CHUM says integrity of licensing process at issue in Craig ‘maneuvering’ on diginets

CHUM Ltd. warns there will be "far reaching" effects on the whole broadcasting system if the CRTC accepts a rival’s rationale for rebranding and rejigging its youth-oriented digital specialty television channel. In a strongly worded follow-up filing to the commission on February 5, CHUM asks the question: "To what extent can the basic character of a ‘niche’ specialty service be changed and still remain acceptable to the commission?" CHUM has accused Calgary-based Craig Broadcast Systems Inc. of so radically changing two of its digital channels – its Category 1 youth channel and a Category 2 music channel – that they are now competitive with MuchMusic in violation of CRTC policy. "In CHUM’s view, there are two fundamental issues at stake: the integrity of the licensing process, i.e. ‘When you go to the commission and you promise something, do you have to do it?’ and foreign ownership and control," says Peter Miller, CHUM’s VP of business and regulatory affairs. "To me those strike at the heart of everything the commission does," he tells CCR. "At the end of the day, it doesn’t matter what CHUM thinks. What’s important and why it’s so useful that this process has gone public is what the cultural community and other players in the system think, and ultimately what the CRTC does." Not only is the CRTC considering CHUM’s complaint, but it is also probing an ownership agreement between Craig and Viacom International Inc., a partner in the channels and supplier of programming. The CRTC issued a statement February 6, asking for views on the joint venture between Craig and Viacom, which controls MTV. The deal signed last summer allowed Craig to launch its youth channel, previously called Connect, as MTV Canada. It also gives Viacom the option to buy up to 51 per cent of MTV Canada, should Craig decide to sell control in the future. However, Canadian foreign ownership laws prohibit foreign firms from owning more than 33 per cent of a media holding company and more than 20 per cent of the operating company. In its February 5 filing, CHUM notes that Craig’s reply to its initial complaint "raises additional concerns regarding the application of the principles and conditions by which the commission regulates the broadcasting system." CHUM contends in its submission that Craig changed the whole nature of its Category 1 channel when it was met with lukewarm reactions by distributors, who wouldn’t agree to pay the 30-cent subscriber wholesale rate Craig had based its business plan on. "It seems obvious that the revamping of this service was more a case of reworking a less than ideal business plan rather than that of an opportunity presenting itself," Miller writes in the submission. CHUM also takes issue with the way Craig has categorized some of its programming. For example, it contends that Craig’s flagship Select program should not be categorized as variety programming, but rather a music video program. To categorize Select as variety, Craig notes that music videos make up less than 50 per cent of the program, if the time devoted to commercials during the show is included. CHUM calls "absurd" Craig’s contention that music videos contained in Select should not be counted toward the 10 per cent limit imposed by the commission in its licence conditions because the program is being logged as a variety show. "Using Craig’s interpretation of this condition Book Television could, by simply utilizing ‘discussions’, offer an unlimited number of feature films each week, effectively nullifying the limit imposed by the commission," CHUM notes. "In fact, Craig’s interpretation would render meaningless many of the limits imposed on all new digital licensees," CHUM writes. In a February 7 letter, the CRTC granted Craig the right to reply to CHUM’s latest filing, but said it must limit comments to any new information or proposals identified by CHUM in its February 5 response but not in the original January 9 complaint. Craig has until February 14 to respond.

CHUM says integrity of licensing process at issue in Craig ‘maneuvering’ on diginets

News | 02/15/2002 5:00 am EST

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