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ARCHIVED -  Decision CRTC 96-596

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Decision

Ottawa, 4 September 1996
Decision CRTC 96-596
1155636 Ontario Inc.
Across Canada - 199600859
The Comedy Network - Approved
Following a Public Hearing beginning on 6 May 1996 in the National Capital Region, the Commission approves the application by 1155636 Ontario Inc. (the licensee) for a broadcasting licence to carry on a national, English-language programming undertaking (Specialty Television Service). The new service will be known as The Comedy Network (TCN).
This service will be available via satellite to all broadcasting distribution undertakings across the country. In the case of those distribution undertakings that are subject to the Commission's distribution and linkage requirements, it will be available on a modified dual status basis, as explained in Public Notice CRTC 1996-120, which introduces this and other decisions released today, and in accordance with the provisions set out in the distribution and linkage public notice also issued today (Public Notice CRTC 1996-121).
The Commission will issue a licence expiring 31 August 2003, subject to the conditions specified in the appendix to this decision and in the licence to be issued.
Since the Access Rules have immediate application to TCN, the service of the programming undertaking must, by condition of licence, be in operation within 12 months of this decision unless the service provider, prior to the expiry of this period, applies for and receives an extension of time within which to commence operations.
Ownership
The licensee company will be effectively owned and controlled by Baton Broadcasting Incorporated (Baton), with 65.1% of the voting interests. Baton, which is indirectly controlled by members of the Eaton family, is one of Canada's largest operators of private television stations, and directly and indirectly controls 42.9% of the voting interests in CTV Television Network Ltd. (see Decision CRTC 96-251). Shaw Cable Systems Inc. and Astral Broadcasting Group Inc. each own a further 14.95% of the voting interests in the licensee. The former is Canada's second largest cable operator and owner of the youth specialty service YTV Canada Inc. The latter is an investor in, and distributor of, films and television programs, with interests in several licensed specialty, pay and pay-per-view undertakings. The remaining 5% of the licensee's voting shares will be owned by Les Films Rozon inc., which company is involved in the production of an annual series of television specials featuring comedians appearing at Montréal's Just for Laughs comedy festival.
Programming
Nature of service
TCN will provide a national English-language specialty service consisting of Canadian and international programs devoted exclusively to the following categories, as set out in item 6 of Schedule I to the Specialty Services Regulations, 1990: 7(b) (Programs of comedy sketches) 7(f) (Ongoing comedy series), 9 (Variety) and 11 (Human interest). A condition of licence requiring TCN to preserve the nature of the service, as described above, is set out in the appendix to this decision.
Canadian content
TCN committed to devote to the distribution of Canadian programs not less than 58% of the broadcast year, and not less than 72% of the evening broadcast period. A condition of licence requiring adherence to these commitments is contained in the appendix to this decision.
The Commission notes that the licensee proposes to broadcast more than 600 hours of original Canadian programs in its first year of operation. Concerns were raised at the hearing regarding the feasibility of producing this amount of material, while ensuring that it is attractive and of high quality. The Commission, however, is confident that the licensee's experience and expertise in television comedy production will enable it to achieve both of these objectives.
Canadian programming expenditures
Consistent with the approach outlined by the Commission in Public Notice CRTC 1996-120 concerning requirements for Canadian programming expenditures, and
as discussed with the licensee at the hearing, it is a condition of licence that TCN expend on Canadian programs a minimum of $5,975,000 in the broadcast year following the first year of operation, and a minimum of 41% of the previous year's gross revenues derived from the operation of this service in each subsequent broadcast year.
Some flexibility in the accounting of Canadian programming expenditures is provided for in the conditions of licence attached to this decision.
The Commission notes the licensee's statement that original programming to be aired on the service will represent expenditures in excess of $39 million over the first licence term.
Advertising
Consistent with the licensee's commitments, it is a condition of licence that all paid advertising material distributed on TCN shall be national paid advertising, and shall be restricted to 12 minutes per clock hour.
Other matters
Access
The interests and activities of certain of TCN's shareholders in program production raise concerns regarding the access that independent producers will have to this service. The Commission notes in this regard the licensee's commitment that 75% of TCN's expenditures on original Canadian production will go directly to the independent production community and will not be spent on projects produced by any of the licensee's shareholders or their affiliates.
The participation of Shaw Cable in the ownership of TCN also raises concerns due to Shaw Cable's influence as Canada's second largest cable operator, and the possibility that this influence might be exercised to the advantage of TCN, at the expense of other programming services. Accordingly, the Commission expects that TCN will not be given preferential treatment or access to distribution undertakings by any distributor that holds an ownership interest in the licensee company.
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. In its application, the licensee indicated that it has developed its own policy in this regard. The Commission notes the licensee's statement in the application that "...active recruitment searches will be conducted to ensure all members of the designated groups are represented. This will be particularly critical for our hiring of on-air talent to ensure that the program hosts portray all groups." The Commission encourages the licensee to implement this commitment and will review the licensee's performance in implementing the Employment Equity practices at the time of licence renewal.
Closed captioning
In accordance with the policy announced in Public Notice CRTC 1996-120, the Commission requires the licensee to close caption not less than 90% of all programming over the broadcast day by the end of the licence term.
Conclusion
The Commission is satisfied that this new service, operating under the effective ownership and control of an experienced Canadian broadcaster, and benefiting from the extensive experience in television comedy production possessed by the licensee's principals, will contribute to diversity within the broadcasting system by offering a showcase for distinctive and attractive Canadian programming in a genre that is high in demand among Canadian audiences.
The Commission acknowledges and has considered the interventions submitted in respect of this application.
This decision is to be appended to the licence.
Allan J. Darling
Secretary General
APPENDIX / ANNEXE
Conditions of licence for TCN
1. The licensee shall provide a national, English-language specialty service and shall draw its programs exclusively from category 7(b) (Ongoing comedy series), category 7(f) (Programs of comedy sketches), category 9 (Variety), and category 11 (Human interest), as set out in item 6 of Schedule I of the Specialty Services Regulations, 1990.
2. The licensee shall devote to the distribution of Canadian programs not less than 58% of the broadcast year, and not less than 72% of the evening broadcast period.
3. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1992-28, 1993-90 and 1993-174:
(a) In the broadcast year following the first year of operation, the licensee shall expend on Canadian programs not less than $5,975,000.
(b) In each subsequent broadcast year, the licensee shall expend on Canadian programs not less than 41% of the previous broadcast year's gross revenues derived from the operation of this service.
(c) In the broadcast year following the first year of operation and in each subsequent broadcast year, excluding the final year, the licensee may expend an amount on Canadian programs that is up to five percent (5%) less than the minimum required expenditure for that year set out in or calculated in accordance with this condition; in such case, the licensee shall expend in the next broadcast year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underspending.
(d) In the broadcast year following the first year of operation, and in each subsequent broadcast year where the licensee expends an amount on Canadian programs that is greater than the minimum required expenditure for that year set out in or calculated in accordance with this condition, 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 overexpenditure and any amount deducted under paragraph (i) above.
(e) Notwithstanding the above, during the licence term, the licensee shall expend on Canadian programs, at a minimum, the total of the minimum required expenditures set out in or calculated in accordance with the licensee's conditions of licence.
4. (a) Subject to subsection (b), the licensee shall not distribute more than twelve (12) minutes of advertising material during each clock hour.
(b) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may distribute, during each clock hour, a maximum of 30 seconds of additional advertising material that consists of unpaid public service announcements.
(c) The licensee shall not distribute any paid advertising material other than national paid advertising.
5. This undertaking shall be in operation within twelve (12) months of the date of this decision, or, where the licensee applies to the Commission within this period and satisfies the Commission that it cannot complete implementation before the expiry of this period and that an extension is in the public interest, within such further period of time as is approved in writing by the Commission.
6. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB's) "Sex-Role Portrayal Code for Television and Radio Programming", as amended from time to time and approved by the Commission.
7. The licensee shall adhere to the provisions of the "Broadcast Code for Advertising to Children", published by the CAB, as amended from time to time and approved by the Commission.
8. The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the CAB's "Voluntary Code Regarding Violence in Television Programming", as amended from time to time and approved by the Commission.
For the purpose of these conditions of licence, the terms "broadcast day", "broadcast year", "evening broadcast period" and "clock hour" shall have the same meaning as those set out in the Television Broadcasting Regulations, 1987; "first year of operation" shall mean the first broadcast year in which the licensee is in operation for a period exceeding 90 days, excluding any free trial period; and "national paid advertising" shall mean advertising material as defined in the Specialty Services Regulations, 1990 and that is purchased at a national rate and receives national distribution on the service.