ARCHIVED - Broadcasting Decision CRTC 2003-452

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Broadcasting Decision CRTC 2003-452

  Ottawa, 9 September 2003
  Westman Media Cooperative Ltd.
Brandon, Minnedosa, Neepawa and Carberry, Manitoba
  Application 2002-0689-8
Public Hearing in Edmonton
16 June 2003
 

New video-on-demand service for Manitoba

  The Commission approves the application by Westman Media Cooperative Ltd. for a licence to operate a regional, Manitoba-based, predominantly English-language, general interest video-on-demand service consisting primarily of feature films.
 

The application

1.

The Commission received an application by Westman Media Cooperative Ltd. (Westman) for a broadcasting licence to operate a regional, Manitoba-based, predominantly English-language video-on-demand (VOD) programming service. The applicant proposed that, initially, the VOD service would consist largely of feature films. Westman indicated, however, that other programming categories, including long-form documentaries, drama and comedy, and music and dance could also be made available. Westman added that, while programming would be predominantly in English, programming in French would also be offered in accordance with audience demand. It estimated that French-language programming might represent approximately 5% of its total product offering.

2.

The applicant is currently the licensee of broadcasting distribution undertakings (BDUs) providing cable television service to Brandon, Minnedosa, Neepawa and Carberry, Manitoba. The Commission notes Westman's plans to limit delivery of its proposed VOD service to the customers of these four BDUs. The Commission, however, reminds the applicant that it has established a competitive licensing framework for the VOD industry and that Westman, as a VOD licensee, may negotiate arrangements for the distribution of its proposed VOD service by other BDUs in the region.
 

Intervention

3.

The Commission received one intervention to this application. In its filing, the Canadian Cable Television Association (CCTA) supported a proposal by Westman to direct its mandatory contribution to Canadian programming, i.e., a minimum of 5% of its gross revenues derived from broadcasting activities, to local expression rather than to an existing independent Canadian production fund. Specifically, Westman proposed to devote these revenues to funding the community programming activities of its Manitoba BDUs.

4.

The requirement that VOD undertakings contribute, by condition of licence, 5% of their gross revenues from broadcasting activities to Canadian programming, and specifically, to an independent Canadian production fund, is one of a number of elements contained in the Commission's licensing framework for VOD services referred to above. This framework is set out in Licensing of New Video-on-demand Programming Undertakings - Introduction to Decisions CRTC 97-283 to 97-287,Public Notice CRTC 1997-83, 2 July 1997 (Public Notice 1997-83) and Introductory statement to Decisions CRTC 2000-733 to 2000-738: Licensing of new video-on-demand and pay-per-view services, Public Notice CRTC 2000-172, 14 December 2000 (Public Notice 2000-172). Westman, however, argued that its community channel activities were more deserving of the funding. It added that 5% of its VOD gross revenues "would not be a significant amount of money for a Canadian production fund but it is very significant to our Community Programming Department."

5.

The CCTA also suggested that the amount of money concerned would be very small. It noted further that Westman, in its capacity as a BDU licensee, has already been granted relief by the Commission from the requirements pertaining to contributions to independent Canadian program production funds contained in the Broadcasting Distribution Regulations (the Regulations), and is permitted to direct fully 5% of the gross revenues earned through its BDU activities to the community channel. This relief was granted by the Commission in Decision CRTC 99-85, 13 April 1999. The Commission stated that the exception to the Regulations was warranted by, among other things, the not-for-profit nature of the undertaking and the fact that Westman's Brandon BDU funds the only local television programming in several communities. According to the CCTA, this same rationale supports Westman's request for an exception to the VOD licensing framework.
 

The Commission's analysis and determination

6.

The Commission has considered the arguments of the applicant and the intervener, but is not persuaded that an exception to the VOD licensing framework is warranted in the circumstances of the present case. The Commission notes in this regard the applicant's statement, as part of the deficiency process, that it would be prepared to accept a requirement that it contribute to an independent Canadian program production fund a minimum of 5% of the gross revenues derived from its activities as a VOD licensee.

7.

Another element of the Commission's VOD licensing framework is the requirement that VOD licensees, by condition of licence, remit to Canadian rights holders 100% of the revenues that they earn from distributors for the exhibition of Canadian films. In its application, as filed, Westman had indicated that it intended to remit a negotiated percentage of these revenues to rights holders. However, in response to questions put by the Commission during the deficiency process, Westman agreed to accept a condition of licence requiring that it remit to rights holders 100% of the revenues that it earns as a VOD licensee from the exhibition of Canadian films, less applicable operating expenses.

8.

The Commission notes the applicant's willingness to accept such a requirement, as qualified above, but reminds Westman that the VOD licensing framework makes no provision for the deduction of operating expenses from the amounts that VOD licensees must, by condition of licence, remit to rights holders. Nor, in the Commission's view, would such deductions be appropriate.

9.

The Commission is committed to improving service to viewers who are deaf or hard of hearing, and has consistently encouraged broadcasters to increase the amount of closed captioned programming they broadcast. The Commission generally requires all broadcasters to offer a minimum percentage of closed captioned programs consistent with the nature of their services. In its application, as filed, Westman did not indicate what levels of closed captioning it intended to provide. Accordingly, the Commission questioned the applicant on the matter as part of the deficiency process. It also referred Westman to Théâtre Archambault @ la maison - video-on-demand service, Broadcasting Decision CRTC 2002-203, 23 July 2002, in which the Commission imposed a condition of licence on a new VOD licensee requiring that it caption not less than 90% of its programming by no later than 1 September 2006 (i.e., two years prior to the expiry of the licence).

10.

In response to the Commission's deficiency questions, Westman stated that it would accept the challenge to provide closed captions for not less than 90% of its program offering by no later than 1 September 2006. In the circumstances, the Commission considers that the applicant should be required to provide closed captions for a minimum of 90% of all programming by no later than 1 September 2008 (i.e., two years prior to the expiry of the licence).

11.

Based on its examination of this application, and taking into account the various matters and Commission determinations outlined above, the Commission is satisfied that the application is in conformity with the VOD licensing framework and, accordingly, approves the application by Westman for a licence to operate a video-on-demand service.
 

Issuance of the licence

12.

The licence will expire 31 August 2010, and will be subject to the conditions of licence specified therein and to the conditions of licence listed in the appendix to this decision. The licence for this undertaking will be issued once the applicant has informed the Commission in writing that it is prepared to commence operations. The undertaking must be operational at the earliest possible date and, in any event, no later than 24 months from the date of this decision, unless a request for an extension of time is approved by the Commission before 9 September 2005. In order to ensure that such a request is processed in a timely manner, it should be submitted at least 60 days before this date.
 

Other matters

 

French-language programming

13.

As noted above, Westman indicated that French-language programming would be offered in accordance with audience demand, and estimated that this programming might represent approximately 5% of its total product offering. In Public Notice 2000-172, the Commission underscored the importance it places on subscribers being able to select programming in the official language of their choice. Accordingly, as part of its licensing framework for VOD services, the Commission stated that it would expect, to the maximum extent possible, that: ".each VOD service make its on-demand program offering available to customers in both official languages [and that licensees] adhere to their commitments with respect to French-language programming." The Commission reiterates these expectations and confirms their applicability to Westman's proposed VOD service.
 

Programming packages

14.

In accordance with its policy on programming packages set out in Public Notice 2000-172, the Commission expects the applicant to ensure that its programming packages are made available to viewers for periods not exceeding one week.
 

Adult programming

15.

In addition to the conditions of licence contained in the appendix requiring that the licensee adhere to the Pay television and pay-per-view programming code regarding violence, and to the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, the Commission expects Westman to adhere to its commitment to submit its internal policy on the broadcast of adult programming before it implements the service.
 

Cultural diversity

16.

Section 3(1)(d)(iii) of the Broadcasting Act stipulates that the Canadian broadcasting system should "through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society".

17.

More broadly, the Commission expects the licensee to endeavour, through its programming and employment opportunities, to reflect the presence in Canada of cultural and racial minorities and Aboriginal peoples. The Commission further expects the licensee to ensure that the on-screen portrayal of such groups is accurate, fair and free of stereotypes.
 

Service to persons with visual impairments

18.

The Commission is committed to improving the television service available to persons with visual impairments through the provision of audio description and video description (also known as described video). Accordingly, the Commission expects Westman to provide an audio description of all programming that contains textual or graphic information, including programming broadcast on the barker channel. The Commission also expects Westman to acquire and make available described versions of programming where possible, and to ensure that customer service responds to the needs of visually impaired customers. The Commission notes Westman's commitment to provide a telephone line for visually-impaired viewers to place VOD orders. Further, it encourages Westman to ensure that a proportion of its titles is available with description.
 

Employment equity

19.

Because this applicant is subject to the Employment Equity Act and files reports concerning employment equity with Human Resources Development Canada, its employment equity practices are not examined by the Commission.
  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: www.crtc.gc.ca 

 

Appendix to Broadcasting Decision CRTC 2003-452

 

Conditions of licence

 

1. The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of section 4 (logs ands records).

 

2. The licensee shall maintain for a period of one year, and submit to the Commission upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.

 

3. Except as authorized by the Commission, the broadcasting undertaking licensed herein shall be operated in fact by the licensee itself.

 

4. The license shall ensure that, at all times:

 

a) not less than 5% of the English-language feature films and not less than 8% of the French-language feature films in the inventory available to subscribers are Canadian;

 

b) the feature film inventory includes all new Canadian feature films that are suitable for VOD exhibition and which meet the approved Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services; and

c) not less than 20% of all programming other than feature films in the inventory available to subscribers is Canadian.

5. The licensee shall contribute 5% of its gross annual revenues to an existing Canadian program production fund administered independently of its undertaking. Further, the licensee shall submit to the Commission, before it implements the service, the name of the Canadian program production fund to which it will make these contributions.

For the purpose of this condition:

a) "gross annual revenues" shall be 50% of the total revenues received from customers of the broadcasting distribution undertaking distributing the video-on-demand service, when the video-on-demand service is a "related service";

b) a "related service" is one in which the broadcasting distribution undertaking distributing the video-on-demand service, or any of its shareholders owns, directly or indirectly, 30% or more of the equity of the video-on-demand service;

c) "gross annual revenues" shall be the total amount received from the broadcasting distribution undertaking distributing the video-on-demand service, when the video-on-demand service is not a "related service".

 

6. The licensee shall ensure that not less than 25% of the titles promoted each month on its barker channel are Canadian titles.

 

7. The licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.

 

8. The licensee shall not enter into an affiliation agreement with the licensee of a distribution undertaking unless the agreement incorporates a prohibition against linkage of its service with any non-Canadian discretionary service.

 

9. No later than 1 September 2008 and until the end of the licence term, the licensee shall caption at least 90% of all titles in its inventory.

 

10. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' Sex-role portrayal code for television and radio programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.

 

11. The licensee shall adhere to the Pay television and pay-per-view programming code regarding violence, as amended from time to time and approved by the Commission.

 

12. The licensee shall adhere to the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, as amended from time to time and approved by the Commission.

Date Modified: 2003-09-09

Date modified: