ARCHIVED -  Decision CRTC 94-285

Decision

Ottawa, 6 June 1994

Decision CRTC 94-285

Canadian Broadcasting Corporation

Across Canada - 931523500

National French-Language Television News Service - Approved

Following a Public Hearing in the National Capital Region commencing 14 February 1994, the Commission approves the application by the Canadian Broadcasting Corporation (CBC) for a broadcasting licence to carry on a specialty programming undertaking (Réseau de l'Information - RDI) to provide a national French-language television news service. This service will be available to cable television affiliates across the country on a dual-status basis, as explained in Public Notice CRTC 1994-59 which introduces this and other decisions, and in accordance with the provisions set out in the distribution and linkage public notice also issued today (Public Notice CRTC 1994-60).

The Commission will issue a licence expiring 31 August 1999, subject to the conditions specified in the appendix to this decision and in the licence to be issued. This licence term will enable the Commission to consider the renewal of the licence together with that of Newsworld, RDI's English-language counterpart, also operated by the CBC.

When licensing Newsworld in 1987 (Decision CRTC 87-904), the Commission required the CBC to submit a feasibility study on the possible introduction of a French-language news service "even if the implementation of such a service could only be undertaken on a gradual basis or in association with other public or private partners". In 1989 (Decision CRTC 89-599), the Commission denied the CBC's initial application for a national French-language specialty news and information service. The Commission found the proposed programming to have serious shortcomings, including an unacceptable level of repeat programs. Further, the Commission was not satisfied that the Corporation had demonstrated that there was sufficient interest in the service, and noted that the proposal appeared to have little support.

In approving RDI, the Commission considered the quality of the CBC's proposal, which surpasses the application denied in 1989, the demonstrated support for the proposed service, and the fact that this submission addresses the major concerns outlined in Decision CRTC 89-599. The Commission also took into account the CBC's unique news infrastructure, its nationally and internationally recognized journalistic standards, and the limited commercial impact that the undertaking should cause. The Commission further notes that this was the only filing proposing an all-news service that was comparable to Newsworld.

Programming

RDI's stated that its mandate is [TRANSLATION] "to provide all Canadians across Canada who understand French with a complete 24-hour news service". In addition to drawing on the extensive news gathering and production system of its French-language television network, the Corporation intends to give emphasis to the production role of its stations and affiliates with a view to expanding their participation and providing a better reflection of all regions of the country. RDI also plans to form partnerships with other public and private broadcasters in Canada to exchange services, acquire programs and engage in co-productions. The RDI service will include an international component broadcasting live daily broadcasts of European news and, in co-operation with other Francophone countries, an international magazine program.

Consistent with its application, RDI programming will include, by condition of licence, news, analysis and interpretation, reporting and actualities, religious and educational programs, and sports. Sports programs must include no live event coverage.

The CBC committed to broadcast a minimum of 90% Canadian content during the daytime and evening hours; adherence to this commitment shall be by condition of licence. The Corporation further indicated that two-thirds of its programming expenditures would be devoted to producing Canadian programming. Given the nature of the RDI service and the 90% Canadian content requirement mentioned above, the Commission considers it unnecessary to impose a condition of licence relating to RDI's level of spending on Canadian programs. The Commission also notes the high level of original content to be offered by RDI (82%, according to statements made at the hearing), and expects the licensee to adhere to this commitment.

With regard to regional participation, the Commission notes the principle of multipolarity advanced by the CBC, by which it is intended to give recognition to the economic and demographic realities of Francophone Canada. On the one hand, the Corporation plans to concentrate news gathering, editing and broadcasting operations in Montréal so as to make maximum use of existing satellite systems, land links and other facilities; on the other hand, it intends to decentralize production, making use of regional facilities for as many programs as possible to take advantage of the resources present in the many Francophone population centres, outside Montréal at the provincial level, and outside of Quebec at the national level.

Consequently, RDI programming must reflect, by condition of licence, the concerns of each Francophone population centre in Canada identified by the CBC as the following: Atlantic Canada, Quebec, Ontario and Western Canada. To this end, the licensee must ensure that at least one-third of all original programs distributed by RDI each broadcast year are the productions of CBC regional stations or RDI's regional associates.

The main programs within this regional component of RDI programming will include the major daily magazine programs "Le monde vu de ..." and "Le Canada aujourd'hui". "Le monde vu de l'Atlantique", for example, and the corresponding programs originating from Quebec, Ontario and Western Canada will be original programs broadcast live from the CBC's regional stations in Moncton, Quebec City, Ottawa and Winnipeg, respectively. The programs will cover regional, national and international events from the vantage point of each region. Under agreements with Télévision Quatre Saisons (TQS) and Radio-Québec, RDI will also cover various regions of Quebec. "Le Canada aujourd'hui" will be a 90-minute daily evening program consisting of four segments produced in Moncton, Quebec City, Ottawa and Edmonton. The concerns and points of view of each of the four regions will be shared with all Canadians. The Commission expects this program to be carried in prime time throughout the licence term.

The Commission also notes the significant involvement of other broadcasters in RDI programming, particularly in weekend magazine shows. Cogeco Radio-Télévision Inc., in association with CKRS-TV Jonquière, will cover municipal subjects, employment and careers; TQS will report on culture, politics, sports, health and youth; and Radio-Québec will handle education. The Commission notes that the RDI line-up will include some programs from TVOntario, and it encourages the Corporation to draw on other French-language broadcasters to enrich and diversify its information sources as much as possible. The Commission notes the CBC's commitment to ensure that a minimum of 23% of its program schedule consists of programming obtained from these partners and sources outside the Corporation. The Commission expects this commitment to be honoured throughout the licence term.

Regarding RDI's international component, the Commission notes the CBC's efforts to broaden its coverage to include all Francophone countries. In particular it notes that the program "Le monde francophone" will give other Francophone nations an opportunity to express their concerns and views on the world, thus fostering closer links with some 43 foreign countries. The Commission further notes the production and broadcast of a daily newscast consisting exclusively of international stories supplied by the bureaus operated jointly by the English- and French-language networks of the CBC in Washington, Paris, London, Beijing and Moscow, as well as the Berlin bureau, scheduled to open in September 1994. The Commission also notes that RDI will broadcast live, on a daily basis, the morning and evening newscasts of the French network France 2 and the pan-European Euronews newscast.

The Commission notes the assurances given by the CBC at the hearing that it will continue to fulfil the mandates of its main network and existing news service. The CBC stated that, from 1988 to 1993, the level of information programming on its main network increased from 25% to 35%, and that this substantial presence will continue. Consequently, the Commission expects the licensee to ensure that implementation of the RDI service will have no adverse impact on the information service of the CBC's main French-language network.

The CBC also emphasized the improvements that RDI will bring about with respect to increased availability and scheduling flexibility of news programming notably through its hourly and half-hourly news updates and special event reports with no time limitations. It stated that this would ensure that RDI programming is [TRANSLATION] "complementary to the main network and the news services of other conventional television undertakings". The CBC also outlined its efforts to develop a program schedule that offers additional choice, and added: [TRANSLATION] "We are not trying to compete against conventional networks".

In this context, the Commission raised the matter of RDI's proposal to broadcast at 9:00 p.m. and 11:00 p.m., the same program that the main service carries at 10:00 p.m. (Téléjournal). The CBC explained at the hearing that the 9:00 p.m. broadcast is intended to respond to a long-standing request from viewers in the Maritimes to receive the Téléjournal at 10:00 p.m. in their time zone. The Corporation added that this edition of the program would be adapted slightly to reflect the concerns of Canadians in that region, and that the 11:00 p.m. edition essentially would be a repeat broadcast. The Commission is not satisfied that the 11:00 p.m. broadcast is warranted, and is concerned that this element of the schedule could impact negatively on conventional television networks.

With regard to simulcasting, the CBC will be prohibited by condition of licence from simulcasting any RDI programs on the main network, except for a segment of RDI's weekday morning news program; this daily segment shall not exceed two hours in length.

Distribution

The CBC proposed to provide the RDI service to affiliated cable undertakings for distribution on the basic service in Francophone markets. In Anglophone markets, the Corporation proposed that RDI be distributed on a high-penetration discretionary tier.

The Commission received many interventions from Francophone associations outside Quebec who supported the RDI proposal, but expressed serious concerns regarding the plan to distribute it as a discretionary service in Anglophone markets. These interveners argued the CBC did not give adequate consideration to making RDI accessible to Franco- phones living outside Quebec, many of whom live in majority Anglophone communities. They stated that, since RDI proposed to expend so much effort to produce information programming in all regions of the country and to reflect regional concerns, it would be ironic if the people directly concerned would not have access to these programs. Several interveners requested that distribution of RDI be mandatory in all parts of Canada.

In reply to these interventions the CBC expressed confidence that RDI will reach the greatest possible number of Francophone households outside Quebec without mandatory distribution being required. The Corporation indicated that it will use a marketing strategy similar to that used for TV5, the international French-language specialty programming service now available in about 3.5 million cable households outside Quebec. The features of the service that the CBC plans to promote include its very attractive programming at the exceptionally low rate of $0.10 per month, high demand among Francophones, the fact that it is a public service reflecting one of Canada's two major linguistic communities to the other, and the new linkage rules coming into effect on 1 January 1995 that will allow cable operators distributing RDI to offer an additional foreign service attractive to subscribers. The CBC advised that, if these plans are not successful, it will apply to the Commission to have the service declared to be a mandatory service. With respect to this commitment, the Commission notes that under subsection 9(4) of the Cable Television Regulations, 1986, the Commission can determine that a programming service is of national public interest and license it as a mandatory service to be distributed as part of the basic service.

Following the Structural Public Hearing in 1993 (Public Notice CRTC 1993-74), the Commission decided to authorize dual carriage status for all specialty programming services. The Commission defines dual carriage status as follows: when a cable undertaking decides to distribute a dual status service, it must distribute it on the basic service unless the specialty service licensee consents to have it distributed on a discretionary basis.

Having analysed the application as filed, the Commission has decided to authorize distribution of RDI in Francophone markets on a dual status basis. This decision is consistent with the policy established in Public Notice CRTC 1993-74; it is also consistent with the CBC's own objective to have RDI distributed on basic service in Francophone markets and be offered on a high-penetration discretionary tier.

Wholesale Fee

The CBC proposed initial wholesale rates of $0.90 on basic service and $0.10 on a discretionary tier per month for French- and English-language markets, respectively. It further proposed annual increases over the duration of the licence term equal to an average rate of increase in the consumer price index of 2.8%. The Corporation argued that these annual increases are justified because RDI is a not-for-profit public service and because of the limited size of the Francophone market. RDI projects that advertising will represent on average only 9% of its total annual
revenues. It indicated that these increases will provide its only room to manoeuvre, and that a shortfall in these revenues could jeopardize certain of its programming commitment and require it to forego capital investments that may possibly be required in the future.

When renewing the licences of various specialty programming services in 1992, including that of Newsworld (Decision CRTC 92-529), the Commission evaluated the applicants' wholesale rate proposals taking into account the contribution these services make to the Canadian broadcasting system and its concerns regarding the affordability of basic cable service.

As a general policy governing the rate regulation of these undertakings, the Commission decided not to authorize annual increases based on the inflation rate. Such increases may be justified for specialty services whose sole source of revenue is subscription fees because they carry no advertising; but services like RDI can compensate for inflation or otherwise increase their income by maximizing their advertising revenues. Given the flexibility with regard to advertising in the attached conditions of licence, the Commission views RDI's advertising revenue forecasts as somewhat conservative. The Commission further notes that licensees of these services can also improve operating margins by enhancing the overall efficiency of their undertakings.

In accordance with the general practice referred to above, and following an examination of the complete application file, the Commission has decided to authorize the CBC to charge the cable distributors of RDI maximum monthly wholesale rates of $0.90 and $0.10 in Francophone and Anglophone markets, respectively, when distributed as part of the basic service, for the duration of the licence term. The annual rate increases proposed by the CBC to counter the effects of inflation are denied.

Recognizing that RDI will rely to a large extent on the existing infrastructure of the main network and its news-gathering capacity, the Commission notes the applicant's statements at the hearing that any financial restructuring within the CBC as a whole would not adversely affect that capacity. The CBC also indicated that, by using new technologies in innovative ways, it is confident that it will be able to realize additional savings and maintain service to the public. The Commission also notes the statement that, if RDI revenues are less than forecast, the two basic objectives of drawing on regional stations and on other associated broadcasters will not be affected. The CBC also reiterated that it is a not-for-profit corporation and that any profits earned by RDI will be reinvested in the service.

Regarding the issue of cross-subsidization, the CBC indicated at the hearing that the main network will be prohibited from subsidizing RDI because the main network receives parliamentary appropriations. Consequently, any additional operating expenditures incurred by RDI operations will be covered by RDI's own revenues. The CBC indicated that it would use the same cost separation accounting methods as were approved by the Auditor General for Newsworld. The RDI licence will contain the same conditions of licence as the Newsworld licence regarding annual filing of financial statements.

Other Matters

In accordance with the CBC's application, the Commission has imposed a condition of licence requiring that, by 31 August 1996 at least 28% of RDI programs have closed captioning or sign language interpretation for the deaf and hearing impaired, and that this level increase to at least 50% by the end of the licence term. The Commission further requires, by condition of licence, that RDI increase annual expenditures on captioning and signing from $62,000 to $275,000 by the end of the licence term.

In Public Notice CRTC 1992-59 entitled "Implementation of an Employment Equity Policy" dated 1 September 1992, the Commission announced its intention to evaluate broadcasters' employment equity practices. The CBC indicated that RDI has developed a detailed employment plan indicating hiring levels for the designated groups in each employment category. The Commission encourages the Corporation to promote equitable representation in on-air personnel and voice-overs in programming and advertising produced by RDI. The Commission will consider these matters at the time of licence renewal. The Commission notes that, in order to increase the representation of women on the air, RDI will distribute a current affairs analysis program utilizing women only.

Over 300 interveners expressed support for the RDI application, representing all regions and all sectors, including trade unions, chambers of commerce, school boards, municipalities, elected representatives and such associations as the Fédération nationale des associations de consommateurs du Québec, the Institut québécois de la recherche sur la culture, and most associations of Francophones outside Quebec.

The Commission also notes the opposing interventions filed by Télé-Métropole Inc. and Vidéotron Ltée, which essentially argued that the CBC would be competing against itself, but would not be required to establish an owner partnership; and from the Union des artistes, which argued that it would be unfair for RDI to receive funding from different sources, and stated that it would support another application to operate a headline news service.

 Allan J. Darling
 Secretary General

APPENDIX / ANNEXE

Conditions of Licence for Réseau de l'information (RDI)

For the purpose of measuring compliance with Conditions of Licence 1, 2, 3 and 6 set out below, the first broadcast year of the licence term will be deemed to commence on 1 September 1994.

1. The programming provided by Réseau de l'information (RDI) shall be dedicated exclusively to programs drawn from the following categories as set out in Schedule I to the Specialty Services Regulations, 1990:

 News (category 1);

 Analysis and Interpretation
 (category 2);

 Reporting and Actualities (category 3);

 Religion (category 4);
 Education, informal
 (category 5b); and
 Sports (category 6).

 Programs from the sports category shall include no live sports event coverage.

2. Over the broadcast year, the licensee shall devote at least 90% of its programming to the distribution of Canadian programs during the broadcast day as well as during the evening broadcast period.

3. RDI programming shall reflect the concerns of each of the principal Francophone regions in Canada identified by the CBC as: Atlantic Canada, Quebec, Ontario and Western Canada. To this end, the licensee shall ensure that at least one-third of all  of the original programs distributed by RDI each broadcast year are regional productions either produced by the CBC's own stations in the regions or by RDI's regional associates. Each region concerned shall be identified in the program logs.

4. (1) The licensee shall charge exhibitors of this service in Francophone markets a maximum monthly wholesale rate per subscriber of $0.90 when distributed as part of the basic service;

 (2) The licensee shall charge exhibitors of this service in non-Francophone markets a maximum monthly wholesale rate per subscriber of $0,10 when distributed as part of the basic service;

 (3) For the purposes of this condition, an exhibitor will be considered to be operating in a Francophone market where the population having French as its mother tongue represents more than 50% of the total population of all cities, towns and municipalities, encompassed in whole or in part within the licensed area of the exhibitor, according to the most recent population figures published by Statistics Canada.

5. (1) Subject to subsections (3) and (4), the licensee shall not distribute more than 8 minutes of advertising material during each clock hour;

 (2) The licensee shall not distribute any paid advertising material other than paid national advertising;

 (3) In addition to the maximum of 8 minutes of advertising material referred to in subsection (1), the licensee may broadcast, during each clock hour, a maximum of 30 seconds of additional advertising material that consists of unpaid public service announcements;

  (4) Where a long-form live program that is not regularly- scheduled occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material set out in subsection (1) during any of those clock hours, up to a maximum of 10 minutes in any clock hour, provided that the average number of minutes of advertising material broadcast during the clock hours occupied by the program does not exceed 8 minutes.

6. From the date of commencement of service to 31 August 1996, the licensee shall ensure that a minimum of 28% of all programming distributed on the service is either closed captioned or signed. During each of the following three twelve-month periods, the licensee shall ensure that a minimum of 34%, 37% and 50% respectively of all programming distributed on the service is either closed captioned or signed.

7. The licensee shall allocate, at a minimum, the amounts indicated below to the captioning or sign-language interpretation of programs for the hearing impaired in each year of RDI operation:

 from the date of commencement of service to 31 August 1995: $62,000;

 from 1 September 1995 to 31 August 1996: $95,000;

 from 1 September 1996 to 31 August 1997: $163,000;

 from 1 September 1997 to 31 August 1998: $200,000;

 from 1 September 1998 to 31 August 1999: $275,000.

8. The licensee shall file with the Commission, by 30 June of each year, its unaudited financial statements for the preceding fiscal year in a format consistent with RDI's declarations. The licensee shall also report the total incremental revenues and total incremental costs incurred by RDI within the notes to the audited financial statements of the CBC at the end of each fiscal period.

 The licensee shall also file, by 30 November of each year, unaudited financial statements in a format consistent with previous years for the twelve-month period ending the preceding 31 August. CBC management shall certify that these financial statements have been reviewed in accordance with section 8200 of the Canadian Institute of Chartered Accountants handbook.

9. The licensee shall keep separate accounts, which set out for each fiscal year ending 31 March,

 a) the gross revenues of its operations under this licence; and

 b) the amounts expended by it on the acquisition of and/or the investment in Canadian programs intended for distribution on the undertaking, including a breakout of the amount expended for closed captioning and/or signing for the deaf and hearing-impaired of programs distributed on the news and information service.

10. The licensee shall file with the Commission, on or before 30 June in each year, a statement of the accounts referred to in the preceding condition of licence.

11. (1) Subject to subsection (2), the licensee shall not engage in the simultaneous distribution of regularly-scheduled RDI programming on the CBC French Television Network or on any CBC-owned-and-operated or affiliated undertaking;

 (2) Notwithstanding subsection (1), the licensee may engage in the simultaneous distribution of a maximum of two hours of the five-hour weekday news program entitled "Ce matin".

12. The licensee shall adhere to the Revised CBC Guidelines on Sex-Role Portrayal, dated 12 August 1991, as amended from time to time and approved by the Commission.

13. The licensee shall adhere to the standards for television violence outlined in its policies on programs (No. 14) and youth programs (No. 15) and in its journalistic policy, as amended from time to time and approved by the Commission, subject to the condition that these policies, at a minimum, conform to the provisions of the CAB's Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission.

14. The licensee shall adhere to the standards for children's advertising set out in the Corporation's Advertising Standards Policy C-5 dated 4 June 1986 and entitled "Advertising Directed to Children Under 12 Years of Age", as amended from time to time and approved by the Commission, provided that the policy meets as a minimum the standards set out in the CAB's Code on Broadcast Advertising to Children, as amended from time to time and approved by the Commission.

For the purpose of these conditions, the terms "broadcast day", "broadcast month", "broadcast year", "clock hour" and "evening broadcast period" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987; and "paid national advertising" shall mean advertising that is purchased at a national rate and receives national distribution on the service.