ARCHIVED -  Decision CRTC 95-68

Decision

See also: 95-68-1

Ottawa, 28 February 1995

Decision CRTC 95-68

First Choice Canadian Communications Corporation

Eastern Canada - 931955900

Licence renewal for The Movie Network

Following a Public Hearing in the National Capital Region beginning on 25 April 1994 and Decision CRTC 94-607 dated 12 August 1994, the Commission renews the broadcasting licence issued to First Choice Canadian Communications Corporation (First Choice) to carry on an English-language pay television programming undertaking to provide a regional general interest service known as "The Movie Network" in eastern Canada (Ontario, Quebec and the Atlantic provinces), from 1 March 1995 to 31 August 2001, subject to the conditions of licence specified in the appendix to this decision and in the licence to be issued.

The Commission is satisfied that First Choice has complied with the terms and conditions of its licence. In evaluating First Choice's proposals and commitments for the new licence term, the Commission has taken into account the distinct characteristics of the pay television marketplace and has given consideration to the licensee's past performance, the assumptions underlying its subscriber and revenue projections and its plans for the new licence term.

The conditions of licence contained in the appendix to this decision reflect the Commission's general concerns with respect to Canadian pay television services; they are also in line with the licensee's own commitments as set out in its application.

Expenditures on Canadian programming

As part of this renewal application, First Choice requested revisions to the condition of licence related to Canadian programming expenditures. These proposed revisions would base the calculation of such expenditures on the revenues of the preceeding year, rather than the current year and allow some flexibility in total expenditures from year to year.

The Commission has decided to adopt the approach based on the revenues of the previous year for all specialty and pay television services and therefore amends the licensee's relevant condition of licence accordingly.

Furthermore, the Commission has decided to extend to licensees of specialty and pay television services the same flexibility already granted to licensees of conventional television stations.

Concerning script and concept development funding, First Choice proposed that the Foundation to Underwrite New Drama for Pay Television (FUND) should be permitted to support a bursary program for Canadian writers. In addition, First Choice proposed to contribute to FUND not less than $750,000 in each year of the licence term, for a minimum of $7 million over a proposed seven-year licence term. The Commission notes that this amendment will allow the licensee some flexibility, in recognition of the fact that the number and quality of projects will vary on a yearly basis but that this will not affect the total sum allocated to the program. Accordingly, the Commission approves the licensee's request. In the appendix, condition of licence 7 states a minimum of $6,500,000 based on the approved 61/2 year term of licence.

Captioning

With respect to closed captioning, the Commission has considered the concerns expressed in the interventions submitted by the Society of Deaf and Hard of Hearing Nova Scotians, and Closed-Captioning & Subtitles, and the licensee's response thereto. The Commission expects First Choice to meet its commitment to close caption 100% of its programming (apart from certain events such as musical concerts) within three years, as stated in its application.

Expectations

In Decision CRTC 88-772 dated 27 October 1988 which renewed First Choice's licence, the Commission expressed a number of expectations regarding First Choice's future performance. It hereby sets out the following expectations to govern First Choice's performance in the new licence term.

The Commission expects First Choice to co-operate with other Canadian pay television licensees to achieve the widest possible distribution of Canadian feature films and other Canadian programming, including the distribution of sub-titled or dubbed versions of French-language Canadian productions.

The Commission expects the licensee to ensure that it maintains, in each year of the new licence term, the ratio of Canadian to foreign programming expenditures found in its application.

The Commission expects First Choice to adhere to the "Pay Television Programming Standards and Practices" as amended from time to time, and approved by the Commission.

In Public Notice CRTC 1994-155 dated 21 December 1994, the Commission announced that it had accepted, with certain qualifications, the new code on the depiction of violence on television, submitted by the pay-television and pay-per-view industry in November 1994. The Commission also stated that at the time of licence renewal, it would require compliance with the code as a condition of licence. Accordingly, the relevant new condition of licence is set out in the appendix to this decision.

The Commission expects the licensee, during the new licence term, to make use of the line 21 text capability to inform its deaf and hearing- impaired subscribers who are equipped with a decoder permitting the reception of captioned information, of the time at which closed-captioned programs are scheduled to appear and to advise viewers of First Choice whenever technical difficulties prevent scheduled captioned programming from being presented.

The Commission expects First Choice to direct no more than 25% of its total equity funding, in any year, to productions financed or financially assisted by Astral Communications Inc. (Astral).

The Commission expects the licensee to abide by its commitment to treat all producers and distributors on a non-discriminatory basis.

The Commission expects the licensee to ensure that any multiplexing in the future will be done in accordance with the provisions regarding multiplexing set out for pay television services in Public Notice CRTC 1993-74 dated 3 June 1993.

Employment equity

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled "Implementation of an Employment Equity Policy", the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. The Commission encourages First Choice to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Interventions

The Commission acknowledges the many interventions submitted in regard to First Choice's licence renewal and has noted the licensee's reply to concerns raised in some of these interventions.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

CONDITIONS OF LICENCE FOR FIRST CHOICE

Nature of the service

1. The licensee shall provide a regional general interest pay television programming undertaking in English, with programming intended for all audiences. The licensee shall not distribute programming from categories 1 (news), 4 (religion) or 5 (education) of item 6 of Schedule I to the Pay Television Regulations, 1990 and shall not devote more than 5% of its programming schedule during each semester to programming from category 6 (sports) of item 6, with a maximum of 20 hours in any week. The licensee shall devote at least 50% of its programming schedule during each semester to dramatic programs.

Exhibition of Canadian programs

2. Commencing 1 March 1995 and during each semester of this licence term, the licensee shall devote to the distribution of Canadian programs not less than

 (i) 30% of the time from 6:00 p.m. to 11:00 p.m. (Eastern time) and

 (ii) 25% of the remainder of the time during which the service is in operation.

For the purpose of this condition, a 150% credit will be given for time during which First Choice distributes a new Canadian production that commences between 6:00 p.m. and 11:00 p.m. (Eastern time) or, in the case of a new Canadian production intended for children, at an appropriate viewing hour between 6:00 a.m. to 9:00 p.m., and First Choice will receive such a credit for each subsequent showing in the specified time periods of such a production within a two-year period from the date of first showing by the licensee.

3. In the period 1 March 1995 to 31 August 1995 and in each subsequent broadcast year during the term of this licence, the licensee shall devote to the distribution of Canadian dramatic programs not less than 50% of the time that it is required to devote to the distribution of Canadian programs.

Expenditures on Canadian programs

4.(a) During the period 1 March 1995 to 31 August 1995, the licensee shall expend on the acquisition or investment in Canadian programs, a percentage of its revenues for the period 1 March 1994 to 31 August 1994 that is not less than the percentage shown in the table below. For the broadcast year begining 1 September 1995 and in each subsequent broadcast year during the term of this licence, the licensee shall expend on the acquisition of or investment in Canadian programs, a percentage of its revenue for the previous broadcast year that is not less than the percentage shown in the table below:

Average number of residential, bulk
and Satellite Master Antenna television
subscribers (SMATV) in the previous
broadcast year/Nombre moyen d'abonnés du
service résidentiel, de groupe et du
système de télévision par satellite à
antenne collective (STSAC) au cours de Percentage of revenues/
l'année de radiodiffusion précédente Pourcentage des recettes

459,999 or less/ou moins 22%
460,000 - 499,999 23%
500,000 - 539,999 24%
540,000 - 579,999 25%
580,000 - 619,999 26%
620,000 - 659,999 27%
660,000 - 699,999 28%
700,000 - 739,999 29%
740,000 - 779,999 30%
780,000 - 819,999 31%
820,000 and greater/ou plus 32%

(b) In any broadcast year of the licence term, including the partial broadcast year ending 31 August 1995 but excluding the final broadcast year, the licensee may expend an amount on Canadian programming that is up to 5% less than the minimum required expenditure for that broadcast year, as set out and calculated in accordance with this condition of licence.

(c) Should the licensee avail itself of this flexibility in any broadcast year including the partial broadcast year ending 31 August 1995, it shall expend in the next broadcast year of the licence term, in addition to the minimum required expenditure for that broadcast year, the full amount of the previous broadcast year's underspending.

(d) In any broadcast year of the licence term, including the partial broadcast year ending 31 August 1995, the licensee may expend an amount on Canadian programming that is greater than the minimum required expenditure for that broadcast year as set out and calculated in accordance with this condition of licence; in such case, the licensee may deduct:

 (i) from the minimum required expenditure for the next broadcast year of the licence term, an amount not exceeding the amount of the previous broadcast year's overspending; and

 (ii) from the minimum required expenditure for any subsequent broadcast year of the licence term, an amount not exceeding the difference between the overspending and any amount deducted under paragraph (i) above.

(e) Notwithstanding the above, during the licence term, the licensee shall expend on Canadian programming, at a minimum, the total of the minimum required expenditures as set out and calculated in accordance with this condition of licence.

5. During the licence term, the licensee shall devote to the acquisition of Canadian programs not less than 60% of its expenditures on the acquisition of or investment in Canadian programs. The required expenditure is calculated pursuant to condition of licence 4.

6. In each broadcast year during the term of this licence, including the partial broadcast year ending 31 August 1995, the licensee shall allocate to Canadian dramatic programs at least 50% of its expenditures on the acquisition of or investment in Canadian programs for that year.

7. The licensee shall expend on script and concept development, including bursaries for writers,  excluding overhead costs, not less than $375,000 during the partial broadcast year ending 31 August 1995 and not less than $750,000 in each broadcast year thereafter for a minimum of $6,500,000 over the licence term.

8. In making the calculations required for the purposes of conditions 4 to 7, only actual cash outlays shall be taken into account.

Distribution of film and video productions involving Astral Communications Inc. (Astral)

9. Where Astral has carried on financing or distribution activities with respect to a film or video production, the licensee shall not distribute that film or video production unless all actual production and creative control, apart from financial approvals which the pay television licensees normally require, remains the full responsibility of an independent Canadian production company.

Gender portrayal

10. The licensee shall adhere to the guidelines on gender portrayal, set out in the Canadian Association of Broadcaster's (CAB) "Sex-Role Portrayal Code for Television and Radio Programming" as amended from time to time and approved by the Commission.

Depiction of violence

11. The licensee shall adhere to the "Pay Television and Pay-Per-View Programming Code Regarding Violence", as amended from time to time and approved by the Commission.

Definitions

In these conditions:

 "acquisition" means to acquire exhibition rights for the licensed territory, excluding overhead costs.

 "broadcast year" means the period from 1 September to 31 August and each twelve-month period thereafter beginning on 1 September.

 "expend" and expenditure means actual cash outlay.

 "investment" means an equity investment or an advance on account of an equity investment but not overhead costs or interim financing by way of a loan.

 "new Canadian production" means:

 (a) a Canadian dramatic program

   (i) which exceeds 75 minutes in duration and in relation to which all financial expenditures made by the licensee were made prior to the commencement of principal photography or taping and in which principal photography or taping was completed after 1 January 1985; and

   (ii) which is intended for children and exceeds 22:30 minutes and in relation to which all financial expenditures made by the licensee were made prior to the completion of principal photography or taping

 (b) and which is a program that has never been broadcast in English in the licensed territory.

 "revenue" means revenue from residential, bulk and SMATV subscribers and does not include revenue from Direct-to-Home Satellite Services (DTH) subscribers or any return on an investment in programming.

 "script and concept development expenditures", means those expenditures excluding overhead costs, that are incurred prior to the commencement of pre-production and before the financing of the project is in place. Spending on programs that are assured of going to air at the time of the expenditure are not considered as script and development expenditures.

 "semester" means each six-month period beginning on 1 September and 1 March.