ARCHIVED - Broadcasting Decision CRTC 2012-555

This page has been archived on the Web

Information identified as archived on the Web is for reference, research or recordkeeping purposes. Archived Decisions, Notices and Orders (DNOs) remain in effect except to the extent they are amended or reversed by the Commission, a court, or the government. The text of archived information has not been altered or updated after the date of archiving. Changes to DNOs are published as “dashes” to the original DNO number. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats by contacting us.

PDF version

Route reference: Part 1 application posted on 3 May 2012

Ottawa, 11 October 2012

Allarco Entertainment 2008 Inc.
Across Canada

Application 2011-1689-8

Complaint filed by Allarco Entertainment 2008 Inc. regarding the distribution of Shaw Movie Club by Shaw Cablesystems Limited and the distribution of the multiplexed channels of Movie Central Ltd.

The Commission finds that the provision of Shaw Movie Club by Shaw Cablesystems Limited does not contravene standard condition of licence 7(b) for video-on-demand undertakings or standard condition of licence 4(a) for pay television services.

The parties

1. Allarco Entertainment 2008 Inc. (Allarco) (general partner) is the licensee together with C.R.A. Investments Ltd. (limited partner), carrying on business as Allarco Entertainment Limited partnership, of Super Channel, a national, English-language general interest pay television programming service.

2. Shaw Communications Inc. operates various broadcasting distribution undertakings (BDUs) in Western Canada under the names Shaw Cablesystems Limited and Videon Cablesystems Inc. (Videon). Videon is also the licensee of Shaw on Demand’s Shaw Movie Club, a subscription video-on-demand (SVOD) package distributed by Shaw Cablesystems Inc. and Videon. Shaw Cablesystems Limited and Videon will be referred to collectively as “Shaw” for the remainder of this decision.

3. Movie Central Ltd. is the licensee of Movie Central, a regional general interest pay television service offered in British Columbia, Alberta, Saskatchewan, Manitoba, the Yukon Territory, the Northwest Territories and Nunavut. Movie Central Ltd. is wholly owned by Corus Premium Television Inc., a corporation wholly owned and controlled by Corus Entertainment Inc. Movie Central Ltd., Corus Premium Television Inc. and Corus Entertainment inc. will be referred to collectively as “Corus” for the remainder of this decision.

The complaint

4. On 11 December 2011, the Commission received an application by Allarco setting out a complaint regarding the distribution of Shaw Movie Club by Shaw and the distribution of the multiplexed channels1 of Movie Central.  

5. Since July 2011, Shaw has been offering the Shaw Movie Club SVOD package to its subscribers, which consists of on-demand movies sourced from Movie Central. By subscribing to Shaw Movie Club, consumers also receive access to three of the four linear multiplexed channels offered by Movie Central (Movie Central 1, Movie Central 2 and Movie Central 3). HBO Canada, the fourth linear multiplexed channel offered by Movie Channel, is not included in the Shaw Movie Club package.

6. Allarco alleged that Shaw Movie Club was operated by Shaw in breach of standard condition of licence 7(b) for video-on-demand (VOD) undertakings. This condition prohibits VOD services from offering a Canadian SVOD package that is directly competitive with a genre-protected Canadian linear pay or specialty service unless the package is an on-demand extension of the Canadian linear pay or specialty service.

7. Allarco further alleged that by permitting Shaw to distribute a “disaggregated” version of Movie Central, i.e., a version offering only three of its four multiplexed channels, Corus is in breach of standard condition of licence 4(a) for pay television services, which states that a licensee shall offer its multiplexed channels only together in a package.

8. The Commission received responses from Shaw and Corus but did not receive any interventions concerning this application. The public record for this proceeding is available on the Commission’s website at www.crtc.gc.ca under “Public Proceedings.”

Issues

9. The Commission considers that the issues it must address are the following:

Is the Shaw Movie Club SVOD package an on-demand extension of the linear pay television service Movie Central?  

Regulatory framework

10. Standard condition of licence 7(b) for VOD undertakings, set out in Broadcasting Regulatory Policy 2011-59, states:

The licensee is prohibited from offering a Canadian SVOD package that is directly competitive with a genre-protected Canadian linear pay or specialty service, unless the package is an on-demand extension of this Canadian linear pay or specialty service.

11. Accordingly, the prohibition set out in standard condition of licence 7(b) that a Canadian SVOD package may not be competitive with a genre-protected Canadian linear pay or specialty service would not apply if the on-demand programming offered by Shaw Movie Club is an extension of the linear pay television service Movie Central.

Positions of parties

12. Allarco was of the view that the Shaw Movie Club SVOD package should not be considered an extension of a Canadian linear pay service (namely, Movie Central) for the following reasons:

13. Shaw and Corus argued that Shaw Movie Club constitutes an on-demand extension of Movie Central since all of the content offered on the SVOD package is sourced from Movie Central.

14. Shaw and Corus acknowledged that Shaw Movie Club did not include content from HBO Canada and that Movie Central and Shaw Movie Club were offered at two different price points. However, they maintained that there was no regulation or policy prohibiting the offering of more than one on-demand extension of a service or requiring the SVOD extension of a pay or specialty service to be exactly the same in terms of content as a pay and specialty service or for such a service to be offered on identical terms as a linear service.

15. Therefore, Shaw and Corus were of the view that Shaw Movie Club is a valid on-demand extension of Movie Central and that, accordingly, the prohibition from being competitive with a genre-protected Canadian linear pay or specialty service set out in standard condition of licence 7(b) for VOD undertakings would not apply.

Commission’s analysis and decision

16. As noted above, in Broadcasting Regulatory Policy 2011-59, the Commission determined that Canadian SVOD packages should not be directly competitive with a genre-protected Canadian linear service, except for an on-demand extension of this linear service.

17. The notion of an on-demand extension (or on-demand version) was defined by the Commission in Broadcasting Regulatory Policy 2010-190, in which it stated that such services “are offered on dedicated channels and are made up of programming that has already aired on the linear service.”

18. In the present case, the on-demand programming offered by Shaw Movie Club is comprised entirely of programming that has already been broadcast on Movie Central, the linear service.

19. The Commission is of the view that an on-demand extension does not necessarily have to offer all the programming available on the linear service. Various considerations, such as the potential consumer demand for on-demand versions of specific programs and the difficulty negotiating on-demand rights for certain programs, could lead licensees to decide not to offer a complete duplication of the linear programming in an on-demand extension.

20. Accordingly, the Commission considers that the fact that Shaw Movie Club is not offering an on-demand version of all the programming available on Movie Central does not necessarily mean that it is not an extension of Movie Central.

21. With respect to the fact that an on-demand extension known as Movie Central on Demand also exists, nothing in the policy prevents a pay or specialty service from having more than one extension or from offering different extensions at different price points. Additionally, the Commission notes that although Shaw Movie Club is offered at a lower price than Movie Central, the Shaw Movie Club subscription is still linked with the linear service.

22. Based on the above, the Commission considers that Shaw Movie Club qualifies as an on-demand extension of Movie Central. Accordingly, the prohibition on being directly competitive with a genre-protected Canadian linear pay or specialty service set out in standard condition of licence 7(b) for VOD undertakings does not apply.

Is Corus in breach of standard condition of licence 4(a) for pay television services by permitting Shaw to offer a linear version of Movie Central not containing HBO Canada?

Regulatory framework

23. Standard condition of licence 4(a) for pay television services, set out in Broadcasting Regulatory Policy 2011-443, states:

The licensee shall offer its multiplexed channels only together in a package.

Positions of parties

24. Allarco submitted that by permitting Shaw to distribute a “disaggregated” version of Movie Central (i.e., a version not offering all of its multiplexed channels together in a package), Corus is in breach of standard condition of licence 4(a) for pay television services.

25. Allarco noted that subscribers of Shaw Movie Club receive access to only three of the four Movie Central linear channels and submitted that there was no technical or legal reason why HBO Canada should be excluded from the linear offering.

26. In response, Corus argued that because of capacity or technological issues, all of the multiplexed channels of pay television services have almost never been available in all households. Corus added that the Commission recognized this practice when, in 2007, it approved the distribution of one of Encore Avenue Ltd.’s multiplexed channels on an unencrypted basis.2

Commission’s analysis and decision

27. In Broadcasting Regulatory Policy 2011-443, the Commission established a standard condition of licence stipulating that pay television services must offer their multiplexed channels only together in a package.

28. This condition of licence was first introduced in several individual pay television licences in 2001 in order to prevent individual multiplexed channels from being offered on a standalone basis. Since some pay television licensees had adopted a thematic approach in programming (i.e., individual multiplexed channels dedicated to comedy, action, romance, etc.), the Commission was concerned that if offered on a standalone basis, multiplexed channels could be competitive with Category 1 services (now Category A services).

29. In the case of the linear programming offered by Shaw Movie Club, none of Movie Central’s multiplexed channels are offered on a standalone basis. Further, there is no evidence that a package comprising the linear channels Movie Central 1, Movie Central 2 and Movie Central 3 modifies the nature of the pay television service Movie Central in such a way as to render it competitive with any Category A services.

30. In light of the above, the Commission finds that Corus is not in breach of standard condition of licence 4(a) for pay television services by permitting Shaw to offer a linear version of Movie Central not containing HBO Canada.

Secretary General

Related documents

Footnotes

[1] Pay television services often distribute their programming on two or more channels. These channels are referred to as “multiplexed channels.”

[2] See Broadcasting Decision 2007-411.

Date modified: