Re: Broadcasting Notice of Consultation CRTC 2013-394

Call for comments on the terms and conditions of distribution for Canadian Category C national news specialty services

Mr. John Traversy
Secretary General
CRTC
Ottawa, ON
K1A 0N2

Dear Mr. Traversy:

Friends of Canadian Broadcasting is an independent watchdog for Canadian programming on radio, television and online, supported by 180,000 Canadian households. Friends is not affiliated with any broadcaster or political party.
On November 30, 2009 the Commission issued Broadcasting Notice of Consultation CRTC 2009-732¹ in which it called for comments on proposed changes under which it would consider future 9(1)(h) applications. After public comment and consideration of submissions in CRTC 2010- 629 (August 27, 2010) the Commission issued final criteria under which it would consider future 9(1)(h) applications.
The Commission subsequently held a public hearing² in which it considered applications for either renewal of, or new applications for 9(1)(h) status, including an application by Sun News.
Friends intervened on both the consultation and hearing phases supporting the Commission’s position that 9(1)(h) status should be given to a licensee only when an ‘exceptional’ service is proposed that the Commission feels in in the public interest and would not otherwise be available to Canadian television viewers.
In its subsequent decision³ the Commission was categorical on the many reasons why it was turning down Sun’s application. The full text of the key paragraphs from that decision is:
“125. As regards the argument that Sun News is disadvantaged compared to other Canadian Category C news services, most of which launched over 20 years ago, the Commission notes that Sun News would not have been allowed to enter the market of national news services if the Commission had not opened the genre of mainstream national news to competition in Broadcasting Public Notice 2008-100 and that Sun News opted to launch its service as a competitive or Category C service without carriage rights. As such, the Commission is of the view that the applicant accepted the potential business risk associated with choosing to launch an unprotected and unsubsidized service whose genre had only recently been opened to competition. The Commission also notes the arguments submitted by Rogers and other BDUs to the effect that Sun News operates in the same genre and language as other specialty Category C services such as CBC News Network and CTV News Channel and therefore cannot be considered unique or exceptional.
“126. Moreover, the Commission notes that in its application, Sun News did not clearly demonstrate how its service would make an exceptional contribution to the objectives of the Act, nor even make any specific reference to sections of the Act, except to state that the service safeguards, enriches and strengthens the political, social, cultural and economic fabric of Canada by giving voice to a wide range of views.
“127. In addition, while Sun News broadcasts a significant amount of Canadian content, the Commission notes that Sun News did not make significant or exceptional commitments to Canadian programming expenditures that would exceed commitments normally made by Canadian news services. In fact, the Canadian content contributions of Sun News are not significantly higher than those of other licensed Canadian news services. Accordingly, the Commission finds that the applicant did not demonstrate that the service is making exceptional commitments to original, first-run Canadian programming in terms of exhibition and expenditures, as required by the Policy.
“128. In light of the above, the Commission denies the applicant’s request for mandatory distribution on the digital basic service. Further, as regards the applicant’s request to obtain mandatory distribution on the analog basic service, the Commission notes that it has clearly stated its policies that it would not permit further additions to the analog basic service to limit its cost to consumers and to promote a migration to digital service.”
Given the Commission’s rejection of the Sun application for 9(1)(h) application (for reasons that Friends fully supports) we are at a loss to comprehend why, on the same day, the Commission would issue its Notice of Consultation with respect to Category C National News services which appears to be for the singular purpose of ensuring that Sun News acquires not only mandatory carriage and specific dial positioning but also a CRTC-sanctioned dispute resolution mechanism that would appear to pave the way for Sun to argue for rate parity with existing national news services – and possibly even existing US services.
The confusion is exacerbated by the Commission’s consultation preamble in which it re-states that:
- In Broadcasting Public Notice 2008-100, the Commission stated that “services operating in the genre of mainstream national news were strong, healthy, highly popular and highly competitive, and therefore ripe for competition.” As such, the Commission eliminated genre protection and paved the way for competitive Canadian news services such as Sun News which was subsequently launched.
- The Commission also established rules that would apply to such services, including the following:
a common and standard nature of service definition;
- common Canadian programming exhibition and spending obligations, as well as original programming obligations, where appropriate;
- no access rights;
- no regulated wholesale fee; and
- continued genre exclusivity from non-Canadian and Category B services.
These rules were in effect when Sun News launched. The only plausible reason for the Commission to be re-visit its Category C policy has nothing to do with common issues related to Category C licenses, specific issues related to CBC News Network or CTV News Channel, but only because Sun News is not getting the viewership, and therefore the revenue, that it imagined it would, despite enjoying distribution to over five million Canadian homes, far more than that enjoyed by most Canadian specialty services.
On September 3, 2010, Kory Teneycke, Vice-President of Sun News, wrote a piece in various Sun Media publications entitled: "Margaret Atwood's U.S. sellout: Icon's ignorant attack confirms just why Canada needs Sun TV News":

"The final lie most of the media stories, petitions and general ankle-biting from our competitors promote is about money. Sun TV News is not, nor has it ever, asked for "mandatory carriage" by cable or satellite companies.
"As the critics correctly point out, this would be tantamount to a tax on everyone with cable or satellite service. It is what CBC News Network has, but not what we are asking for.
"We are simply asking for the channel to be "offered" by the distributors. This is meant to allow any Canadian who wants to get the channel to be able to call their cable or satellite company and subscribe to it. It does not mean it is a part of the basic cable or satellite package, nor does it dictate what (if any) package it would be a part of. We believe those should be private negotiations between Sun TV News and each individual cable and satellite provider.”
1. Notwithstanding this initial bravado, in 2010 and Sun News’ subsequent launch in April 2011, the reality is that despite being distributed to almost five million Canadian homes, Sun News continues to enjoy only a very modest audience. Sun would love to blame this on the lack of BDU agreements, channel placement or virtually any other excuse, but it is apparent that viewers simply appear to have little interest in Sun News – as evidenced by its dismal ratings.
2. The following chart based on CRTC Specialty financial data for 2012 demonstrates that both CBC and CTV all-news services are doing well while, at the same time demonstrating the scope of the problem for Sun News. This also begs the question: “Why should BDU customers be asked to pay for yet another service that they clearly do not want – simply because Sun News is not financially successful.”
3. The Commission has put forth that one reason for this consultation to take place is because of its concerns about access and carriage conditions. Yet, as the Commission heard during the Diversity of Voices and BDU Hearings, there are several Category A services, especially those owned by independent companies, that lack the clout to negotiate reasonable terms of carriage. The proposals contained in the Commission’s consultation notice effectively subordinate Category A licenses to Category C licenses because of the additional dispute resolution mechanisms that are proposed.
4. Friends believes that if the Commission were to move forward with these proposed changes the same consideration should also be extended to the Category A services, many of which enjoy nowhere close to the almost five million subscribers that Sun News has already achieved.
5. The CRTC has previously determined that news programming is well served and profitable, and thus no longer provides genre protection or any other regulatory considerations for national news services.
6. Sun News is not unique, nor does there appear to be a sbustnatial demand for its service. It does not meet any of the 9(1)(h) criteria that the Commission established in 2010 – which is why the Commission turned down its application for 9(1)(h) status in the first place. Yet the Commission’s notice indicates, astonishingly, the possibility that these proposed changes could be implemented under the authority of 9(1)(h).
7. FRIENDS believes that the proposals to implement mandatory carriage, packaging requirements, channel placement and a dispute resolution mechanism which would see Sun News ultimately argue that it should be generating the same revenue as services that are providing real news are a complete contradiction of the Commission’s 9(1)(h) policy and inconsistent with the existing policies governing Category A services.
8. Were such measures to be adopted, the Commission would face justified concerns that it was succumbing to political interference.

Yours sincerely,

Spokesperson

– 30 –

For information: Jim Thompson 613-567-9592

¹CRTC 2009 – 732 Call for comments on proposed revisions to the criteria used to assess applications for mandatory distribution pursuant to an order under section 9(1)(h) of the Broadcasting Act

²CRTC 2013-19 Applications for mandatory distribution on cable and satellite distribution systems pursuant to section 9(1)(h) of the Broadcasting Act and applications for the licence renewal of independent conventional, pay and specialty television services

³CRTC 2013-372 Applications for mandatory distribution on cable and satellite under section 9(1)(h) of the Broadcasting Act

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