Broadcasting Notice of Consultation CRTC 2010-952 PDF version Ottawa, 22 December 2010 Notice of hearing 4 April 2011 Gatineau, Quebec Group-based licence renewals for English-language television groups Deadline for submission of interventions/comments: 28 January 2011 [Submit an intervention/comment or view related documents] The Commission will hold a hearing commencing 4 April 2011 at 9:00 a.m., at the Conference Centre, Portage IV, 140 Promenade du Portage, Gatineau, Quebec, to consider the applications described below: Introduction In A group-based approach to the licensing of private television services, Broadcasting Regulatory Policy CRTC 2010-167, 22 March 2010 (Broadcasting Regulatory Policy 2010-167), the Commission announced a new group-based approach to the licensing of private television services affiliated with larger Canadian broadcasting groups (the group-based policy). The Commission indicated that the new group-based framework would apply, at the outset, to ownership groups that generate more than $100 million in annual revenues from private, English-language conventional television stations and own at least one English-language specialty and/or pay programming service. The groups meeting the criteria at this time are CTVglobemedia (CTVgm), Shaw Media Inc. (Shaw) and Rogers Broadcasting Ltd. (Rogers). Accordingly, the Commission has received applications from these large broadcasting ownership groups for the renewal of the television stations and specialty and pay services listed below. In addition, Corus Entertainment Inc. (Corus) has requested that its television services also be renewed under the new group-based licensing framework. The Commission has also received a separate renewal application from Shaw Cablesystems Ltd. (Shaw Cablesystems) for the CJBN-TV service located in Kenora, Ontario. Since this station shares common ownership with some of the larger ownership groups, the Commission will treat its renewal application as part of this proceeding. Some of the groups have also applied for revocation of licenses that will not expire until 2012 or later. The granting of new licences as of September 2011 will allow these services to immediately be part of the new group-based policy. Pursuant to Broadcasting Regulatory Policy 2010-167, each of the large ownership groups have submitted group renewal applications for their various affiliated services on a group basis. All of the key proposed amendments submitted with respect to the conventional television stations operated by each of these groups can be found under the 2 application number assigned to the group as specified below. The key amendments proposed with respect to their pay and specialty services follow under individual application numbers. Item Applicant Application 1. CTVglobemedia Inc. 2010-1261-6 2. Shaw Media Inc. 2010-1307-8 3. Corus Entertainment Inc. 2010-1350-8 4. Shaw Cablesystems Limited 2010-1306-0 5. Rogers Broadcasting Limited 2010-1253-3 Preamble In implementing this framework through the group-based policy, the Commission’s objective is to provide private broadcasting groups with greater flexibility in the allocation of resources amongst their various television platforms while permitting the Commission to consider factors such as the total audience reached by a broadcasting group, the totality of its revenues and of its programming commitments and obligations. While providing greater flexibility to television services, this new framework will also permit the Commission to ensure continued support for the creation of Canadian programming, particularly in categories that continue to be under-represented in the Canadian broadcasting system. In particular, the Commission has announced new group-based Canadian programming expenditure (CPE) requirements and additional requirements related to programs of national interest (PNI), which the Commission has defined as scripted drama, documentaries and Canadian awards shows. Key issues In this proceeding, the Commission will implement the group-based policy, including the CPE and PNI requirements and the various other changes set out in Broadcasting Regulatory Policy 2010-167 and in Regulatory frameworks for broadcasting distribution undertakings and discretionary programming services – Regulatory Policy, Broadcasting Public Notice CRTC 2008-100, 30 October 2008 (Broadcasting Public Notice 2008-100), and other recent proceedings. In this regard, the key issues the Commission will consider include: • Group-based Canadian programming expenditures; • Group-based programs of national interest expenditures; • Groups treated in this proceeding; • Terms of trade; and • Digital television transition. 3 In addition, the Commission will examine a number of specific changes proposed by the applicants, as set out in items 1 to 5 below. Canadian programming expenditures During the current and previous licence terms, certain pay and specialty services operated by the large broadcast ownership groups have been required to spend a percentage of their individual revenues on the purchase and production of Canadian programming. Similarly, conventional television stations have generally been required to broadcast a minimum of 8 hours per week of “priority” programming (drama, documentaries, regional programs, etc.). In Broadcasting Regulatory Policy 2010-167, the Commission set out a new approach that recognizes the role played by large ownership groups in the production and broadcast of Canadian programming. Under this new approach, each of the following services will be required to spend a percentage of its revenues on the purchase and production of Canadian programming, and the total amount of expenditures across all applicable services in a group will equal a set percentage of the total group revenues: • all conventional television stations; • all Category A pay and specialty services; and • all Category B services with more than one million subscribers that are part of each group. Competitive mainstream sports and news specialty services are excluded from this regime. The Commission stated that it would set an appropriate group-level CPE requirement for each group that would maintain the historical level of spending by the group, in addition to the individual CPE requirements set for the services that are part of that group. In Broadcasting Regulatory Policy 2010-167, the Commission took the preliminary view that an appropriate group CPE for each of the ownership groups would represent a minimum of 30% of aggregate revenues. The Commission further indicated that specialty and pay services that are subject to the group-based CPE requirement will be given the flexibility to meet the requirement by spending up to 100% of their required CPE on Canadian productions broadcast, on other qualifying specialty or pay services or on television stations that are part of the same group. Conventional television stations will be permitted to spend up to 25% of their CPE requirements on productions broadcast by other qualifying specialty services that are part of the group. Programs of national interest In Broadcasting Regulatory Policy 2010-167, the Commission indicated that it would replace the current requirements related to priority programming with requirements on the group to spend a set amount of annual revenues on PNI (programs from program categories 7 Drama and comedy and 2(b) Long-form documentary, as well as specific Canadian award shows that celebrate Canadian creative talent). The Commission’s 4 preliminary view was that a requirement that groups spend at least 5% of revenues on PNI would be appropriate. The Commission also indicated that the services that are part of these groups should be subject to a condition of licence requiring that at least 75% of PNI expenditures be allocated to independently-produced programs. Finally, the Commission stated that it expects that the groups will commission PNI production from all regions of Canada commensurate with their presence in the respective markets in which they broadcast. In order to assist the Commission in making its final determinations on the appropriate spending level for PNI, the Commission requested further information from the groups relating to current and historical expenditures on these types of programming. Applicant’s proposals regarding CPE and PNI As part of their applications in this proceeding, all four of the large broadcast ownership groups have proposed that group-based CPE and PNI requirements be set as follows: • CPE and PNI expenditure requirements in year one of the new licence term would be calculated based on an average of the revenues in each of the three previous broadcasting years; • CPE and PNI requirements in years two to five of the licence term would be calculated based on revenues earned in the previous broadcasting year; • Each group has some flexibility to under spend or over spend a portion of their CPE and PNI requirements in any given broadcasting year, provided that the total minimum aggregate amounts are spent over the course of the licence term; and • CPE requirements for conventional television stations would be based on a formula. This formula would take the total dollar amount of the CPE requirement for all of the applicable services in the group in a given year and subtract the dollar amounts of the CPE requirements of all of the pay and specialty services in that group. The remainder is the dollar amount of the CPE requirement for conventional stations in that group for that year. Groups treated in this proceeding