ARCHIVED -  Public Notice CRTC 1986-176

Public Notice

Ottawa, 23 July 1986

Public Notice CRTC 1986-176

PROPOSED REGULATIONS RESPECTING TELEVISION BROADCASTING

I. INTRODUCTION

Television broadcasting in Canada has been regulated by the federal government since its inception in the early 1950s. In the beginning, the Canadian Broadcasting Corporation provided a national public broadcasting service and also acted as the regulatory agency for privately-owned stations, as required by the Canadian Broadcasting Act of 1936. In 1953, the CBC revised the existing radio broadcasting regulations to encompass television and called the new regulations the "CBC Regulations for Sound Broadcasting Stations."

Following publication of the Report of the Royal Commission on Broadcasting (the Fowler Report), the Broadcasting Act of 1958 created a new regulatory agency, the Board of Broadcast Governors (BBG), to regulate radio and television stations and to advise the Government on applications for new or amended licences. In 1959 the BBG replaced the CBC Regulations for Sound Broadcasting Stations with the "Radio (TV) Broadcasting Regulations." These were the first regulations to apply solely to television and included the first requirements with respect to a minimum level of Canadian content.

The Broadcasting Act of 1968 created the Canadian Radio-television Commission to succeed the BBG and gave the Commission its current regulatory powers in respect of television.

Since this time the Commission (renamed the Canadian Radio-television and Telecommunications Commission as a result of new responsibilities pursuant to the Canadian Radio-television and Telecommunications Commission Act of 1976) has undertaken a number of regulatory changes relating to television. These include the revising of Canadian content requirements, the replacement of the Broadcasting Licence Fee Regulations with a new set of regulations designed to eliminate certain inequities, and amendments with respect to commercial messages, public service announcements, and promotions.

Today the Canadian broadcasting system continues to develop amidst fundamental changes in the broadcasting environment. One of the primary sources of change is the competition arising from new services and alternate forms of home entertainment. Video cassette recorders (VCRs), satellite master antenna (SMATV) systems, television receive only (TVRO) dishes, and a variety of Canadian pay and specialty television services, as well as a growing number of conventional and discretionary non-Canadian services, provide close substitutes for conventional Canadian television operations.

In consequence, the Commission has reviewed its Television Broadcasting Regulations to determine those regulations necessary to achieve the objectives of the Broadcasting Act and foster a distinctive Canadian broadcasting system; those no longer necessary to achieve the objectives of the Act; those more appropriate to self-regulation by means of industry codes; and those requiring an updating, streamlining or clarification. As with the Radio (AM), Radio (FM), and Cable Television Regulations, the Commission has abandoned a detailed regulatory approach and is proposing a more supervisory approach, considered more appropriate to the contemporary broadcasting environment.

At the same time, the Commission is determined to promote a regulatory framework conducive to the development and support of Canadian talent and artistic expression. The television regulations should enable the television broadcast and program production industries to expand and develop so as to foster an increase in the quality and diversity of the Canadian broadcasting system. The Commission is therefore proposing to make greater use of a condition of licence approach, upon request by licensees, to improve the quality or diversity of Canadian programs.

With these same objectives in mind, the Commission is also enlarging the definition of a "local" program (Public Notice CRTC 1986-177) and requesting comments with respect to the Commission's treatment of "production packages" (Public Notice CRTC 1986-179), in separate public notices published today.

Where possible, the Commission has coordinated its review of television, cable television and radio regulations so as to ensure a measure of conformity and coherence across all regulations. As a result, many of the televisions regulations proposed herein are similar or identical to the Proposed Regulations Respecting Radio (A.M.) and Radio (F.M.) Broadcasting as announced in Public Notice CRTC 1986-66 of 19 March 1986.

In this notice the Commission is issuing for public comment, pursuant to subsection 16(2) of the Broadcasting Act, a proposal for new regulations in respect of television broadcasting. What follows is a discussion of the major changes contained in the proposed Television Broadcasting Regulations as set out in Section VI of the notice.

II. HIGHLIGHTS OF THE DRAFT REGULATIONS

In keeping with the Proposed Regulations Respecting Radio (A.M.) and Radio (F.M.) Broadcasting, the proposed television regulations have been substantially simplified. The television regulations will apply to both station and network operators, but not to any programming that is broadcast by a licensee using a signal contained in a second audio program channel or multiplex channel.

(i) Canadian Programs

The central element in the existing and proposed regulations, and a major preoccupation of the Commission, concerns the provision of Canadian programs. Indeed, the distinctive character of the Canadian broadcasting system, especially with respect to television, is primarily associated with the Canadian component of television schedules.

Subsection 8(1) of the existing regulations requires that the total amount of time devoted to the broadcasting of Canadian programs by any station or network be not less than 60 percent of the total broadcast day, and not less than 60 percent of the total time between 6 p.m. and midnight in the case of a public station or network (i.e. the CBC) or 50 percent in the case of a private station or network. This provision was first introduced on 1 October 1970.

Following consultations with the television broadcasting milieu, section 4 of the proposed Television Broadcasting Regulations relating to Canadian Programs proposes a new approach to Canadian content that would allow licensees, by condition of licence, to reduce the minimum proportion of their total broadcast day devoted to Canadian programs from 60 percent to 50 percent provided certain requirements are met.

It should be noted this change would not apply to a public station or network (i.e. the CBC). Nor would it affect the Commission's 50 percent Canadian content requirements for the period between 6 p.m. and midnight with respect to any other licensee. The special requirements necessary for a licensee to avail itself of the new approach are outlined in a proposed policy statement contained in Part III below. The proposed policy statement also outlines the Commission's objectives in proposing such a change with respect to the quality or diversity of Canadian programs offered by the Canadian broadcasting system.

It should be noted the attached regulations retain a 12 month reporting period, as explained in Public Notice CRTC 1986-178 published today. The attached regulations also propose that this reporting period commence 1 September rather than 1 October in order to ensure greater conformity with the fiscal year-end of the vast majority of licensees as well as with the financial reporting procedures.

(ii) Programming Content

The prohibitions in section 5 of the attached regulations are virtually identical to those in the first four subsections of section 6 of the existing regulations. However, the remaining provisions of the existing regulations have been deleted because they were considered outdated, covered by other legislation or regulations or unnecessary to achieve the objectives of the Act. These include prohibitions with respect to offensive promotional programs, programs on birth control or veneral disease, appeals for donations and subscriptions, lotteries and station contests.

For example, in the attached regulations, the Commission proposes to eliminate the regulation governing the frequency of station contests and the value of prizes used in such contests. The Commission considers the current regulation outdated and wishes to permit more latitude for licensees in structuring promotional campaigns and in attracting advertisers. The Commission expects broadcasters to use discretion in broadcasting such programs and encourages them to address this issue in an industry code.

With respect to the advertising of alcoholic beverages, the television regulations currently prohibit the advertising of spirituous liquor and set out conditions for the broadcasting of beer, wine and cider in provinces where such advertising is permitted. A primary objective of these regulations is to ensure that alcohol-related commercial messages do not promote the greater use of alcohol or represent the consumption of alcohol as a necessary part of any social activity or as a necessity for the enjoyment of life.

While a revised proposal is contained in section 6 of the draft regulations attached to this document, it should be noted that the Commission has already requested comments on this proposal (Public Notice CRTC 1986-68 dated 19 March 1986) and the proposal included here may therefore be amended in response to the submissions received with respect to the Commission's recent public hearing which began on 21 May 1986. The hearing examined the broadcast advertising of various products, including alcoholic beverages, on both radio and television. The Commission expects the regulations with respect to the broadcast advertising of alcoholic beverages will be substantially the same for both media.

A decision will soon be announced on this issue and consequently the Commission does not expect to receive additional comments on section 6 of the attached regulations at this time.

With respect to the advertising of food and drugs, the Commission presently requires that all continuities of advertisements of food and drugs to which the Food and Drug Act applies be submitted in advance of their broadcast to the Minister of National Health and Welfare or the Minister of Consumer and Corporate Affairs, and to the Commission for approval and registration.

While a revised proposal is contained in section 7 of the draft regulations attached to this document, it should be noted that this proposal may also be amended in response to the submissions received by the Commission with respect to the public hearing mentioned above.

The Commission does not expect to receive additional comments on section 7 of the attached regulations at this time.

(iii) Ethnic Programs

The proposed regulations incorporate recent changes enacted by the Commission pursuant to its policy statement "A Broadcasting Policy Reflecting Canada's Linguistic and Cultural Diversity", (Public Notice CRTC 1985-139 of 4 July 1985). These amendments were issued by the Commission for comment in Public Notice CRTC 1985-261 of 4 December 1985 and enacted on 19 February 1986 (Public Notice CRTC 1986-65 of 14 March 1986). The newly amended regulations set out the definition of ethnic programs and the requirements for their broadcasting. Hence, the Commission does not expect to receive additional comments on these amendments at this time.

(iv) Logs and Records

Section 10 of the attached regulations is substantially the same as section 5 of the existing regulations. However, licensees would now be required to retain a "clear and intelligible audiovisual tape recording or other exact copy" of all programming for four weeks from the date of broadcast, rather than the continuity, manuscript or audio reproduction of such.

Section 5(7) of the existing regulations relating to information requested by the Commission appears in a slightly amended form as section 12 of the new regulations and is now identical in the proposed radio, cable and television regulations.

Schedule 1 of the attached regulations contains the Commission's proposed new television program subclasses and key figures. The proposed subclasses, including new program categories, are reflective of current programming trends in Canada and elsewhere and more in conformity with the general understanding of program categories by the public.

The proposed categories are divided into three broad groupings of programming, rather than four as is presently the case. The three broad groupings are information, sports and music & entertainment. In turn, information and music & entertainment are each divided into five categories. A description of the proposed program categories is contained in Appendix A.

The revised and expanded version of the key figures will permit the Commission, licensees and other interested parties to classify television programs using alphanumeric characters and simplifies the information that licensees must provide in the form of program logs.

The Commission realizes that any simple classification scheme for television programs raises difficult questions with respect to programs that may fall into more than one category. The Commission is proposing an up-dated version in keeping with current television standards and practices that should represent a substantial improvement over the existing program categories.

(v) Advertising Material

Section 11 of the attached regulations relating to advertising represents a streamlined version of the current regulations but retains all of the latter's major provisions. The existing regulations relating to classified announcement programs have also been included in the proposed section 11. The current regulations concerning the identification of advertising material have been deleted; they are no longer useful.

The existing regulations place limitations on the advertising content in the body of a newscast. This was intended to ensure that newscasts remain impartial with respect to advertising. The Commission notes, however, the growing variety of media sources providing news and information and considers that this competition reduces the likelihood of advertising influencing news reporting. Consequently, the Commission proposes to eliminate this section in favour of an industry code developed by industry-related organizations.

Other provisions in the existing regulations set out conditions for the broadcast of advertising concerning bonds, shares, securities and commodities. These regulations were intended to safeguard the investing public from the advertisement of fraudulent or misrepresented investment schemes. While maintaining a concern for the public interest in the broadcast promotion of stocks, bonds and other assets, the Commission considers that its concerns with respect to this issue overlap with those of provincial security commissions, among others. Since there are alternative means of safeguarding potential investors, the Commission is confident its regulations in this area are no longer necessary.

(vi) Affiliation

As with the proposed radio regulations, the Commission has deleted that part of the existing television regulations entitled "Chain Broadcasting" (section 23), except for the prohibition against entering into an affiliation agreement with a non-Canadian operator. In the Commission's view, many of the provisions contained in section 23 of the existing regulations are redundant: either they outline powers accorded to the Commission by the Broadcasting Act, or they are repeated elsewhere in the television regulations proposed herein.

The existing regulations also provide for the Commission to intervene in disputes between the CBC and its affiliates with respect to affiliation agreements and reserved time. However, the contractual obligations of CBC affiliates are conditions of their licences and conflicts can be dealt with by the Commission on this level. Consequently, the Commission considers that existing regulations in this respect are no longer necessary and proposes to delete them.

(vii) Transfer of Ownership or Control

The proposed regulation requires that licensees notify the Commission of any act, agreement or transaction whereby a person ends up controlling 20 to 39 percent of the voting shares of a licensee. A similar obligation exists whenever control over 40 percent or more of the voting shares is obtained. This change is intended to reduce the regulatory lag that results from the current regulations, while at the same time ensuring the Commission is fully informed of any such transfer. The Commission has, however, retained the requirement for prior approval for changes in effective control and has added a provision requiring prior approval for changes resulting in any person having control of 30 percent or more of the issued voting securities.

III. PROPOSED CONDITION OF LICENCE APPROACH TO CANADIAN CONTENT

The Commission's concern for the quality and diversity of Canadian programs available on the Canadian broadcasting system is addressed in the proposed condition of licence approach to Canadian content outlined in this section. This concern is also reflected in the Commission's public notices in respect of Local Television Programs (Public Notice CRTC 1986-177 and Recognition for Canadian Programs - Production Packages (Public Notice CRTC 1986-179), both issued today.

By means of subsection 4(3) of the attached regulations, the Commission proposes to introduce some flexibility into the Canadian content time requirements contained in the regulations by allowing a licensee, by condition of licence, to reduce the time allocated to Canadian content over the entire broadcast day from 60 to 50 percent, provided the licensee meets certain requirements. In particular, the Commission is proposing to allow a participating licensee to reduce the number of hours devoted to Canadian programs provided it maintains the proportion of its gross revenues allocated to expenditures on Canadian programs equal to the licensee's best single-year performance over the previous three years.

In other words, the Commission in- tends to accept a licensee's proposal to reduce its Canadian programs aired during the daytime by 10 percent provided the licensee also proposes an amendment to its licence involving a condition of licence to maintain the proportion of its gross revenues allocated to spending on Canadian programs at a specified historical level. In this way, the hourly average of spending on Canadian programs would increase in line with licensees' gross revenues enabling them to improve the quality of such programs. Those licensees who did not wish to avail themselves of this approach would not be obliged to do so, and in their case, the existing Canadian content requirements would continue to apply.

The rationale for the Commission's new condition of licence approach may be summarized as follows. The Commission is concerned by the rapid rise in the price of primetime U.S. television programs aired by Canadian broadcasters. Unlike the case of Canadian pay and specialty services, the Commission does not impose expenditures requirements in respect of Canadian programs on Canadian television services. The Commission is therefore concerned that increases in the price of non-Canadian programs may reduce the funds allocated by Canadian broadcasters to Canadian programs. Since the distinctive character of the Canadian broadcasting system relies upon the Canadian component of broadcasters' schedules, any reduction in expenditures on Canadian content would be highly undesirable. Indeed, the growing competition for Canadian audiences from new services of all kinds requires the programming of distinctive programs of high quality by Canadian broadcasters, with exclusivity playing an important role. The condition of licence approach proposed here would offer Canadian television broadcasters more flexibility in scheduling, permit the production or acquisition of higher quality Canadian product attracting larger audiences, while creating more possibilities for the simulcasting of non-Canadian programs. This approach would therefore ensure that any incremental revenues derived from newly scheduled non-Canadian programs, as well as any general increase in broadcasters' gross revenues, will be reflected in the funds flowing to Canadian programs so as to increase the quality or diversity of such programs.

The information required to implement and monitor this proposal is not requested in television broadcasters' annual financial returns at the present time. However, the Commission is currently developing an annual monitoring package that would provide the requisite information. In the interim, applicants for a reduction in their Canadian content time requirements in accordance with subsection 4(3) will be required to submit the information indicated in the proposed schedule and working sheet (see Appendices B and C) at the time of their application, on a confidential basis if so desired. Because any such application would involve a potential amendment to an existing licence in the form of a new condition of licence, each proposed condition of licence would be announced by the Commission for comments in a public notice prior to the Commission's decision.

In addition to supplying information on their expenditures in respect of Canadian programs telecast for the previous three years, as indicated in the appended schedule and working sheet, participating licensees will be required to supply additional information with their annual financial return in each subsequent year until such time as the annual Canadian content monitoring package is in operation for all licensees. The Commission will wish to review the condition of licence approach after it has been in place for three years and make any adjustments necessary.

Each new condition of licence would include an explicit lapsing provision: if the licensee fails to meet the requirements of the condition in any given twelve-month period, then the condition itself would lapse and the 60 percent Canadian content time requirement will come into effect for the following year. This provision would prevent a licensee from applying for the amendment at the time of licence renewal and then failing to meet the expenditure requirement for an extended period of time. In other words, the Commission would have a built-in form of corrective action.

In proposing this approach, the Commission wishes to introduce a simple, straight-forward mechanism by which objectives of the Broadcasting Act can be achieved. The proposed condition of licence approach, with its reference to a fixed proportion of gross revenues, avoids arbitrary or subjective requirements in favour of positive approach that can be easily monitored.

It should also be noted that the Commission presently offers television licensees a 150 percent time credit for dramatic programs which meet specified criteria (Public Notice CRTC 1984-94 dated 15 April 1984).

It is the Commission's expectation that program categories which are less available in the market, or program categories where particular broadcasters have special expertise, will increase as a result of the new condition of licence approach, and will then improve the diversity or quality of the Canadian programs offered in the market of the participating broadcaster. Over the next three years, the Commission will gather the information necessary to monitor the success of this new approach.

IV. PROPOSED POLICY ON COMMUNITY TELEVISION

For some time the Commission has been seeking means of promoting the extension of television services to underserved communities. The objectives outlined in such documents as the Report of the Committee on Extension of Service to Northern and Remote Communities (1980) and The Costs of Choice (1985) with respect to the distribution of satellite broadcasting services in underserved communities reflect the Commission's continuing efforts to ensure access to a wide range of television services by communities in all regions of Canada.

Television viewers in many parts of the country are now able to secure a considerable array of television services by means of off-air, cable and satellite signals. However, despite the variety of services available, a significant number of Canadian households are as yet unable to receive a full range of services. In order to ensure that all Canadians are able to receive a full range of services, the Commission is proposing a new policy on Community Television. This policy would allow for the authorization of local over-the-air television operations in remote or underserved communities which are not large enough to support a full range of Canadian over-the-air or cable services (i.e. operations that would exist in areas normally served by Part III licensees as defined in the Cable Television Regulations).

(i) The Community Channel and Community Radio

The Commission has some experience with community broadcast services in the form of the Community Channel on cable systems and Community Radio.

In 1976 the Commission, by regulation, required all cable television licensees to provide a Community Channel on the basic band as a priority service. Only programming produced by the licensee, or by members of the community or communities served by the licensee, or by another licensee where such programming was of particular interest to the community or communities served by the licensee, was permitted on the channel. The Commission's intention was to provide communities with a programming service that gave consideration to issues of local concern.

The obligation to provide a Community Channel does not, however, apply to Part III Cable systems. Where such systems do not provide a Community Channel, the Commission wishes to encourage the implementation of a service that gives consideration to issues of local concern.

In Public Notice 1985-194 of 26 August 1985, the Commission announced the adoption of a new definition, role and mandate for community radio stations. The new definition required local community ownership and participation in decisions on programming matters. It also included reference to programming criteria designed to ensure that programming be community-oriented and different from the programming of other stations in the market.

(ii) Definition of Community Television

The Commission has considered whether it would be opportune to create a special class of licence to encourage the development of community television operations. However, since the Commission does not wish to limit unduly the nature of the programming provided by such operations, it has decided not to create such a class of licence but rather to design a licensing policy for community television in line with its policy for community radio.

For the purposes of the proposed policy, a community television station is defined as a station characterized by the local nature of its ownership, programming and the market it is designed to serve.

The Commission is proposing to favourably consider applications for a licence to operate a community television station that provides for management, operation, and programming primarily by and for members of the local community. The station's management should allow for community access and reflect the interests and special needs of the audience it is licensed to serve. In addition, the programming of a community television station should provide an alternative to that of existing services within the licensed service area.

(iii) Role and Mandate

The Commission will expect community television services to develop innovative and alternative forms of community-oriented programming that contribute to the diversity and variety of television services within their community. The Commission also expects community television operators to serve all members of the community by offering some programs which appeal to everybody, as well as programs which deal with matters of interest to specific elements of the community, such as neighbourhoods, surrounding towns, villages, and specific interest groups. The Commission does not expect community television services to operate over the full broadcast day in all cases.

A community television station might include non-Canadian programs, such as feature films, in its schedule provided it meets the Commission's Canadian content requirements as well as all responsibilities in respect of community programming as outlined above.

(iv) Financing and Ownership

In general the Commission expects that on-going financing for such community television stations will derive from governments, public subscription campaigns and local advertising. Advertising will be permitted on any community television station as stipulated by the regulations for all television licensees.

With respect to ownership, the Commission expects a community television operation to be owned and controlled by an organization whose membership is made up primarily of citizens of the community at large. However, the Commission does not wish to preclude cooperative efforts between existing licensees together with members of the community who wish to put forward a joint proposal. The Commission encourages potential applicants to be innovative when proposing ownership and management structures.

(v) Conclusion

The Commission encourages those interested in undertaking a community television operation to explore all options for technical delivery of their service. Such options could include, but are not necessarily limited to, low power television transmission, conventional over-the-air transmission, and cooperative efforts with existing television licensees for the sharing of technical services.

While not wishing to preclude any applications for the provision of the kind of community television service outlined in this policy statement, the Commission encourages prospective applicants to be guided by the principles set out in this document. Prospective applicants should also take into consideration the proposed new television regulations in developing their proposals.

V. SUBMISSION OF PUBLIC COMMENTS

The Commission requests comments from interested parties on the proposed television regulations as set out in Part VI and on the proposed policies identified in Parts III and IV of this notice. Comments should be submitted on or before 29 August 1986. The Commission will hold a Public Hearing in Hull at Phase IV, Place du Portage beginning 30 September 1986 to discuss the comments received.

The Commission wishes to stress that its existing policies and regulations as well as the obligations assumed by licensees as conditions of licence, of course, remain in effect. The policies will continue to be applied and the regulations and conditions of licence will continue to be enforced until changes resulting from this review have been announced, or new regulations and conditions have been adopted.

Fernand Bélisle Secretary General