sun news application for mandatory carriage

7/29/2019 Sun News application for mandatory carriage.

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An Application to the CRTC on behal o Sun News Network

Supplementary Brie

CanadianTvFirst.ca

May 30, 20


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96o original Canadian television content/hours week

Sun News Network produces


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CanadianTvFirst.ca


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Table O Contents

1. Introduction ........................................................................... 1

2. Proudly Canadian ................................................................. 3

3. Canadians Want More Voices .............................................. 4

4. Carriage Chaos ..................................................................... 6

5. Location Matters ................................................................... 8

6. Seeing Is Believing .............................................................. 10

7. Distribution + Dial Position = Ratings ................................. 12

8. Fair Is Fair ............................................................................ 14

9. Strong Role For The CRTC................................................. 16

10. Financial Considerations .................................................... 18

11. Sun News Meets All Criteria ............................................... 19

12. Our Ask ............................................................................... 20

13. About Us ............................................................................. 21


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The theory of the free press

is not that the truth will be

presented completely orperfectly in any one instance,

but that the truth will emerge

from free discussion.- Walter Lipmann


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1.1 In July 2010, Groupe TVA and Sun Media made

an application to the CRTC or a license or a

new English language national news specialty

service Sun TV News.

1.2 In that application we stated our intent to:

i Produce and broadcast 100%

Canadian television.

ii Cover stories and issues ignored by

others in the Canadian news media.

iii Broaden the range o opinion in the

Canadian media.

1.3 Ater one year on air, we have delivered on these

commitments in spades.

1.4 We are a Canadian content powerhouse. Not

including elections and other news specials, we

produce 96 hours/week o Canadian content.

Our news is o, by and or the Canadian people.

1.5 We are punching above our weight when it

comes to news - whether it is breaking stories

about wanted war criminals roaming our streets,

being the exclusive broadcaster o the Trudeau/Brazeau Fight or the Cure, or by being the

only national cable news network to have live

coverage o election nights in Saskatchewan

and Manitoba.

1.6 Gone are the days o boring talking heads

and tired talking points. Debate on Sun News

has lived up to its promise o being raw and

edgy. Love them or hate them, our hosts and

commentators swing or the ences every night.

1.7 In our initial application, we requested mandatory

distribution or Sun News or a period o three

years.

1.8 This was in recognition that the all-news marketthat we were launching into was a mature

market. Moreover, our competitors had enjoyed

highly preerential rules compared to the rules

we were being asked to operate under. CTV

News Channel and CBC News Network had

enjoyed mandatory distribution, preerential dial

placement and mandated subscription ees or

13 and 21 years respectively.

1.9 Sun News on the other hand, is distributed like

a third-rate oreign news service available inonly 4 out o 10 households with major BDUs like

Telus and MTS not even oering it. This situation

is unsustainable.

1.10 The CRTC indicated it was not considering

mandatory distribution or any channels at the

time o our initial application, but would have

a process opening in 2012 under which such

requests would be considered. (Broadcasting

Regulatory Policy CRTC 2010-629)

1.11 It is through this process that Sun News is

applying for mandatory distribution

on analog and digital basic service in

Canada.

1. Introduction

1


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Eight in ten Canadians, surveyed by Abacus Data, agreed that all Canadians

should have access to every Canadian cable all-news channel.

FIGURE 2.1:

Fig 5.0. p 19. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012 ABACUS DATA

Caryn Lieberman,

Host o Right Now

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2.1 Sun News is 100% Canadian (and proud o it).

Not only is our content Canadian, but so is our

ownership. More than any other private network,

our parent companies TVA and Quebecor have

been on the oreront o producing original,

Canadian television. Moreover, LCN produces

98 hours o original Canadian news

programming every week.

2.2 And Sun News contributes to that strong

tradition. We are producing 11 unique shows

that oer 96 hours/week o original television

programming every second o it Canadian.

2.3 Sun News produces more Canadian content

than almost any other network in the Canadian

specialty service universe. (Figure 2.2)

2.4 As proud Canadians, we agree with the CRTCthat Canadian content matters. That Canadian

news o, by and or Canadians needs to have

a place at the centre o our television landscape.

2.5 And so do Canadians. (Figure 2.1).

2. Proudly Canadian

FIGURE 2.2: ESTIMATED WEEKLY HOURS OF CANADIAN CONTENT BY NETWORK

Based on website and program guide analysis or the week o May 14, 2012. First-run programming only.

Sun News is a Canadian Content Powerhouse

OWNOUTBRAVO APTNDISCOVERY SUN

100

1 2.5 4.57

96

16.5

0

Hoursoforig

inallyproducedCanadianconte

ntperweek Thats91.5hour

s

morethanOprah!

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3.1 Since beore its launch, Sun News has promised to

shake up the media consensus - to bring to the oreront

new voices and views that are oten ignored by others.

We believe our programming has lived up to that

promise.

3.2 Our desire or more diversity in Canadian media is

shared by the public. A large majority o Canadians

believe the media is dominated by a ew voices that all

think alike (Figure 3.1). And an overwhelming majority

wants to see more voices in the media1.

3.3 This desire by Canadians or more voices conrms

Walter Lippmans amous observation that: The theory

o the ree press is not that the truth will be presented

completely or perectly in any one instance, but that the

truth will emerge rom ree discussion.

3.4 It is our belie that no single media source, or news

channel, will ever be able to perectly refect the views

and news interests o a country as diverse as Canada.

And Sun News is improving our media by adding to its

diversity and ensuring stories ignored by other media

outlets are given air voice.

THE NEWS

MEDIA IN

CANADA ISDOMINATED

BY A FEW

VOICES WHO

ALL THINK

ALIKE.

57% OF CANADIANS AGREE

23% OF CANADIANS DISAGREE

23%

57%

3. Canadians Want More Voices

FIGURE 3.1:

Fig 2.0. p 5. Cable News and the Cable and Satellite

Industry. Abacus Data Inc. 2012 AB ACUS DATA

1. p 5. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012

AB ACUS DATA

AB ACUS DATA

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Ensure that prime time television in French and in English iswritten, directed, stars, and is about Canada and Canadians.

Jack Layton on the role of the CRCNDP.CA - http://www.ndp.ca/press/layton-will-restore-unding-arts

Alex Pierson, Co-Host o AM Agend

interviews Jack Layton and Olivia Chow on Sun New

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4.1 Despite this strong thirst or news alternatives in

the market, Sun News has encountered enormous

resistance rom Canadian cable and satellite

providers when it comes to making the channel

available to Canadians. In act, Sun News is only

available in 4 out o 10 households. (Figure 4.1)

4.2 What is even more concerning is distribution has

declined since its launch. Until October 2011, Sun

News was still operating its over the air broadcast

towers in Ontario, which compelled Rogers,

Bell Fibe and Cogeco to carry Sun News on

analog digital basic cable service in most Ontario

markets. Since shutting down our towers, Rogers

has replaced Sun News on Channel 15 with

their own all-news channel (City News Channel).

Ironically, the ratings or City News Channel are

signicantly less than those Sun News was getting

when it occupied that dial placement. (Figure 4.2)

4.3 While Sun News has chosen not to pursue an

undue preerence complaint against Rogers or

this action, it speaks strongly to the challenges

we have aced when dealing with major Canadian

cable and satellite providers.

4.4 Even more surprising, BDUs like MTS and Telus

are not oering Sun News at all! In case you were

wondering, both Telus and MTS oer Al Jazeera,

BBC World News and other oreign

all-news channels.

4. Carriage Chaos

FIGURE 4.1:SUN NEWS IS ONLY IN 4 OF 10 CANADIAN HOUSEHOLDS

5.1 Million6.7 Million11.6 Million

TOTAL MARKET(CBCS NEWS CHANNEL

DISTRIBUTION)

SUN ON ANALOG

& FREE PREVIEW

SUN TODAY

4/10

HOUSE

HOLDS

CANADIANHOUSEHOLDS

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SOURCE: BBM: AMA, 2+, M - F, 5PM - 11PM, Ontario

Average Minute Audience

2,600

16,400

FIGURE 4.2:SUN NEWS PERFORMS BETTER THAN CITY NEWS CHANNEL IN ONTARIO

APR18,

2011-

OCT31,

2011

OCT31,

2011-

DEC31,

2011

Krista Erickson,

Host o Canada Live

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5.1 Where Sun News is oered, it is oten done so

in a manner which makes marketing the channel

particularly dicult. For instance there are three

dierent channel locations or Shaw customersdepending on which service they have signed up or.

5. Location Matters

FIGURE 5.1:NATIONAL VARIATIONS IN SUN NEWS CHANNEL PLACEMENT

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41%22%

34%

34% 22%

26%

FIGURE 5.2:SUN NEWS REGIONAL AWARENESS IS GREATEST IN FORMER ANALOG MARKETS

In Ontario, awareness of the Sun News network was 57%overall but higher in Ottawa (60%), oronto (59%), andin the Greater oronto Area (61%) than in the rest of the

province (50%).Abacus Report, pg. 33

57%

61%

Awareness2to3

times

greaterwhereSun

News

hadanalogdistri

bution!

g 6.1. p 28. Cable News and the Cable and Satellite Industr y. Abacus Data Inc. 2012 AABBAACCUUSS DDATATAA 9


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6.1 We are proud to be ollowing in the ootsteps o

Canadian broadcasting legends like Moses Znaimer

by oering viewers radically dierent approaches to

news television. Our hard news and straight talk is ahuge departure rom the sae, traditional approach

to news taken by our competition.

6.2 While Sun News is not or everyone, it is or many

o the Canadians that are rustrated with the lack o

diversity in the current news options.

6.3 Our research shows that seeing is believing. Once

these discontent news viewers have been exposed

to our approach to news, they like it.

6. Seeing Is Believing

FIGURE 6.1:SUN NEWS VIEWER DEMOGRAPHICS

Demographic Group Sun News Viewership

Male 66%

Female 34%

18 to 29 9%

30 to 44 21%

45 to 59 39%

60 and over 31%

Income less than $50k 39%

Income $50k to $100k 40%

Income over $100k 21%

Specic Subgroups

Low Income Seniors 12%

Despite being inthe typical Sun News

viewer demographic,most focus groupparticipants had neverheard of the Sun NewsNetwork prior to thefocus group session.When shown threeclips from variousprime time programs,almost all said theywould watch SunNews if they could getaccess to it.

Table 6.0. p 29. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012 AABBAACCUUSS DDATATAA

p 30. Cable News and the Cable and Satellit

Industry. Abacus Data Inc. 2012 AABBAACCUUSS DDAA

Likelyanalog

cablecustomers

!

Ezra Levant, Host o The Source

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Much o Sun News audience is lower income,and is heavily oriented to elderly Canadians onfxed incomes. Tese viewers are more likely tobe analog cable subscribers or reasons o cost

and resistance to new technology.

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7.1 When you look at Sun News ratings over its rst year, it

is easy to see the eect that distribution and dial positionhave on ratings perormance.

7.2 When Sun News went rom 6.7 million households to

5.1 million households it had a dramatic, negative eect

on ratings, because the channel was no longer carried

on analog and digital basic service. They went rom an

average o 27,400 beore to 13,000 ater (Figure 7.2) 2+

prime-time rom launch until December 31, 2011.

7.3 The move rom Channel 15 on Rogers to Channel 142

had a particularly negative impact.

7.4 None o this is surprising. You cant watch a channel you

dont get, and you are less likely to watch a channel that

is in the stratosphere than one that is lower on the dial.

7.5 With all o this in mind, it is not a mystery that Sun News

is not well known in the market place. Just over one in

three Canadians have even heard o Sun News. Less

than hal that number has watched.

7. Distribution + Dial Position = Ratings

FIGURE 7.1:

NATIONAL NETWORK AWARENESS

38%

89%96%

Fig 6.0. p 27. Cable News and the Cable and Satellite Industry. Abacus

Data Inc. 2012 AABBAACCUUSS DDATATAA

Brian Lilley,

Host o Byline


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SunNewsNetworkWeeklyAudience

FIGURE 7.2:DECLINE OF SUN NEWS AUDIENCE AFTER LOSS OF ANALOG SIGNAL

13,000

Apr 18 2011 - Oct 31 2011 Jan 2012 - May 2012

BBM, 2+, 5P - 11P M-F

27,400WITH ANALOG

WITHOUT ANALOG

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8.1 None o these challenges existed or Sun News

competitors when they launched. When CBC

Newsworld was granted a license in 1987, it was given

mandatory distribution in every Canadian household,

and dial placement that was superior to that o its main

competitor, the American news channel CNN. CTV

News Channel had similar advantages when it launched

in 1997.

8.2 This preerential treatment continued or 21-years

or CBC News Network and 13-years or CTV News

Channel. That was the decision o the CRTC at the

time, and it was the right decision. Without ensuring

access to the market, cable news in Canada would have

continued to be dominated by American news channels.

8.3 The challenges o launching a new Canadian cable

news channel have evolved, but they have notdiminished over the years. A larger television universe

means Canadian channels need to compete with a host

o oreign news channels Fox News, MSNBC, HLN,

Bloomberg, CNBC, BBC World News, etc.

8.4 When it comes to the amount BDUs pay or Canadian

cable news services, a urther discrepancy exists.

Cable and satellite providers paid CBC Newsworld

$0.63/month per subscriber. It is worth noting the

CBC amount was over and above the existing taxpayer

subsidies paid to the state broadcaster.

8. Fair Is Fair

1987

FIGURE 8.2:THE CANADIAN ALL NEWS LANDSCAPE

2012

63

18

CBC NEWS NETWORK SUN NEWS NETWORK

PROPOSAL

FIGURE 8.1:BDU CARRIAGE FEES

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66%

10%

NOYES

When CBC Newsworld was granted a licence in 1987the CRC cited the need to maintain our

Information sovereignty. Tat need continues today

Decision CRC 87-904

Do you think that new Canadian television all-news channels should

be given a similar advantage to allow them to compete with CBC Newsand CV News?

FIGURE 8.3:

Fig. 5.7 p 25. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012 AABBAACCUUSS DDATATAA

15


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9.1 The challenges o launching new Canadian channels

has not diminished, nor has the important role the CRTC

plays in ensuring Canadian content nds a place on

Canadian television. As Pierre Juneau said: Canadian

broadcasting should be Canadian.

9.2 While the CRTC does not rule on the basis o public

opinion, it is worth noting there is strong public support

or the Commissions core mandate o ensuring original

Canadian programming does not get sidelined

(Figure 9.1).

9.3 Opinion research also demonstrates the public is

skeptical about Cable and Satellite providers when it

comes to oering a choice o channels (Figure 9.2).

9.4 In the past the CRTC has not only demonstrated

steadast support or original Canadian content, but in

ensuring new Canadian entrants have an opportunity

to enter the market thus enhancing choice and

competition. The most recent example would be the

Canadian Government`s decision to reserve a portion

the wireless spectrum or new entrants to the marke

9.5 A lot has changed since 1987 when the CRTC granted

license to CBC Newsworld with mandatory distributio

The cable news market today is crowded with oreign

cable news channels particularly American news

channels.

9.6 The one thing that has not changed is the importance

that Canadian news channels be made available to ALCanadians.

Very Important Somewhat Important

Not that important Not at all important Unsure

3%7%36%51% 3%

How important is the CRC in ensuring Canadian cable and satellitesubscribers have access to Canadian television programming?

9. Strong Role For The CRTC

FIGURE 9.1


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FIGURE 9.2:

It is a highly competitive marketgiving consumers like you choiceand fair prices.

It is an uncompetitive market where a

few companies can limit choice andcharge high prices to consumers.

Which of the following statements describes the cable and satellitetelevision Industry in Canada?


71%

18%

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10.1 The business model or Sun News is similar to that

o other all-news channels. Approximately 72%

o our expenses are directly related to the cost o

producing 96 hours/week o original television content

everything rom salaries or news coverage across

the country to technical production sta and the cost

o operating our studios. Our revenues come rom two

sources: distribution ees paid by cable and satellite

providers (BDUs) and advertising revenues.

10.2 The current distribution agreements Sun News has

with cable and satellite providers are inadequate

to support the channel, both in terms o price

and penetration rate (only oered in 4 out o 10

households). Additionally, the distribution challenges

also negatively impact advertising revenues. As a

result we project an operating loss o $17 million in2012, with urther losses going orward. This is clearly

unsustainable.

10.3 Should Sun News be successul in obtaining a

mandatory distribution order, the CRTC would be

responsible or setting the distribution ees paid

by cable and satellite providers. For instance: in

the past the distribution ee or CBC Newsworld in

the anglophone market has been $0.63/month per

subscriber.

10.4 While it is an amount less than 1/3 what CBC

Newsworld was granted, we believe Sun News can

be nancially viable with mandatory distribution to allanalog and digital households with a distribution ee

o $0.18/month per subscriber.

10.5 Sun News, and its parent companies, will continue

to assume a great deal o risk in this project. Our

projections show that i we are able to achieve

our aggressive advertising goals, Sun News will

generate a modest operating margin o 2.9% in 2014,

increasing to just over 9 % in 2017 (year ve). Due to

the large capital investments needed to start up a new

television network, we would not achieve a positivenet income until 2020 (year 7).

10.6 Should the cable and satellite providers choose to

pass the ull cost o Sun News to their customers,

the nancial impact on the basic service would be

negligible only $2.16/year per household.*

*The cost would be $1.08/year per

rancophone households.

10. Financial Considerations

FIGURE 10.1:

New Canadian all-news channels should get the same advantages thatchannels before them received in terms of placement on the dial andsubscription fees.


71%AGREE

9%DISAGREE

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11. Sun News Meets All Criteria

11.1 Sun News actively and enthusiastically contributes

to the goals laid out in the Broadcasting Act.

Perhaps the most important demonstration o this is

the sheer volume o original Canadian broadcasting

we are producing 96 hours per week.

11.2 We serve, saeguard, enrich and strengthen the

political, social, cultural and economic abric o

Canada by oering voice to a wide range o views

rom Ezra Levant to Warren Kinsella and every

point o view in between!

11.3 In addition we are among Canadas most outspoken

advocates or reedom o speech, which helps to

ensure every point o view has an opportunity to

be shared, regardless o ashion or controversy.

We believe ree speech and a ree, diverse mediaare the oundation on which a stable, vibrant

democracy is built.

11.4 We are all about Canadian points o view. Our

programming highlights the best o Canadian talent

with hosts, commentators and contributors that

refect the diversity o this great country be it

by gender, race, region or religion. We are proud

to promote the multicultural, multiracial nature o

Canadian society and the special place o aboriginal

peoples within that society.

11.5 As a subsidiary o Quebecs largest media

company, we appreciate the importance oCanadas linguistic duality. In act we live it every

day as we work with our colleagues in TVA and

Quebecor Media to share stories with our audience

rom coast to coast and in both ocial languages.

11.6 And we celebrate the values that make Canada

great. Not just those laid out in the Broadcasting

Act, but others that go beyond that; such as:

hard work, patriotism, strong amilies and healthy

communities.

As Pierre Juneau said:

Canadian broadcastingshould be Canadian.

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12.1 In keeping with its proud history, we

encourage the CRTC to rearm its role as

the champion o original Canadian television

content. To this end we request:

i. Mandatory distribution o Sun News on all

analog and digital basic service in Canada,

rom January 1, 2013 until December 31,

2017. Ater this ve-year period has ended,

Sun News would be treated like other

Category C services.

ii. The rate paid to Sun News by Canadian

BDUs would be set at $0.18/month

per subscriber. *

iii. Distribution in a lower dial placement than

American and other oreign news channels.

12.2 We strongly believe Sun News meets all the

criteria laid out in the commission policy or

channels seeking mandatory distribution

on the basic service. The approach we are

recommending passes other tests as well:

12.3 i Canadian TV First

Virtually no channel on cable today can

compete with Sun News when it comes

to generating 100% original Canadian

programming. We are making 96 hours/week

o new content that is o, by and or Canadians.

And we are doing it without receiving a dime o

taxpayer money. Not bad, eh?

ii Fairness

Our plan would allow Sun News to establish an

audience under similar rules and regulations

to those aorded CBC Newsworld and CTV

News Channel or 21 and 13 years respectively.

We dont begrudge our competitors in any

way, we simply want the same rules that they

enjoyed at least or the next 5-years

iii Diversity

Sun News greatly enhances news diversity in

Canada. We expand debate, cover dierent

news stories, and bring new Canadian voices

to our public discourse. And all o that is

healthy or our media and or our democracy.

iv Precedence

We also believe our plan is in keeping with the

approach taken by the Canadian Government

in allowing dierent rules or new entrants in

the wireless spectrum auction. The Canadian

Government made the right decision to bring

new wireless players into the market then, andthey would be right now to do the same or

Canadian all-news channels!

*The rate would be $0.09/month or French

language households.

12. Our Ask

CanadianTvFirst.ca

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13. About Us

13.1 Quebecor Media Inc.is a subsidiary o Quebecor

Inc. (TSX:QBR.A) (TSX:QBR.B), one o Canadas

most important holding company operating in the

telecommunications and media businesses. Withmore than 16,000 employees, Quebecor Media

Inc., through its subsidiary Videotron Ltd., is an

integrated communications company engaged in

cable television, interactive multimedia development,

Internet access services, cable telephone services

and mobile telephone services.

13.2 Through Sun Media Corporation, Quebecor Media

Inc. is the largest publisher o newspapers in

Canada. It also operates Canoe.ca and its network

o English and French language Internet propertiesin Canada. In the broadcasting sector, Quebecor

Media Inc. operates, through TVA Group Inc., the

number one French language general interest

television network in Qubec, a number o specialty

channels and the SUN News English language

channel. Another subsidiary o Quebecor Media Inc.,

Nurun Inc., is a major interactive technologies and

communications agency with oces in Canada, the

United States, Europe and Asia. Quebecor Media

Inc. is also active in magazine publishing (TVAPublishing Inc.), book publishing and distribution

(Sogides Group Inc. and CEC Publishing Inc.), the

production, distribution and retailing o cultural

products (Archambault Group Inc. and TVA Films),

video game development (BlooBuzzStudios Inc.),

DVD, Blu-ray disc and videogame rental and

retailing (LeSuperClub Vidotron Ltd), the printing

and distribution o regional newspapers and fyers

(Quebecor Media Printing Inc. and Quebecor

Media Network Inc.), news content production and

distribution (QMI Agency), multiplatorm advertisingsolutions (QMI Sales) and the publishing o printed

and online directories, through Quebecor Media

Pages TM.

SUN NEWS HAS BUREAUS IN

Vancouver

Calgary

Edmonton

Regina

Winnipeg

TorontoOttawa

Montreal

Moncton

Washington, DC

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