CanadianTvFirst.

ca
An Application to the CRTC on behalf of Sun News Network Supplementary Brief

May 30, 2012

hours / week
of original Canadian television content

96
Sun News Network produces

CanadianTvFirst.ca

Table Of 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

The theory of the free press is not that the truth will be presented completely or perfectly in any one instance, but that the truth will emerge from free discussion. - Walter Lipmann

1. Introduction
1.1 In July 2010, Groupe TVA and Sun Media made an application to the CRTC for a license for a new English language national news specialty service Sun TV News. 1.7 In our initial application, we requested mandatory distribution for Sun News for a period of three years. 1.8 This was in recognition that the all-news market that we were launching into was a mature market. Moreover, our competitors had enjoyed highly preferential rules compared to the rules we were being asked to operate under. CTV News Channel and CBC News Network had enjoyed mandatory distribution, preferential dial placement and mandated subscription fees for 13 and 21 years respectively. 1.9 Sun News on the other hand, is distributed like a third-rate foreign news service available in only 4 out of 10 households with major BDUs like Telus and MTS not even offering it. This situation is unsustainable. 1.10 The CRTC indicated it was not considering mandatory distribution for any channels at the time of 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.

1.2 In that application we stated our intent to: i Produce and broadcast 100% Canadian television. Cover stories and issues ignored by others in the Canadian news media. Broaden the range of opinion in the Canadian media.

ii

iii

1.3 After 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 of Canadian content. Our news is of, by and for 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 of the Trudeau/ Brazeau Fight for the Cure, or by being the only national cable news network to have live coverage of election nights in Saskatchewan and Manitoba. 1.6 Gone are the days of boring talking heads and tired talking points. Debate on Sun News has lived up to its promise of being raw and edgy. Love them or hate them, our hosts and commentators swing for the fences every night.

Caryn Lieberman, Host of Right Now

FIGURE 2.1:

Eight in ten Canadians, surveyed by Abacus Data, agreed that all Canadians should have access to every Canadian cable all-news channel.

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

A B A C U S DAT A

2. Proudly Canadian
2.1 Sun News is 100% Canadian (and proud of 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 forefront of producing original, Canadian television. Moreover, LCN produces 98 hours of original Canadian news programming every week. 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 CRTC that Canadian content matters. That Canadian news of, by and for Canadians needs to have a place at the centre of our television landscape. 2.5 And so do Canadians. (Figure 2.1).

2.2 And Sun News contributes to that strong tradition. We are producing 11 unique shows that offer 96 hours/week of original television programming every second of it Canadian.

Sun News is a Canadian Content Powerhouse

FIGURE 2.2: ESTIMATED WEEKLY HOURS OF CANADIAN CONTENT BY NETWORK
100 Hours of originally produced Canadian content per week

91.5 hours T hats than Oprah! more

96

16.5 1 2.5
OUT

4.5
OWN

7
DISCOVERY APTN SUN

BRAVO

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

FIGURE 3.1:

THE NEWS MEDIA IN CANADA IS DOMINATED BY A FEW VOICES WHO ALL THINK ALIKE.

3. Canadians Want More Voices

3.1 Since before its launch, Sun News has promised to shake up the media consensus - to bring to the forefront new voices and views that are often ignored by others. We believe our programming has lived up to that promise. 3.2 Our desire for more diversity in Canadian media is shared by the public. A large majority of Canadians believe the media is dominated by a few voices that all think alike (Figure 3.1). And an overwhelming majority wants to see more voices in the media1.

57%
57% OF CANADIANS AGREE

3.3 This desire by Canadians for more voices confirms Walter Lippmans famous observation that: The theory of the free press is not that the truth will be presented completely or perfectly in any one instance, but that the truth will emerge from free discussion. 3.4 It is our belief that no single media source, or news channel, will ever be able to perfectly reflect the views and news interests of 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 fair voice.

23%
23% OF CANADIANS DISAGREE
Fig 2.0. p 5. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S DATA

1. p 5. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S DATA

A B A C U S DATA

Alex Pierson, Co-Host of AM Agenda, interviews Jack Layton and Olivia Chow on Sun News

Ensure that prime time television in French and in English is written, directed, stars, and is about Canada and Canadians. Jack Layton on the role of the CRTC
NDP.CA - http://www.ndp.ca/press/layton-will-restore-funding-arts

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

CANADIAN HOUSEHOLDS

4/10 HOUSEHOLDS

11.6 Million

6.7 Million

5.1 Million

TOTAL MARKET
(CBCS NEWS CHANNEL DISTRIBUTION)

SUN ON ANALOG & FREE PREVIEW

SUN TODAY

4. Carriage Chaos
4.1 Despite this strong thirst for news alternatives in the market, Sun News has encountered enormous resistance from Canadian cable and satellite providers when it comes to making the channel available to Canadians. In fact, Sun News is only available in 4 out of 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 for City News Channel are significantly 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 preference complaint against Rogers for this action, it speaks strongly to the challenges we have faced when dealing with major Canadian cable and satellite providers. 4.4 Even more surprising, BDUs like MTS and Telus are not offering Sun News at all! In case you were wondering, both Telus and MTS offer Al Jazeera, BBC World News and other foreign all-news channels.

Krista Erickson, Host of Canada Live

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

OCT 31, 2011 DEC 31, 2011

APR 18, 2011 OCT 31, 2011

16,400
2,600
SOURCE: BBM: AMA, 2+, M - F, 5PM - 11PM, Ontario

5. Location Matters
5.1 Where Sun News is offered, it is often done so in a manner which makes marketing the channel particularly difficult. For instance there are three different channel locations for Shaw customers depending on which service they have signed up for.

FIGURE 5.1: NATIONAL VARIATIONS IN SUN NEWS CHANNEL PLACEMENT

In Ontario, awareness of the Sun News network was 57% overall but higher in Ottawa (60%), Toronto (59%), and in the Greater Toronto Area (61%) than in the rest of the province (50%).
Abacus Report, pg. 33

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

times 2 to 3 ews areness Sun N Aw r where ribution! greate og dist d anal ha

22% 26% 34%
57%

41%

34%

22%

61%
Fig 6.1. p 28. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S D AT A ATA

6. Seeing Is Believing
6.1 We are proud to be following in the footsteps of Canadian broadcasting legends like Moses Znaimer by offering viewers radically different approaches to news television. Our hard news and straight talk is a huge departure from the safe, traditional approach to news taken by our competition. 6.2 While Sun News is not for everyone, it is for many of the Canadians that are frustrated with the lack of 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.

Ezra Levant, Host of The Source

FIGURE 6.1: SUN NEWS VIEWER DEMOGRAPHICS

Demographic Group Male Female 18 to 29 30 to 44 45 to 59 60 and over Income less than $50k Income $50k to $100k Income over $100k Specific Subgroups Low Income Seniors

Sun News Viewership 66% 34% 9% 21% 39% 31% 39% 40% 21%

Despite being in the typical Sun News viewer demographic, most focus group participants had never heard of the Sun News Network prior to the focus group session. When shown three clips from various prime time programs, almost all said they would watch Sun News if they could get access to it.
p 30. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S D AT A

12%
A B A C U S D AT A

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

g ly analo r s! Like t ome s cable cu

10

Much of Sun News audience is lower income, and is heavily oriented to elderly Canadians on fixed incomes. These viewers are more likely to be analog cable subscribers for reasons of cost and resistance to new technology.

11

Brian Lilley, Host of Byline

7. Distribution + Dial Position = Ratings

7.1 When you look at Sun News ratings over its first year, it is easy to see the effect that distribution and dial position have on ratings performance.

FIGURE 7.1: NATIONAL NETWORK AWARENESS

7.2 When Sun News went from 6.7 million households to 5.1 million households it had a dramatic, negative effect on ratings, because the channel was no longer carried on analog and digital basic service. They went from an average of 27,400 before to 13,000 after (Figure 7.2) 2+ prime-time from launch until December 31, 2011. 7.3 The move from Channel 15 on Rogers to Channel 142 had a particularly negative impact. None of 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. With all of 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 of Sun News. Less than half that number has watched.

96%

89%

7.4

38%

7.5

Fig 6.0. p 27. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S D AT A

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

27,400
WITH ANALOG

Sun News Network Weekly Audience

13,000
WITHOUT ANALOG

Apr 18 2011 - Oct 31 2011

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

Jan 2012 - May 2012

13

8. Fair Is Fair
8.1 None of these challenges existed for 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 of its main competitor, the American news channel CNN. CTV News Channel had similar advantages when it launched in 1997. 8.2 This preferential treatment continued for 21-years for CBC News Network and 13-years for CTV News Channel. That was the decision of 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 of launching a new Canadian cable news channel have evolved, but they have not diminished over the years. A larger television universe means Canadian channels need to compete with a host of foreign news channels Fox News, MSNBC, HLN, Bloomberg, CNBC, BBC World News, etc. 8.4 When it comes to the amount BDUs pay for Canadian cable news services, a further 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.

FIGURE 8.1: BDU CARRIAGE FEES

63 18
CBC NEWS NETWORK SUN NEWS NETWORK PROPOSAL

FIGURE 8.2: THE CANADIAN ALL NEWS LANDSCAPE

1987
14

2012

When CBC Newsworld was granted a licence in 1987 the CRTC cited the need to maintain our Information sovereignty. That need continues today. Decision CRTC 87-904

FIGURE 8.3:

Do you think that new Canadian television all-news channels should be given a similar advantage to allow them to compete with CBC News and CTV News?

66%
10%

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

YES

NO
A B A C U S D AT A

15

9. Strong Role For The CRTC

9.1 The challenges of launching new Canadian channels has not diminished, nor has the important role the CRTC plays in ensuring Canadian content finds a place on Canadian television. As Pierre Juneau said: Canadian broadcasting should be Canadian. 9.4 In the past the CRTC has not only demonstrated steadfast support for 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 of the wireless spectrum for new entrants to the market. 9.5 A lot has changed since 1987 when the CRTC granted a license to CBC Newsworld with mandatory distribution. The cable news market today is crowded with foreign 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 ALL Canadians.

9.2 While the CRTC does not rule on the basis of public opinion, it is worth noting there is strong public support for the Commissions core mandate of 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 offering a choice of channels (Figure 9.2).

FIGURE 9.1

How important is the CRTC in ensuring Canadian cable and satellite subscribers have access to Canadian television programming?

51%

36%

7%

3% 3%

Very Important Not that important

Somewhat Important Not at all important Unsure

Fig. 4.0 p 13. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012

A B A C U S D AT A

16

FIGURE 9.2:

Which of the following statements describes the cable and satellite television Industry in Canada?
It is an uncompetitive market where a few companies can limit choice and charge high prices to consumers. It is a highly competitive market giving consumers like you choice and fair prices.

71

18

Fig. 3.0 p 11. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012

A B A C U S D AT A

17

10. Financial Considerations

10.1 The business model for Sun News is similar to that of other all-news channels. Approximately 72% of our expenses are directly related to the cost of producing 96 hours/week of original television content everything from salaries for news coverage across the country to technical production staff and the cost of operating our studios. Our revenues come from two sources: distribution fees 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 of price and penetration rate (only offered in 4 out of 10 households). Additionally, the distribution challenges also negatively impact advertising revenues. As a result we project an operating loss of $17 million in 2012, with further losses going forward. This is clearly unsustainable. 10.3 Should Sun News be successful in obtaining a mandatory distribution order, the CRTC would be responsible for setting the distribution fees paid by cable and satellite providers. For instance: in the past the distribution fee for 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 financially viable with mandatory distribution to all analog and digital households with a distribution fee of $0.18/month per subscriber. 10.5 Sun News, and its parent companies, will continue to assume a great deal of risk in this project. Our projections show that if we are able to achieve our aggressive advertising goals, Sun News will generate a modest operating margin of 2.9% in 2014, increasing to just over 9 % in 2017 (year five). Due to the large capital investments needed to start up a new television network, we would not achieve a positive net income until 2020 (year 7). 10.6 Should the cable and satellite providers choose to pass the full cost of Sun News to their customers, the financial impact on the basic service would be negligible only $2.16/year per household.* *The cost would be $1.08/year per francophone households.

FIGURE 10.1:

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

71% AGREE 9% DISAGREE

Fig. 5.0 p 19. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012
A B A C U S D AT A

18

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 of this is the sheer volume of original Canadian broadcasting we are producing 96 hours per week. 11.2 We serve, safeguard, enrich and strengthen the political, social, cultural and economic fabric of Canada by offering voice to a wide range of views from Ezra Levant to Warren Kinsella and every point of view in between! 11.3 In addition we are among Canadas most outspoken advocates for freedom of speech, which helps to ensure every point of view has an opportunity to be shared, regardless of fashion or controversy. We believe free speech and a free, diverse media are the foundation on which a stable, vibrant democracy is built. 11.4 We are all about Canadian points of view. Our programming highlights the best of Canadian talent with hosts, commentators and contributors that reflect the diversity of this great country be it by gender, race, region or religion. We are proud to promote the multicultural, multiracial nature of Canadian society and the special place of aboriginal peoples within that society. 11.5 As a subsidiary of Quebecs largest media company, we appreciate the importance of Canadas linguistic duality. In fact we live it every day as we work with our colleagues in TVA and Quebecor Media to share stories with our audience from coast to coast and in both official 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 families and healthy communities.

As Pierre Juneau said:

Canadian broadcasting should be Canadian.

19

12. Our Ask

12.1 In keeping with its proud history, we encourage the CRTC to reaffirm its role as the champion of original Canadian television content. To this end we request: i. Mandatory distribution of Sun News on all analog and digital basic service in Canada, from January 1, 2013 until December 31, 2017. After this five-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 foreign news channels. 12.2 We strongly believe Sun News meets all the criteria laid out in the commission policy for 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 of new content that is of, by and for Canadians. And we are doing it without receiving a dime of taxpayer money. Not bad, eh? ii Fairness Our plan would allow Sun News to establish an audience under similar rules and regulations to those afforded CBC Newsworld and CTV News Channel for 21 and 13 years respectively. We dont begrudge our competitors in any way, we simply want the same rules that they enjoyed at least for the next 5-years iii Diversity Sun News greatly enhances news diversity in Canada. We expand debate, cover different news stories, and bring new Canadian voices to our public discourse. And all of that is healthy for our media and for our democracy. iv Precedence We also believe our plan is in keeping with the approach taken by the Canadian Government in allowing different rules for new entrants in the wireless spectrum auction. The Canadian Government made the right decision to bring new wireless players into the market then, and they would be right now to do the same for Canadian all-news channels!

CanadianTvFirst.ca

*The rate would be $0.09/month for French language households.

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13. About Us
13.1 Quebecor Media Inc.is a subsidiary of Quebecor Inc. (TSX:QBR.A) (TSX:QBR.B), one of Canadas most important holding company operating in the telecommunications and media businesses. With more 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 of newspapers in Canada. It also operates Canoe.ca and its network of English and French language Internet properties in 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 of specialty channels and the SUN News English language channel. Another subsidiary of Quebecor Media Inc., Nurun Inc., is a major interactive technologies and communications agency with offices in Canada, the United States, Europe and Asia. Quebecor Media Inc. is also active in magazine publishing (TVA Publishing Inc.), book publishing and distribution (Sogides Group Inc. and CEC Publishing Inc.), the production, distribution and retailing of 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 of regional newspapers and flyers (Quebecor Media Printing Inc. and Quebecor Media Network Inc.), news content production and distribution (QMI Agency), multiplatform advertising solutions (QMI Sales) and the publishing of printed and online directories, through Quebecor Media Pages TM.

SUN NEWS HAS BUREAUS IN

Vancouver Calgary Edmonton Regina Winnipeg Toronto Ottawa Montreal Moncton Washington, DC
21

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