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ARCHIVED -  Decision CRTC 99-111

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Decision

Ottawa, 21 May 1999

Decision CRTC 99-111

Alliance Atlantis Communications inc. and Premier Choix Networks Inc., on behalf of a company to be incorporated - Canal Histoire

Across Canada - 199713136

7 December1998 Public Hearing in Montréal

Summary

The Commission approves a new French-language specialty television service called "Canal Histoire", to be available to distribution undertakings across Canada. This service will provide documentary series and mini-series, drama programs and discussion programs based on history and recent events. The licence will expire on 31 August 2005.

This new service will enrich the Canadian broadcasting system by the distinct nature of its programming and the importance of the licensee's contribution to the development of Canadian programs. In addition, the proposed partnerships will result in synergies that will make it possible to finance quality programs that can make their mark both nationally and internationally.

In French-language markets, Canal Histoire will be offered on a discretionary tier consisting solely of French-language services, including this service as well as the three other services approved today (Decisions CRTC 99-109, 99-110 and 99-112). In other markets, Canal Histoire will be offered on a discretionary basis unless the licensee agrees with the distribution undertakings to have it distributed on the basic service.

Programming

Nature of service

1. The licensee is proposing a service combining information and entertainment. Canal Histoire will air Canadian original programs, Canadian repeat titles and foreign programs. It will consist of three main components:

· feature documentary series and mini-series on historical events and figures, periods of crisis and prosperity, ancient civilizations, genealogy, great social and cultural movements, and day-to-day history;

· movies as well as drama series and mini-series portraying great achievements and milestones in history, broadcasts recreating the lives of the major players and figures in history;

· Interviews with witnesses or protagonists in history, quizzes, magazines and discussion programs on history-related topics. This component will create a link between current events and history and will promote a climate of discussion and interaction with viewers.

2. To ensure diversity in its foreign programming, the licensee committed to devote at least 25% of such programming to material from non-U.S. sources. The Commission expects the licensee to adhere to this commitment. The programs will target the population as a whole, but will be particularly aimed at viewers aged 25 to 54 years.

3. At the hearing, the licensee made a firm commitment to devote at least 75% of its expenditures to acquire Canadian broadcasting rights to original, first-run programs. The Commission expects the licensee to adhere to commitment, by condition of licence.

4. Consistent with the application, the licensee must, by condition of licence, offer a national French-language specialty service devoted to history, with at least 95% of the programs drawn exclusively from categories 2 (Analysis and interpretation), 5 (Education), 7 (Drama - based solely on history) and 11 (Human interest), as set out in Schedule I of the Specialty Services Regulations, 1990.

5. The daily schedule will consist of one block of original programs and two blocks of repeat programs. The service will be on the air 24 hours a day, 7 days a week.

6. Canal Histoire will acquire all its programs from Canadian independent producers or distributors, with the exception of promotional messages for the service and the filler programming it produces.

7. Regarding the reflection of Canada's cultural diversity, the licensee indicated that its program schedule would give it [translation] "opportunities to incorporate the concerns, history and vision of the cultural communities that have enriched Quebec's and Canada's diversity". The Commission expects Canal Histoire's programming to reflect that commitment.

Canadian content

8. The licensee made a commitment to broadcast a minimum of 35% Canadian content from 6 a.m. to midnight, and 35% from 6 p.m. to midnight, for the first and second years of operation. It will increase these percentages to at least 40% in the third, fourth and fifth years of operation, and to at least 45% in the sixth and seventh years. It is a condition of licence that the licensee adhere to this commitment. At the hearing, the licensee explained that these levels are significant in light of the limited number of subscribers and the large production budgets required for this type of original programming.

Canadian programming expenditures

9. Consistent with the approach outlined by the Commission in Public Notices CRTC 1992-28, 1993-93 and 1993-174 concerning requirements for Canadian programming expenditures, the licensee is required to expend a minimum of $4,578,000 on the acquisition of and/or investment in Canadian programs in the broadcast year following the first year of operation, as defined in the condition of licence set out in the attached appendix. Further, in each subsequent broadcast year, the licensee shall expend on Canadian programs a minimum of 35% of the previous year's gross revenues derived from the operation of the service.

10. It is a condition of licence that the licensee adhere to the Commission's requirements respecting Canadian program expenditures. The Commission has provided for some flexibility in the accounting of these expenditures in the appendix to this decision.

11. At the hearing, the Commission expressed concerns regarding the possibility of double-counting of expenditures on Canadian programs for History Television and Canal Histoire. In response, the licensee indicated that it would accept a condition of licence in this respect. This issue, which was discussed in Public Notice CRTC 1993-93, is covered by the condition of licence governing expenditures on Canadian programs set out in the appendix to this decision.

12. The service will rely extensively on the independent production sector. The licensee has agreed to spend nearly $32 million on independent productions over the service's seven years of operation.

Advertising

13. Consistent with the licensee's plans, Canal Histoire may distribute a maximum of 12 minutes of national advertising material, plus a maximum of 30 seconds of unpaid public service announcements, in each clock hour of the broadcast day. Some flexibility for the placement of advertising material in longer programs is provided. The relevant conditions of licence are set out in the appendix to this decision.

Ownership

14. The licensee is a business corporation with two shareholders: Les Réseaux Premier Choix inc. (Premier Choix) and Alliance Atlantis Communications inc. (Alliance/Atlantis). Initially, Premier Choix had Alliance Communications Corporation (Alliance) as its partner. However, in Decision CRTC 99-106 dated 20 May 1999, the Commission approved the merger of Alliance and Atlantis Communications inc. to form the new entity Alliance/Atlantis.

15. Each shareholder will hold 50% of the shares in the licensee. It will be governed by a board of directors consisting of three directors appointed by each shareholder.

16. Premier Choix is licensee of a French-language pay television service, Super Écran, and two French-language specialty services, Canal Famille and Canal D. Premier Choix is an affiliate of Astral Communications inc. (Astral), which is involved, alone or with others, in managing ten specialty, pay and pay-per-view television services. Astral's direct or indirect interest in a large number of specialty services raises the question of concentration of ownership in French-language specialty services.

17. Following the merger, Alliance/Atlantis has become the largest Canadian undertaking in the independent production, distribution and export of feature films and television programs. It is the parent corporation of Alliance Atlantis Broadcasting Inc., licensee of four English-language specialty services: Showcase, History & Entertainment Network, Home & Garden Television, and Life Network. Alliance Atlantis Broadcasting Inc. is also an equal partner with Shaw Communications Inc. in a national French-language video-on-demand service. In addition, Alliance/Atlantis is one of the shareholders of the Canal Fiction service approved today.

18. Although the involvement of Astral and Alliance/Atlantis raises the issue of concentration of ownership in specialty services, the Commission is of the view that the resources and experience of these corporations and the synergies to be derived from their partnership will ensure that the proposed programming will feature diversity and high quality, will appeal to consumers, and will promote healthy competition among French-language specialty services.

19. In light of the ownership of the Canal Histoire service described above, the Commission must make certain that there are competitive guarantee mechanisms to protect the interests of independent producers. Canadian independent producers who are not shareholders of Canal Histoire must have an equitable opportunity to provide programs for the service. In reply to the Commission's concern, the licensee stated that it would acquire all the distribution rights other than ownership for the feature films from Canadian independent distributors, that it would treat all Canadian producers and distributors without discrimination, and that it would not give any preferential treatment to programs produced or distributed by Alliance/Atlantis. To that end, it made a commitment at the hearing that not more than 5% of its expenditures paid to independent producers would be for programs produced by corporations holding shares in the service or its affiliates. The licensee is required to adhere to this commitment by condition of licence.

Method of distribution

20. Canal Histoire will be delivered via satellite to all broadcasting distribution undertakings across the country. The distribution arrangements are explained in Public Notice CRTC 1999-89, in the preamble to this decision, and also in Public Notice CRTC 1999-90 concerning distribution and linkage, which accompanies the decisions released today.

21. In French-language markets, Class 1 and Class 2 licensees that distribute this service must distribute it on a discretionary basis only, on a tier consisting solely of French-language programming services. This tier must include, at a minimum, Canal Z, Canal Fiction and Canal Évasion, also approved today.

22. In other markets, Class 1 and Class 2 licensees may offer Canal Histoire on a modified dual-status basis.

23. With respect to distribution on a discretionary tier, especially in francophone markets, the Commission notes that, in its business plan, the licensee proposed a wholesale rate of $0.80. The Commission expects the licensee to negotiate with distributors and that such negotiations will permit the licensee to implement its plans and to broadcast programming of the quality contemplated in its application, according to its business plan. The Commission will monitor the situation closely.

Implementation

24. This approval is subject to the condition that the service shall be in operation by 10 January 2000 or, where in the interim the applicant applies to the Commission and shows the Commission that it cannot begin operating the service before that date and that an extension is in the public interest, within such additional time as the Commission shall approve in writing. The licence shall not be issued unless the service is implemented within the authorized period or unless the Commission grants an extension.

25. The Broadcasting Distribution Regulations require distribution undertakings to provide sixty (60) days' notice to the programming services affected by a channel realignment. The Commission, accordingly, expects the licensee to inform distribution undertakings at least ninety (90) days before the date on which Canal Histoire begins broadcasting.

26. This authority will only be effective and the Commission will only issue the licence at such time as it receives documentation establishing that an eligible Canadian corporation has been incorporated in accordance with the application in all material respects and that this corporation may be issued a licence.

Other matters

Closed captioning

27. The licensee made a commitment to distribute 1,680 hours of closed captioned programming for the deaf and hearing impaired during the first year of operation, and to increase this gradually to a level of 1,948 hours in the seventh year. The licensee will spend a total of $905,000 for closed captioning over the licence term.

28. The Commsision expects the licensee to adhere to these commitments. It encourages the licensee to exceed these commitments over the licence term and to monitor the quality of closed captioning during exhibition.

29. From the start of operations, the licensee will have a telecommunication device for the deaf (TDD), and will ensure that the TDD number is well publicized.

Employment equity

30. 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 this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Conclusion

31. The Commission is satisfied that Canal Histoire will offer attractive, high-quality Canadian programs, in a genre that is relatively under-represented on Canadian television, that will contribute to the enrichment and diversity of the Canadian broadcasting system. In approving this application, the Commission is satisfied that there is a clear demand for a service such as that proposed, and that the commitments by the licensee will result in new opportunities and new funding sources for independent producers. Finally, the Commission considers that the proposed partnership between Canal Histoire and History Television will result in synergy that will make it possible to fund quality programs that can make their mark both nationally and internationally.

32. The Commission acknowledges and has considered the interventions submitted with respect to this application.

Secretary General

This decision is to be appended to the licence. It is available in alternative format upon request, and may also be viewed at the following Internet site:

www.crtc.gc.ca

Appendix to Decision CRTC 99-111

Conditions of licence for "Canal Histoire"

Nature of the service

1. (a) The licensee shall provide a national French-language specialty television service that is dedicated exclusively to history and recent events.

(b) At least 95% of the programming must be drawn exclusively from the following categories: 2 (Analysis and interpretation), 5 (Education), 7 (Drama - solely on historical subjects) and 11 (Human interest), as set out in Schedule I of the Specialty Services Regulations, 1990.

(c) At least 80% of the feature films for theatrical release (category 7d) broadcast on Canal Histoire each year must have been copyrighted for at least 7 years before the date of broadcast. The program logs must make it possible to identify the dates.

(d) The licensee shall not broadcast more than one feature film per day during prime time (6 p.m. to midnight).

Exhibition of Canadian programs

2. In each broadcast year, the licensee shall devote to the distribution of Canadian programs not less than 35% of the broadcast day and not less than 35% of the evening broadcast period. Those percentages shall be increased to at least 40% in the third, fourth and fifth years of operation, and to at least 45% in the sixth year.

Expenditures on Canadian programs

3. In accordance with the Commission's position on Canadian programming expenditures as set out in Public Notices CRTC 1992-28, 1993-93 and 1993-174:

(a) In the broadcast year following the first year of operation, the licensee shall expend on Canadian programs not less than $4,578,000;

(b) In each subsequent broadcast year, the licensee shall expend on Canadian programs, including script and concept development expenditures for Canadian programs that are not broadcast, not less than 35% of the previous broadcast year's gross revenues derived from the operation of the service;

(c) In the broadcast year following its 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 year of the licence term, in addition to the minimum required expenditure for that year, the full amount of the previous year's underexpenditure;

(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 year of the licence term, an amount not exceeding the amount of the previous year's overexpenditure; and

(ii) 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 paragraph (i) above.

(e) Notwithstanding paragraphs (c) and (d) 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 condition of licence.

4. The licensee shall devote at least 75% of its expenditures to acquire Canadian programs to first-run original Canadian programs. For purposes of defining first-run original programs, those acquired jointly, from the initial production funding stage, by Canal Histoire and History Television, regardless of which of the two services broadcasts them first, will be accepted, provided that the licensee adheres to its commitments for expenditures on Canadian programs as set out above.

5. The licensee shall limit to 5% annually its expenditures to acquire the rights to Canadian original programs devoted to programs produced by the licensee's shareholders or affiliates.

Advertising

6. (a) Subject to subsections (b), (d) and (e), 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;

(d) Where a program occupies time in two or more consecutive clock hours, the licensee may exceed the maximum number of minutes of advertising material allowed in those clock hours if the average number of minutes of advertising material in the clock hours occupied by the program does not exceed the maximum number of minutes that would otherwise be allowed per clock hour;

(e) In addition to the twelve minutes of advertising material referred to in subsection (a), the licensee may broadcast partisan political advertising during an election period;

(f) For the purpose of this condition, advertising material does not include a promotion for a Canadian program to be broadcast by the licensee, notwithstanding that a sponsor is identified in the title of the program or is identified as a sponsor of that program, where the identification is limited to the name of the sponsor only and does not include a description or representation of the products or services or any attributes of the sponsor's products or services.

Rate

7. From the date of commencement of service, the licensee shall charge each exhibitor of this service in Francophone markets a maximum wholesale rate of $0.48 per subscriber per month, when the service is distributed as part of the basic service.

Adherence to industry codes

8. 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 approved by the Commission.

9. The licensee shall adhere to the provisions of the CAB's Broadcast Code for Advertising to Children, as amended from time to time and approuved by the Commission.

10. 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.

Definitions

For the purpose of these conditions of licence, all time periods shall be reckoned according to the eastern standard time "broadcast day" shall mean a period of 24 consecutive hours commencing each day at 8 a.m.; the terms, "broadcast year", "evening broadcast period" and "clock hour" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987; "broadcast week" shall have the same meaning as that set out in the Radio Regulations, 1986; "first year of operation" shall mean the first broadcast year in which Canal Histoire is in operation for a period exceeding 90 days, excluding any free trial period; and "paid national advertising" shall mean advertising material as defined under the Specialty Services Regulations, 1990 and that is purchased at a national rate and receives national distribution on the service.