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ARCHIVED -  Decision CRTC 99-112

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Decision

Ottawa, 21 May 1999

Decision CRTC 99-112

3403688 Canada inc. - Canal Évasion

Across Canada - 199713160

7 December1998 Public Hearing in Montréal

Summary

The Commission approves a new French-language specialty television service called "Canal Évasion," to be available to distribution undertakings across Canada. This service will be devoted to travel, tourism and adventure. The licence will expire on 31 August 2005.

This new service will enhance the Canadian broadcasting system by the distinct nature of its programming and the importance of the licensee's contribution to the development of quality Canadian programs. This contribution will provide undeniable support to creators and to the French-language independent production industry.

In French-language markets, Canal Évasion will be offered on a discretionary tier consisting solely of French-language services, including at least this service and the three other services approved today (decisions CRTC 99-109, 99-110 and 99-111). In the other markets, it will be offered on a discretionary basis unless the licensee agrees with the distribution undertaking to have it distributed on the basic service.

Programming

Nature of service

1. The licensee is proposing programs focusing on tourism, adventure and travel. This "practical guide" to travel information and advice will cover a variety of destinations in terms of their culture, history, sports, food, and so forth. Programs will be designed to appeal to the general viewing audience but will particularly target viewers between the ages of 25 and 64.

2. Consistent with the application, the licensee shall, by condition of licence, offer a national French-language television specialty service devoted entirely to tourism, adventure and travel. Ninety percent of the programming provided by Canal Évasion must be devoted exclusively to programs drawn from category 5b (Education - Informal), and the remainder of the programming (i.e., 10%) shall be drawn exclusively from category 11 (Human interest), as set out in Schedule I to the Specialty Services Regulations, 1990.

3. The daily schedule will consist of three blocks of eight hours: 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.

4. Furthermore, the licensee has stated that it will form an association with Canal Voyage France, which will supply it with the majority of its non-Canadian programs and will also provide co-production opportunities. The licensee plans to develop an Internet site for its service in co-operation with this association.

Canadian content

5. The licensee made a commitment to broadcast a minimum of 60% Canadian content from 6 a.m. to midnight, and a minimum of 60% from 6 p.m. to midnight. The licensee is required to adhere to this commitment by condition of licence.

Canadian programming expenditures

6. 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 $4,489,000 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 50% of the previous year's gross revenues derived from the operation of the service. 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 applicable condition of licence set out in the appendix to this decision.

7. The service will rely extensively on the independent production sector. The licensee has agreed to spend nearly $18 million on independent productions over the service's first seven years of operation, including $2.4 million in the first year.

Advertising

8. Consistent with the licensee's plans, Canal Évasion may distribute a maximum of 12 minutes of national advertising, 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. Conditions of licence to this effect are set out in the appendix to this decision.

Ownership

9. 3403688 Canada Inc. is a corporation whose ownership is shared as follows: BCE Inc. or a wholly owned subsidiary (50.1%); Serdy direct Inc. (19.9%); TVA Group Inc. (10%); Media Overseas (10%); and Pathé/Canal Voyage France (10%). BCE Inc. or one of its wholly owned subsidiaries will hold control of the licensee. The service will form the subject of a management contract with TVA Group Inc. In order that it may ensure that ultimate control of the licensee remains in the hands of BCE Inc. or one of its wholly owned subsidaries, the Commission expects the licensee to submit this management contract to the Commission for approval.

10. As discussed in Public Notice CRTC 1999-89, the Commission is concerned about the participation of any distributor in the ownership of specialty program services with respect to vertical integration and to concentration of ownership. BCE Inc. is a public corporation with subsidiaries in broadcasting (e.g., Bell Satellite Services Inc. (BSSI), which is primarily involved in satellite distribution) and telecommunications (e.g., Bell Canada). Among other things, BSSI owns a national direct-to-home (DTH) pay-per-view service and a satellite relay distribution undertaking (SRDU). BSSI has access to a huge market via satellite but does not currently occupy a dominant position in the broadcasting distribution market. It has fewer than 150,000 subscribers across Canada, about 20% of whom are in the French-language market. Unlike Vidéotron ltée, BSSI does not have a predominant position in the broadcasting market.

11. Vidéotron, conversely, is a cable distributor that occupies a predominant position in the cable distribution market. Regarding the participation of TVA Group Inc. (TVA Inc.) in Canal Évasion, the Commission notes that a corporate link exists between that company and Vidéotron through Groupe Vidéotron Ltée, even though these are separate public corporations whose shares are traded on the stock exchange. While TVA Inc.'s proposed level of participation of 10% of voting shares is relatively low, the Commission considers that it would be advisable to limit such participation to that level by condition of licence, in light of TVA Inc.'s predominant position in the French-speaking conventional television market and its corporate link to Vidéotron, as mentioned above. Accordingly, the licensee will not be able to increase TVA Inc.'s participation in Canal Évasion without first obtaining the Commission's approval.

12. Furthermore, by condition of licence, the licensee must spend no more than 25% of its annual budget for acquiring the rights to original Canadian programming on programs produced by companies that are shareholders of the licensee or its affiliated companies.

Method of distribution

13. Canal Évasion will be delivered via satellite to all broadcasting distribution undertakings across the country. The conditions for distribution 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.

14. In French-language markets, Class 1 licensees 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 Histoire, Canal Fiction and Canal Z, which are also approved today.

15. In other markets, Class 1 and Class 2 licensees may offer it on a modified dual-status basis.

16. 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 $0.49. 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

17. 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 by 10 January 2000 unless the Commission grants an extension.

18. The Broadcasting Distribution Regulations require a distribution undertaking 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 Évasion begins broadcasting.

Other matters

Closed captioning

19. The Commission notes the licensee's commitment to distribute 780 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 1,225 hours in the seventh year. The licensee will spend a total of $876,000 for closed captioning during the licence term.

20. The Commission expects the licensee to adhere to its commitments. The Commission also encourages the licensee to exceed these commitments over the licence term and to monitor the quality of captions during exhibition.

21. The Commission notes that, 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.

Dubbing

22. As for the French-language dubbing of Canadian acquired programs, the Commission notes that the applicant will allocate $826,000 during the first seven years of operation; it expects this dubbing to be done in Canada.

Employment equity

23. 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

24. The Commission is satisfied that Canal Évasion will offer attractive, high-quality French-language programs that will contribute to the enrichment and diversity of the Canadian broadcasting system. In approving this application, the Commission is satisfied that the licensee will contribute to the development of Canadian programming and that the licensee will provide support to creators and to the French-language independent production industry.

25. 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 99-112

Conditions of licence for "Canal Évasion"

Nature of the service

1. (a) The licensee shall provide a national French-language television specialty service that is dedicated exclusively to tourism, adventure and travel;

(b) ninety percent of the programming must be drawn from category 5b (Education - Informal) and 10% from category 11 (Human interest), as set out in Schedule I to the Specialty Services Regulations, 1990.

Ownership

2. Any transaction increasing TVA Group Inc.'s ownership of Canal Évasion to more than 10% of voting shares cannot proceed without the prior approval by the Commission.

Exhibition of Canadian programs

3. In each broadcast year, the licensee shall devote to the distribution of Canadian programs not less than 60% of the broadcast day and not less than 60% of the evening broadcast period.

Expenditures on Canadian programs

4. 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 $4,489,000;

(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 50% 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.

5. The licensee must spend no more than 25% of its annual budget for acquiring the rights to original Canadian programming on programs produced by companies that are shareholders of the licensee or affiliated companies.

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.

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 approved 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 purposes of these conditions of licence, all time periods shall be calculated according to the eastern standard time; the terms "broadcast day", "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 Évasion 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.