CCR Update

February 19, 2003 CRTC upholds decision to grant only optional digital carriage to World Television Network (WTM) The CRTC today upheld a decision granting only optional digital carriage to the proposed multicultural channel World Television Network/Le Réseau Télémonde inc. (WTM). WTM launched a Cabinet appeal of the CRTC decision that gave it only a Category 2 digital licence, when it was seeking analog carriage as well. WTM owner Dan Iannuzzi argued that his proposed channel deserved analog carriage because its multicultural content would help fulfill the objectives of the Broadcasting Act, and thus needed to be accessible to as many Canadians as possible (CCR, Jan. 31/02). However, the CRTC found that it "believes that WTM has genuine aspirations to offer a service that reflects and connects Canada’s multicultural communities to broader audiences. However, the commission does not consider that the applicant’s proposed service would fully succeed in meeting these aspirations." The CRTC adds in Broadcasting Decision 2003-57, "As suggested by the name the applicant has chosen for its company and its service, World Television Network/Le Réseau Télémonde inc. proposes to place a heavy emphasis on non-Canadian programming, which it describes as ‘world programming.’ …The commission does not consider that this programming, by its very nature, is capable of reflecting Canada’s multicultural reality." The CRTC held a public hearing on the matter on May 9, 2002 after Cabinet referred the CRTC decision back to the regulator for reconsideration (CCR, March 28/02). The recent release of a CRTC report stating that Canadians have access to a wide variety of ethnic programming services foreshadowed this decision (CCR Update, Feb. 5/03). Iannuzzi’s argument that there was a need for more multicultural programming doesn’t carry as much weight when there is already a wide array of ethnic programming services available. Ottawa commits $150 million over two years to the Canadian Television FundThe federal government’s 2003 budget, released yesterday, commits $150 million over two years to the Canadian Television Fund (CTF). That means the government’s contribution to the fund will drop to $75 million per year from $100 million. The funding announcement falls short of the industry’s wishes – both in terms of dollars and length. Speculation at the recent Canadian Film and Television Production Association conference was that the government would reduce its funding commitment (CCR, Feb. 13/03). Since 1996, the federal government has contributed $100 million annually to the CTF. The industry has been lobbying Ottawa for stable, long-term funding for the CTF for the past few years, but the government has recently delivered only one-year funding extensions. The current one-year contribution was set to expire on March 31. "Over the years, the Canadian government has certainly demonstrated its support for home-grown television programming," CTF chair Janet Yale said in a news release reacting to the budget announcement. "The challenge going forward will be for Canada’s television industry to adjust to a smaller resource base."The CTF estimates that a budget reduction of $25 million per year would likely result in about 60 fewer productions being supported by the fund each year. This would represent a potential $83-million drop in production activity and a loss of some 290 hours of original programming each year. However, continued growth in revenues of broadcast distributors, particularly satellite TV operators, would help offset some of the reduction in federal funding. Vidéotron’s leave to appeal inside wiring decision deniedThe Federal Court of Appeal has denied Vidéotron ltée’s leave to appeal a CRTC decision limiting what it can charge third parties for the use of its inside wiring. Quebecor Media Inc.-owned Vidéotron transferred the inside wiring it owned in multiple-dwelling units in Quebec to a subsidiary. It argued that the subsidiary, Câblage QMI Inc., did not fall under CRTC jurisdiction. It notified competitors Bell ExpressVu LP, Look Communications Inc. and Cable VDN Inc. that it was going to charge them a monthly fee of $5 per customer for the use of the wiring. The CRTC set the price at 52 cents per month per subscriber and issued a mandatory order that Vidéotron allow its competitors to use the wires at the commission-set price. The leave to appeal was opposed by Bell ExpressVu, Look and Cable VDN. Vidéotron is also asking the CRTC to reconsider its decision to issue the mandatory order because it argues there is no obligation on the part of the user to pay the fee as all three competitors have refused to sign binding contracts with CQMI (CCR, Dec. 13/02). Craig applies to register trademark for "The Toronto Show"Craig Broadcast Systems Inc. has applied to register a trademark for "The Toronto Show," which presumably will air on its yet-to-launch toronto/one conventional TV station (CCR, April 12/02). The trademark application is in association with proposed services including "(1) Design, development, production, broadcast and distribution of a television show(s), operation of a web site which provides information about television entertainment, television news, and television information; television broadcasting and telecommunication of information and advertisements for others." The application also lists a standard rote of products on which the company might slap the name, including media such as CDs and DVDs with pre-recorded content. Whistler Cable extends territory to include Pemberton BCIn what appears to be gearing up as a heated battle between Whistler Cable Television Ltd. and a new cableco entering the Whistler market, the incumbent has received CRTC approval to include Pemberton BC in its service area (Broadcasting Decision 2003-48). The new entrants to the Whistler market, David Reid and partner Richard Hazell, currently operate an unlicensed cableco in Pemberton BC. They are expected to build on that system to enter the Whistler market, after being granted a licence by the CRTC (CCR Update, Jan. 8/03; CCR, Aug. 29/02 and July 18/02). CRTC approves transfer of ownership in unlaunched MediaNet digital channelsThe CRTC today approved an ownership change at MediaNet that sees Padmini Koneswaran, the wife of one of the original owners, take control of the company with a 57.45% stake (Broadcasting Decision 2003-54). As well, three new shareholders Kevin Davis, Lalitha Brodie and Emil Vassenine will each own 14.18% of the company. The original owners, Peethambaran Koneswaran, previously with a 51% stake in the company, and Phillip Koneswaran, who owned 49%, retain less than 1% of the company, holding just one Class A common share each. MediaNet has been licensed for three, yet-to-launch Category 2 digital specialty TV channels: Newsinternational, MovieWorld, and Music Music Music. MediaNet has also applied to acquire the assets of the Category 2 pay TV service known as NTI Tamil Service, and the Category 2 channel known as ITBC Television from Network Television International Inc. The acquisitions will be considered at a March 24 public hearing in Gatineau QC (Broadcasting Notice of Public Hearing 2003-1-1). CRTC decides against licensing more Category 1 digital channelsThe CRTC has returned a licence application for a proposed new Category 1 channel called People TV to Felicia Olarewaju, president of OlaFarmHollywood, of Manitoba. In a February 19 letter, the CRTC notes that it "has determined that it would be premature to consider new applications for Category 1 services. Further, at this point, the commission does not contemplate licensing additional Category 1 services." Revenues, net income up at Rogers Communications in 2002Rogers Communications Inc. (RCI) posted a 12.3% increase in revenues in its 2002 fiscal fourth quarter ended Dec. 31, 2002 over the same period a year earlier, including a 13.6% increase in cable revenues, according to 2002 fourth quarter and year-end financial results released by the cableco late last week. Total revenues were $1.167 billion in the quarter, up from $1.039 billion. Cable revenues increased to $422.4 million from $371.8 million. For the 2002 fiscal year, total revenues increased to $4.323 billion from $3.912 billion, and cable revenues rose to $1.596 billion from $1.433 billion. Net income was up sharply in the quarter and full year thanks to a one-time gain on the sale of AT&T Canada Deposit Receipts. Rogers increased its previously released operating profit guidance range for its media division to $95-$100 million from $90-$95 million to reflect a stronger advertising market. On the subscriber side, there were no changes in the financial results to preliminary subscriber numbers released by Rogers in early January (CCR Update, Jan. 8/03). Rogers writes down investments in Cogeco Inc. and Cogeco CableRogers Communications Inc. wrote down its investments in Cogeco Inc. and Cogeco Cable Inc. during its fiscal 2002 fourth quarter ended Dec. 31, 2002, the company disclosed last week in its fourth quarter and year-end financial report. The value of the writedown was $40.9 million. This follows a writedown of $198 million in the second quarter of fiscal 2002 (CCR Update, July 24/02). Cogeco Inc. noted in its 2002 Annual Report that, "Cable companies in general and Cogeco Cable in particular, continue to be severely undervalued by equity markets, which have been troubled by issues that are not specific to the communications sector." VOD buy rates on the rise at Rogers CableRogers Cable Inc. achieved an average buy rate of 2.5 titles for its video-on-demand (VOD) service as of the end of 2002, Michael Lee, VP of product development at Rogers Cable, said during a conference last week to discuss parent Rogers Communications Inc.’s 2002 fourth quarter and year-end financial results. Average buy rates hit 3.4 titles in January, he added. The service, initially available to about 570,000 households in central Toronto, is now being rolled out in other Rogers cable systems and should be available to 60% of customers by the end of 2003, Lee noted (CCR, Oct. 24/02 and March 1/02). Rogers Sportsnet wholesale fees heading upwardsBroadcast distributors will likely face "substantial" wholesale fee increases for the carriage of Rogers Sportsnet when distribution agreements expire in August, Tony Viner, president and CEO of Rogers Media Inc., told financial analysts last week. Viner said the specialty TV channel’s average wholesale rate when carried in optional packages is well below that of competitor TSN, even though Sportsnet’s audience levels are the same or exceed those of TSN in many markets. He said TSN’s average wholesale rate is $1.45 per subscriber per month while Sportsnet’s is $1.02 per subscriber per month. "You can speculate as to the increase that we might be looking for, but we believe it will be substantial," Viner said during a conference call last week to discuss parent Rogers Communications Inc.’s 2002 fourth quarter and year-end financial results. "And we believe it’s reflective of the kind of audience delivery that we’ve had and the investment that we’ve made in the regional sports contracts." Vidéotron adds 16,000 digital cable boxes in fourth quarter of 2002; basic subscribers continue to declineQuebec cable operator Vidéotron ltée added 16,000 net digital cable set-top boxes in its fiscal 2002 fourth quarter ended Dec. 31, 2002, according to subscriber statistics released last week in conjunction with parent company Quebecor Media Inc.’s fourth quarter and 2002 year-end financial results. That’s down from the 20,000 net digital boxes added in the previous quarter and the 17,000 net digital boxes added in the fourth quarter of 2001. The cableco added 57,000 digital boxes in the 2002 fiscal year. Vidéotron’s basic cable customer base continued to decline in the fourth quarter, the fifth consecutive quarter in which it has dropped. The cableco lost 16,000 basic cable customers in the fourth quarter and 136,000 in the full year. On the financial side, Vidéotron’s revenues totaled $181.7 million in the fourth quarter, up from $180 million in the same period a year earlier. Operating income in the fourth quarter of 2002 was $73.2 million, up from $70.6 million in the same period a year earlier. For the 2002 fiscal year, revenues were $715.6 million and operating income was $262.7 million, compared to $709.6 million and $271.9 million respectively the previous year. CRTC releases specialty, pay and pay-per-view TV financial statisticsThe new digital specialty television channels were money draining on their owners in the 2002 broadcast year ended September 30, while most analog specialty channels continued their strong financial showing. For a more in-depth analysis of the numbers, see the upcoming issue of Canadian Communications Reports. More details: News Release Financial Summaries Report (With amortization) Financial Summaries Report Rogers gets approval for channel placement of OMNI.2The CRTC has granted Rogers Cable Inc. permission to carry affiliate Rogers Broadcasting’s second ethnic television station, OMNI.2, on channel 14 in Greater Toronto and on channel 15 in its Erin/Caledon, Grand Valley and Orangeville cable systems (Broadcasting Decision 2003-53). The channel will not be carried on the basic band but will be included in the basic service. CRTC puts Telus BDU application back in playThe CRTC has announced that it will consider Telus Communications Inc.’s application for two regional licences to operate cable systems at a March 24 public hearing in Gatineau QC (Broadcasting Notice of Public Hearing 2003-1-1). The application was originally scheduled to be heard in November 2002, but was pulled as the commission sought clarification of concerns (CCR, Nov. 22/02). The deadline for intervention is March 10. The hearing will also consider the licensing of some more Category 2 digital specialty TV services and FM radio stations. CanWest completes sale of newspapers to Osprey MediaCanWest Global Communications Corp. announced on February 14 that it has completed its previously announced sale of newspaper and related assets in southern Ontario to Osprey Media Holdings Inc. for $193.5 million in cash (CCR, Jan. 30/03). Sabia tells Parliamentary committee that little change is needed to foreign ownership rules BCE Inc. president and CEO Michael Sabia told the House of Commons Standing Committee on Industry, Science and Technology yesterday that existing foreign ownership limits for telecommunications carriers at the holding company level could be increased to 49% from the current 33% level, while limits at the operating company level should remain at the current 20%. Making these changes would require little effort, he added."Allowing for greater flow of capital is always a positive move," Sabia said in prepared remarks. "As we move forward, we need to sustain policies that build strength and real competition, among strong competitors. That, more than foreign ownership rules, will encourage continued investment." Sabia said the telecommunications industry is currently healthy and previous presentations to the contrary misrepresent the current state of the industry. He noted that Canadians enjoy some of the lowest telecommunications prices in the world, a result of competition. In earlier testimony before the committee, some incumbent and competitive telephone companies told the committee that removing foreign ownership restrictions isn’t a high priority. Broadcasters CHUM Ltd., Astral Media Inc., and Alliance Atlantis Communications Inc. have called for the status quo, while the head of the former National Broadband Task Force David Johnston has lobbied for freer flow of foreign capital (CCR, Feb. 13/03). For more on the committee hearings, see the upcoming issue of Canadian Communications Reports affiliate newsletter Network Letter. Bell Globemedia buys 15% stake in Maple Leaf Sports and EntertainmentBCE Inc. subsidiary Bell Globemedia has purchased a 15% stake in Maple Leaf Sports and Entertainment, the holding company that owns the Toronto Maple Leafs, the Toronto Raptors, the Air Canada Centre and the two digital specialty TV channels Leafs TV and RaptorsTV. Its partners in the venture are the Ontario Teachers’ Pension Plan and Larry Tannenbaum. Copps urges artists, organizations to continue fight to express their own culturesCanadian Heritage minister Sheila Copps urged artists and cultural organizations to continue to push for the right to preserve, express and promote the many languages and cultures of the world. Speaking February 4 at the Second International Meetings of Professional Cultural Organizations in Paris, France, she noted, "We are now at a turning point in our collective drive toward the recognition of the right of all states, in every part of the world, to enact their own cultural policies." But she added, "However, it is important to underscore the fact that we haven’t won yet. Cultural organizations like the ones you represent must pursue – indeed must increase – your efforts in support of something that is of capital importance: the protection of our means of expression. You must continue to convince your respective governments to preserve and promote the many languages and cultures of this world." CWC award winners honoured at 12th Annual Gala and Awards DinnerPamela Wallin, former TV broadcast host and currently Canadian Consul General in New York, received the Woman of the Year award at the 12th Annual Gala of the Canadian Women in Communications (CWC) on February 17. Lillyann Goldstein, CEO and in-house legal counsel at @Wallace Studio, and Linda Hughes, president and publisher of the Edmonton Journal, were given the Trailblazer of the Year award. Dawn Hunt, VP of government and intercarrier relations at Rogers AT&T Wireless, was named Mentor of the Year, the Canadian Television Fund as Employer of the Year, and Sue McGarvie, CEO of Romance Communications, as Chapter Volunteer of the Year. The 2003 Jeanne Sauvé Professional Development Program participants were also named. They are: Anik Gibeault (CRTC), Joelle Mader (Canadian Heritage), Lisa McPhail (Industry Canada), Amy Nidzgorski (Industry Canada), Juline Ranger (CPAC), Tina-Marie Tatto (Global Television Network) and Jennifer Wharram (Industry Canada). CSI series set to debut on Alliance Atlantis’ Showcase and Showcase Action channelsThe high-ratings grabber CSI: Crime Scene Investigation will begin airing on Showcase and Showcase Action, on April 26, Alliance Atlantis Communications Inc. announced today. The company co-produces the show and owns the two specialty channels. CSI will air on Saturdays and Sundays on Showcase, and from Monday to Friday on Showcase Action. CTV Inc. will continue to broadcast the first-run episodes of the crime series. CSUA conference coverageFor complete coverage of the Canadian Satellite Users Association conference, Canadian Digital Broadcasting Summit 2003, held earlier this week in Toronto, see the upcoming issue of Canadian Communications Reports. INTERNATIONAL NEWS FCC forms new office of strategic planning and policy analysisThe Federal Communications Commission (FCC) has formed an office of strategic planning and policy analysis (OSP). The new office, created this month, will focus on the commission’s short- and long-term policy objectives and incorporate the policy functions of the existing office of plans and policy. The chief of the OSP will be Jane Mago, and Robert Pepper, formerly chief of the office of plans and policy, will be part of the new office as chief of policy development. Kathleen O’Brien Ham is deputy chief of the new office, and Maureen C. McLaughlin is chief of staff. More details: http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-231046A1.doc http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-231048A1.doc FCC continues media ownership hearings on February 27The Federal Communications Commission (FCC) is holding a public hearing on February 27 in Richmond, Virginia as part of its review of broadcast ownership regulation. At an earlier public hearing at Columbia University, FCC chair Michael Powell said the regulator hopes to ensure that some existing regulations on media ownership remain in place (CCR Update, Jan. 22/03). Streambox releases real-time video transport for broadcasting, cable and satelliteStreambox has released a new video delivery solution for television broadcasting over a single T1 line, the Seattle-based software developer announced today. "The new ACT-L2 Video Transport is a high-compression solution that delivers stunning full-motion, full-frame, true-broadcast-quality interlaced video at 1.5 mbps," Streambox states in a media release. SBC Communications looking to offer bundled package to compete with cable’s triple playTelco giant SBC Communications is looking at acquiring DirecTV so it’ll be able to offer a truly bundled package of services that can compete with cable’s "triple play," according CableWorld magazine. SBC currently has a marketing partnership with EchoStar, which in January offered new customers a $25 per month discount on packages of video and SBC Yahoo-branded DSL service. TV stations linked to newspapers, unaffiliated stations produce better news: PEJ studyThe Project for Excellence in Journalism’s (PEJ) five-year study of local news in the United States came up with some interesting findings including: Smaller station groups overall tended to produce higher-quality newscasts than stations owned by larger companies (by a significant margin); Stations with cross-ownership, in which the parent company also owns a newspaper in the same market, tended to produce higher quality newscasts; and Local ownership offered some protection against newscasts being very poor, but did not encourage superior quality. The study, involving an analysis of 172 stations and about 23,000 stories over five years, suggests that ownership type does not make a difference.

CCR Update

Broadcast | February 19, 2003

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