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ARCHIVED -  Decision CRTC 97-527

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Decision

Ottawa, 28 August 1997
Decision CRTC 97-527
Baton Broadcasting Incorporated and certain of its subsidiaries, CHUM Limited and CTV Television Network Ltd.
- Across Canada
Approval of applications by Baton Broadcasting Incorporated and certain of its subsidiaries, CHUM Limited, and CTV Television Network Ltd. for authority to transfer either the assets, or share equity representing effective control, of the CTV Television network, and of various English-language television and other programming undertakings across Canada.
1. Following a Public Hearing in the National Capital Region beginning on 15 July 1997, the Commission approves each of the applications listed in Appendix I to this decision.
2. Collectively, the applications considered at the 15 July 1997 hearing propose changes that will materially affect the ownership structure of several familiar elements of the private, English-language television industry in Canada. Their approval will reshape and consolidate, on a local, regional and national basis, the broadcasting operations of two key industry participants, namely Baton Broadcasting Incorporated (Baton) and CHUM Limited (CHUM). Approval will also result in the transfer of effective control of CTV Television Network Ltd. (CTV) to Baton, and the withdrawal of Electrohome Limited (Electrohome) as a television licensee.
3. The proposals constitute the applicants' response to an increasingly competitive and dynamic television and communications environment. Their approval can be expected to have a significant impact on the operations of the two principal broadcasting groups involved, on the Canadian advertising industry and the investment community, as well as on television audiences across Canada and the Canadian broadcasting system as a whole.
4. The Commission is satisfied that the benefits attached to these transactions, not only the applicants' commitments to incremental expenditures on Canadian programming and other system enhancements, but also the long-term, intangible benefits that the transactions will generate, warrant approval of the applications. Among the principal reasons for the Commission's approval is its conviction that the expansion of Baton's base within the Canadian television industry and, in particular, the stability that Baton's control of CTV will bring to the network, will permit realization of CTV's full potential as an essential component of, and contributor to, the Canadian broadcasting system.
5. In reaching its decision, the Commission has taken into account various other matters, including the issue of concentration of ownership. While this issue and others are discussed in later sections of this decision, the Commission, on the basis of its case-by-case assessment, is satisfied that any concerns are outweighed by the benefits of the transactions.
6. The applications propose the transfer of effective control of one or more broadcasting undertakings through the transfer, either of assets or of voting shares, from one party to another. Based on the evidence filed with the applications, the Commission has no concern with respect to the availability or adequacy of the financing required by the parties to complete these transactions.
7. In each case involving the transfer of assets, the Commission will issue a new licence to the purchaser, expiring 31 August 2002, upon surrender of the current licence. This is the same date on which the current licences expire, with the exception of the 31 August 2000 expiry date of the licence now issued to CHUM in respect of the Atlantic Satellite Network (ASN). Apart from modifications affecting the expenditures on, or exhibition of, Canadian programming by certain of the undertakings and, in the case of the television undertakings being acquired by CHUM from Baton, the elimination of conditions requiring affiliation to the CTV network, the new licences will be subject to the same conditions as those in effect under the current licences. The conditions of licence for each of the undertakings whose assets are to be transferred are set out in Appendix II.
8. The licence terms granted herein, while less than the maximum of seven years permitted under the Broadcasting Act, will enable the Commission to better distribute its workload and to consider the renewal of the licences at an earlier date, in accordance with the Commission's regional plan.
Corporate Strategies of the Principals
9. As noted above, approval of these applications signals the departure of Electrohome from any further direct participation in the control of Canadian television stations. While Electrohome will obtain a substantial shareholding in Baton, and while Electrohome's controlling shareholder, Mr. John Pollock, will assume responsibilities as chairman of Baton's executive committee, Electrohome described the sale of its broadcasting holdings as an essential response to the "current dynamics of our industry" and as being in the best interests of the company's shareholders. Electrohome stated that its impetus for entering into a strategic alliance with Baton in 1996 was to obtain a guaranteed program supply for Electrohome's television stations CFRN-TV Edmonton and CKCO-TV Kitchener. It noted, however, that there was a belief at that time that neither company was large enough to continue as an effective player, and that evolution, at some point, "...would get us to where we are today." Electrohome added that, over the period since the strategic alliance was formed, the motivation for a merger of the Baton and Electrohome interests has increased. It noted, in particular, the expanded competition for advertising revenues created by the licensing of a new, independent television service in Alberta, and the establishment by CITY-TV Toronto and CHCH-TV Hamilton of additional transmitters in Ontario.
10. In the case of CHUM, the applicant noted that the decision to sell its television properties in Atlantic Canada was reached with great difficulty. CHUM, however, like Baton and many interveners to this proceeding, emphasized the evolution that has reshaped the Canadian broadcasting industry in recent years, and the pressures this has created to bring the ownership of CTV under the control of a single shareholder. CHUM stated that its television undertakings in the Maritimes are mature operations that, in the face of increasing overheads and competition, have little prospect of revenue growth unless the ownership structure of CTV is amended:
CTV needs to have a solid controlling shareholder who can bring synergies and economies of scale to its operation and get rid of the duplicated infrastructure that exists in the organization, so that there will be money available to put into the production of Canadian programming.
11. According to CHUM, Baton is the logical choice as CTV's controlling shareholder. CHUM noted, in particular, Baton's size and experience within the industry, its financial and other contributions to the network over the years, and the fact that Baton possesses the infrastructure and resources that CTV needs if it is to realize its potential.
12. CHUM claimed that recognition of these realities was in large measure responsible for the decision to sell its Maritime television properties and its shares in CTV to Baton. CHUM stated that the inclusion of ASN's assets as part of this package was necessitated by the fact that ASN is in a loss position and would not be able to continue as a stand-alone undertaking, divorced from the operations of CJCH-TV Halifax and the other Maritime television stations being sold to Baton. These stations are collectively known as the Atlantic Television Network (ATV).
13. CHUM emphasized, however, that key to its decision to sell the assets of ASN and the ATV stations to Baton was its understanding with the purchaser that their sale would be conditional upon it gaining approval to acquire ownership of certain Ontario television stations from Baton. CHUM stated that these stations will give it a strong regional base and access to the economies of scale that will enable it to compete with the other large regional television groups active in Ontario, namely Baton, WIC Television Ltd. (WIC) and CanWest Global Communications Corp. (CanWest Global). According to CHUM, the transaction allows it to trade a mature business (ATV) for "...new growth opportunities in Ontario...a place where we have knowledge and have experience." CHUM further noted that CHRO-TV Pembroke, CFPL-TV London and the other television undertakings it will acquire from Baton will allow CHUM to build on its expertise in the operation of local, independent television stations in Ontario, and will integrate well with its ownership of CKVR-TV Barrie, particularly from the standpoint of CHUM's ability to acquire programming.
14. From a business perspective, Baton's objectives in these transactions are clear and understandable. Concerning its purchase of a controlling interest in CTV, Baton echoed the above comments by CHUM that this change will "...remove the structural inefficiencies which have undermined CTV's ability to compete [and] reverse the economic fragility which has left CTV unable to maximize the resources it devotes to strong, popular Canadian programming." Baton noted that the majority of its revenues come from the CTV affiliates that it owns, "...so it is in our overwhelming self-interest to ensure that CTV works." Baton added:
We believe we can breathe new life into CTV, bringing to it the breadth of our national resource base, working together as one family of television stations.... The "BBS" brand, which we have been building up in Ontario [would] disappear. Our stations in Ontario would be branded "CTV", along with whatever the local identifier is for that particular community.
15. The Commission notes the applicant's plans to strengthen audience recognition of CTV.
16. In explaining its purchase of Electrohome's broadcasting interests in Ontario and western Canada, and, more particularly, of CHUM's television undertakings in the Atlantic region, Baton noted that it, too, is at a cross-roads as a broadcaster:
Do we stay where we are, an Ontario and western-based broadcaster with a number of specialties? Or do we reach higher along the risk/reward continuum and try to make a larger contribution to Canada.... The only way we can achieve this consistently as private broadcasters is through critical mass. Reach translates into viewers and therefore into the revenues we need to amortize national licence fees. Reach also confers the ability to schedule and promote these programs so that they find the audience they need and deserve.
17. The Commission notes in this regard that approval of these transactions will give Baton, through its owned-and-operated television stations, a presence in English-language television markets across Canada comparable to that of CanWest Global and WIC, as measured by potential reach.
The Benefits Test
18. Because the Commission does not solicit competing applications for authority to acquire the assets or transfer effective control of broadcasting undertakings, 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. As a first test, the applicant must demonstrate that the proposed transfer will yield significant and unequivocal benefits to the community served by the broadcasting undertaking and to the Canadian broadcasting system as a whole, and that it is in the public interest.
19. In particular, the Commission must be satisfied that the benefits, both those that can be quantified in monetary terms and others that may not easily be measured in terms of dollar value, are commensurate with the size and nature of the transaction, including the responsibilities to be assumed, the characteristics and viability of the broadcasting undertaking in question, and the scale of the programming, management, financial and technical resources available to the purchaser.
20. The Commission has assessed the various projects and initiatives proposed by the applicants as the benefits associated with the various transactions. The Commission has also considered the significant and unequivocal intangible benefits that Baton and CHUM claimed would result from approval of the various transactions. Notwithstanding its disqualification of a portion of the tangible benefits proposed, the Commission is satisfied that the remaining tangible and intangible benefits, taken as a whole, are commensurate with the size and nature of the transactions, and that approval of these applications is in the public interest.
21. Details concerning the benefits are contained in the four following sections of this decision which deal, respectively, with i) the Baton-Electrohome strategic merger; ii) Baton's purchase from CHUM of the assets of the ATV stations and ASN; iii) in exchange for the above, CHUM's purchase from Baton of the assets of CHRO-TV, CFPL-TV and other Ontario television undertakings; and iv) Baton's acquisition of effective control of CTV.
22. The Commission, however, wishes to reiterate the particular weight it attaches to Baton's commitments to preserve and strengthen the national network, and to ensure that the network moves quickly towards full achievement of its mandate as a vital, essential contributor to the Canadian broadcasting system. The Commission notes in this regard the following statement by Baton:
In the time remaining in CTV's licence, we will prepare and present a licence renewal application. It will propose a comprehensive vision for CTV's future, an ownership structure, and a business plan that will guarantee the network's long-term stability.
23. The Commission places great importance on Baton's undertaking at the hearing to present the Commission, at the time of the CTV licence renewal, with a new business plan for the network reflecting Baton's commitment to drama and other high quality Canadian programming. The Commission reminds Baton that it has high expectations for CTV's next renewal application, and encourages CTV to return with nothing less than a firm commitment to Canadian programming that is significantly greater than the network's current requirements.
Baton-Electrohome Strategic Merger
24. The applications at the 15 July 1997 hearing were presented to the Commission in two phases. In the first of these, the Commission heard proposals that would bring an end to the role of Electrohome as licensee of CFRN-TV Edmonton and other CTV-affiliated television stations in Alberta and as an equal 50% shareholder, along with Baton, in various other Canadian television stations.
25. The circumstances whereby Electrohome and Baton came to share equally in the ownership of these broadcasting undertakings were the subject of Decision CRTC 96-251, in which the Commission approved a strategic alliance between the two broadcast groups. The current applications involving Baton and Electrohome were described by Baton at the hearing as a "strategic merger" of the two parties' broadcasting interests, constituting a "comprehensive and natural evolution" of the ownership structure approved in Decision CRTC 96-251.
26. The applications propose a series of transactions whereby, among other things, the assets of CFRN-TV and of other Alberta undertakings currently licensed to Electrohome will be transferred, initially to Baton, and subsequently to TV West Inc. (TV West). TV West is currently the licensee of CFCN-TV Calgary, CFQC-TV Saskatoon, CKCK-TV Regina and five other Prairie television stations.
27. Directly or indirectly, Baton and Electrohome each hold a 50% equity interest in TV West. They also share equally in the ownership of South West Ontario Television Inc. (SWOTI) and Vancouver Television Inc. (VTI). SWOTI is licensee of CKCO-TV Kitchener, CFPL-TV London, CKNX-TV Wingham, CHWI-TV Wheatley and two other television undertakings in southwestern Ontario. VTI is the prospective licensee of CIVT-TV Vancouver, a new television station authorized in Decision CRTC 97-39, but not yet in operation. Under the transactions as proposed, Electrohome's 50% equity interest in each of these three licensee companies will be transferred to Baton.
28. Although not the subject of an application, it is also proposed that Electrohome's ownership of 14.24% of the voting equity in CTV will be transferred to Baton. This will increase Baton's direct and indirect holdings in CTV, at the end of the first phase, to 42.72%. In addition to its responsibilities as licensee of Canada's only privately-owned, national, English-language television network, CTV is licensee, or exercises effective control, of two specialty service programming undertakings and a direct-to-home pay-per-view programming undertaking.
29. In exchange for the broadcasting interests described above, Electrohome will receive a 23% voting interest in Baton, plus a cash payment and the right to nominate two members of Baton's Board of Directors. Baton and Electrohome indicated that the purchase price (shares and cash, together) represents a total consideration of approximately $106.5 million.
30. The tangible benefits proposed in the context of the Baton-Electrohome strategic merger include expenditures of $6 million over five years on the production of The Baton Signature Presentations, a series of specials produced at the rate of approximately one per year and dealing with difficult social issues of national interest. A minimum of 50% of these expenditures will be directed to independent producers. The programs, will be made available free of charge to stations in markets other than where Baton has a presence.
31. The proposed benefits also include expenditures of $4 million over the same period to improve the news-gathering and news packaging capabilities of various stations in Ontario and western Canada. Although the Commission notes the benefit claimed in respect of Baton's plans to install digital technology to replace the analogue regional television news system now in use by CFRN-TV Edmonton and other Alberta stations, the Commission considers that the expenditure of $250,000 on digital VCRs and cameras proposed as part of this initiative would likely have to be made in the near future, as a necessary cost of doing business, with or without these applications. The expenditure thus falls within the categories of proposed benefits that have been generally rejected as such for reasons outlined in Public Notice CRTC 1993-68 dated 26 May 1993.
32. The Commission expects Baton to ensure that all of the remaining expenditures of $9,750,000, these being the acceptable tangible benefits of the transactions, are made in accordance with the schedules outlined in the various applications.
33. With further regard to the proposed expenditure of $250,000 on digital VCRs and cameras, notwithstanding its disqualification as a benefit, the Commission has generally required that such capital expenditures be implemented because they constitute part of the transfer application considered via the public process. Accordingly, and consistent with the Commission's policy set out in Public Notice CRTC 1993-68, the Commission requires the applicant to adhere to its commitment to expend $250,000 on the purchase of this digital equipment.
34. With respect to CFRN-TV, the Commission notes Baton's acceptance of a condition of licence governing expenditures on Canadian programming, whereby Electrohome's current obligations in this area will be transferred to the new licensee in a seamless fashion.
35. As for Baton's application to acquire effective control of CKCO-TV Kitchener, the Commission notes that this station and the Baton-owned CFTO-TV Toronto provide local and CTV network services to communities approximately 80 kilometres distant from each other. Nevertheless, there is a significant degree of overlap between the signals of the two stations, and the two signals are also widely available to cable television subscribers in both cities.
36. This raises the issue of concentration of ownership and, more specifically, the Commission's policy that generally prohibits the common ownership of two programming undertakings of the same class that operate in the same language and serve the same market.
37. In its case-by-case assessment of past applications where this policy has been raised, the Commission has generally focused on three basic concerns: i) whether denial would likely result in the termination of a valued local service; ii) whether approval would serve to diminish the diversity of news and editorial voices available within the market; and iii) whether approval would convey an undue competitive advantage to the applicant. In the Commission's view, the first of these concerns is not relevant in this case, nor are the other concerns either present or pertinent to any significant degree.
38. With respect to diversity, the Commission notes that this region of Ontario includes Canada's largest and most competitive media market, assuring residents of a vast choice among news and editorial perspectives. Evidence has not been put forward sufficient to convince the Commission that approval of Baton's acquisition of effective control of CKCO-TV Kitchener would have any appreciable effect in diminishing the diversity of news voices currently available. The Commission notes in this regard that Baton will retain the operational structure now in place at these stations, so that the production of news and other local programming at each will remain the responsibility of separate news directors and station managers.
39. As for any concern that approval would give Baton an undue competitive advantage, there is again no compelling evidence to support such a conclusion. The Commission is satisfied that the relative strength and experience of the existing television broadcasters in these two markets, and the very limited viewership that CKCO-TV Kitchener and CFTO-TV Toronto attract in each other's primary market (a share of 1% in each instance according to the Fall 1996 BBM survey), effectively rule out the likelihood of any undue competitive advantage.
40. A potential concern does arise, however, in the context of Baton's coincidental acquisition of effective control of the new independent television station CIVT-TV Vancouver and of CTV. The concern surrounds Baton's control of the programming schedule of CIVT-TV Vancouver and its influence over the approximately 40 hours per week of programming that CTV provides to its affiliates CHAN-TV Vancouver and CHEK-TV Victoria, licensed to WIC. At the hearing, Baton was questioned closely regarding the possible conflict that might emerge as a consequence of these separate responsibilities.
41. According to Baton at the hearing, should WIC perceive a conflict arising to its disadvantage, the mechanism for its resolution already exists in the form of meetings of CTV's Program Affiliates Committee which occur from time to time throughout the year. The applicant added that it could not foresee the occurrence of such a conflict, given the very different nature of the two services; it noted that CTV's schedule contains a large component of news and public affairs programming that is essentially national in scope, while CIVT-TV's programming will have an intensely local focus. Baton, however, made the following commitment:
What we want to say on the Public Record in terms of if there were a conflict, a conflict would have to go to the benefit of CTV, because the majority of our economic interest is with CTV. We and CTV will become one.
42. The Commission expects Baton to adhere to this important commitment, and to ensure that the interests of CTV prevail in the event of conflicts between the CTV schedule and that of CIVT-TV Vancouver.
Baton's Purchase of ATV and ASN
43. During the second phase of the 15 July 1997 hearing, the Commission heard applications affecting the ownership of the satellite to cable programming undertaking known as ASN; as well as of CTV affiliates CJCH-TV Halifax and CJCB-TV Sydney, Nova Scotia; CKLT-TV Saint John and CKCW-TV Moncton, New Brunswick.
44. As proposed, the assets of these undertakings will be transferred from CHUM to Baton's wholly-owned subsidiary, BBS Ontario Incorporated (BBS Ontario). BBS Ontario is, itself, licensee of CTV affiliates CFTO-TV Toronto, CJOH-TV Ottawa, CHRO-TV Pembroke and eight other television undertakings in Ontario.
45. At the hearing, CHUM claimed that the package of assets that it will sell to Baton, which includes goodwill, has a value of $32.7 million.
46. Baton proposed no incremental benefit in relation to its purchase of ASN, noting that the undertaking has experienced negative profit before interest and taxes in each of the last four years, and a cumulative loss of more than $3 million over that period.
47. The Commission notes Baton's commitment to adhere to all of the conditions and expectations attached to ASN's licence at the time of its last renewal, including the existing condition of licence prohibiting ASN from soliciting local advertising in the Halifax/Dartmouth area.
48. At the hearing, Baton and CHUM discussed with the Commission a proposed long-term program supply agreement between the two parties, whereby certain of the programs to which CHUM holds rights would continue to be broadcast on ASN. This would ensure that viewers have ongoing access to familiar and popular CHUM programming, and preserve CHUM's ability to amortize, over a sufficiently broad audience base, the costs of purchasing national rights. The Commission expects Baton to file an executed copy of this agreement within 30 days of closing the transaction.
49. As discussed at the hearing, the Commission expects Baton to ensure that all newscasts, including live segments, are captioned on ASN by 1 September 2000, using either real-time captioning or another method capable of captioning live programming; and that not less than 90% of all programming is captioned by 31 August 2002.
50. In the case of the ATV television stations, Baton proposed tangible benefits consisting of incremental expenditures of $3.7 million. The tangible benefits include expenditures of $2,275,000 over 7 years to establish and operate a new program development office in Halifax, whose staff will provide on-site expertise and advice to independent producers in the Atlantic region. As a further benefit, Baton will make expenditures of $1,428,000 over the same period to commission from independent Maritime producers at least four, one-hour documentaries per year, and six, half-hour episodes of The Storytellers. The latter is a series of development programs first proposed in the context of the CIVT-TV Vancouver application approved earlier this year. The independent production described above will be overseen by the Halifax program development office.
51. As an intangible benefit, the applicant noted that approval will give viewers in the Maritimes access to news stories produced by Baton's staff at television stations elsewhere across Canada and will elevate the organization's news service to a status that is much broader and more national in scope.
52. The Commission accepts these tangible and intangible benefits as commensurate with the size and nature of the transaction involving the sale of ATV and ASN to Baton. The Commission expects Baton to make the expenditures described above in accordance with the schedules proposed in its applications.
53. The licence for CJCH-TV Halifax is currently subject to a condition of licence requiring CHUM to expend on Canadian programming in accordance with a formula set out in renewal Decision CRTC 95-418 dated 12 July 1995. In the same decision, the levels of expenditures on Canadian programming by the other ATV stations were the subject of expectations expressed by the Commission.
54. In its application to acquire the assets of CJCH-TV Halifax, Baton requested that the new licence be made subject to a condition that would establish certain minimum quantitative requirements for the annual exhibition, during the evening broadcast period, of Canadian programming in categories 7, 8 and 9. Under the condition as proposed, such programming would increase gradually from 6 hours per week during the 1997-1998 broadcast year, to 7 hours per week during the final year of the licence term. According to Baton, approval of these applications will give the company the critical mass that will "...make it possible to create enough high quality Canadian programming to achieve the [quantitative] criteria on an ongoing basis." At the hearing, Baton stated that it would abide by conditions of licence establishing quantitative requirements for the other ATV stations at the same levels as those that would apply to CJCH-TV Halifax.
55. In the circumstances, the Commission is satisfied that the applicant's proposal is acceptable and it is approved accordingly. Conditions of licence establishing these minimum quantitative requirements are contained in Appendix II.
56. Except as modified above, the Commission notes that Baton has agreed to adhere to all of the conditions and expectations contained in Decision CRTC 95-418. Baton also made a commitment to adhere to the expectation imposed on CHUM in that decision that it provide a minimum weekly average of 11 hours 30 minutes of original news on all four of the ATV stations. The Commission considers that this will ensure the continuity of ATV's local news voice.
57. As discussed at the hearing, Baton is also required to ensure that all newscasts on the ATV stations, including live segments, are captioned by 1 September 1998, using either real-time captioning or another method capable of captioning live programming; and that not less than 90% of all programming is captioned by 31 August 2002.
CHUM's Purchase of CHRO-TV Pembroke, CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley
58. In exchange for its broadcast holdings in Atlantic Canada, CHUM will acquire the assets of CHRO-TV Pembroke and its transmitter CHRO-TV-43 Ottawa from BBS Ontario; and the assets of CFPL-TV London, CKNX-TV Wingham, and CHWI-TV Wheatley and its transmitter CHWI-TV-60 Windsor from SWOTI. CHUM will operate these undertakings as independent television stations.
59. At the hearing, Baton claimed that it had established the sum of $32.7 million as the value of the package of assets, including goodwill, that it will sell to CHUM. As noted above, this is the same value that CHUM placed on the assets of ASN and the ATV stations it will sell to Baton.
60. The proposed tangible benefits of these applications include the contribution by CHUM of a minimum of $1.89 million to a new program production fund on behalf of the southwestern Ontario stations ($1.26 million) and CHRO-TV ($630,000).
61. CHUM also proposed a number of unquantified or intangible benefits, including the creation of a ten-member Ottawa news bureau, the launch of a media literacy program for students and parents in the stations' viewing areas, and CHUM's commitment to develop a special niche for these stations through the provision of programming modelled on that now broadcast by CHUM's successful Barrie station CKVR-TV. According to CHUM, this programming will be designed to offer a complementary alternative to that available from other television stations, while ensuring that each of its undertakings retains a primarily-local focus.
62. The Commission accepts the above-noted tangible and intangible benefits as commensurate with the size and nature of the transaction and expects CHUM to implement them. In particular, the Commission expects CHUM to ensure that contributions totalling a minimum of $1.89 million have been made to the fund by the end of the licence term.
63. The Commission also expects CHUM to submit annual reports to the Commission, setting out details concerning the fund's receipts and disbursements; the reports shall be filed along with the licensee's annual returns, and be reconciled with these returns, beginning with the annual returns submitted in respect of the 1998 broadcast year. In the interest of public accountability, the reports shall be placed on the licensee's public file for examination by independent producers and by other interested parties.
64. The Commission notes CHUM's commitment to meet or exceed a number of requirements specified in Decision CRTC 96-542, which approved the application by BBS Ontario to disaffiliate CHRO-TV Pembroke from the CTV network and to add a transmitter at Ottawa. Specifically, CHUM committed to: provide a minimum average of 12 hours of original weekly local news focused on Renfrew County and the Upper Ottawa Valley; maintain a minimum of 11 hours 30 minutes per week of local original programming, excluding news and coverage of live sports events; broadcast a minimum of 13 hours 30 minutes per week of programming directed to children and youth; and purchase a new, live-eye, microwave truck, at a cost of $350,000. The Commission notes that the new truck will be stationed in Pembroke and reserved for the exclusive use of CHRO-TV.
65. In addition to the above, CHUM committed to increase, from 4 hours per week to 5 hours 30 minutes per week, the amount of Canadian programming in categories 7, 8 and 9 to be aired during the evening broadcast period on CHRO-TV.
66. As agreed to by CHUM at the hearing, the Commission expects the licensee to ensure that all newscasts on CHRO-TV, including live segments, are captioned by 1 September 1998, using either real-time captioning or another method capable of captioning live programming; and that not less than 90% of all programming is captioned by 31 August 2002.
67. CHUM also offered commitments to meet or exceed various requirements identified in Decision CRTC 95-108, which last renewed the licence for CFPL-TV London, as well as those for the undertakings serving Wingham and Wheatley. The Commission notes in particular CHUM's undertaking to broadcast a minimum of 17 hours per week of original local news on CFPL-TV London, including noon-hour, and early and late evening newscasts; a weekly minimum of 5 hours 40 minutes of original local news originating at CKNX-TV Wingham; and 10 hours per week of local Windsor news on CHWI-TV Wheatley and its transmitter CHWI-TV-60 Windsor. CHUM also committed to broadcast on these undertakings a minimum of 8 hours per week of other original local production consisting of public affairs, farming information and music and variety programming, all of specific relevance to viewers in London, Wingham and Windsor.
68. Again as agreed to by CHUM at the hearing, the Commission requires the licensee to ensure that all newscasts on CFPL-TV London, including live segments, are captioned by 1 September 1998, using either real-time captioning or another method capable of captioning live programming; and that not less than 90% of all programming is captioned by 31 August 2002. In the case of CKNX-TV Wingham and CHWI-TV Wheatley, the Commission encourages CHUM to achieve these levels of captioned programming by the end of the licence term.
69. The Commission notes that its general policy on the common ownership of programming undertakings is raised in the context of CHUM's applications to purchase the assets of these Ontario television undertakings from Baton. In the case of CHRO-TV Pembroke and its transmitter CHRO-TV-43 Ottawa, their signals overlap that of CHUM's existing facility CITY-TV-3 Ottawa, which transmits the programming of CITY-TV Toronto. There are also varying degrees of overlap between the signals of CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley on the one hand, and the signals of CHUM's CITY-TV-2 London and CKVR-TV Barrie on the other.
70. The Commission's examination of these matters included reference to the three basic concerns described earlier in this decision in the context of its discussion regarding Baton's common ownership of CKCO-TV Kitchener and CFTO-TV Toronto.
71. With respect to the first of these concerns, the Commission notes that CHRO-TV currently operates at a financial loss. There is no evidence, however, to suggest that the continued operation of this, or any of the other undertakings CHUM proposes to acquire from Baton, would be in jeopardy should these applications be denied.
72. Nevertheless, with specific reference to CHRO-TV Pembroke, the Commission notes that it was, in part, concerns for the continued survival of the station's local service that led the Commission to approve Baton's application, despite its ownership of CJOH-TV in nearby Ottawa, to purchase the Pembroke station from its previous owners (Decision CRTC 90-1074). As noted above, in recognition of CHRO-TV's dependence on Ottawa viewers and revenues, the Commission recently authorized CHRO-TV to disaffiliate from the CTV network, and to provide a local service to Pembroke and Ottawa and the surrounding Ottawa Valley via a new transmitter at Ottawa. Thus, in the absence of the current applications, Baton would remain as owner of both CJOH-TV and CHRO-TV, the only two local, English-language, commercial television undertakings serving Ottawa.
73. As for diversity, the Commission notes that there will be no net decrease in the number of distinct news and editorial voices in any of the affected markets brought about by the replacement of Baton by CHUM as owner of these stations. In fact, in the case of CHRO-TV, the Commission views as an important intangible benefit the fact that the overall diversity of local news and information programming available to viewers in the Ottawa area, and CHRO-TV's effectiveness as a vital local presence in the communities it serves, will be enhanced through CHUM's ownership of the station. The Commission notes in this regard that, while CHRO-TV's news will remain strongly oriented to the Ottawa Valley under CHUM's commitments, the news programming produced by CITY-TV, and available in the Ottawa area on CITY-TV-3, will remain focused on the Metropolitan Toronto area. This distinction will also be present between the local news programming of the London, Wingham and Wheatley stations and that of CITY-TV.
74. With respect to local programming in general, the Commission considers that approval of CHUM's applications will enhance diversity in each of the markets by giving audiences access to a particular style of programming that has proven attractive to viewers of CKVR-TV Barrie in the years following approval of CHUM's application to disaffiliate this station from the CBC in 1994.
75. Although the Commission expects that audiences will welcome this enhanced diversity, it notes that CHUM's ability to broadcast separate programming on two television undertakings available in the same market does raise the question of whether this would create an undue competitive advantage for CHUM. In the circumstances, the Commission is satisfied that no undue advantage should emerge in these cases, given the experience and relative strength of CHUM's competitors operating in the markets of Ottawa and southwestern Ontario. To the extent that any potential or latent concern remains, however, the Commission, as stated earlier in this decision, is satisfied that it is outweighed by the overriding benefits of the transactions.
76. As a part of these applications, CHUM requested Commission approval of a change to the existing condition of licence related to Canadian programming expenditures by CHRO-TV Pembroke. The existing condition of licence requires the licensee to expend on Canadian programming, in each year, a specific amount, which is augmented or decreased in accordance with a formula that takes into account year-by-year fluctuations in the station's advertising revenues. CHUM proposed to replace this condition of licence with one that would require it to spend on Canadian programming, over the new term of CHRO-TV's licence, a minimum of 32% of total advertising revenues earned during that period.
77. CHUM argued that the proposed change is necessary due to an unexpected and drastic decline in advertising revenues earned by the Pembroke station in recent years. According to the applicant, the current licence requirements would oblige it to expend on Canadian programming an average of more than 85% of the station's projected revenues in the coming licence term. The applicant also argued that "... existing requirements include a fixed amount of expenditure which does not benefit" from the provisions contained in the condition that would otherwise allow some flexibility to react to advertising revenue fluctuations.
78. Ordinarily, the Commission will permit the licensee of a television undertaking the size of CHRO-TV to choose between a condition of licence specifying annual requirements for the exhibition of Canadian programming in the underrepresented categories during the evening broadcast period, or one specifying minimum annual expenditures on Canadian programming, such as the condition of licence that currently applies to CHRO-TV. In certain instances, licensees have been given conditions that include requirements for both expenditures on, and exhibition of, Canadian programming.
79. Because CHUM's proposal calls for expenditures to be calculated as a percentage of revenues earned over a number of years, and in the absence of any minimum exhibition requirement, the licensee would be free to spend substantially less on Canadian programming in one or more years than would be permissible under an annual expenditure requirement. The monies not so spent could be invested, instead, in other areas. If this were to occur, particularly during the early years of a licence term, and because such alternative investments would not necessarily result in increased advertising revenues, the total amount of such revenues and consequent expenditures on Canadian programming could prove to be lower at the end of the licence term, than would have been the case under an approach that established minimum expenditure requirements on an annual basis.
80. Overall, the Commission's policy objectives have been to ensure a consistent and stable yearly investment in Canadian programming. In its view, the licensee's proposal would be inconsistent with this objective, and its approval would constitute an unnecessary and inappropriate precedent. Accordingly, the application to amend the existing condition of licence for CHRO-TV's expenditures on Canadian programming as requested by CHUM is denied.
81. At the same time, the Commission is mindful that the existing requirements of CHRO-TV's licence are unduly onerous, given the recent, precipitous downturn in the station's advertising revenues, and the station's inability to take advantage of the flexibility generally available to television licensees in these circumstances. Under the unique circumstances affecting CHRO-TV, continued application of the present condition of licence would require levels of expenditure far in excess of the industry average for stations of this size.
82. Accordingly, in Appendix II of this decision, the Commission provides CHUM with the choice of adhering to a condition of licence that establishes a lower base amount than is currently in place (Option 1), or accepting a condition of licence that specifies a minimum requirement for the exhibition of Canadian programming in the under-represented categories during the evening broadcast period (Option 2). The Commission calculates that compliance with Option 1, while requiring yearly expenditures, would result in expenditures averaging approximately 32% of the advertising revenues earned over the course of the licence term.
83. The Commission requires CHUM to advise the Commission, in writing, within sixty days of the date of this decision, as to its choice in this regard. This information will be placed on the public file.
84. As a further part of these applications, CHUM requested Commission approval of a change to the current condition of licence that establishes minimum Canadian programming expenditure requirements for CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley, on a combined basis.
85. As in the case of CHRO-TV Pembroke, the existing condition of licence for these stations requires the licensee to expend on Canadian programming an annual amount, which is adjusted yearly in accordance with a formula that takes into account annual fluctuations in advertising revenue.
86. Similar to the change it requested for CHRO-TV, CHUM proposed a new condition of licence for CFPL-TV, CKNX-TV and CHWI-TV that would require the licensee to spend on Canadian programming, over the new term of licence, a minimum of 34% of total advertising revenues earned by these stations, on a combined basis, during that period.
87. CHUM argued that a change to the existing condition of licence is necessary due to an expected significant reduction in the advertising revenues earned by the three stations. According to CHUM, the reduction will occur as the result of the removal of Baton-supplied programming and the stations' conversion to independent status following their take-over by the applicant. CHUM argued that, given the stations' new operating circumstances, and without the proposed change in the condition of licence, the required expenditures would represent a much higher percentage of advertising revenues than is currently the case.
88. For the reasons noted above in its assessment of CHUM's proposed condition of licence for CHRO-TV, the Commission is not convinced of the suitability of a condition of licence that would permit calculation of Canadian programming expenditures as an average over a number of years, particularly in the absence of a further exhibition requirement. Furthermore, given the financial circumstances of the London, Wingham and Wheatley stations and the flexibility that the licensee has under the current condition of licence to react to changes in advertising revenue, the Commission is not convinced that a change to this condition is warranted at this time.
89. Accordingly, the application to amend the existing condition of licence concerning expenditures on Canadian programming by CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley is denied.
Baton's Acquisition of Effective Control of CTV
90. In exchange for $10 million, CHUM will transfer to Baton its ownership of 14.24% of the issued voting equity in CTV. As a consequence of this transaction, Baton will own a total of 56.96% of CTV's voting shares (42.72% directly and 14.24% indirectly), and will thus assume effective control of that company.
91. At the hearing, Baton assured the Commission that, under the terms of CTV's agreement with its affiliates, "...there is a very codified distribution of time, programs and hours, and that CTV is under an obligation to offer renewal to its affiliates on similar terms and conditions." The Commission notes CTV's statement at the hearing that this agreement is due to expire in August 2000, or at the end of the CTV network's current licence term, whichever occurs first. The network licence now has an expiry date of 31 August 1999. Should the Commission elect to issue an administrative extension to the CTV network licence term beyond its present expiry date, the Commission will expect Baton to ensure that the CTV affiliates continue to have the benefit of the terms of the current CTV affiliation agreement for the duration of that extended licence term.
92. The Commission has already underscored the importance it has attached, in reaching this decision, to the intangible benefits it expects to flow from fulfilment by Baton of its commitments as the new, controlling shareholder of CTV. In addition to these commitments, Baton stated that it will contribute a minimum of $1 million, by 31 August 1999, to a new fund. The fund's objective will be to assist independent producers to bring Canadian literature to television screens by providing funding over and above the usual industry licence fee. Baton stated that this "top-up" fund, known as The Baton Canadian Literature Initiative, will only be available to arm's-length independent producers.
93. The Commission is satisfied that this tangible benefit, taken together with the many intangible benefits associated with this transaction, is acceptable and commensurate with the transaction's size and nature.
94. The Commission expects Baton, consistent with its commitment, to ensure that the programs produced with the fund's assistance are broadcast on the full CTV network during network sales time. It also expects Baton to ensure that these programs are broadcast by CTV before the end of the network's current licence term. Baton is further reminded that, for the purpose of the top-up fund, the usual licence fee shall be calculated, using the threshold amount specified within the policies of the Canadian Television and Cable Production Fund (CTCPF). This is in accordance with Baton's statements at the hearing.
95. The Commission expects CTV to submit annual reports to the Commission, setting out details concerning the fund's receipts and disbursements. The reports should include: a description of each project; the name of the independent production company involved; the total production budget; the licence fee calculated using the CTCPF formula; the actual or proposed date of the production's broadcast on CTV; and the amount of the top-up. The reports shall be filed along with the licensee's annual returns, beginning with the annual returns submitted in respect of the 1998 broadcast year, and shall be placed on the licensee's public file for examination by independent producers and by other interested parties.
96. The Commission notes that, following completion of the Baton-Electrohome strategic merger and Baton's purchase of the various broadcasting holdings of CHUM, Baton intends to affect an intracorporate reorganization whereby, among other things, BBS Ontario, SWOTI, TV West, and the holding company that owns TV West (BBS Saskatchewan Incorporated) will be amalgamated. Ultimately, the amalgamated company (Amalco) would own 100% of the share equity of VTI and 14.24% of CTV. It would also hold the assets, and become licensee, of ASN and all of Baton's other conventional television undertakings, both those Baton currently controls and those whose ownership or control it will acquire from Electrohome and CHUM. Although such an intracorporate reorganization would not require prior Commission approval, the Commission requests Baton to confirm its plans in this regard, to advise when they have been implemented and to furnish the Commission, at that time, with true copies of all pertinent incorporating and other documentation.
97. At the hearing, the Commission discussed with Baton the implications of its acquisition of effective control of CTV for CTV's remaining shareholders, namely WIC with 28.47%, and Moffat Communications Limited (Moffat) with 14.24%. Baton indicated that, following approval of the current applications, it intends to present its business plan to these other shareholders, at which time they will have an opportunity either to continue or to terminate their investment relationship with CTV.
98. The Commission understands that the closing of the transaction whereby CHUM will transfer its CTV shares to Baton will trigger the provisions of a "put" clause contained in the CTV Shareholders Agreement. Under these provisions, each of WIC and Moffat will have the option, within a prescribed period of time, to require Baton to purchase its holdings in CTV at the same price per share as that paid to CHUM. These options, if exercised, would cause Baton to pay $20 million and $10 million to WIC and Moffat, respectively. At the hearing, Baton indicated that, should either or both of the other shareholders exercise this option, the applicant would contribute to The Baton Canadian Literacy Initiative an amount of $1 million for each $10 million package of CTV shares purchased.
99. The Commission notes this commitment. It also notes the documentary evidence filed by Baton verifying its access to the funding that would be required to purchase both remaining lots of CTV shares.
Interventions
100. The Commission received approximately 1,900 written interventions and petitions concerning the applications that are the subject of this decision; these were submitted by other broadcasters, independent producers, representatives of the advertising industry, public interest and advocacy groups, municipalities, and others, including a large number of interested individuals. The Commission acknowledges the unqualified support for approval of these applications, as expressed in all but a very few of the interventions.
101. With respect to the intervention filed by CanWest Global, the Commission has considered the two legal opinions contained therein, as well as the reply submitted by Baton and the further legal opinion provided on behalf of CanWest Global at the oral public hearing. The Commission, for all of the reasons set out in this decision, is not persuaded by CanWest Global's submissions that it is legally precluded from approving the applications at this time. In particular, the Commission wishes to emphasize that its general policies relating to concentration of ownership do not constitute a threshold test, wherein certain criteria must either be met or stand as a bar to approval. Rather, the issue of concentration is simply one factor among many that the Commission must take into account (as it clearly has in the context of this decision) in considering an application for authority to transfer the ownership or effective control of a broadcasting undertaking.
This decision is to be appended to the licence of each of the licensed broadcasting undertakings identified in Appendix I.
Laura M. Talbot-Allan
Secretary General
This document is available in alternative format upon request.
APPENDIX I TO DECISION CRTC 97-527
Applications Considered at the 15 July 1997 Public Hearing
Baton-Electrohome Strategic Merger
i) Application No. 199700521 by TV West Inc., licensee of CFCN-TV Calgary and CFCN-TV-5 Lethbridge, Alberta; and CFQC-TV Saskatoon, CKCK-TV Regina, CIPA-TV / CKBI-TV Prince Albert and CKOS-TV / CICC-TV Yorkton, Saskatchewan and their respective transmitters.
ii) Application No. 199700539 by South West Ontario Television Inc., licensee of CKCO-TV Kitchener, CKCO-TV-2 Wiarton, CKCO-TV-3 Oil Springs, CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley, Ontario and their respective transmitters.
iii) Application No. 199700779 by Vancouver Television Inc. - licensee of CIVT-TV Vancouver.
The above applications are for authority to transfer effective control of the licensees through the transfer of Electrohome Limited's 50% interest in each company to Baton Broadcasting Incorporated.
iv) Application Nos. 199700547, 199700555, 199700563 and 199700571 by Baton Broadcasting Incorporated for authority to acquire the assets, and for broadcasting licences to continue the operation, of the television programming undertakings CFRN-TV Edmonton, CFRN-TV-4 Ashmont, CFRN-TV-6 Red Deer and CFRN-TV-3 Whitecourt, Alberta and their respective transmitters, upon surrender of the current licences issued to Electrohome Limited.
v) Application Nos. 199700589, 199700597, 199700605 and 199700612 by TV West Inc. for authority, upon completing the transaction described in paragraph (iv) above, to acquire the assets, and for broadcasting licences to continue the operation, of the television programming undertakings CFRN-TV Edmonton, CFRN-TV-4 Ashmont, CFRN-TV-6 Red Deer and CFRN-TV-3 Whitecourt, Alberta and their respective transmitters, upon surrender of the licences issued to Baton Broadcasting Incorporated.
Baton-CHUM Asset Exchange
i) Application Nos. 199702931, 199702949, 199702973, 199702957 and 199702965 by BBS Ontario Incorporated for authority to acquire the assets, and for broadcasting licences to continue the operation, of the satellite-to-cable programming undertaking known as Atlantic Satellite Network authorized to serve the Atlantic provinces and the eastern arctic; and of the television programming undertakings CJCH-TV Halifax and CJCB-TV Sydney, Nova Scotia; and CKCW-TV Moncton and CKLT-TV Saint John, New Brunswick and their respective transmitters, upon surrender of the current licences issued to CHUM Limited.
ii) Application No. 199702999 by CHUM Limited for authority to acquire the assets, and for a broadcasting licence to continue the operation, of CHRO-TV Pembroke and CHRO-TV-43 Ottawa, Ontario, upon surrender of the current licence issued to BBS Ontario Incorporated.
iii) Application Nos. 199703007, 199703012 and 199703020 by CHUM Limited for authority to acquire the assets, and for broadcasting licences to continue the operation, of CFPL-TV London, CKNX-TV Wingham, and CHWI-TV Wheatley and its transmitter CHWI-TV-60 Windsor, Ontario, upon surrender of the current licences issued to South West Ontario Television Inc.
Transfer of Control of CTV Television Network Ltd. to Baton Broadcasting Incorporated
Application No. 199702981 by CTV Television Network Ltd., licensee of the national, private, English-language television network and of the national, English-language programming undertaking (Specialty television service) known as CTV News 1, for authority to transfer effective control of the licensee through the transfer of CHUM Limited's 14.24% interest in the company to Baton Broadcasting Incorporated.
APPENDIX II TO DECISION CRTC 97-527
The following conditions of licence apply to TV West Inc., as licensee of CFRN-TV Edmonton:
1. The licensee shall operate this broadcasting undertaking as part of the network operated by CTV Television Network Ltd.
2. The licensee shall expend on Canadian programming, at a minimum,
(i) In the year ending 31 August 1998, the minimum required level of expenditures in the year ending 31 August 1997 (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the three previous years;
(ii) In each subsequent year of the licence term, an amount calculated in accordance with the following formula: the amount of the previous year's expenditures (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the three previous years;
(iii) In any year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming that is up to five percent (5%) less than the minimum required expenditure for that year as set out or calculated in accordance with paragraphs (I) and/or (ii) above; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;
(iv) In any year of the licence term, excluding the final year, where the licensee expends an amount on Canadian programming that is greater than the minimum required expenditure for that year, as set out or calculated in accordance with paragraphs (i) and/or (ii) above, the licensee may deduct:
a) from the minimum required expenditure for the next year of the licence term an amount not exceeding the amount of the previous year's overexpenditures; and
b) from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under a) above;
(v) Notwithstanding paragraphs (iii) and (iv) 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 in or calculated in accordance with paragraphs (i) and/or (ii) above.
For the purpose of the above condition, "expend on Canadian programming" shall have the same meaning as that set out in Public Notices CRTC 1993-93 and 1993-174 dated 22 June and 10 December 1993, respectively.
For the purpose of the above condition, the licensee is not permitted to credit any overexpenditure made in the previous licence term towards Canadian programming expenditures in any year or years of this licence term.
3. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' (CAB) Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the Canadian Broadcast Standards Council (CBSC).
4. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
5. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
The following conditions of licence apply to TV West Inc., as licensee of CFRN-TV-4 Ashmont, CFRN-TV-6 Red Deer and CFRN-TV-3 Whitecourt:
1. The licensee may substitute separate commercial messages for those broadcast by CFRN-TV Edmonton up to a maximum of 6.5% of the commercial availabilities on each undertaking for each hour of original station-produced programming broadcast exclusively on the undertaking each week.
2. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
3. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
4. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
The following conditions of licence apply to BBS Ontario Incorporated, as licensee of CJCH-TV Halifax:
1. The licensee shall operate this broadcasting undertaking as part of the network operated by CTV Television Network Ltd.
2. In addition to the 12 minutes of advertising material permitted by subsection 11(1) of the Television Broadcasting Regulations, 1987, the licensee may broadcast infomercials as defined in Public Notice CRTC 1994-139 and in accordance with the criteria contained in that public notice, as amended.
3. The licensee shall broadcast in the evening broadcast period (between 6:00 p.m. and midnight) the following average number of hours per week of Canadian drama, music or variety programming in each year of the licence term:
1997-1998 6:00 hours
1998-1999 6:00 hours
1999-2000 6:30 hours
2000-2001 6:30 hours
2001-2002 7:00 hours
For the purpose of the above condition, the categories drama, music and variety are defined as set out in Schedule I of the Television Broadcasting Regulations, 1987.
4. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
5. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
6. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
The following conditions of licence apply to BBS Ontario Incorporated, as licensee of CKCW-TV Moncton, CKLT-TV Saint John and CJCB-TV Sydney:
1. The licensee shall operate this broadcasting undertaking as part of the network operated by CTV Television Network Ltd.
2. In addition to the 12 minutes of advertising material permitted by subsection 11(1) of the Television Broadcasting Regulations, 1987, the licensee may broadcast infomercials as defined in Public Notice CRTC 1994-139 and in accordance with the criteria contained in that public notice, as amended.
3. The licensee shall broadcast in the evening broadcast period (between 6:00 p.m. and midnight) the following average number of hours per week of Canadian drama, music or variety programming in each year of the licence term:
1997-1998 6:00 hours
1998-1999 6:00 hours
1999-2000 6:30 hours
2000-2001 6:30 hours
2001-2002 7:00 hours
For the purpose of the above condition, the categories drama, music and variety are defined as set out in Schedule I of the Television Broadcasting Regulations, 1987.
4. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
5. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
6. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC
The following conditions of licence apply to BBS Ontario Incorporated, as licensee of Atlantic Satellite Network:
1. The licensee shall adhere to the Television Broadcasting Regulations, 1987.
2. The licensee shall not solicit local advertising in the Halifax-Dartmouth area.
3. In addition to the 12 minutes of advertising material permitted by subsection 11(1) of the Television Broadcasting Regulations, 1987, the licensee may broadcast infomercials as defined in Public Notice CRTC 1994-139 and in accordance with the criteria contained in that public notice, as amended.
4. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
5. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
6. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
The following conditions of licence apply to CHUM Limited, as licensee of CHRO-TV Pembroke:
1. The licensee shall adhere to either Option 1 or Option 2, set out below, as chosen by the licensee and communicated to the Commission before 27 October 1997. The licensee shall adhere to its selection throughout the entire licence term.
Option 1
The licensee shall expend on Canadian programming, at a minimum,
(i) In the year ending 31 August 1998, a minimum of $1,975,000, before adjustments required by the continued application of the formula currently applicable to CHRO-TV;
(ii) In each subsequent year of the licence term, an amount calculated in accordance with the following formula: the amount of the previous year's required expenditures (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the three previous years;
(iii) In any year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming that is up to five percent (5%) less than the minimum required expenditure for that year as set out or calculated in accordance with paragraphs (i) and/or (ii) above; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;
(iv) In any year of the licence term, excluding the final year, where the licensee expends an amount on Canadian programming that is greater than the minimum required expenditure for that year, as set out or calculated in accordance with paragraphs (i) and/or (ii) above, the licensee may deduct:
a) from the minimum required expenditure for the next year of the licence term an amount not exceeding the amount of the previous year's overexpenditures; and
b) from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under a) above;
(v) Notwithstanding paragraphs (iii) and (iv) 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 in or calculated in accordance with paragraphs (i) and/or (ii) above.
For the purpose the above condition, "expend on Canadian programming" shall have the same meaning as that set out in Public Notices CRTC 1993-93 and 1993-174 dated 22 June and 10 December 1993, respectively.
For the purpose of the above condition, the licensee is not permitted to credit any overexpenditure made in the previous licence term towards Canadian programming expenditures in any year or years of this licence term.
Option 2
The licensee shall broadcast in the evening broadcast period (between 6:00 p.m. and midnight) the following average number of hours per week of Canadian drama, music or variety programming in each year of the licence term:
1997-1998 6:00 hours
1998-1999 6:00 hours
1999-2000 6:30 hours
2000-2001 6:30 hours
2001-2002 7:00 hours
For the purpose of the above condition, the categories drama, music and variety are defined as set out in Schedule I of the Television Broadcasting Regulations, 1987.
2. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
3. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
4. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
The following conditions of licence apply to CHUM Limited, as licensee of CFPL-TV London, CKNX-TV Wingham and CHWI-TV Wheatley:
1. The licensee shall, for CFPL-TV, CKNX-TV and CHWI-TV combined, expend on Canadian programming, at a minimum,
(i) In the year ending 31 August 1998, the minimum required level of expenditures in the year ending 31 August 1997 (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the three previous years;
(ii) In each subsequent year of the licence term an amount calculated in accordance with the following formula: the amount of the previous year's expenditures (before consideration of any overexpenditures or underexpenditures from prior years), increased (or decreased) by the year-over-year percentage change in the total of the station's annual advertising revenues and network payments, as reported in the relevant Annual Return for the years ending 31 August, averaged over the three previous years;
(iii) In any year of the licence term, excluding the final year, the licensee may expend an amount on Canadian programming that is up to five percent (5%) less than the minimum required expenditure for that year as set out or calculated in accordance with paragraphs (i) and/or (ii) above; in such case, the licensee shall expend in the next year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;
(iv) In any year of the licence term, excluding the final year, where the licensee expends an amount on Canadian programming that is greater than the minimum required expenditure for that year, as set out or calculated in accordance with paragraphs (i) and/or (ii) above, the licensee may deduct:
a) from the minimum required expenditure for the next year of the licence term an amount not exceeding the amount of the previous year's overexpenditures; and
b) from the minimum required expenditure for any subsequent year of the licence term, an amount not exceeding the difference between the overexpenditure and any amount deducted under a) above;
(v) Notwithstanding paragraphs (iii) and (iv) 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 in or calculated in accordance with paragraphs (i) and/or (ii) above.
For the purpose of the above condition, "expend on Canadian programming" shall have the same meaning as that set out in Public Notices CRTC 1993-93 and 1993-174 dated 22 June and 10 December 1993, respectively.
For the purpose of the above condition, the licensee is not permitted to credit any overexpenditure made in the previous licence term towards Canadian programming expenditures in any year or years of this licence term.
2. The licensee is authorized to broadcast a maximum of 6.5% of the commercial availabilities on CHWI-TV Wheatley separately from those broadcast on CFPL-TV London, for each hour of original, station-produced programming broadcast exclusively on CHWI-TV Wheatley each week.
3. In addition to the 12 minutes of advertising material permitted by subsection 11(1) of the Television Broadcasting Regulations, 1987, the licensee may broadcast infomercials as defined in Public Notice CRTC 1994-139 and in accordance with the criteria contained in that public notice, as amended.
4. The licensee shall adhere to the guidelines on gender portrayal set out in the CAB's Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.
5. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and accepted by the Commission.
6. 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 accepted by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee remains a member in good standing of the CBSC.