangible benefits amounting to $653,485.70 to be paid in accordance with the terms set out in Broadcasting Decision 2014-465. Upon verification, the Commission confirmed that MusiquePlus had paid the entire amount. 

Conclusion

  1. In light of all of the above, the Commission renews the broadcasting licence for the French-language discretionary services ELLE Fictions and MAX from 1 January 2024 to 31 August 2027.
  2. Pursuant to subsections 49(1) and 50(2) of the Online Streaming Act, the conditions of licence that existed prior to the date of royal assent of that Act are deemed to be conditions imposed under an order made pursuant to section 9.1 of the new Broadcasting Act, or subsection 11.1(2) in the case of expenditures. As such, the conditions of licence for this licensee became conditions of service and continue to apply to the licensee, except to the extent they have been amended by this decision.
  3. Regarding the conditions of service that were imposed at paragraphs 21, 31, 43 and 86, given that this renewal application was filed and published prior to the coming into force of the new Broadcasting Act, and that interested parties had an opportunity to comment on the amendments to conditions of service proposed by the licensee and on the non-compliances as part of the licence renewal proceeding, the Commission considers the public Part 1 proceeding sufficient to achieve the purposes of the publication and consultation requirement set out in subsection 9.1(4) of the new Broadcasting Act. The specifics of these conditions of service are set out in the appendix to this decision.
  4. For ease of reference, and in light of paragraphs 1, 21, 31, 43, 86 and 113 of this decision, the Commission has set out conditions of service for this licensee in the appendix to this decision.Footnote 11 Further, the formal broadcasting licence document issued to a licensee may set out additional requirements for the undertaking, relating to, for example, technical parameters or prohibitions on transfer. The licensee shall also adhere to any such requirements set out in the broadcasting licence for the undertaking.

Secretary General

Related documents

The decision is to be appended to each licence.

Appendix to Broadcasting Decision CRTC 2023-416

Terms, conditions of service, expectations and encouragements for the French-language discretionary services ELLE Fictions and MAX

Terms

The licences will expire on 31 August 2027.

Conditions of service

  1. For each of its services, the licensee shall adhere to the conditions of service set out in Appendix 1 to Standard conditions of service for licensed discretionary services, national news discretionary services and mainstream sports discretionary services and exemption order for exempt discretionary services – Modifications to the advertising time limit requirement, Broadcasting Regulatory Policy CRTC 2023-306, 5 September 2023. Further, the licensee shall adhere to the requirements set out in the broadcasting licences for the undertakings.
  2. For each of its services, the licensee shall adhere to all applicable requirements set out in the Discretionary Services Regulations that were made under paragraph 10(1)(a) or under paragraph 10(1)(i) of the old Broadcasting Act.Footnote 12
  3. In each broadcast year, the licensee shall devote at least 35% of the broadcast day to the broadcast of Canadian programs for each of its services.

Canadian programming expenditures

  1. The licensee shall in each broadcast year devote to the acquisition of or investment in Canadian programming at least:

    (a) 12% of the previous year’s gross revenues of its discretionary service ELLE Fictions; and

    (b) 10% of the previous year’s gross revenues of its discretionary service MAX.

  2. In addition to the Canadian programming expenditures set out in condition of service 4, the licensee shall devote at least $1,402,567 to the acquisition of or investment in Canadian programming by 31 August 2027. At least:

    (a) 55% of this amount shall be invested by ELLE Fictions; and

    (b) 45% of this amount shall be invested by MAX.

  3. Of the Canadian programming expenditures set out in conditions of service 4 and 5, the licensee shall devote at least $546,869 to an independent production company by 31 August 2027. At least:

    (a) 55% of this amount shall be invested by ELLE Fictions; and

    (b) 45% of this amount shall be invested by MAX.

  4. For each of its services, the licensee may claim, in addition to its expenditures on Canadian programming:

    (a) a 50% credit against its Canadian programming expenditure on Canadian programming produced by an Indigenous producer and claimed as Canadian programming expenditures during that broadcast year;

    (b) a 25% credit against its Canadian programming expenditure produced by an official language minority community producer and claimed as Canadian programming expenditures during that broadcast year. The licensee may claim the credit if:

    (i) the programming is produced in the province of Quebec and the original language of production is English; or

    (ii) the programming is produced outside the province of Quebec and the original language of production is French.

  5. For each of its services, the licensee may claim credits calculated in accordance with condition 7 until the expenditures made on Canadian programming produced by Indigenous producers and by official language minority community producers, including credits, reach a combined maximum of 10% of the Canadian programming expenditure requirement of each service.
  6. In each broadcast year of the licence term, excluding the final year:

    (a) for each of its services, 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 of service 4. In such case, the licensee shall expend 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.

    (b) for each of its services, where the licensee expends an amount for that year on Canadian programming that is greater than the minimum required calculated in accordance with condition of service 4, the licensee may deduct that amount from the minimum required expenditure in one or more of the remaining years of the licence term.

    (c) Notwithstanding conditions 9(a) and 9(b), and for each of its services, the licensee shall ensure that it expends on Canadian programming the total of the minimum required expenditures calculated in accordance with condition of service 4 during the licence term.

  7. 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 made by the licensee for that licence term.
  8. The licensee is responsible for any failure to comply with requirements relating to expenditures on Canadian programming that occurred during the previous licence term.

Definitions 

For the purposes of these conditions of service:

As an exception to the definition of “broadcast day” set out in Appendix 1 to Standard conditions of service for licensed discretionary services, national news discretionary services and mainstream sports discretionary services and exemption order for exempt discretionary services – Modifications to the advertising time limit requirement, Broadcasting Regulatory Policy CRTC 2023-306, 5 September 2023, the term “broadcast day” refers to the 24-hour period beginning each day at 6 a.m. or any other period approved by the Commission.

Indigenous producer: an individual who self-identifies as Indigenous, which includes First Nations, Métis and Inuit, and is a Canadian citizen or resides in Canada, or an independent production company in which at least 51% of the controlling interest is held by one or more individuals who self-identify as Indigenous and are Canadian citizens or reside in Canada.  

Independent production company: a Canadian company (i.e., a company carrying on business in Canada, with a Canadian business address, owned and controlled by Canadians) whose business is 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 aggregate, less than 30% of the equity.

Official language minority community (OLMC) producer: a company that meets the definition of “independent production company” and that, if operating in the province of Quebec, produces original English-language programming, or if operating outside of the province of Quebec, produces original French-language programming.

Clarification for OLMC producer

To be considered an OLMC producer in Canada, a production company must:

(a) if it produces original programming in English, have its head office in Quebec and be owned and operated by a resident of Quebec;

(b) if it produces original programming in French, have its head office outside Quebec and be owned and operated by a resident outside of Quebec.

Expectations

The standard expectations applicable to this licensee are set out in Appendix 1 to Standard conditions of service for licensed discretionary services, national news discretionary services and mainstream sports discretionary services and exemption order for exempt discretionary services – Modifications to the advertising time limit requirement, Broadcasting Regulatory Policy CRTC 2023-306, 5 September 2023.

The Commission expects the ELLE Fictions and MAX services to devote a portion of their annual Canadian programming expenditures to original French-language programming.

Cultural diversity

The Commission expects the licensee to reflect the cultural diversity of Canada in its programming and employment practices.

Encouragements

The standards encouragements applicable to this licensee are set out in Appendix 1 to Standard conditions of service for licensed discretionary services, national news discretionary services and mainstream sports discretionary services and exemption order for exempt discretionary services – Modifications to the advertising time limit requirement, Broadcasting Regulatory Policy CRTC 2023-306, 5 September 2023.

Employment equity

In accordance with Implementation of an employment equity policy, Public Notice CRTC 1992-59, 1 September 1992, the Commission encourages the licensee to consider employment equity in its hiring practices and in all other aspects of its management of human resources.

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