CCR Update

November 19, 2003 CTV to broadcast in high definition beginning todayCTV Inc. has announced that it will begin broadcasting in high definition beginning today. The national network will transmit a new "CTV East" signal (CFTO-TV Toronto) in high definition that will be carried nationally on Bell ExpressVu (channel 630 CTVHE) and on Rogers Cable (channel 287). The first show to be broadcast in high definition will be The West Wing at 9 p.m. ET, followed by Law & Order. The feed will be identical to the CFTO analog signal in programming, but HD content will be presented when available and digitally up-converted content will be provided for all programming. Discovery to broadcast solar eclipse in high definition from AntarcticaDiscovery Channel will broadcast the solar eclipse in high definition live from Antarctica on November 23, beginning at 6 p.m ET. The signal will be provided by Japan’s public broadcaster NHK. NHK demonstrated a live HD broadcast from Antarctica at the Banff Television Festival in June, an event that was widely praised by delegates. NHK plans to use several HD cameras to capture the first total eclipse of the sun in Antarctica to be witnessed by humans. Audience building focus of revised CTF rules for 2004-05Audience success will be a determining factor in the funding decisions for the Canadian Television Fund (CTF) in 2004-05, CTF administrators announced November 17. The overhaul of the CTF is aimed at growing audiences for English-language programming, with a focus on dramas. In the French-language market, maintaining the volume and market share of domestic programming will be key, including outside the province of Quebec. Of the funds available for the support of French-language productions, 10% will be earmarked for French-language projects originating outside of Quebec. French-language producers outside of Quebec complained to the Standing Committee on Official Languages in June about the level of CTF funding they received this year (CCR, June 5/03). The overhaul of the CTF is also aimed at reducing administration costs and simplifying the application process. There will be only one application process in the future. The Canadian Film and Television Production Association said that now that issues at the CTF have been addressed, it is time to once again press the government for more public money for the fund. Canada grants film and TV producers higher tax creditsCanadian Heritage and the Department of Finance have announced plans to give domestic film and TV producers higher tax credits – a move that the Canadian Film and Television Production Association (CFTPA) states will restore a much-needed balance to the tax credit system. On November 17, the departments unveiled draft amendments to current tax credits that raise the limit of qualifying labour expenditures from 48% of labour costs to 60%. The current tax credit allows domestic producers to write off 25% of qualified labour expenditures, but the credit is capped at 48% of the production costs. The new limit will apply to productions for which development began on or after the date of the announcement. Another change will be to treat government equity in a production as government assistance, which will reduce the negative impact of equity on the tax credit. Earlier this year, the government granted increased production services tax credits to foreign production companies shooting in Canada while decreasing its funding to the Canadian Television Fund. This led to cries of an imbalance in the system (CCR, Feb. 28/03). "While foreign location shooting is important, we can’t have the domestic industry at a disadvantage. I think the government has helped fix that," said acting CFTPA president and CEO Guy Mayson. Rogers Cable now offers a personal video recorderRogers Cable Inc. announced November 19 the availability of a digital cable set-top box with personal video recorder (PVR) capability, the Scientific-Atlanta Explorer 8000. The PVR will allow customers to record up to 50 hours of programming and watch their favourite show while recording up to two others at the same time. Rogers’ PVR set-top boxes are priced at $499 ($599 minus a $100 programming credit). The cableco said that it would introduce a rental option on the product in the first quarter of 2004. Cool TV gets licence amendment to add long-form documentariesThe CRTC has granted Global Television Network’s digital Category 2 specialty TV channel Cool TV’s request to add long-form documentaries to the program categories it can broadcast (Broadcasting Decision 2003-582). Corus Entertainment Inc. requested that the commission impose a limit on the amount of long-form documentaries that Cool TV could broadcast to ensure that it didn’t become competitive with its Canadian Documentary Channel. The CRTC didn’t impose a limit on the amount, but reminded Global that the long-form documentaries that it airs must be related to jazz, blues and world music. Stornoway wants amendments to its i channelStornoway Communications has applied for licence amendments for its Category 1 current events specialty TV service, i channel. It wants drama to be able to account for 22.5% of its schedule over six months from the 8% per broadcast week it is currently allowed and would like to add game shows (Category 10) and infomercials (Category 14) to the types of programming it is eligible to broadcast (Broadcasting Public Notice 2003-63). Stornoway also wants its Canadian content requirements to be set at 50% during the broadcast day and 50% in the evening period for the remainder of its licence term. Its current Canadian content requirements are 60% over the broadcast day and 50% in the evening, increasing to 65% over the broadcast day and 55% in the evening in year seven of its licence. Stornoway unsuccessfully appealed the expansion in programming categories granted to the Cable Public Affairs Channel (CPAC) on the grounds that those changes would make CPAC competitive with i channel (CCR Update, Feb. 5/03). Telus selling IP-One to business customers in Ontario and QuebecTelus Corp. announced November 17 that it was commercially launching to business customers in Ontario and Quebec its IP-One telephony service, which it dubs the first carrier-grade hosted and managed Internet Protocol (IP) telephony service. Some cablecos are investigating the possibility of using Voice over Internet Protocol (VoIP) as a means to add telephony to their cable TV and Internet offerings (CCR, Oct. 31/03, Oct. 3/03). Proposed amendments to Radiocommunication Act die on the Order PaperThe federal government’s proposed amendments to the Radiocommunication Act that would have increased penalties for satellite TV piracy died on the Order Paper in mid-November when Parliament was prorogued. The amendments would have required companies to have import permits to bring satellite TV equipment into the country, resulted in increased fines and longer jail terms upon conviction, as well as allowed for statutory damages to plaintiffs (CCR, Oct. 31/03). The development angered at least one delegate at the Canadian Association of Broadcasters convention held in Quebec City last week. Shan Chandrasekar, president and CEO of the Asian Television Network, during one session rose to ask, "Where was the problem. Where was the lethargy? With such a tremendous amount of clout within the broadcasting industry (behind the changes) – knowing full well that the Canadian Television Fund is suffering – and here is an incredibly easy way for the government to put a lot of money back in terms of the repatriation of these dollars from these illegal American signals to the Canadian market – why didn’t the government pass the bill?" "I think that this particular minister (Industry minister Allan Rock) and his department let this industry down. I think the full force of this industry, every key stakeholder, for all the right reasons (were behind the amendments)," replied CHUM Ltd. president and CEO Jay Switzer, a member of the panel to which the question was posed. MTS expects TV revenues to climb to as high as $14 million in 2004William Fraser, president and CEO of Manitoba Telecom Services Inc. (MTS), told a recent conference that the telco has generated $1 million in revenue so far from the TV service it launched in Winnipeg in January (CCR, July 31/03). Speaking at Scotia Capital’s Telecom and Tech 2004 conference in Toronto on November 5, he indicated that the TV service should generate between $12 million and $14 million in 2004. He said that MTS anticipates spending $35 million in capital expenditures to expand the TV service in 2004, with the rollout of the VDSL network on which the TV service runs to be complete by 2005. Fraser noted that MTS is capitalizing on "a window of opportunity" by rolling out a digital TV service at a time when analog cable subscribers are beginning to switch to the new technology. MTS’ target is to have 26,000 to 28,000 TV customers by the end of 2004, or a 30% market share, in Winnipeg. But on November 18, MTS announced that the company was faced with lower overall growth, and would be cutting 85 positions this year for an annual savings of $5 million to $7 million. The company said the reductions would come from MTS Communications Inc., the MTS subsidiary that runs the TV service, and Qunara Inc. MTS also announced that it was amalgamating its contact centre operations from Thompson and Dauphin with operations in Brandon and Winnipeg. The company noted that while MTS has maintained solid market performance over the past year, growth in the telecom industry as a whole is still not matching levels seen in prior years. Bell Canada asks CRTC to set triple play bundling rulesBell Canada asked the CRTC on November 6 to set ground rules for the emerging rollout of bundled phone, cable and Internet access packages. The phone giant wants the commission to hold hearings to look into the rules for bundling, resale, winback promotions and promotions in general of the triple play products. "Basically, we’re saying the rules should be the same for service providers who are offering the triple play where one of the products in the triple they have a dominant position in," Lawson Hunter, executive VP of BCE Inc., told CCR affiliate publication Network Letter. Hunter asked the CRTC to look specifically at Voice over Internet Protocol (VoIP) technology, which is thought to be the most cost-effective way for cablecos to enter the telephony business. "The technology is there," Hunter said in a letter to the CRTC. "The demand is there. The business model is there. What’s missing is the opportunity for all service providers to compete on an equal basis, regardless of the platform they use." Michael Hennessy, acting president of the Canadian Cable Television Association, rejected the request. "Let’s face it, these guys, Bell, according to their numbers, which we would probably dispute, have said they have 97.3% of the (residential) market," he told NL. "Even Oliver Twist would be embarrassed to ask for more." For a more detailed analysis of this development, see the Nov. 10, 2003 issue of Network Letter. Rogers wins CRTC approval to change sourcing of U.S. signals in Ottawa marketThe CRTC has granted Rogers Cable Inc. the right to change the source of the U.S. signals it distributes in the Ottawa and southwestern Ontario markets to Detroit, Michigan (Broadcasting Decision 2003-579). Previously, the U.S. signals distributed in Ottawa came from Rochester NY (CCR Update, Sept. 10/03). Rogers indicated that the switch was necessary because MCI, previously Worldcom Inc., has discontinued its microwave service that delivered the Rochester signals to Ottawa. Coming soon to a TV screen….World IdolCTV Inc. has announced that it has partnered with 10 other international broadcasters to broadcast World Idol, a two-part international TV special that will determine the world’s ultimate pop superstar. Canadian Idol winner Ryan Malcolm will compete against Idol winners from 10 other countries for the World Idol crown. The event will be staged in London, England, and will air on Christmas from 8 p.m. to 10 p.m., followed by the grand finale on New Year’s Day from 8 p.m. to 9 p.m. on CTV. St. Joseph Corporation acquires assets of Category 2 diginet Inner Peace TelevisionThe CRTC has approved the acquisition by St. Joseph Corporation (on behalf of a corporation to be incorporated as Salt and Light Catholic Media Foundation) to acquire the assets of the ethnic Category 2 specialty TV service Inner Peace Television Network (Broadcasting Decision 2003-574). The service Inner Peace launched in July 2002. Previously, control of Inner Peace Television was held by St. Joseph Printing Ltd., which is wholly owned by St. Joseph Corporation. The owners said that the channel might be more successful if it were operated as part of a charitable organization (Salt and Light Catholic Media Foundation). No tangible benefits were required as the assets of Inner Peace will be transferred to the Foundation at no cost. EastLink cable systems get approval to carry second set of U.S. 4+1 network signals in digitalA number of cable systems owned by Atlantic Canada’s EastLink Cable Systems, including Halifax Cablevision, Bragg Communications Inc., K-Right Communications Ltd., and Bay Communications, have received CRTC approval to carry a second set of U.S. 4+1 network signals in digital (Broadcasting Decision 2003-573). Radio review delayed at least a yearCRTC chair Charles Dalfen said the CRTC is delaying by at least a year a review of its commercial radio policy, which was due to get underway in 2004. "With new radio technology – including digital audio and satellite radio – still evolving, the planned 2004 review of radio policy will be delayed," he said during his address at the Canadian Association of Broadcasters annual convention in Quebec City last week. He said the CRTC wanted to take more time to consider the impact of satellite radio in the country, particularly since Canadian Satellite Radio Inc. has submitted an application to the regulator. "In making this decision (to delay the review), the commission has noted the very positive financial picture of the radio industry in the past year," he noted. "The ownership and Canadian content changes introduced in 1998 clearly have not impeded significant growth in revenues and profits. In our view, taking a year or so to assess new developments in the industry just makes good sense." For more information on new satellite radio entrants in the Canadian marketplace, please see the Nov. 5, 2003 issue of CCR affiliate publication Report on Wireless. Alliance Atlantis exercises over-allotment option on Movie Distribution Income FundAlliance Atlantis Communications Inc. announced November 14 that it had exercised its over-allotment option of 2,334,216 additional units at a purchase price of $10 per unit. The over-allotment will raise $23.34 million and result in the fund controlling about 6% more of Alliance Atlantis’ motion picture distribution business. The fund holds a 49% indirect interest in the partnership and Alliance Atlantis has the remaining 51%. During an investor’s forum this morning, Alliance Atlantis chair and CEO Michael MacMillan said that the IPO helped the company reduce its debt today to $421 million from $730 million in the first quarter of fiscal 2002. He indicated that since the first quarter of fiscal 2002, debt to EBITDA had dropped from 5.9 times to 2.9 times on a pro forma basis. The IPO raised a total of $254 million. MacMillan also noted that the two CSI series Alliance Atlantis produces should generate revenue of about $1 billion, with gross profit of about $500 million and pre-tax cash flow of about $325 million, from fiscal 2004 to the end of fiscal 2008. CIFVF affected by Canadian Heritage rule changesThe Canadian Independent Film and Video Fund (CIFVF) notes in its 2002-03 annual review that this year was "challenging," due in part to rule changes on money received from the government. Previously, the government money was non-lapsing, meaning that money not disbursed in one fiscal year could be rolled over to the next. But in 2000-01, the government amended its funding conditions, specifying that unused money must be returned by the CIFVF at the end of each fiscal year. The CIFVF was not made aware of the change until the final month of that fiscal year, and in 2002 Canadian Heritage requested that $840,000 be returned. "…Since these monies had to be taken from the current year’s budget, it has meant that funds will not be available for a second CIFVF application deadline in 2003," fund co-chairs Jean-Louis Robichaud and Sylvia Jonescu Lisitza stated in the report’s introduction. The CIFVF has also had its annual government support cut, and could receive less money from Star Choice Communications Inc. as a result of a CRTC decision mandating the establishment of a local programming fund (CCR, Aug. 22/03). ACTRA protests KIA commercial, says child actors being exploitedThe Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) Toronto Performers charges that a commercial being filmed by Avion Films for Korean car manufacturer KIA is exploiting children. "Swinging young children around on guide wires is dangerous business. It is disgraceful that both KIA and Avion Films employ child performers this way without the protection of the NCA (National Commercial Agreement)," ACTRA Toronto spokesperson Dan Mackenzie states. Since the commercial is being shot without ACTRA members, the production doesn’t have to follow the NCA, which has been negotiated between ACTRA and the Institute of Communications and Advertising (ICA) and the Association of Canadian Advertisers (ACA), ACTRA Toronto states. Canadian Broadcast Standards Council launches new web siteThe Canadian Broadcast Standards Council has launched a new web site (www.cbsc.ca). The new site includes search tools and multiple languages. nextMEDIA to switch Charlottetown locations next yearThe International New Media Festival, a.k.a. nextMEDIA, will shift to the Delta Prince Edward Hotel in Charlottetown next year, organizers announced November 17. The festival will run from October 20-23, 2004. INTERNATIONAL NEWS FCC to reject broadcaster request for digital duplication of signals: BloombergThe Federal Communications Commission (FCC) will reject a drive by U.S. broadcasters to force cablecos to show digital versions of analog programming on major networks, Bloomberg News reports. Bloomberg reports that a vote on the matter could take place as early as December 17. Quoting five unnamed FCC lawyers, Bloomberg reports that FCC chair Michael Powell and the four other FCC commissioners have decided individually to reject the broadcasters’ request. In Canada, the CRTC announced last week that it would require cablecos to carry both the analog and digital versions of over-the-air network signals (CCR, Nov. 14/03). Markey introduces privacy protection act for satellite TVU.S. Democrat Edward Markey introduced a bill on November 18 that would extend cable TV privacy protections to customers subscribing to direct-to-home (DTH) satellite TV distributors DirecTV and EchoStar Communications. "Since the privacy provisions protecting cable subscribers were put in place in 1984, the Direct Broadcast Satellite industry has developed. Today, EchoStar and DirecTV, for example, have approximately 20 million subscribers. Although they offer multi-channel video programming across the country in a manner comparable to many cable operators, current legal privacy protections protect cable subscribers but not satellite subscribers," he said in his statement introducing the bill. The bill also covers the personal records of video subscriber choices and viewing habits that are available to companies such as Tivo and Replay TV.

CCR Update

Broadcast | November 19, 2003

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