|
Decision
|
|
Ottawa, 6 April 1989
|
|
Decision CRTC 89-121
|
|
Allarcom Limited
|
|
Red Deer, Coronation and Banff, Alberta -881942700 -881943500
|
|
Following a Public Hearing in Edmonton, Alberta commencing 14 November 1988, the Commission approves the applications by Allarcom Limited (Allarcom) to acquire the assets of CKRD-TV Red Deer and its rebroadcasting undertakings CKRD-TV-1 Coronation and CKRD-TV-2 Banff owned by Monarch Broadcasting Ltd. (Monarch), and to acquire the undivided ownership and control of the assets of the third service television station in Red Deer (to be known as CITA-TV), currently jointly licensed to Monarch and Allarcom, and to obtain broadcasting licences to continue the operation of these undertakings.
|
|
The Commission will issue licences to the applicant upon surrender of the current licences. The licences will expire 31 August 1993 and will be subject to the conditions specified in the Appendix to this decision and in the licences to be issued.
|
|
Allarcom, the licensee of CITV-TV Edmonton, is an Alberta-based company entirely owned by residents of Alberta. It is indirectly controlled by Dr. Charles A. Allard through Cathton Holdings Ltd., which also has a 78.13% interest in Allarcom Pay Television Limited (known as Superchannel), which, in turn, holds a 50% interest in the Family Channel; both are general interest pay television services.
|
|
The vendor, Monarch, is indirectly controlled by Mr. W.H. Yuill through Monarch Communications Inc. In addition to the undertakings which are the subject of this decision, Monarch is licensee of the Red Deer AM station, CKRD; CHAT-AM, CJMH-AM and CHAT-TV Medicine Hat, Alberta; CHAT-TV-1 Pivot, Alberta and CHAT-TV-2 Maple Creek, Saskatchewan; CJXX Grande Prairie, Alberta; and CKXY Vancouver, British Columbia.
|
|
The Commission notes that the purchase price is $10.4 million which includes a debenture in the amount of $836,000 representing the mortgage on CKRD-TV's premises. In addition, Allarcom will refund to Monarch all direct costs in completing the construction of CITA-TV, estimated to be $1.5 million. The Commission has examined the evidence filed with the application and has no concerns with respect to the availability or adequacy of the required financing.
|
CITA-TV was jointly licensed to Allarcom and Monarch on 13 May 1987 (Decision CRTC 87-352) as a rebroadcaster of CITV-TV. The station, which is expected to be operational in early May 1989, is to provide a minimum of 2 hours 30 minutes per week of local programming commencing with the second year of operation. Given the relatively short period of time between the licensing of the new Red Deer station and the submission of these applications, the Commission questioned Monarch on its reasons for wishing to sell CKRD-TV and its interest in CITA-TV. Monarch assured the Commission that when it applied for the new station, there was no intent to withdraw at a later date. It suggested that the television broadcasting environment in central Alberta has changed dramatically in the past eighteen months because of the recent licensing of new cable systems in rural communities and the availability of additional services on cable television undertakings. The vendor noted that "our profitability is marginal and not sufficient to allow us to replace our production equipment before it becomes obsolete or well-worn". Other factors cited by Monarch include increased competition for syndicated programs and national advertising sales, and a decrease in CBC network payments. Mr. Yuill stated at the hearing that he considered that the ongoing viability of CKRD-TV and the successful launching of CITA-TV could only be achieved by "somebody that had larger resources than Monarch". He also stated his desire to sell the stations to "seasoned broadcasters with a commitment to Alberta".
|
|
As stated in a number of decisions relating to applications for authority to transfer ownership or effective control of broadcasting undertakings, and because the Commission does not solicit applications for such transfers, the onus is on the applicant to demonstrate to the Commission that the application filed is the best possible proposal under the circumstances, taking into account the Commission's general concerns with respect to transactions of this nature.
|
|
The Commission reaffirms that the first test any applicant must meet is that the proposed transfer of ownership or control yields significant and unequivocal benefits to the communities served by the broadcasting undertakings, to the Canadian broadcasting system as a whole, and that it is in the public interest.
|
|
In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others which may not easily be measurable in terms of their dollar value, are commensurate with the size of the transaction and that they take into account the responsibilities to be assumed, the characteristics and viability of the broadcasting undertakings in question, and the scale of the programming, management, financial and technical resources available to the purchaser.
|
|
In its application and at the hearing, Allarcom identified several intangible benefits which would result from approval of this transaction. It stated that at a time when the CBC is unable to increase financial contributions to its affiliated stations, CKRD-TV's local service would be maintained and strengthened. It noted that the station's new relationship with CITV-TV would result in enhanced newsgathering and production capabilities for CKRD-TV, greater opportunities for co-operative productions and syndication with out-of-province stations, as well as enhanced program purchasing ability. Allarcom also argued that since CKRD-TV will have ready access to CITV-TV's experienced staff, it should be able to undertake the production of more ambitious public affairs programs and documentary specials. The applicant also stated that CITV-TV would broadcast all programs produced with CKRD-TV thereby providing the programs with exposure in Edmonton and, by virtue of CITV-TV's distribution as part of the CANCOM network, in other Canadian communities.
|
|
With respect to those benefits which are quantifiable, Allarcom promised, among other things, to improve and expand the technical facilities of CKRD-TV as well as to devote significant additional resources to Canadian programming, particularly local programs.
|
|
In its application, Allarcom made a commitment to increase by $1,015,600 over five years its expenditures for local programming above those amounts proposed by Monarch in its licence renewal application for CKRD-TV which was also considered at the Edmonton Public Hearing. At the hearing, the Commission discussed an apparent discrepancy of $336,000 between that commitment and the breakdown provided in Allarcom's projections. The applicant confirmed its 5-year commitment, noting that its projections were in error. It subsequently filed corrected projections for the period 1989/90 through 1993/94 which confirm its $1,015,600 5-year commitment and which the Commission has accepted. Allarcom also advised the Commission that more than 75% of its budget for Canadian programming will be allocated to local productions, a proportion 7% greater than that proposed by Monarch.
|
|
Allarcom made a commitment to increase the amount of local programming produced by CKRD-TV by one and one-half hours per week, from 15 hours 57 minutes to 17 hours 27 minutes. It indicated that this would be accomplished through the introduction of three new half-hour programs. The 52-part current affairs series "Nightline" to be produced exclusively by CKRD-TV will deal with topics of particular interest to residents of central Alberta. "Parenting", a 26-episode series to be produced co-operatively with CITV-TV will deal with issues of modern family life. The third new program proposed is "Coast to Coast Talent Search" for which Allarcom is seeking the participation of other stations across the country to feature Canadian musical, dance and comedic talent. At the hearing it indicated that stations in Halifax and Montreal have expressed an interest in the series and that at least one episode per year will be produced by CKRD-TV Red Deer. Allarcom indicated that if it is unable to secure national participation, at a minimum, it will undertake an annual 26-episode regional talent search program with similar CKRD-TV involvement.
|
|
The applicant also stated that additional resources will be dedicated to the CKRD-TV production "This Business of Farming". Allarcom intends to increase the budget for this program by $68,000 in 1989/90, increasing to $82,654 in 1993/94 and stated that because it will be produced in co-operation with CITV-TV, there will be expanded coverage of the agricultural issues at both the provincial and national levels and that CITV-TV staff will spend time at CKRD-TV to assist with the program's development.
|
|
At the hearing Allarcom was asked if there would be any change to the $1,015,600 financial commitment should any of the new programs not be successful or if it actually spends less for them than what was forecast. The applicant responded as follows:
|
|
We're making the firm commitment on that level of expenditures and if one of those programs is replaced, it'll be replaced with another program of equal dollar amount.
|
|
With respect to those quantifiable benefits relating to the technical aspects of the CKRD-TV operation, Allarcom committed to spend $500,000 to improve the studio and technical facilities. This amount, however, included $60,000 for a new character generator which had been proposed by Monarch in its renewal application. In addition, Allarcom will purchase and install a new microwave antenna at the Halkirk microwave relay site at a cost of approximately $30,000 to "improve the reliability and quality of the signal of CKRD-TV-1 Coronation". The applicant indicated that the new microwave antenna and character generator would be installed immediately upon Commission approval of these applications and that the remainder of the studio improvements would be completed within two years.
|
|
The applicant will also transfer a fully-equipped four-camera mobile studio unit from Edmonton to CKRD-TV immediately following approval of these applications. Allarcom estimates the current value of the mobile to be $300,000 and notes that it would be available to CKRD-TV on an exclusive basis except for those occasions when a split-feed is required for broadcasts of the hockey games of the Edmonton Oilers (a maximum of 18 days each year).
|
|
Based on the evidence contained in the applications and presented at the hearing, the Commission is satisfied that approval of the proposed transactions will yield significant and unequivocal benefits to the communities served by these undertakings, to the Canadian broadcasting system as a whole and that it is in the public interest. Although it does not share all of the opinions expressed by Monarch in its rationale for selling CKRD-TV, the Commission is satisfied that Allarcom's experience and additional resources will result in a strengthening of CKRD-TV's position as the only local station in the Red Deer market. As a result of this transaction, CKRD-TV will be in a position to make the required technical improvements and to add to the level of local production undertaken by Monarch.
|
|
The Commission also notes that the value of the quantifiable benefits package proposed by Allarcom and accepted by the Commission totals $1.78 million over five years.
|
|
The Commission considers that the technical improvements, coupled with the $1,015,600 commitment to additional local programming, will enable Allarcom to ensure that the service offered by CKRD-TV is strengthened, remains locally-oriented and maintains its essentially local character. In the Commission's opinion, the availability of the mobile production studio should strengthen CKRD-TV's ability to cover news and events in Red Deer and in the rural communities located within its service area and the Commission expects the licensee to make full use of this additional production facility for these purposes. Further, the Commission considers that the approval herein granted will reinforce the position of Allarcom as an independent television broadcaster.
|
|
The Commission fully expects Allarcom to meet all of the commitments proposed as benefits to this transaction including its commitment that CKRD-TV produce at least 17 hours 27 minutes of original local production each week throughout the licence term. In this regard, the Commission notes that Allarcom did not propose to introduce local newscasts on weekends. The Commission expects Allarcom to examine this aspect of CKRD-TV's programming and to provide a local news presence on weekends, during the course of the licence term.
|
|
Moreover, according to its financial projections, CKRD-TV will expend $1,212,000 on Canadian programming in the first year of the new licence term. As stated in the Public Notice introducing this and other television renewal decisions issued today, the Commission expects licensees of television stations that earned less than $10 million in total advertising revenues in 1987/88 to adhere to their projected first-year expenditures for Canadian programming at a minimum, and to adjust such expenditures in subsequent years in accordance with the prescribed formula, which is linked to station advertising revenues. The Commission is satisfied that this approach offers a reasonable and fair means of ensuring that the Canadian program expenditures of each station keep pace with changes in its revenue. Accordingly, inasmuch as CKRD-TV's advertising revenues in 1987/88 were less than $10 million, this expectation applies in respect of this station.
|
In issuing these licences, the Commission also authorizes the applicant to make use of the Vertical Blanking Interval. The Commission expects the applicant to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled "Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM)".
|
|
With respect to services for the deaf and hearing impaired, the Commission notes that Allarcom stated at the hearing that 1200 hours per year of closed-captioned programs will be available to Red Deer residents via the CITA-TV service and that CITV-TV will be close captioning its 6:00 p.m. and 11:00 p.m. newscasts next year; newscasts which will also be available on the CITA-TV service. It acknowledged that this would generate pressure to provide closed captioning on CKRD-TV "as soon as practical". The Commission will expect Allarcom to close caption, at a minimum, headlines and appropriate scripted portions of the CKRD-TV early evening local newscasts during the course of this licence term.
|
|
The Commission also expects the licensee to obtain telephone devices for the deaf (TDD) during the first year of the new licence term and to install them wherever is most appropriate, such as in the master control rooms, to ensure access to both CKRD-TV and CITA-TV by deaf and hearing-impaired viewers over the entire broadcast day.
|
|
At the hearing, Monarch apprised the Commission regarding problems with the technical quality of its Banff transmitter signal. The Commission notes that the Department of Communications is only prepared at this time to issue a technical operating certificate for CKRD-TV-2 until 31 August 1990 unless the problems, which were substantiated by four interveners, are rectified. When this issue was raised with the applicant, Allarcom indicated that it would examine the problem and look for ways to improve the situation. The Commission expects Allarcom to file a report on or before 31 July 1989 outlining its progress towards an improved Banff signal. With respect to the operation of CKRD-TV-2 beyond 31 August 1990, the Commission draws the licensee's attention to subsection 13(1)(b) of the Broadcasting Act pertaining to the technical certification of broadcasting undertakings and to subsection 13(2) which provides that any broadcasting licence issued, amended or renewed in contravention of section 13 is of no force or effect.
|
|
At the hearing, Allarcom outlined its plans regarding the fulfillment of the Commission's expectations contained in the original licensing decision, that CITA-TV broadcast 21/2 hours per week of local programming beginning in the second year of operation. Allarcom proposes to expend $688,000 over four years for a current affairs program "Red Deer Magazine". The Commission notes that although CITA-TV will also broadcast the CITV-TV/CKRD-TV co-operative productions originating from Edmonton as well as the CKRD-TV program "This Business of Farming", Allarcom acknowledged that there could be problems related to the pre-releasing of programs on CITA-TV and agreed to examine this issue in order to ensure that CKRD-TV is not disadvantaged in any way.
|
|
At the hearing, Allarcom also referred to the fact that once CITA-TV is operational, the local commercial insertion arrangements which currently exist between CKRD-TV and CFRN-TV-6 Red Deer, which is licensed to Sunwapta Broadcasting Limited, will cease and CITA-TV will sell local commercials in concert with CKRD-TV.
|
|
The Commission wishes to acknowledge the six interventions filed in support of these applications as well as the intervention by Mr. Jim Robertson of Red Deer who was concerned that CKRD-TV would no longer be an affiliate of the CBC. The Commission notes that no evidence was presented at the hearing which would support Mr. Robertson's fears.
|
|
As a result of the approval herein granted, no further action is required with respect to the application (880997200) filed by Monarch to renew the broadcasting licences for CKRD-TV and its rebroadcasting undertakings CKRD-TV-1 Coronation and CKRD-TV-2 Banff.
|
|
Fernand Bélisle
Secretary General
|
|
APPENDIX
|
|
Conditions of licence for CKRD-TV and its rebroadcasting undertakings and CITA-TV Red Deer, Alberta
|
|
1. The licensee shall operate CKRD-TV as an affiliate of the English-language television network operated by the Canadian Broadcasting Corporation.
|
|
2. The licensee shall adhere to the Canadian Association of Broadcasters' self-regulatory guidelines on sex-role stereotyping, as amended from time to time and approved by the Commission.
|
|
3. The licensee shall adhere to the provisions of the Broadcast Code for Advertising to Children published by the Canadian Association of Broadcasters as amended from time to time and approved by the Commission.
|
|
|