CRTC renews Super Channel’s broadcasting licence, with a caveat

The Commission renewed the broadcast licence for a four-year term, but gave a stern warning about non-compliance in relation to CPE, and script and concept development.
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The CRTC has renewed Allarco Entertainment’s broadcast licence for Super Channel for a four-year term, but not before giving the Edmonton-headquartered network a stern warning about repeated regulatory non-compliance and imposing additional regulatory requirements.

Announced in a decision issued June 29, the Commission said the service’s new licence, which came into effect July 1, would be suspended should the national pay television network fail to make shortfall payments or remit reimbursed funds, or if Allarco goes into creditor protection for a third time.

“The Commission finds that Super Channel… is again in serious non-compliance with its regulatory requirements. This represents the second consecutive licence term that Super Channel has been found in serious non-compliance since the service was first authorized to operate in 2006. Based on the nature of the non-compliance and the recurrence, the Commission has significant concerns with the licensee’s willingness and ability to operate the service in a compliant manner,” said the CRTC.

As well, the Commission imposed a mandatory order requiring that the service devote 30% of its previous broadcast year’s gross revenues to CPE, noting that Super Channel was in “severe non-compliance” with its Canadian programming expenditure (CPE) requirements and its expenditure on script and concept development. The Commission also directed it to file a production report annually to ensure that it provides a full and transparent account to both the regulator and the public.

“Despite the Commission’s decision to renew the licence, its concerns remain,” said the CRTC in its explanation for these additional regulatory measures. Noting that this is the second consecutive term in which Super Channel has been found in non-compliance, the Commission said that the manner in which the company has interpreted and implemented some of its conditions of licence “reveals a blatant disregard for its regulatory obligations” and that the regulatory body is particularly concerned with Allarco’s intention not to fulfill the repayment of arrears. “In light of these concerns, the Commission must take the appropriate steps to ensure that Allarco takes its regulatory obligations seriously and the non-compliance does not reoccur,” it said.

According to the CRTC, Super Channel’s failure to comply with its regulatory obligations resulted in spending shortfalls in two main areas: script and concept development expenditures, and its regional outreach program.

In terms of its script and concept development expenditures, the CRTC said it “only learned of the licensee’s systematic use of loans for the purpose of meeting its conditions of licence as a result of the current licence renewal process,” adding that loans cannot be claimed as CPE or as an expense. With regard to the regional outreach program, the CRTC said Super Channel claimed expenses relating to indirect staff costs. During the hearing in November, Allarco had argued that the Commission gave no indication that these expenditures might be ineligible. On this front, the Commission acknowledged that the absence of a clear definition “may have made the appropriate implementation of its conditions of licence related to regional outreach expenditures and shortfall difficult for the licensee.”

To address the expenditure shortfall from its previous term, the CRTC directed Super Channel to pay a total of $5.05 million (split between $2.24 million for the script and concept development, and $2.8 million for the regional outreach program) to the Canada Media Fund (CMF) on a twice-yearly basis for the next four years.

Ultimately, the Commission said that in spite of its concerns, it recognizes Super Channel’s contribution to the Canadian broadcasting system.

“Considering the circumstances of the licensee, the Commission finds that the repayments could reasonably be made over the course of four years. A four-year licence term would also grant the licensee a degree of stability it will need in order to continue operating Super Channel and give it sufficient opportunity to demonstrate its willingness and ability to comply with its regulatory obligations,” the CRTC’s decision said, acknowledging that these new additional measures enacted offer safeguards to ensure Super Channel’s compliance with its new licence.

In response to the CRTC’s decision, Super Channel president and CEO Don McDonald told Playback Daily: “We are happy to finally receive the decision from the Commission and thank the Commission for the four-year license renewal. We are committed to continuing to bring outstanding programming to our viewers and enhancing our relationships with the Canadian production industry, while working within our conditions of license.”

By Lauren Malyk and Jordan Pinto

Image: Unsplash