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ARCHIVED -  Decision CRTC 87-896

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Decision

Ottawa, 1 December 1987
Decision CRTC 87-896
Premier Choix: TVEC Inc. "Canal Famille" - 871204400
The Commission approves the application by Premier Choix: TVEC Inc. for a network licence to operate a French-language specialty television service targeted exclusively to children and young adolescents. This satellite-to-cable service is to be made available to cable television affiliates situated in regions served by a satellite beam covering eastern Canada, for distribution on an optional basis on the basic service, in accordance with the provisions set out in the Public Notices accompanying this decision (Public Notices CRTC 1987-260 and CRTC 1987-262).
In line with the applicant's proposal during the first three years of operation to offer a service devoted exclusively to young people, the licence, which will be issued and be effective on 1 September 1988, will expire 31 August 1991 and will be subject to the conditions set out in the appendix to this decision and in the licence to be issued.
While specifying that its ultimate goal is to offer a French-language specialty programming service for the entire family, the applicant proposed to offer in the first three years of operation a service which would be directed exclusively to children up to fourteen years of age in order that it could concentrate on a very specific audience for whom it would be able to provide a service of the highest quality. The applicant indicated that it hoped to be in a position after the third year of operation to expand its target audience and to increase its broadcast hours, which at the outset will be from 7:00 a.m. to 7:00 p.m. Monday to Thursday and from 7:00 a.m. to 8:00 p.m. Friday through Sunday. The licence herein granted will therefore be for a three-year period. At the time of the renewal of this licence, the licensee will have an opportunity to explain its reasons for expanding its target audience to include the family as a whole and the manner in which it intends to do this without changing its basic objective.
In line with the applicant's proposal and as set out in the appendix to this decision as a condition of licence, the programming offered by the licensee shall be aimed exclusively at children up to the age of fourteen. Moreover, any feature films broadcast on Canal Famille shall have a general audience rating from the Régie du Cinéma du Québec. Further, the licensee shall not broadcast any sports programs, adult-oriented news or advertising material.
At the 20 July public hearing, the Commission also examined an application by Vidéotron Ltée for renewal of the broadcasting licence granted 13 March 1986 for the operation, on an experimental basis, of a satellite-to-cable network to distribute the French-languages programming service, Télé des jeunes. In View of the approval herein granted to Canal Famille, and for the reasons stated in Decision CRTC 87-906, the experimental licence for Vidéotron Ltée's Télé des jeunes network will not be renewed.
Ownership
The applicant, Premier Choix: TVEC Inc. (PC/TVEC), which currently holds a licence to operate Super Écran, the French-language general interest pay television service serving eastern Canada, has proposed to create a new division within the company for Canal Famille. PC/TVEC's largest share-holder (39.9%) is 129610 Canada Inc., a wholly-owned subsidiary of First Choice Canadian Communications Corporation which is the licensee of the national English-language general interest pay television network which serves eastern Canada. Other share-holders are Télévision de l'Est du Canada Inc. (TVEC) with 12.3% a company whose main shareholder is Cogéco Inc., which is controlled by Mr. Henri Audet of Trois-Rivières; and Quebec's Société de développement des industries de la culture et des communications (SODICC) with 8.6%. A further 35.8% of the voting shares in the applicant company are held by members of the public.
Demand
PC/TVEC stated during the hearing that it is satisfied that there exists a demand for a service offering programs specifically for children. In this regard, the company referred to a study by Sorécom Inc. which indicated that 46% of French-speaking cable subscribers would be very or somewhat interested in a French-language specialty service for young people if it were included in the basic service. The applicant added that, in addition to the studies submitted in connection with its application in support of this claim, it has assessed the results of the Commission's consultations in recent years with the public and various interest groups with regard to the benefits of a children's specialty programming service. Its belief is also based on its regular contact over the past three years with the young audience it reaches through a children's club established by the Super Écran pay television service. This "club" has more than 15,00 members twelve years of age or younger and receives an average of 500 letters a month. The applicant added that it also based its contention on the comments of subscribers to Super Écran with whom it has met regularly over the past year.
Programming
The applicant stated at the hearing that if Canal Famille is to be efficient and cost-effective, it must be able to attract and retain an audience of francophone youth and that only the highest quality programs will ensure that these objectives are met. When asked to clarity the distinction between its own family-oriented programs and those offered by conventional broadcasters, the applicant said that Canal Famille programs would be intended for viewing by children and their families together and, rather than simply providing entertainment, such programs would try to convey the values that parents hope to instill in their children. It also made a commitment during the hearing to ensure that the programs it produced would reflect the unique society and culture of young Canadian Francophones.
In line with PC/TVEC's commitment at the hearing, at least 60% of Canal Famille's programming will be Canadian in content, measured on a yearly basis. The applicant also undertook to invest $2.5 million, $3 million and $3.5 million respectively in the first three years of operation for the production or acquisition of Canadian programs. As specified in the appendix, these commitments will be conditions of licence. The Commission notes that the sums mentioned above include $1.9 million, $2.2 million and $2.5 million respectively for investment in Canadian independent productions. The applicant stated that to improve the quality of its programs it expected producers to access the Telefilm Canada fund. Canal Famille did, however, make a commitment to invest the sums specified above regardless of whatever funding independant producers might receive from Telefilm Canada.
The Commission also notes that $80,00, $190,00 and $201,000 respectively of the amounts that are to be invested in Canadian programming for the first three years of operation are to be utilized for developing scripts for new Canadian programs. The Commission notes in this regard the six new concepts for original Canadian programs that the applicant has already developed. These programs will be aimed at specific segments of the target audience: pre-schoolers (up to 5 years of age), primary students (aged 6 to 11) and secondary students (aged 12 to 14). In this regard, the applicant has made a commitment to distribute at least 104 hours of original first-run original Canadian programs each year. This commitment is also a condition of licence as set out in the appendix to this decision. For the purpose of this condition, an original, first-run program means a program which has never before been distributed by any licensee of a broadcasting undertaking, and which will be distributed for the first time by this licensee.
The applicant stated at the hearing that in order to make Canal Famille more attractive to young people, it has entered into negotiation with The Disney Channel, an American specialty programming service, and is about to sign an agreement allowing it to broadcast French versions of some Disney programs, including feature-length productions. These broadcasts will account for no more than 25% of Canal Famille's total programming.
PC/TVEC indicated in its application that because this service will be available to all cable subscribers, Canal Famille will have programming advisory committee whose main purpose will be to help develop program selection criteria and policies and to oversee their application. The committee will have seven members, including representatives, of educational, cultural, sports and recreation groups, as well as parents and members of the cable television industry. The Commission expects that the licensee will have established this advisory committee at least three months prior to commencing operation.
Viability
When asked during the hearing about its projected revenues and the anticipated penetration of its service, the applicant stated that it was confident that the attractiveness and quality of Canal Famille's programs would guarantee its viability, particularly in view of the extra value this service would add to the basic cable service which could help to increase the penetration rate of cable systems, particularly those in the province of Quebec.
The applicant added that the association of Super Écran with Canal Famille would also bring financial benefits, by making it possible to economize on the required capital expenditures at the outset. The required financing of $300,600, as indicated in the application, includes only $20,00 for capital equipment and facilities, since Canal Famille is to share Super Écran's broadcast centre and the equipment required to promote the programs.
PC/TVEC also stated that substantial savings could be realized in terms of the projections submitted in its application if it were to share a satellite transponder channel with another service, It indicated that discussions it had held on this subject prior to the hearing were not conclusive, but it did not rule out the possibility altogether. According to the applicant, such sharing could result in savings of about $2.1 million over three years which, should this come about, the applicant has committed to invest in improving the quality of its programming. The Commission notes that PC/TVEC intends to continue to explore the possibility of sharing a satellite channel with one or more other satellite users so as to reduce transmission costs and increase the amount of money to be invested in programming.
With regard to subscriber fees, PC/TVEC proposed a wholesale rate to cable operators subscribing to Canal Famille of $0.50 per subscriber per month, rising to $0.55 in the second year and to $0.60 in the third year. These rates are hereby authorized as a condition of licence. The Commission notes, however, that the net cost for many subscribers should be less since the application for renewal of the Télé des jeunes service has been denied. Thus, for the more than 25% of Quebec cable subscribers who currently pay $0.25 per month for Télé des jeunes, the net fee for Canal Famille would be about $0.25 a month in the first year of operation. For subscribers to Vidéotron Ltée and to cable operators supplied by Intervision distribution services in Montreal and Quebec City, who represent more than half of all subscribers in the province and currently pay $0.10 per month for Télé des jeunes, the net fee should be about $0.40 per subscriber per month, assuming that the Télé des jeunes service is no longer carried.
Other Matters
In presenting its distribution plan, the applicant indicated that the Canal Famille service would be available on a satellite beam serving eastern Canada and will thus be available to cable operators in the four Atlantic provinces, Quebec, Ontario and the most densely populated part of Manitoba, thereby reaching the vast majority of francophone Canadians. In this regard, the applicant stated at the hearing that it has not ruled out the possibility of some of its programs being produced in one or another of the regions it will serve outside the province of Quebec.
With respect to issues of public concern and in line with the discussions on this subject at the hearing, the Commission requires as a condition of licence, as set out in the appendix, that PC/TVEC adhere to the CAB's guidelines on sex-role stereotyping.
The Commission also expects PC/TVEC to ensure that Canal Famille's Canadian programming reflects realistically the participation of multicultural minorities in Canadian society and contributes to eliminating negative stereotypes.
The Commission also notes that violence in television programs continues to be a matter of public concern, particularly in programs targeted to children. It therefore expects the licensee to exercise particular care and discretion in the presentation and scheduling of programs which depict scenes of violence and to abstain from showing any programs portraying excessive or gatuitous violence.
The Commission further encourages the applicant to close caption its programs for the hearing impaired as its financial situation permits.
Conclusion
The Commission is satisfied that the licensing of this new specialty programming service will contribute significantly to achieving the objective of increasing the diversity of programming available to Canadians, particularly in the francophone market. In its view, the applicant's emphasis on the quality of this programs and its commitment to invest in new Canadian productions for children will fill a gap in this area and, thus, will contribute to enriching the Canadian broadcasting system.
In approving this application, the Commission is satisfied that the proposed service has fulfilled the Commission's basic criteria of demand, viability and audience appeal. The Commission has, in addition, taken into account a number of other favourable factors, including the overall approach that stresses the highest possible program quality; the funds that have been allocated for original productions, particularly for Canadian programs, and the resulting benefits for viewers and for the independent production industry in Canada; as well as the number of new programs that will be aired.
The Commission is also of the opinion that the advantages accruing from this approval outweigh any concern with regard to increased concentration of ownership of broadcasting undertakings.
As for the impact this service could have on broadcasters in terms of audience fragmentation and erosion of advertising revenue, the Commission has considered the evidence and information presented by the applicant, as well as the comments and studies available in the context of this hearing.
Having examined all of the information available to it, in particular the applicant's commitment that no advetising will be presented on Canal Famille, the Commission has concluded that even if this service could attract as much as 1% of the audience to conventional broadcasting services, the overall impact of the Canal Famille on existing broadcasters will be negligible.
At the time of the renewal of the Canal Famille licence, the Commission will expect the licensee to be in a position to demonstrate how it plans to improve the quality of its programming.
In approving this applications, the Commission has taken into account the concerns raised by interveners, paricularly the Association des câblodistributeurs du Québec Inc., as well as from some twenty-four cable licensees with respect to, among other things, an excessively high subscriber fee, the partial utilization of a channel and the very narrow target audience proposed. The Commission notes that these concerns have been addressed in this decision or in the introductory statement to the decisions released today.
The Commission has also taken note of the comments of certain other cable operators and several organizations such as the Association des producteurs de films et de vidéo du Québec, The Vanier Institute of the Family, the Children's Brosdcast Institute and the Canadian Home and School and Parent-Teacher Federation.
Fernand Bélisle
Secretary General
APPENDIX
Conditions of Licence
Premier Choix: TVEC Inc. (Canal Famille)
1. The programming provided by the licensee shall have as its target audiences only children and youth up to 14 years of age.
2. All feature films distributed on Canal Famille shall have a general audience rating from the Régie du Cinéma du Québec.
3. The licensee shall not distribute on Canal Famille any programs from the sports category (category 6) set out in Items 6 of Schedule I of the Television Broadcasting Regulations, 1987.
4. The licensee shall devote not less than 60% of the broadcast year to the distribution of Canadian programs.
5. a) From 1 September 1988 until 31 August 1989, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than $2.5 million.
 b) From 1 September 1989 until 31 August 1990, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than $3 million.
 c) From 1 September 1990 until 31 August 1991, the licensee shall expend on the acquisition of and/or investment in Canadian programs not less than $3.5 million.
6. The licensee shall distribute no advertising material.
7. a) From the date of commencement of service until 31 August 1989, the licensee shall charge each exhibitor of this service the wholesale rate of $0.50 per subscriber per month.
 b) From 1 September 1989 to 31 August 1990, the licensee shall charge each exhibitor of this service the wholesale rate of $0.55 per subscriber per month.
 c) From 1 September 1990 to 31 August 1991, the licensee shall charge each exhibitor of this service a wholesale rate of $0.60 per subscriber per month.
8. The licensee shall adhere to the CAB self-regulatory guidelines on sex-role stereotyping, as amended from time to time and accepted by the Commission.
9. The licensee shall keep separate accounts which set out for each financial year ending 31 August
 a) the gross revenues in respect of its operations under this licence;
  b) the amounts expended by it on the acquisition of and/or investment in Canadian programs intended for distribution on its undertaking, including a breakout of amounts spent on script and concept development; and
 c) the amount expended by it for acquisition of non-Canadian programs for distribution on its undertaking.
10. The licensee shall file a statement of the accounts referred to in section 9 with the Commission on or before 30 November in each year.
11. For purposes of these conditions, all time periods shall be reckoned according to the eastern time zone.
12. The definitions of advertising material, broadcast day, broadcast month, broadcast year, and Canadian program set out in section 2 of the Television Broadcasting Regulations, 1987 (SOR/87-49), as amended by SOR/87-425, and the provisions of sections 5, 6, 7, 8, 10(1) and (3) to (6), 12, 13 and 14 of the said Regulations shall apply to the conditions shall apply to the conditions and to the licensee with the necessary changes.
13. Together with the record required to be filed with the Commission pursuant to subsection 10(3) of the Television Broadcasting Regulations, 1987, the licensee is required to provide in its program log or machine readable record the following information:
 a) for each program, the audience target consistent with the following categories: up to 5 years, 6 to 11 years, 12 to 14 years, and
 b) for each program, an indication as to whether it is an original, first-run Canadian program.
14. In each broadcast year, the licensee shall distribute no less than 104 hours of original, first-run Canadian programs.
 For the purposes of this condition, an original, first run program means a program which has never before been distributed by any licensee of a broadcasting undertaking, and which will be distributed for the first time by the licensee.