CRTC opens consultation on 9(1)(h) applications

CBC/Radio-Canada, Quebecor Media Inc. and ZoomerMedia Ltd. are among 21 broadcasters seeking CRTC mandatory distribution orders for carriage of their specialty channels, the CRTC said. In a notice of consultation posted on the commission website Monday, the CRTC said it will consider 22 applications for mandatory distribution of channels under section 9(1)(h) of the Broadcasting Act, which allows the commission to require broadcast distributors to carry certain television channels “on such terms and conditions as the Commission deems appropriate.” Channels that receive a mandatory distribution order benefit from a CRTC requirement that all broadcast distributors offer those channels—often on their basic service package—increasing their subscription and viewership numbers, driving up advertising revenues as a result. The commission also typically requires broadcast distributors to pay a monthly, per subscriber fee to broadcasters who operate mandatory distribution channels, which can provide a broadcaster with millions of dollars in annual revenues. “Because part of these fees for these channels are reflected on Canadians’ monthly cable or satellite bills … the Commission requires the distribution of these channels only in exceptional circumstances where the channels fulfill important policy objectives under the Act,” the commission said in the notice. Under new criteria established in decision 2010-629, the CRTC said it will only consider mandatory distribution orders for channels that make an “exceptional contribution to Canadian expression,” offer an “exceptional commitment” to Canadian programming, and contribute “in an exceptional manner” to the objectives of the Broadcasting Act. That decision in August 2010 also imposed a moratorium on new applications for mandatory distribution orders, and instructed interested broadcasters to apply for an order by June 1, 2012. Posted on the commission’s website on Monday, those applications seek mandatory distribution for eight specialty services that do not currently have CRTC broadcast licences, and for eight specialty services that currently operate without a mandatory distribution order. Another five broadcasters asked the CRTC to renew the mandatory distribution orders for their services, including CBC, which is seeking to renew the order pertaining to its ARTV service, and Accessible Media Inc., which is seeking to renew orders for two of its specialty services serving people with disabilities. Four other services that currently have mandatory distribution orders do not need to apply for renewals at this time, the commission said, including CBC News Network, Réseau de l’information (RDI), and Pelmorex Communications Inc.’s The Weather Network/MétéoMédia, and Quebecor's TVA network. In an application dated May 30, 2012, Quebecor said it has struggled to secure carriage of its Sun News Network channel in the absence of a mandatory distribution order, which it first requested when it applied for the channel’s broadcasting licence in summer 2010. In the fall of 2010, following criticism from competitors that said the company was seeking unfair regulatory protection, Quebecor dropped the request, and instead applied for a standard, Category B specialty channel licence. Quebecor had argued that CBC News Network and BCE Inc.'s CTV News Channel benefited from mandatory carriage licences for 21 and 13 years, respectively, putting its new Sun News Network at a disadvantage, an argument it repeats in its latest application. The CRTC has since deregulated all-news and sports specialty channels, removing the mandatory carriage, or “must offer” privileges. Quebecor's Sun News channel would benefit from the “must offer” provision by receiving more revenues from a larger pool of subscribers. The company, which hired firm Ensight Canada to lobby the federal government for mandatory distribution of the channel in October, said Sun News is only currently available in 40 per cent of Canadian households, and is not carried by broadcast distributors Telus Corp.and MTS Allstream Inc. It added that its current agreements with other broadcast distributors that carry the all-news channel are “inadequate” to support its operating expenses, and projected that the channel lost $17 million in 2012. Even with a mandatory distribution order, it said, the company “will continue to assume a great deal of risk” on the channel despite aggressive advertising goals. “Due to the large capital investments needed to start up a new television network, we would not achieve a positive net income until 2020,” the company wrote in its application for a five-year mandatory distribution order. Quebecor asked the commission to force broadcast distributors to carry the channel on their basic analog and digital cable packages, and “on a lower dial placement than American and other foreign news channels.” It also asked the commission to require broadcast distributors to pay 18 cents per month for each of their English market subscribers that receive the channel, and nine cents per month for each of their French market subscribers. “Should the cable and satellite providers choose to pass the full cost of Sun News to their customers, the financial impact on the basic service would be negligible—only $2.16/year per household,” Quebecor said of the English-language market. In an application seeking a mandatory distribution order for its VisionTV channel, ZoomerMedia said consolidation in the Canadian broadcast industry would threaten independent broadcasters’ survival if they could not obtain guaranteed distribution. Without an order, it said, VisionTV could lose up to $10 million in annual revenues when its current carriage agreements expire by the end of 2013. “We believe that in the event that VisionTV does not obtain an Order for Mandatory Distribution under Section 9(1)(h) of the Broadcasting Act, BDUs will be emboldened to relocate VisionTV to a thinly distributed discretionary tier,” the company wrote. It added that many of the channel’s subscribers would be unable to afford the channel if it was placed on a more expensive tier. “The forced migration of VisionTV to thinly-penetrated digital packages at the hands of any combination of BDUs … would have significant negative implications for current VisionTV subscribers,” the company wrote. ZoomerMedia asked the commission for a mandatory distribution order that would grant VisionTV 12 cents a month from broadcast distributors for each of their subscribers. It also asked the commission to issue an order preventing vertically integrated broadcast distributors from removing the channel from their basic service packages prior to the commission’s decision on its application. The CRTC said in the consultation notice that it will accept interventions on each of the applications until Feb. 20, and that they will be considered at a public hearing near the commisison's Gatineau, Que. headquarters starting on April 23. That hearing will also consider licence renewal applications for 91 other conventional television stations and specialty services, the commission added. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Danika Grenier at dgrenier@thewirereport.ca -- Correction: An earlier version of this story did not include TVA in the list of channels that are currently subject to mandatory distribution orders.

CRTC opens consultation on 9(1)(h) applications

Broadcast | January 21, 2013

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