|
Broadcasting Decision CRTC 2004-8
|
|
See also: 2004-8-1
Ottawa, 21 January 2004 |
|
CTV Television Inc.
Across Canada |
|
Application 2002-0895-1
Public Hearing in the National Capital Region
26 May 2003 |
|
CTV Newsnet – Licence renewal
|
|
In this decision, the Commission
renews the broadcasting licence for the specialty television
service known as CTV Newsnet, from 1 March 2004 to 31 August 2010. The
details regarding the licensee's specific proposals for the new licence
term, and the conditions of licence and other obligations determined by
the Commission are set out below. |
|
The application
|
1. |
The Commission received an application by
CTV Television Inc. (CTV) for the renewal of the broadcasting licence
for the national, English-language specialty television service known as
CTV Newsnet. |
2. |
The Commission’s general analysis with
respect to its consideration of this and other applications heard at the
26 May 2003 Public Hearing for the licence renewal of specialty
television services is set out in Introduction to Broadcasting
Decisions CRTC 2004-6 to 2004-27 renewing the licences of 22 specialty
services, Broadcasting Public Notice CRTC 2004-2, 21 January 2004
(Public Notice 2004-2). |
3. |
The Commission received 540 interventions
that specifically supported CTV Newsnet’s licence renewal application.
In addition, 23 interveners opposed the licensee’s request to increase
its maximum wholesale rate and one expressed concern regarding the audio
description provided by the service. The concerns raised by these
interveners are discussed in this decision. |
4. |
Other interveners raised general concerns
related to all of the specialty television licence renewal applications
considered as part of this public process. These concerns are discussed
in Public Notice 2004-2. |
5. |
On the basis of its review of this licence
renewal application and having considered the interveners' comments, the
Commission renews the broadcasting licence for CTV Newsnet, from
1 March 2004 to 31 August 2010.1
The licence will be subject to the conditions specified therein and to
the conditions set out in the appendix to this decision. |
|
Wholesale rate
|
6. |
As part of its licence renewal application,
CTV requested an amendment to its conditions of licence in order to
increase the maximum wholesale rate it charges each exhibitor of the
service by $0.11, from $0.085 per subscriber per month to $0.195 per
subscriber per month, when the service is carried as part of the basic
service. |
7. |
The licensee contended that CTV Newsnet
could not achieve profitability unless it was granted an increase in its
wholesale rate. It claimed that viewers’ ever increasing demand to
receive immediate coverage of news events has resulted in a fundamental
change in the business model for headline news services. In order to
meet viewers’ expectations, the licensee implemented improvements to
CTV Newsnet’s service during its first licence term, including
increasing staffing across the country, adding technical enhancements
and providing more timely news coverage. Consequently, CTV Newsnet
incurred significantly higher costs than anticipated in its original
business plan, resulting in a $16 million loss over the licence term. |
8. |
The licensee submitted that CTV Newsnet’s
advertising revenues and subscriber levels have reached a plateau and
would grow only minimally in the new licence term. In the licensee’s
view, the only means for CTV Newsnet to generate additional revenues
would be through an increase in its subscriber fees. The licensee
claimed that merely maintaining the various improvements that it had
initiated during the current licence term would cost $21 million over
the new licence term and, if it were not granted a rate increase, it
would be forced to abandon these initiatives in order to achieve a
business plan that would be "break-even, at best." |
9. |
The licensee expected that the proposed
increase in CTV Newsnet’s wholesale rate would generate incremental
subscriber revenues totalling $52.3 million over the new licence term.
In response to questioning at the hearing, the licensee stated that less
than $10 million of these additional revenues would be allocated to CTV
Newsnet’s profit before interest and tax (PBIT). It made a commitment
that $42.7 million would be invested in news gathering, program
production and associated expenses. |
10. |
In response to a request by the Commission
at the hearing, the licensee submitted documentation dated 30 May 2003
describing the specific initiatives it would implement over the new
licence term if its proposed rate increase were approved. The licensee
planned to allocate $14.6 million to implement new improvements to
CTV Newsnet’s service, including introducing a live-anchor format that
allows more rapid updates of the content of the 15-minute news wheel. It
would also spend $21 million to maintain programming improvements
initiated during the current licence term. Of the remaining revenues
generated by the proposed rate increase, $2.2 million would be allocated
to associated sales and promotion, $0.6 million to additional general
and administrative expenses, $4.3 million to additional depreciation
expenses, and $9.6 million to the licensee’s PBIT. |
|
Interventions
|
11. |
Twenty-three parties filed interventions
opposing the proposed rate increase. |
12. |
The Canadian Cable Television Association
(CCTA) and Star Choice Television Network Incorporated (Star Choice),
the licensee of a national direct-to-home satellite distribution
undertaking, alleged that CTV had underestimated its ability to generate
additional revenues from existing sources, such as subscriber fees and
advertising revenues. Both the CCTA and Star Choice contended that
CTV Newsnet has adequate financial resources to provide a level of
service that would be consistent with its mandate without an increase in
its wholesale rate. |
13. |
The Canadian Cable Systems Alliance (CCSA),
which represents 90 small and medium-sized cable broadcasting
distribution undertakings (BDUs) across Canada, expressed concern that
approval of the proposed increase in CTV Newsnet’s wholesale rate would
result in substantial new costs for its members without any benefit for
their subscribers. According to the CCSA, increasing the price of the
service would impede the ability of some cable BDUs to fulfil their
obligation under section 3(t) of the Broadcasting Act "to provide
efficient delivery of programming at affordable rates" and could force
some small cable BDUs to drop CTV Newsnet from their line-up. |
14. |
In individual interventions, numerous
distributors or their representatives echoed the concerns raised by the
CCTA and the CCSA. Many of these interveners emphasized that the cost of
any rate increase must be absorbed by the distributor or the consumer.
They also suggested that a rate increase might cause some subscribers to
cancel their services. MTS Communications Inc., the licensee of a cable
BDU serving Winnipeg and surrounding communities in Manitoba, contended
that the proposed rate increase would have a negative impact on its
operation as a new entrant in the marketplace, regardless of whether the
cost was absorbed by the consumer or the distributor. |
|
The licensee’s reply
|
15. |
In response, the licensee maintained that
its projections of minimal growth in subscriber and advertising revenues
over the new licence term are realistic. The licensee argued that the
interveners did not substantiate their claims that a rate increase would
not deliver good value to subscribers or that it would cause them to
cancel their service. According to the licensee, its surveys indicated
strong support for CTV Newsnet. The licensee further maintained that the
proposed wholesale rate increase would strengthen CTV Newsnet, thus
enabling it to fulfil its mandate as a national headline news service. |
|
The Commission’s analysis and determination
|
16. |
The Commission considers that the basic
monthly rate for specialty television services should be as affordable
as possible for subscribers. As explained in Public Notice
2004-2, the
Commission considers that specialty services should examine all possible
means to increase revenues, particularly advertising revenues, before
applying for a rate increase. In addition, the Commission expects that
any additional revenues generated from a rate increase will be allocated
to programming that is consistent with the licensee’s nature of service.
The Commission considers that no portion of a rate increase should be
directed to enhancing a licensee’s profitability. |
17. |
In the present case, the Commission has
taken into consideration the concerns expressed by the interveners with
respect to the proposed wholesale rate increase and, in particular, its
potential impact on subscribers. The Commission also recognizes the
financial difficulties that the licensee has experienced during
CTV Newsnet’s first licence term. The Commission considers that it is
important that CTV Newsnet be able to improve the quality of its
programming in order to fulfil its mandate as a national headline news
service. The Commission is, therefore, prepared to approve the portion
of the proposed rate increase that will fund incremental expenditures to
implement new improvements to CTV Newsnet’s programming and a portion of
the proposed rate increase that will fund incremental expenditures to
maintain the programming enhancements initiated during the first licence
term. The Commission, however, is not prepared to grant the portion of
the proposed rate increase that would be allocated to funding the full
cost of programming enhancements undertaken in the first licence term,
or for costs that are not directly related to improving the service’s
programming, or to contribute directly to the licensee’s profitability.
Based on its analysis of the programming initiatives described in the
documentation submitted by the licensee, the Commission finds that a
rate increase of $0.06 per subscriber per month is justified. |
18. |
The Commission, therefore,
approves in part the licensee’s request to amend its conditions of
the licence in order to increase the service’s monthly wholesale rate.
Accordingly, by condition of licence, commencing 20 April 2004,
the Commission authorizes the licensee to charge BDUs distributing
CTV Newsnet a maximum of $0.145 per subscriber per month when it is
distributed as part of the basic service. The condition of licence is
set out in the appendix to this decision. |
19. |
The Commission expects that the licensee
will spend the incremental revenues resulting from this increase in its
wholesale rate on new programming improvements and on maintaining
programming enhancements that contribute to CTV Newsnet’s mandate as a
national headline news service. Beginning in the broadcast year ending
31 August 2005, the licensee must file with its annual return a separate
report demonstrating that CTV Newsnet has fulfilled this expectation,
including the programming initiatives that were implemented and their
cost. |
|
Cultural diversity
|
20. |
As stated in Public Notice
2004-2, the
Commission expects the licensee to endeavour, through its programming
and employment opportunities, to reflect Canada’s ethno-cultural
minorities and Aboriginal peoples. The Commission further expects the
licensee to ensure that the on-screen portrayal of such groups is
accurate, fair and non-stereotypical. |
21. |
CTV has filed a corporate cultural
diversity plan with the Commission setting out specific commitments
relating to corporate accountability, reflection of diversity in
programming, and community involvement as they relate to the presence
and portrayal of cultural diversity. The licensee indicated that many of
the plan’s initiatives have been directly aimed at CTV’s newsgathering
operations, including CTV Newsnet. The "Rainbow Rolodex" of
authoritative spokespeople from a variety of backgrounds is one of the
initiatives used by CTV Newsnet to ensure that its news coverage
reflects Canada’s diversity. CTV Newsnet also maintains a close
partnership with the Aboriginal Peoples Television Network, particularly
in the area of news gathering. |
22. |
The Commission expects the licensee to
continue to contribute to cultural diversity and to implement the
commitments set out in its corporate cultural diversity plan, including
those elements directly aimed at news gathering and CTV Newsnet. |
23. |
The Commission notes that CTV’s corporate
cultural diversity plan currently encompasses persons with disabilities.
As discussed in Public Notice 2004-2, the Commission expects the
licensee to continue to incorporate persons with disabilities into its
cultural diversity corporate planning and to ensure that this is
reflected in its annual reports on cultural diversity, beginning with
the report to be filed in December 2004. |
|
Employment equity and on-air presence
|
24. |
Pursuant to section 5(4) of the
Broadcasting Act, the Commission does not regulate or supervise
matters concerning employment equity in relation to broadcasting
undertakings with more than 100 employees, as they are subject to the
Employment Equity Act. However, the Commission continues to regulate
matters such as on-air presence. |
25. |
The Commission expects the licensees of
specialty television services to ensure that the on-air presence of
members of the four designated groups (women, Aboriginal persons,
persons with disabilities and members of visible minorities) is
reflective of Canadian society, and that members of these groups are
presented fairly and accurately. |
26. |
In response to questions by the Commission
on this issue, the licensee reported that CTV Newsnet currently has five
on-air anchors of which three are members of visible minorities. The
licensee also stated that it has undertaken initiatives during the
current licence term to recruit and improve the on-air presence of
Aboriginal persons. |
27. |
The Commission encourages the licensee to
continue with its initiatives to recruit Aboriginal persons during the
new licence term. The Commission further expects CTV to take steps
during the new licence term to address any gaps in the on-air presence
of members of the four designated groups on CTV Newsnet. |
|
Service to persons who are deaf or hard of hearing
|
28. |
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. Most English-language
services must close caption at least 90% of their programming. |
29. |
During the current licence term, CTV
Newsnet was expected to close caption all of the programming offered on
the service. The licensee stated that, at times, technical difficulties
and unexpected circumstances impeded its ability to achieve this level
of captioning. It stated that its closed captioning efforts are now more
successful. |
30. |
As part of the licence renewal process, the
licensee made a commitment to close caption all of CTV Newsnet's
programming during the new licence term. However, the licensee submitted
that 90% of the broadcast day would be a more appropriate level for the
purpose of a condition of licence. It explained that a 90% requirement
would allow for a reasonable margin of error and ensure that a technical
error does not cause CTV Newsnet to be in non-compliance with a
condition of licence. |
31. |
The Commission recognizes that requiring
100% captioning at all times by condition of licence may not be
reasonable. A 90% obligation provides some flexibility to cover
unforeseen circumstances (such as late delivery of captions, technical
malfunctions, or the lack of availability of captions for programs
acquired outside North America), or programming where captioning may not
be feasible, such as third-language programming. |
32. |
Consistent with its general approach for
English-language services, the Commission is imposing a condition of
licence requiring the licensee to close caption at least 90% of all
programming aired during the broadcast day, beginning not later than
1 September 2004. The condition of licence is set out in the appendix to
this decision. |
33. |
At the same time, the Commission expects
the licensee to abide by its commitment to close caption all the
programming aired on CTV Newsnet during the new licence term. The
Commission further expects that, during the new licence term, the
licensee will focus on improving the quality, reliability and accuracy
of its closed captioning, and work with representatives of the deaf and
hard of hearing community to ensure that captioning continues to meet
their needs. |
|
Service to persons who are blind or whose vision is impaired
|
34. |
The Commission is committed to improving
the accessibility of television programming for persons with visual
impairments through the provision of audio description2
and video description (also known as described video).3 |
35. |
The licensee stated that audio description
is an inherent aspect of the programming offered by a news service
because a significant part of news programming consists of play-by-play
description, analysis and discussion. In training its on-air staff, the
licensee, nevertheless, emphasizes the importance of providing audio
description when text and graphics are displayed on screen. CTV stated
that all advisories broadcast on CTV Newsnet as well as most still
images, such as phone numbers, stock figures or weather information
posted on the screen, are presented in both a visual format and in a
voice-over. |
36. |
During the current licence term, the
Commission received a number of complaints from viewers regarding the
quality of audio description offered on CTV Newsnet, particularly during
the presentation of weather reports. In addition, as part of this
licence renewal process, the Commission received an intervention from
Mr. J. Clark of Toronto claiming that CTV Newsnet does not provide
enough audio description and that what it does provide is of inferior
quality. |
37. |
The licensee did not specifically reply to
this intervention. |
38. |
The Commission considers that news services
have a particular responsibility to ensure that their programming is as
accessible as possible. Accordingly, the Commission expects that, during
the new licence term, the licensee will provide audio description,
wherever appropriate, and ensure that the audio description offered by
CTV Newsnet is of good quality. The Commission further expects the
licensee to take the necessary steps to ensure that its customer service
responds to the needs of viewers who have visual impairments. |
|
Programming delivered across time zones
|
39. |
As discussed in Public Notice
2004-2, the
Commission expects the licensee to demonstrate responsibility in the
scheduling of programming intended for adult audiences, taking into
account time zone differences between where a program originates and
where it is received. |
|
Compliance with industry codes
|
40. |
In accordance with its usual practice for
specialty television services, the Commission is imposing conditions
of licence requiring the licensee to adhere to industry codes
related to sex-role portrayal, advertising to children, and the
depiction of violence in television programming. |
|
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 Broadcasting Decision CRTC 2004-8
|
|
Conditions of licence
|
|
1. (a) The licensee shall provide a national English-language
television specialty service, and shall draw its programming
exclusively from the following categories, as set out in section 6
of Schedule I of the Specialty Services Regulations, 1990, as
amended from time to time:
|
|
1 News
3 Reporting and actualities
13 Public service announcements
14 Infomercials, promotional and corporate videos
|
|
(b) Subject to 1. (d), the licensee shall maintain a "headline
news" format, as described in its original application for a
broadcasting licence, presented in a continuously-updated fifteen
minute wheel.
|
|
(c) Subject to 1. (d), in any broadcast week, no fifteen-minute
period shall elapse without the broadcast of a headline news segment
of a minimum of two minutes duration (excluding commercials). The
headline news segment must contain a comprehensive news bulletin
that includes such programming elements as news, weather, sports and
business reports.
|
|
(d) The licensee shall be deemed to be in compliance with this
condition provided there are no more than 25 occurrences, during any
broadcast week, in which more than 15 minutes elapse without the
broadcast of a headline news segment, as described in 1. (c). For
the purposes of assessing compliance with this requirement, each
15-minute period that elapses without the broadcast of such a
headline news segment shall count as a separate occurrence.
|
|
(e) During any occurrence in which more than 15 minutes elapse
without the broadcast of a headline news segment, the licensee must
provide an onscreen display of the headline news items.
|
|
(f) For the purpose of this condition, a "broadcast week" shall
be defined as the period of seven consecutive broadcast days,
beginning on Sunday.
|
|
2. The licensee shall devote the entire broadcast year to the
distribution of Canadian programs.
|
|
3. (a) The licensee shall not distribute more than twelve
(12) minutes of advertising material during each clock hour.
|
|
(b) The licensee shall not distribute any paid advertising
material other than paid national advertising.
|
|
(c) 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.
|
|
4. Commencing 20 April 2004, the licensee shall charge each
exhibitor of the service a maximum wholesale rate of $0.145 per
subscriber per month, where the service is carried as part of the
basic service.
|
|
5. The licensee shall provide closed captioning for not less than
90% of all programs aired during the broadcast day, beginning not
later than 1 September 2004.
|
|
6. 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. The
application of the foregoing condition of licence will be suspended as
long as the licensee remains a member in good standing of the Canadian
Broadcast Standards Council (CBSC).
|
|
7. 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.
|
|
8. 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. The application of
the foregoing condition of licence will be suspended as long as the
licensee remains a member in good standing of the CBSC.
|
|
For the purpose of these conditions of
licence, the terms "broadcast day", "broadcast year", "evening broadcast
period" and "clock hour" shall have the same meaning 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; "paid national advertising" shall mean advertising material as
defined in the Specialty Services Regulations, 1990 and that is
purchased at a national rate and receives national distribution on the
service. |
|
Footnotes:
2Audio
description involves the provision of basic voice-overs of textual or
graphic information displayed on the screen. A broadcaster providing
audio description will, for example, not simply display sports scores on
the screen, but also read them aloud so that people who are visually
impaired can receive the information.
|