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Decision CRTC 2001-154

  Ottawa, 28 February 2001
  591810 B.C. Limited (Country Music Television)
Across Canada 1999-1834-8
  Application processed by Public Notices
CRTC 2000-69 dated 26 May 2000 and
2000-137 dated 28 September 2000
 

Licence renewal for Country Music Television (CMT)

  The licence for CMT is renewed for a full term. The Commission further approves certain changes to the nature of the programming that may be broadcast on the service, including a reduction in the minimum amount of all programming that must consist of music videos from 90% to 70%.
  The Commission, however, denies the applicant's proposal to charge a monthly fee when CMT is distributed as part of the basic service by broadcasting distribution undertakings such as cable systems. It also denies CMT's request to introduce a definition of music video programs because that would have the effect of reducing the minimum level of Canadian video clips that CMT must broadcast.
1. The Commission renews the broadcasting licence issued to 591810 B.C. Limited (Country Music Television) for the national English-language specialty programming undertaking known as Country Music Television (CMT) from 1 March 2001 to 31 August 2007. The licence is subject to the conditions specified in the appendix to this decision, and in the licence to be issued.
2. The Commission notes that, during the current licence term, CMT has complied with all conditions of its licence.
3. As part of its application for licence renewal, CMT proposed several amendments to its conditions of licence. These proposed amendments, as well as the Commission's determinations on them, are discussed in the following sections of this decision.
 

Introduction of a basic wholesale rate

4. Since it was licensed in 1994 (Decision CRTC 94-284), CMT has provided its service free of charge when it is distributed by a broadcasting distribution undertaking (BDU) as part of the basic service. In its licence renewal application, the applicant proposed to charge monthly wholesale rates of $0.06 and $0.02 per subscriber for carriage on the basic service in Anglophone and Francophone markets respectively.
5. The applicant's commitment to make CMT available free to subscribers when distributed on the basic service was the key reason that the Commission granted CMT "dual status" when it was first licensed. Specialty services with such status must be distributed as part of a BDU's basic service unless the specialty service licensee consents to distribution on a discretionary tier. Services that are available on the basic service reach more homes than those that BDUs distribute on a discretionary basis and therefore have the potential of achieving higher advertising revenues. CMT is the only one of the six English-language specialty services licensed in 1994 that has dual status.
6. In support of its current request, CMT indicated that many cable distributors have moved CMT from their discretionary tier to the basic service. This allows cable operators to find room on their discretionary tiers, which are often filled to capacity, for new analog services.
7. CMT, however, considers that migration of CMT to the basic service is having a detrimental effect. Basic carriage serves to reduce CMT's subscription revenues because it receives a subscriber fee when the service is distributed on a discretionary basis, but not when the service appears on basic. As well, some cable operators assign CMT a channel position on the basic service that is above the scrambled pay television channels. This tends to limit the number of viewers that watch the service and therefore decreases the potential advertising revenues for CMT.
8. CMT considered that implementation of a basic rate would remove any financial incentive for BDUs to move CMT to the basic service, and would result in additional revenue for CMT to spend on Canadian programming.
9. The Commission considers that CMT's original commitment not to charge a fee when the service is distributed on the basic service was an important commitment that was made during a competitive licensing process. It continues to be concerned that the cost of basic cable service remains affordable and notes that approval of CMT's proposal would increase the cost that subscribers pay for basic service.
10. As pointed out by interveners such as the Canadian Cable Television Association (CCTA) and CHUM Limited, CMT has been and remains a profitable service. As well, while noting the applicant's concerns about a migration of CMT to the basic service, it notes that Rogers and Shaw, the largest cable operators in Canada, still predominantly distribute CMT on a discretionary basis. CMT therefore receives a monthly fee for each subscriber who receives the service on these systems. The Commission therefore considers that, under the current circumstances, CMT has not demonstrated a clear need for implementation of a rate for basic carriage.
11. In light of the above, the Commission, by majority vote, denies the applicant's proposal. CMT must therefore continue to be free of charge to subscribers when a BDU distributes it as part of the basic service.
 

Spending on Canadian talent development

12. When it was licensed in 1994, the Commission imposed a condition of licence that required CMT to spend a total of $12,285,000 over the licence term on a Video Incentive Program. Through this program, CMT paid Canadian artists for the use of their videos. As well, CMT was required to spend $300,000 by 31 August 1995 on the production of Canadian country music videos.
13. When Shaw Communications Inc. acquired 90% of the issued and outstanding voting shares of CMT in November 1996, Shaw made further commitments totalling $1.9 million with respect to Canadian talent development over the remainder of the licence term. The licensee has fulfilled all of the Canadian talent development commitments noted above.
14. In its licence renewal application, CMT proposed a new approach to Canadian talent development to be called the Video Advantage Program. Under this program, a minimum of 10% of the previous year's gross revenues would be allocated to investment in Canadian video and other program production. At least half of this 10% would be allocated to the development and production of Canadian country music videos. The balance would be targeted to the development and creation of program content featuring Canadian country music artists, to be acquired from Canadian independent producers.
15. Interveners were in favour of CMT's proposal to support the production of new videos and other programming aimed at furthering the careers of Canadian artists. However, some interveners, such as the Canadian Independent Record Production Association (CIRPA) expressed concern about the amount of money that would be devoted to the project.
16. According to CMT's projections, a total of $9.6 million would be allocated to the Video Advantage Program over the new licence term. This would be lower than the total amount spent on the Video Incentive Program during the previous licence term. The licensee, however, noted that it proposed to significantly increase other types of Canadian programming expenditures if the Commission granted various requests related to changing the type of programming that CMT provides. These changes are discussed later in this decision.
17. The Commission considers that the Video Advantage Program proposed by the applicant will be of significant benefit to Canadian country music artists. It notes the encouragement that CMT received from the Canadian country music industry to develop a "star system" through, for example, interview programs, documentaries and other music programming from independent producers.
18. The Commission further considers that spending on Canadian talent development should remain at a level that at least matches that of the previous licence term. It notes that a spending level of 22% of the previous year's gross revenues would be consistent with the licensee's contribution to the Video Incentive Progam in recent years.
19. The Commission is therefore imposing a condition of licence, set out in the appendix to this decision, that requires that no less than 22% of the previous year's gross revenues be allocated to the Video Advantage Program. At least half of this amount must be allocated to develop and produce Canadian country music videos. The remainder of the 22% must be allocated to develop, produce and exhibit Canadian program content featuring Canadian country artists.
20. The Commission has also considered the current profitability of CMT and the financial resources available to Corus, the majority owner of the service, in establishing the 22% rate.
 

Programming changes

  Nature of programming
21. During the past licence term, CMT was required to ensure that at least 90% of its programming came from category 8b - Music video clips. During the remaining 10% of its schedule, it could offer programming from any category.
22. In its application for licence renewal, CMT proposed to decrease from 90% to 70% the minimum amount of programming that must consist of music videos. The remainder of its schedule would be drawn from a range of other information and entertainment programming categories, including feature films.
23. The applicant, however, proposed measures to limit the amount of programming offered in particular categories, and to ensure that the feature films it broadcast were compatible with CMT's overall orientation to country music.
24. First, it proposed a limitation of 14 hours per week, including repeats, of programming from categories 7a - Ongoing dramatic series, 7b Ongoing comedy series (sitcoms), 7c  - Specials, mini-series, made-for-TV feature films and 7d Theatrical films aired on TV.
25. Second, CMT proposed that the Commission impose a condition of licence that would permit it to broadcast no more than four music-related feature films per month. Further, under CMT's proposal, an individual feature film could be broadcast only once during the evening broadcast period, and repeated a maximum of three times at other times during the same broadcast week.
26. Third, CMT proposed that only feature films meeting one of the following criteria would qualify for broadcast:
  a) a country music artist is the key subject element of the film;
  b) a country music artist is cast in a key performing role; or
  c) the film soundtrack is predominantly country music.
27. CHUM expressed concern that the changes proposed by CMT could have a negative impact on its music video services MuchMusic and MuchMoreMusic. It was especially concerned that the criteria for feature films that the applicant proposed were too broad. Astral suggested that feature films should have to meet all three of the criteria that CMT proposed in order to be eligible for broadcast on the service.
28. The Commission considers that the reduction in the minimum level of programming that must consist of music videos from 90% to 70%, as well as the 14-hour limitation on material from category 7, are reasonable and consistent with the requirements of other music video services. The Commission therefore approves the applicant's proposals, which are reflected in conditions of licence set out in the appendix. As well, the condition of licence setting out the program categories that the applicant may broadcast specifies clearly that CMT will provide programming focused on country and country-oriented music.
29. The Commission is, however, concerned that the third criterion suggested by the applicant for deciding if feature films may be broadcast is too broad. Country music artists now record music in a variety of styles, some of which are quite similar to other types of popular music. A film that met the third criterion but not the other two might therefore not reflect the overall orientation of the service. The Commission therefore considers that only films that meet one of the first two criteria suggested by the applicant should be broadcast on CMT. This is reflected in the conditions of licence set out in the appendix.
  Canadian content
30. During the past licence term, CMT, by condition of licence, had to ensure that at least 40% of all music videos that it broadcast were Canadian.
31. As part of its application for licence renewal CMT proposed a change to this condition. Specifically, it proposed that the 40% Canadian content level be maintained for the 70% of its programming which consists of a flow of music videos. However, during the remaining 30% of its programming it indicated that it should be permitted to broadcast some Canadian music video programs. For conventional television stations and other specialty services that broadcast music, such programs are deemed to be Canadian if:
 
  • all elements other than the music video clips are Canadian, and
 
  • a minimum of 30% of the individual music video clips are Canadian.
32. The Commission does not apply the definition of a Canadian music program to music specialty services. It rather requires a minimum level of Canadian video clips to be broadcast over the entire broadcast week.
33. In support of its proposal, CMT noted, among other things, that there has been a decrease in the number of Canadian country music videos produced by major labels since 1996. CMT further noted that Canadian country artists are encouraged or even required to relocate to Nashville in order to boost their careers. This often results in the videos that these artists produce not qualifying as Canadian.
34. CIRPA opposed CMT's proposal, considering that the current 40% minimum Canadian content level for music videos should be maintained. The Directors Guild of Canada (DGC) submitted that CMT had not demonstrated that the proposed change was necessary.
35. The Commission notes that CMT made its commitment to broadcast a 40% level of Canadian videos during a highly competitive licence process. It further notes that the total number of videos broadcast on the service and consequently the number of Canadian videos will likely decrease in light of the Commission's approval of its proposal to reduce the required minimum level of music video programming from 90% to 70%. Therefore, in light of these factors, the Commission denies the applicant's proposal with respect to Canadian content for music videos.
36. A condition of licence set out in the appendix maintains CMT's current requirement that 40% of the music videos broadcast be Canadian, regardless of whether they are aired during video flow programming, or during other types of programming. In light of the above, the Commission will not apply the definition of a "Canadian music video program" as set out in Public Notice CRTC 2000-42 for purposes of determining if a program containing music videos is Canadian.
37. In addition, the Commission is imposing a new condition of licence to cover programming that does not consist of video clips. This condition requires that at least 60% of such programming during the broadcast year and at least 50% of such programming during the evening broadcast period be Canadian.
  Sources of programming
38. The DGC considered that CMT should acquire programming that is not part of its usual video flow from independent producers. The Canadian Film and Television Production Association considered that CMT should commit all spending resulting from the Video Advantage Program to producers who are not affiliated to Corus Entertainment Inc., a company affiliated to CMT. The Alberta Motion Picture Industries Association further urged the Commission to use caution and careful analysis in relation to the use of programming produced either by CMT itself or by affiliated companies.
39. The Commission notes these concerns and will monitor the situation, consistent with its approach in other cases of producer-affiliated broadcasters. The Commission also notes that, under the Video Advantage Program, money for the development and creation of program content featuring Canadian artists would be used to acquire programming from Canadian independent producers.
 

Other matters

  Cultural diversity
40. In Public Notice CRTC 1999-97 entitled Building on success - A policy framework for Canadian television, the Commission expressed its confidence that the Canadian broadcasting system could "better reflect the presence of minority groups in Canadian society, and. portray them accurately and fairly." The Commission encourages the licensee to recognize, respect and actively promote diversity.
  Employment equity
41. The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996 and therefore files reports concerning employment equity with Human Resources Development Canada.
  Service to the hearing-impaired
42. As part of its renewal application, the licensee stated that it will invest at least $50,000 per year over the new licence term, for the captioning of programming other than videoflow. The Commission also notes the licensee's statements that approximately 20% of all videos acquired by the service are closed captioned, and that approximately 35% of CMT's total library of music videos have been treated for CMT's "Songbook" format, which displays song lyrics on-screen.
43. The Commission notes the licensee's commitments, and requires the licensee to caption 90% of all non-music programming (including presentations by program hosts) during the broadcast day, by the end of the licence term. The Commission expects that the increase to the 90% level will be achieved in an incremental manner over the entire licence term.
  Program category definitions
44. Following additions and alterations to program category definitions set out in Public Notice CRTC 1999-205, the Commission has approved the changes as set out in Public Notice CRTC 2000-137. The changes do not reflect any significant alteration to CMT's existing nature of service.
  The public process and interventions
45. Following the original application process, the Commission requested further clarification from the licensee on a number of matters. All interveners to this application were provided with the opportunity to comment on CMT's responses, and CMT was given the opportunity to reply to those comments. In reaching its final decisions, the Commission has taken into account all of the submissions received.
46. In addition to any interventions discussed above, the Commission acknowledges and has considered all of the interventions submitted in support of this application.
 

Related CRTC documents

 
  • Decision 2000-160 - Six-month administrative renewal for Country Music Television
 
  • Decision 99-506 - Flexibility to broadcast infomercials for specialty services
 
  • Decision 97-388 - Licence amendment for Country Music Television
 
  • Decision 96-701 - Licence amendment for Country Music Television (CMT) (formerly New Country Network)
 
  • Decision 94-284 - The Country Network - a country music video service - Approved
 
  • Public Notice 1999-205 -Definitions for new types of priority programs; revisions to the definitions of television content categories; definitions of Canadian dramatic programs that will qualify for time credits towards priority programming requirements
 
  • Public Notice 1996-148 - Transfer of control
 
  • Public Notice 1992-59 - Implementation of an employment equity policy
  Secretary General
  This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: http://www.crtc.gc.ca 

Appendix to Decision CRTC 2001-154

  Conditions of licence for Country Music Television
  1.(a) The licensee shall provide a service with programming focused on country and country-oriented music. Programming shall be drawn from the following categories, as set out in Schedule I to the Specialty Services Regulations, 1990.
  Category 2b - Long-form documentary,
  Category 7a - Ongoing dramatic series,
  Category 7b - Ongoing comedy series (sitcoms),
  Category 7c - Specials, mini-series, made-for-TV feature films,
  Category 7d - Theatrical feature films aired on TV,
  Category 8a - Music and dance other than music video programs or clips,
  Category 8b - Music video clips,
  Category 8c - Music video programs,
  Category 9 - Variety,
  Category 10 - Game shows,
  Category 11 - General entertainment and human interest,
  Category 12 - Interstitials,
  Category 13 - Public service announcements, and
  Category 14 - Infomercials, promotional and corporate videos.
  (b) Not less than 70% of all programming broadcast by the licensee shall be drawn from Category 8b - Music video clips.
  (c) No more than 14 hours of the programming broadcast during any broadcast week shall be drawn from Category 7.
  (d) No more than four feature films (Category 7d) shall be broadcast per month. An individual feature film may be broadcast only once in the evening broadcast period. That film may be repeated up to three times, during the same broadcast week. No feature films shall be broadcast except those in which:
 

(i) a country music artist is the key subject of the film, or

 

(ii) a country music artist is cast in a key performing role.

  2.(a) Not less than 40% of all music videos (Category 8b) broadcast by the licensee during the broadcast year shall be Canadian music videos, whether aired as part of videoflow or packaged in other types of programming.
  (b) With the exception of programs drawn from Category 8b and 8c, the licensee shall devote not less than 60% of the broadcast year and not less than 50% of the evening broadcast period to the distribution of Canadian programs.
  3. The licensee shall, in each year of the licence term, allocate not less than 22% of the previous year's gross revenue for investment in Canadian video and program production, through CMT's Video Advantage Program (VAP), to be allocated as follows:
  a) A minimum of 11% of the previous year's gross revenue shall be allocated to develop and produce Canadian country music videos.
  b) Up to 11% of the previous year's gross revenue shall be allocated to develop and create program content featuring Canadian country music artists, to be acquired from Canadian independent producers.
  c) Together with its Annual Return, the licensee shall file a list of the contributions for each year, setting out how the contributions were directed.
  4. (a) Subject to subsection (b) and (d), the licensee shall not distribute more than twelve minutes of advertising material during each clock hour.
  (b) The licensee shall not distribute any paid advertising material other than paid national advertising.
  (c) 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.
  (d) 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.
  5. 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.
  6. The licensee shall adhere to the provisions of the Broadcast code for advertising to children, published by the CAB, as amended from time to time and approved by the Commission.
  7. The licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the CAB's Voluntary code regarding violence in television programming, as amended from time to time and approved by the Commission.
  For the purpose of these conditions, the terms "broadcast day", "broadcast month", "broadcast year," "clock hour" and "evening broadcast period" shall have the same meanings as those set out in the Television Broadcasting Regulations, 1987; and "paid national advertising" shall mean advertising that is purchased at a national rate and receives national distribution on the service.

Date Modified: 2001-02-28