decision aftermath

The crtc’s choice of June 6, 1994 – the 50th anniversary of D-Day – to announce the 10 winners in the first round of specialty channel licensing carries some inescapable ironies.

Like the multitude of troops who gained a European beachhead in the Second War, 48 applicants made their way to crtc central in Hull, Que. last February to fight for a niche broadcasting licence. Again like the troops, only a fraction survived. And, as an endless stream of historians and commentators revisit the D-Day invasion to hash over its significance, so all those touched by the specialty decision revisit every possible scenario to figure out what it all means for broadcasting’s tomorrow.

Playback has assembled the facts of the decision and the implications for the broadcasting structure, details on the next moves by the cable industry and a wide range of reaction to the decision.

The six English services, to be distributed nationally, are:

– Bravo!, an entertainment and performing arts channel owned by CHUM Ltd. and controlled indirectly by Allan Waters of Toronto.

– The Country Network, a country music service majority-owned by CFCN Productions, a Maclean Hunter company, and 566684 Alberta Ltd., controlled by Rawlco Communications.

– The Discovery Channel, a documentary and non-fiction service controlled by a general partnership between Labatt Brewing and Labatt Communications.

– Lifestyle Television, an information and entertainment service of particular interest to women represented by Linda Rankin and owned by Moffat Communications of Winnipeg.

– Showcase, an all-fiction service with limited U.S. programming represented by Phyllis Yaffe and majority owned by Toronto-based Alliance Communications and Robert Lantos (55%), cbc (20%), Productions La Fete, Montreal (17%), and 11 other independent Canadian producers.

– YOU:Your Channel, a lifestyle service on issues such as fitness, food, travel, parenting, personal relationships, etc. owned by Atlantis Television Ventures.

The two French-language specialty services are:

– Arts et Divertissement, a documentary and cultural service to be distributed east of Manitoba, owned by the Astral Broadcasting Group indirectly controlled by the Greenberg family of Montreal.

– Le Reseau de l’information, a national all-news service with at least one-third of all programming to be produced by cbc affiliates in French-speaking regions or by rdi associates – Cogeco, Radio-Nord, ckrs-tv in Jonquiere, Que., Television Quatre Saisons, Radio-Quebec and tvontario.

The two English-language pay-tv services are:

– The Classic Channel, a First Choice Canadian Communications Canadian and foreign movie service to be distributed in Eastern Canada and programmed with film copyrighted at least five years prior to distribution on The Classic Channel, which is controlled indirectly by Astral Communications, Montreal.

– Moviemax, an Allarcom Pay Television classics movie service to be distributed in Western Canada and owned by WIC Western International Communications, Vancouver.

$518 million

According to the crtc, the 10 new licencees will together spend more than $518 million on Canadian programming, production and acquisition, over the next five years, $100 million by the two French-language services. Bravo! and The Country Network will establish long-term funding mechanisms for the support of artistic and musical talent.

The crtc says about 80% of subscribers in English-speaking markets should have access to the six new English specialty services by January 1995.

crtc chairman Keith Spicer says the commission will eventually get out of the channel licensing business once digital video compression becomes a reality. Despite this, he says there’s a future for a regulator in Canada, if only to keep an eye on the big communication monopolies, and to regulate on issues such as privacy, pricing and freedom of access.

The deadline for new specialty channel applications – for what Spicer calls the final selection round based on scarcity of channel capacity – is June 1995. Those services are expected to be launched in January 1997.

In the next round of hearings, Spicer says ‘criteria will likely remain the same,’ adding reapplying services won’t be faced with the high costs of an initial submission. Spicer says there are no plans ‘to lighten up on Canadian content rules and the funding of artists and producers.’

‘We’re close to world takeoff speed for the Canadian production industry,’ he says.

‘It has been very painful turning down some of the proposals,’ says Spicer, adding: ‘The door is open to reapply within a yearit’s not the end of the world.’

Spicer says the denial of licences is not a rejection based on ‘qualitybut maybe a rejection in reference to timing.’ Ultimately the number of new licences was determined by capacity, he says.

The licensing of the 10 new Canadian specialty channels is a transitional step which began with crtc Structural Hearings in March 1993.

A new task force will oversee the launch of the new specialty tv services. Cable operators and licensees of the 10 new services will work together through The Task Force on Pay and Specialty Channels toward a Jan. 1, 1995 launch. The committee, set up days after the June 6 announcement, currently represents large and smaller members of the Canadian Cable Television Association and is chaired by Scott Colbran, president of Maclean Hunter Cable.

ccta president Ken Stein says it will be tough for cable operators to market the 10 new services, adding that the lack of news, sports, comedy and animation surprised his membership. ‘Everybody’s going to have to work hard to make sure consumers are convinced’ to pay for these services. He expects cablecasters will push the new entries to offer free preview periods, one to six months in duration, before customers are asked to pay.

Having said that, Stein adds that ccta members are ‘being positive about this. These are services that are going to help us compete with the direct broadcast satellites.’

Stein says he expects the first meeting of the task force and the new licensees will take place later this month or early next month. He says one priority will be determining marketing and communications plans for the new services; another will be deciding if the six new English-language specialties will be integrated onto existing cable tiers or given one all their own.

Predictably, the hallways and meeting rooms at the Banff Television Festival, where representatives of many applications were ensconced on Decision Day, became a cauldron mixing glee, puzzlement and fury.

In general, negative reaction and bewilderment seemed to focus on the lack of comedy and animation channels licensed, on the win for The Country Network, on the criteria the crtc used to make its decisions, on the cost of failed applications, and on a sense that the crtc is restricting companies’ development plans aimed at surviving into the next century.

Process flawed

crtc chairman Keith Spicer, in a question-and-answer session with Laurier LaPierre, followed by questions from the floor, conceded that possibly the process of selecting new licences was flawed, given the high cost of applying for the 48 applicants and the fact only 10 were approved. But Spicer said the crtc wanted to be wide open to new licence ideas. ‘We didn’t want to limit people’s imagination by telling them what we were after.’

Ian Morrison of Friends of Canadian Broadcasting says he’s not so much concerned with the commission’s choices, but rather with how they were made. ‘The cable industry was telling the crtc that there was limited carriage, but there was quite a bit of channel capacity actually. The cable industry was discounting duplicate and non-programming services and telling the crtc to put limits on how many channels should be licensed.’

As Morrison sees it, ‘the crtc’s mandate is to license all of the applicants, to get as much Canadian content on Canadian screens as possible.’ Morrison maintains the commission ‘caved in to the cable monopolies and came in with a limited decision. We felt that the commission was captured by the industry that it was supposed to regulate.’

Sandy Crawley of actra says the union is ‘considering an appeal to cabinet on the basis that the channels that were granted indicate an abrogation of the commission’s responsibilities.’

The appeal, if it goes ahead, will be led by actra, the Directors Guild of Canada and the Canadian Conference of the Arts. Crawley says he can’t discuss the actual basis of the appeal, but ‘there is a 50:50 chance we will go aheadwe don’t feel we’re being overly dramatic. We wish the channels all well, but at the same time we don’t think it’s inappropriate for cabinet to look at the commission or make new licences available in underserved areas such as drama.’ Crawley says the appeal process could be underway in about 20 days.

In terms of specific reasons for rejecting certain categories, Spicer fielded a lot of questions at the Banff forum. Asked why the crtc passed on an animation service, given Turner Broadcasting’s aspiration to bring its service into Canada, Spicer said there were good applicants in the category and he hopes they will reapply in the next licensing round. But, he says, ‘I don’t believe cartoons are the only way of helping children’s programming.’ He added that if an American service is carried by cable when the Canadian animation service is licensed it will be bounced in favor of the Canadian service.

More than cartoons

But animation applicants saw their proposals as offering much more than cartoons. Cinar ceo Micheline Charest says she was ‘staggered’ by the rejection of Fun TV. ‘We feel it was a huge blow to the animation industry in this country. I think we proved to the commission that it was worthy from all aspects. It was certainly one of the most viable channels from an audience standpoint. It would also give birth to product that was Canadian and very exportable.’

Without doubt, she says, there will be an animation application in the next round.

She says the commission is under considerable pressure to continue this process. ‘Too much money has been invested and too much time and energy spent. There is a strong need for the animation industry in this country to have an outlet for their productions or it will dramatically move into being a service industry for U.S. product.’

Adds Louise Dansereau of The Cartoon Network: ‘It’s a very perplexing decision given the substantive nature of the cultural business argument and in light of the new report about the violence in animation coming in from the U.S. and the credibility of the applicants.

Too much news?

One angry Banff questioner asked Spicer who he thinks he is to tell the Canadian people that they have too much news already. ‘I didn’t ask for the job,’ Spicer retorted, adding someone had to make those decisions.

On the dearth of multicultural channels licensed, Spicer said the commission didn’t set out to turn them all down, and pointed out that the mere existence of specialties doesn’t mean every multicultural group should have its own.

Was there a philosophical reason why Canadian Learning Television was not licensed? Said Spicer: ‘It was an excellent application but we had to look at bringing new voices to the table. We wanted to license some new channels like the women’s channel, Lifestyle.’ And later: ‘Yes it is sad that the failure of the clt bid spells a death knell for ACCESS Television in Alberta, but access was not part of the clt application.’

Varying moods

Before and after the formal Banff session with Spicer, festival delegates reflected in varying moods on the specialty decisions. One senior broadcaster, who asked not to be named, felt ‘shocked and angry’ over the crtc’s decisions. ‘As a whole they treated broadcasters very shabbily. The crtc is trying to retain control over something they can’t control any longer and in the process they are hurting Canadian companies that are trying to position themselves to be competitive in the face of the coming mega-channel universe.They could have phased in more services over an extended period of time, but (doing it) this way, just teasing people with very expensive applications, doling out the licences bit by bit, is inexcusable.’

Says Don Brinton, deputy chairman of CanWest Broadcasting, ‘We feel…we’re (broadcasters) still doing a very credible job in radio and tv and that we carry a big load in terms of our Canadian content and community responsibilities. But the commission seems to be looking totally towards new distribution media such as cable, telephone, satellite, and in terms of production, they have skewed things very much towards the independent producer.’

Most won’t return

As for applicants reapplying for the licences they were denied this time around, Brinton says: ‘Most of the applicants are not going to come back in the next round because there just isn’t going to be room. I think that will apply to 70%-85% of the niches or slots. So I think applicants are going to have to come back with a whole new set of ideas, which is a very expensive proposition.’

Michael McCabe, president of the Canadian Association of Broadcasters, takes a broader view: ‘I think they could have approved more. From our point of view, there won’t be an enormous impact on either our viewership or advertising revenues. There were no new licences awarded in the areas of news or sports, which are major areas of our operations. All the specialty services only get 14% of viewing time, and that’s after many years, so these new services are not going to increase the fragmentation of our audiences.

‘I’m surprised cable people are saying that it is not a strong enough package to market because there are some good services approved.’

At the Banff forum, a question for Bravo! chief Paul Gratton suggested its plan to spend $4.8 million on independent production over its licence period is ‘peanuts’ and will not further the cause of artists. Countered Gratton: ‘$4.8 million is not peanuts…City-tv has shown that good tv does not have to cost a lot but it is essential that good tv be entertaining. The channel will speak for itself. It will have an audience and develop an audience for the performing arts and then arts groups will support the channel.’

Delighted with Bravo!

McCabe says he is ‘delighted with Bravo! because there’s a chance for a strong broadcasting group and a popular arts channel rather than one that is just elite and esoteric, and likewise with Lifestyle.’

No one seemed to question the validity of Discovery Channel being chosen. Discovery president Trina McQueen says ‘what I find so wonderfully interesting and Canadian is that it is more virtuous to be one of the losers than one of the winners.’ She says there were a lot of wonderful applications but the good part about the process was that it brought out a huge amount of talent, innovation and ideas and some very scary competition.

Producers did not seem too distressed over the issue of self-dealing, with Atlantis Communications on the record promising not to produce anything itself for its channel. However, the provincial funding agencies in their biannual meeting, held in Banff, placed the issue fairly high on their agenda.

Potential conflicts

Says Wayne Sterloff of British Columbia Film: ‘There are a lot of potential conflicts that we want to be prepared for such as producers offsetting the cost of their productions with a change in their recoupment position by virtue of being a broadcaster.’

But the former executive director of Telefilm Canada, Pierre DesRoches, says the self-dealing issue is straightforward for Telefilm: ‘If these broadcaster/producers have more than a 10% stake in a broadcast organization then they cannot trigger the Broadcast Fund for their channel.’

In general, says DesRoches, ‘there were a few surprises and I was disappointed that Chapiteau did not get a licenceit should have in that it was a joint venture between four or five broadcasters, which you don’t find very often. Overall, the selections will help the broadcasting system, but there was not enough in the drama field.’

with files from joanne morgan in Banff, leo rice-barker in Montreal and pamela cuthbert and susan tolusso in Toronto.