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ARCHIVED -  Decision CRTC 87-899

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Decision

Ottawa, 1 December 1987
Decision CRTC 87-899
MeteoMedia Inc. - 871231700
The Commission approves the application by MeteoMedia Inc. (MeteoMedia), for a network licence to provide a national weather specialty programming service. This satellite-to-cable service will be available to cable television affiliates on an optional basis for distribution on the basic service, in an English-language version (Weather Now) and a French-language version (Météo-Instant), in accordance with the provisions outlined in the Public Notices accompanying this decision (Public Notices CRTC 1987-260 and 1987-261). The licence, which will be issued and be effective on 1 September 1988, will expire 31 August 1993 and will be subject to the conditions specified in the appendix to this decision and in the licence to be issued.
As described by the applicant and as set out as a condition of licence in the appendix, the programming provided by the new network shall be dedicated exclusively to video programming, text and graphic displays relating to meteorological, atmospheric and marine conditions for local, regional and national areas of Canada, and international areas as they may be of interest to Canadians, as well as programming relating to the prevention and effects of these conditions. This service will be available on a 24 hour-a-day basis in both official languages.
Although existing television broadcasters include weather in their regular program schedules, the service proposed by MeteoMedia will be distinguished form conventional offerings by the comprehensive and up-to-date nature of its reports, its availability throughout the day, the provision of backgrounding information and special features such as weather radar. Further, its use of live video will set it apart from the enhanced graphics weather service currently available on some Canadian cable systems.
Ownership Structure
The major shareholder in MeteoMedia is Lavalin Inc. (Lavalin) of Montreal, a Canadian engineering organization which hods 80% of the common voting shares. Lavalin, through its various divisions, is established in nine of the ten provinces of Canada. The corporation is wholly owned by lavalin Ltée/Ltd. which is in turn owned by four shareholders, namely, Messrs. Bernard Lamarre, Marcel Dufour, Armand Couture and Jacques Lamarre, all of whom are residents of the province of Quebec.
Lavalin, a new entrant into the broadcasting field, has acquired solid expertise in the meteorological field through its wholly-owned subsidiary MacLaren Plansearch, which collects and analyses weather data for a wide range of corporate and other clients.
The Weather Channel (TWC), which is the U.S. counterpart to the proposed Canadian weather network, holds the remaining 20% of the common voting shares. After five years of operation, TWC is well-established in the United States with more than 26,000,000 subscribers.
MeteoMedia stated at the hearing that the shareholders will invest funds proportionate to their holdings, with a ceiling on TWC's contribution. Accordingly, TWC will advance 20% of the required funding to a maximum of $600,00 while Lavalin's share will be 80% plus any amount needed over and above the minority shareholder's maximum contribution.
Demand
MeteoMedia indicated that it became convinced that there was a need for the proposed new service after studying the mass of weather date gathered by Environment Canada and its presentation by existing broadcasting and print media. On the basis of its observations, it concluded that the public dissemination and comprehension of weather information could be significantly improved. In its view, "a quality video and graphic presentation available on demand that better explains the impact of weather on the consumer is not presently available in Canada", hence this application.
As evidence of the demand and need for the proposed new service, MeteoMedia referred at the heating to the results of polls conducted for Environment Canada's Atmospheric Environment Service (AES) which highlighted the safety aspect of comprehensible weather information, as well as to the experience of MacLaren Plansearch with a wide variety of customers and the growing success of TWC in the United States. In this regard, it noted that according to the AES date the level of consumer interest in the weather is higher in Canada than it was in the United States prior to the inception of TWC, which attracted more than 6 million new subscribers last year.
Based on the experience of TWC, the applicant expressed its confidence that its service would create new viewing habits once the public became aware of its availability and that it would become indispensable as a source of vital weather surveillance information on demand. It was also encouraged, it said, by the positive response of cable operators across the country.
Programming
The programming provided by the applicant will be 100% Canadian and produced entirely be MeteoMedia at its Halifax studios. Environment Canada will provide MeteoMedia's computers with raw weather date which will be analyzed and prepared for network use by staff meteorologists and graphics personnel and continuously monitored and updated.
In the first three years of operation MeteoMedia proposes to offer 8 hours of video programming each weekday, from 6:00 a.m. to 10:00 a.m. and from 4:00 p.m. to 8:00 p.m. eastern time, and 12 hours of video programming between 8:00 a.m. and 8:00 p.m. on Saturday and Sunday. Commencing in the fourth year of operation, these amounts will be increased to 14 hours each day, between 6:00 a.m. and 8:00 p.m. eastern time, provided MeteoMedia's subscriber projections are met.
English an French video presentations will originate with the Halifax studios on an alternating basis, such that English-language viewers will receive video programming while French-language viewers receive graphics and vice versa. During each hour of video programming, on-camera meteorologists will provide approximately twenty-five minutes of national and regional weather information. The remainder of the hour will consist of graphics displays and textual information specific to each individual market in the language selected be the local cable affiliate, miscellaneous weather-related information such as long-range forecasts, weather averages, special information for schools, sportsmen and vacationers, and advertising material.
For the balance of the program schedule, MeteoMedia proposes to offer 16 hours of graphics programming each weekday between midnight and 6:00 a.m., between 10:00 a.m. and 4:00 p.m., and between 8:00 p.m. and midnight. On Saturday and Sunday, it has scheduled 12 hours of graphic information between 8:00 p.m. and 8:00 a.m. These amounts are to be reduced to 10 hours per day, between 8:00 p.m. and 6:00 a.m., in years four and five, commensurate with the proposed increases in video presentations.
The applicant has made a commitment to spend the following minimum amounts on Canadian programming in each year to the licence term: $3.9 million in year one, $4.1 million in year two, $4.4 million in year three, $6.6 million in year four and $6.9 million in year five.
As discussed with the applicant at the heating, the Commission has imposed conditions of licence, as set out in the appendix to this decision, which require MeteoMedia to maintain a Canadian content level of 100% and to devote not less than the programming expenditures noted above to Canadian programs.
Viability
MeteoMedia proposes to derive its revenues from a combination of monthly subscriber fees and the sale of advertising. The Commission notes that at the hearing, Lavalin made a further commitment to provide what-ever financial support is necessary during the licence term in the event of revenue shortfalls.
MeteoMedia forecast its total revenues in year on as $4.9 million, based on 1.9 million subscriber and advertising revenues of $350,00. By year five, its projected revenues would increase to $15.2 million, based on a subscriber base of 4.7 million and advertising revenues of $2 million. These projections were formulated using cable penetration statistics published in January 1987 by the CCTA, the experience of TWC and the results of an advertising study undertaken by E. Brian Bimm Associates using input from potential advertisers/agencies and TWC.
The Bimm study found that advertisers were interested in having a additional outlet mor to enhance a distinct product or identity than to expand the reach and frequency of their messages at the expense of other media. It also noted that the revenues required to ensure the viability of the new service represented a very small percentage of the pool of television advertising revenues in Canada.
In the application, furthermore, MeteoMedia stated that its revenue projections had taken into account the fact that viewers would tune in to the proposed service for brief periods of between 10 and 15 minutes. In light of these fluctuating viewing patterns, it anticipated that the proposed service would have a negligible impact, if any, on existing licensees either in terms of audience fragmentation or advertising revenues.
The Commission has examined the applicant's advertising projections and has attached conditions of licence requiring MeteoMedia to limit the use of advertising material to the proposed maximum of 12 minutes per hour and to national advertising only, as set out in the appendix.
The proposed wholesale rate to each exhibitor of $0.20 per subscriber per month for each of the English-and French-language versions in year one, increasing by an inflation factor of 5% in each subsequent year of the licence term to $0.24 in year five, is authorized by condition of licence.
Other Matters
In describing the technical aspects of its proposal, the applicant indicated that tit expected to use one transponder on the Anik D-2 satellite to distribute the network service to local head-ends across Canada. It also highlighted the importance of a head-end interface device, developed by TWC and known as STAR (satellite transponder addressable receiver) which is fundamental to the provision of the service as proposed.
STAR will be provided to individual cable operators by MeteoMedia, free of charge, and will enable the cable operator to choose to distribute the Weather Now or Météo-Instant feed, or both, depending on channel capacity. Perhaps mor significantly, it allows the delivery of local weather information to particular local head-end from one national network, as well as the immediate transmission of Environment Canada's weather warnings and advisories to specific affected areas.
Conclusion
In reaching its decision, the Commission has noted the unique characteristics of this proposal, including its ability to provide a national weather service in both official languages. In addition, it has noted its use of innovative technology to gather and disseminate weather information tailored to the needs of individual markets across Canada, the use of videos, graphics and text, and the fact that the programming is 100% Canadian. The Commission considers that this network will perform a valuable public service in terms of improving public safety through the provision of up-to-the-minute essential weather information from local, regional and national perspectives, at any time of the day or night, while adding to the diversity of programming available on the Canadian broadcasting system.
The Commission is also satisfied, based on the information presented, that Lavalin has the capacity to meet its financial commitments and to compensate for any shortfalls in capital financing or operating revenues. Based on the significant corporate resources of Lavalin, along with the relevant experience of MacLaren Plansearch and TWC, the Commission considers that the proposal contains all the elements necessary for the development of a viable, high-quality service.
As to the impact that the licensing of this service may have on existing broadcasters in terms of audience fragmentation and erosion of advertising revenues, the Commission has examined the evidence and information presented by the applicant and has assessed all of the presentations and submissions available in the context of this hearing.
After careful consideration, the Commission has concluded that although this service could obtain a very minimal audience share from conventional broadcasters, the over-all impact on existing broadcasters will be negligible.
With regard to issues of public concerns and specifically with respect to the network's live programming, the Commission requires MeteoMedia, by condition of licence, to abide by the CAB's self-regulatory guidelines on sex-role stereotyping, as set out in the appendix to this decision.
The Commission also expects MeteoMedia to ensure that its live programming reflects realistically the participation of multicultural minorities in Canadian society.
The Commission further notes that the extensive use of graphics displays and text by this service will make it readily accessible to hearing-impaired viewers.
Interventions
The Commission has taken into account the views expressed by the many interveners who supported this application, including elected representatives and members of the cable industry. In its intervention, the Cable Television Association of Alberta stated that "research has shown a very high proportion of television viewers actively seek out a weather channel forecast each day", while Westman Media Co-operative Ltd. emphasized that this service would be valuable in smaller communities which cannot currently receive the Environment Canada weather service.
Other interveners, including Environment Canada, the Canadian Air Traffic Control Association, the Eastern Fisherman's Association, and the Canadian Federation of Agriculture highlighted the safety aspects of such a service and its importance to the farming, forestry, fishing, marine, tourism and travel industries.
The Commission has also considered the concerns of those interveners who questioned, among other matters, the licensing of this specialty service at this time, its viability, the distribution of the weather network on the basic service and costs related to basic cable subscribers, as well as the impact on conventional broadcasters. The Commission notes that these concerns have been addressed in this decision or in the introductory statement to the decision released today.
Fernand Bélisle
Secretary General
APPENDIX
Conditions of Licence
MeteoMedia Inc.
1. The programming provided by licensee shall be dedicated exclusively to video programming, text and graphics relating to meteorological, atmospheric and marine conditions for local, regional and national areas of Canada, and international areas as they may be of national interest to Canadians, as well as programming relating to the prevention and effects of these conditions.
2. The licensee shall devote not less than 100% of the broadcast year to the distribution of Canadian programs.
3.  a) From 1 September 1988 until 31 August 1989, the licensee shall expend no less than $3.9 million on the investment in and/or acquisition of Canadian programs.
  b) From 1 September 1989 until 31 August 1990, the licensee shall expend no less than $4.1 million on the investment in and/or acquisition of Canadian programs.
  c) From 1 September 1990 until 31 August 1991, the licensee shall expend no less than $4.4 million on the investment in and/or acquisition of Canadian programs.
  d) From 1 September 1991 until 31 August 1992, the licensee shall expend no less than $6.6 million on the investment in and/or acquisition of Canadian programs.
  e) From 1 September 1992 until 31 August 1993, the licensee shall expend no less than $6.9 million on the investment in and/or acquisition of Canadian programs.
4.  a) The licensee shall distribute no more than 12 minutes of advertising material during each clock hour.
  b) The licensee shall not distribute any advertising material other than national advertising.
5.  a) From 1 September 1988 to 31 August 1989, the licensee shall charge each exhibitor of this service the wholesale rate of $0.20 per subscriber per month for each language version exhibited.
  b) From 1 September 1989 to 31 August 1990, the licensee shall charge each exhibitor of this service the wholesale rate of $0.21 per subscriber per month for each language version exhibited.
  c) From 1 September 1990 to 31 August 1991, the licensee shall charge each exhibition of this service a wholesale rate of $0.22 per subscriber per month for each language version exhibited.
  d) From 1 September 1991 until 31 August 1992, the licensee shall charge each exhibitor of this service a wholesale rate of $0.23 per subscriber per month for each language version exhibited.
  e) From 1 September 1992 to 31 August 1993, the licensee shall charge each exhibitor of this service a wholesale rate of $0.24 per subscriber per mont for each language version exhibited.
6. The licensee shall adhere to the CAB's self-regulatory guidelines on sec-role stereotyping, as amended from time to time and accepted by the Commission.
7. 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 its licence; and
  b) the amounts expended by it on the acquisition of and/or investment in Canadian programs intended for distribution o its undertaking.
8. The licensee shall file a statement of the accounts referred to in section 7 with the Commission on or before 30 November of each year.
9. For purposes of these conditions, all time periods shall be reckoned according to the eastern time zone.
10. The definitions of advertising material, broadcast day, broadcast month, broadcast year, Canadian program, clock hour and commercial message set out in Section 2 of the Television Broadcasting Regulations, 1987 (SOR/87-49), as amended by SRO/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 these conditions and to the licensee with the necessary changes.