COMMUNICATIONS, ENERGY AND PAPERWORKERS UNION OF CANADA and
CITY-TV et al.
File Nos. 18031-C and 18173-C.Decision No. 22.
Canada Industrial Relations Board, Jean L. Guilbeault, Q.C.,
Vice-Chair, Patrick H. Shafer, Member and Veronique L.
June 29, 1999
Decision of the Board: --
I. Introduction [*2]
1. These reasons deal with the question of whether the Canada Labour Code,
R.S.C. 1985, c. L-2, properly applies to the labour relations of
CityInteractive, a division of CHUM Limited ("CityInteractive"). This question
arose in the context of an application for review of an existing bargaining
certificate pursuant to s. 18 of the Canada Labour Code (Part I - Industrial
Relations), n1 filed by the Communications, Energy and Paperworkers Union of
Canada ("CEP" or "the applicant") on March 26, 1997.
2. CEP is the certified bargaining agent for a group of employees of the
employer known as CITY-TV, CHUM City Productions Limited, Much Music Network and
Bravo!, Divisions of CHUM Limited ("the respondent" or "CHUM Television"). The
predecessor of the applicant, the National Association of Broadcast Employees
and Technicians ("NABET"), was certified by the Board on June 3 1988 (File No.
555-2774) to represent a bargaining unit of employees of "CITY-TV, CHUM City
Productions Limited, and MuchMusic Network, division of CHUM [*3] Limited".
This certificate was most recently amended on July 10, 1995 to add the Bravo!
television station and to reflect other changes, including that CEP had
succeeded NABET as bargaining agent for the said unit (Files Nos. 530-2431 and
3. In addition to seeking a review of the employer's proper designation, the
applicant requests an order clarifying the scope of the bargaining unit
described in the certificate. CEP asserts that the employer should be
redesignated in the certificate as "CHUM Limited, the television group" and that
the employees of CityInteractive, who occupy new positions, should be included
in the certificate.
4. CHUM Television opposes the application on constitutional grounds. In
contesting the Board's constitutional jurisdiction, CHUM Television argues that
CityInteractive is an economically self-sustaining operation, separate and
severable from the television operation and independent from broadcasting. It
submits that CityInteractive's primary purpose is to design, produce, market,
license and distribute interactive material (including Web sites, CD-ROMs and
related specialty products), and that the regulation of such activities is
within the provincial [*4] realm. Consequently, CityInteractive's operation is
neither itself a federal undertaking, nor an operation that is vital, essential
or integral to CHUM's broadcasting business. On the basis of
CityInteractive's alleged status as a stand-alone business of CHUM, the
respondent submits that the application must also fail because CHUM Television
does not employ the employees concerned.
5. To the contrary, CEP's position in this respect is that CityInteractive is
an integral part of CHUM's television operation, coming as such under federal
jurisdiction. According to CEP, the employees covered by this application
perform work directly for and in connection with CHUM's television operation,
and CityInteractive's nexus and relationship to television broadcasting clearly
demonstrates that this is not a separate autonomous operation, but rather an
entity very much linked to CHUM's federal broadcasting undertaking. CEP submits
that there is only one legal entity before the Board and that is CHUM Limited.
That entity, which is clearly federal, is the only employer in this case.
6. If CityInteractive is found to be a truly separate stand-alone operation,
CEP asserts, in the alternative, that it [*5] still comes under federal
jurisdiction on its own account, given the nature of its operation and what it
does as a going concern. On this point, CEP submits that CityInteractive's
Internet-related activities are completely analogous to "broadcasting" and that
they amount to communication activities that extend beyond the limits of a
province pursuant to s. 2(b) or (f) of the Code. CEP states that the question of
whether CityInteractive comes under federal jurisdiction on its own account
brings into the equation the much larger question of whether the Internet is in
itself a federal work or undertaking pursuant to s. 92(10)(a) of the
Constitution Act, 1867. The implication is that if the Internet is in itself a
work or undertaking that is subject to federal jurisdiction, it should follow
that an undertaking that engages in communications activities and/or performs
activities analogous to broadcasting over the Internet should then fall within
the federal realm.
7. Finally, if CityInteractive is found not to be a federal undertaking on
its own account, CEP asserts that it must still be found to come under federal
jurisdiction because there is a degree of integration with CHUM's television
[*6] operation that can be characterized as "vital", "essential" or "integral".
8. Since the issue raised by the respondent concerns constitutional
jurisdiction over the regulation of work involving services delivered over the
Internet, a novel subject which has not yet been considered in constitutional
jurisprudence, the Board directed the respondent to give the Attorneys-General
of Canada and of the provinces notice of these proceedings. Notice was given;
however, none chose to participate.
9. The collective agreement in force between the parties when this
application was filed expired on March 31, 1997. It was renewed for a term
running from July 1, 1997 to June 30, 2000, and the Bravo! television station
was specifically added to that collective agreement. Since these proceedings
began, CHUM launched two new channels, the Space channel and Cable Pulse 24.
Those stations were also added to the collective agreement by agreement of the
parties, even though they are not specifically mentioned in the bargaining
10. Following its s. 18 application, CEP filed a complaint pursuant to s. 94
of the Code alleging that the respondent had committed unfair labour practices
by attempting, [*7] inter alia, to intimidate employees in the department by
altering their methods of remuneration (File No. 18173-C). The Board
consolidated the proceedings and heard joint proof in both files. However, these
reasons deal solely with the issue of the Board's constitutional jurisdiction.
II. Evidence on Record
11. These proceedings began with a one-day tour of the ChumCity building
located at 299 Queen Street West, Toronto, which houses the core of CHUM's
television operation. This tour enabled the Board to take a view of the
operations for the purpose of giving some context to the evidence it would then
hear. In the course of that visit, the Board had the opportunity to view CHUM
Television's main operation and to question staff about the nature of their work
and the manner in which various activities were performed. The tour also
included a visit to CityInteractive's offices, housed on the fifth floor of the
ChumCity building. This background gave the Board valuable insight into how and
why CityInteractive and CHUM Television operate as they do.
12. Following this visit, the Board heard oral evidence over 18 days of
hearing. The respondent called four witnesses, namely Mr. Josh Raphaelson, [*8]
CityInteractive's general manager; Mr. Mark Lewis, director of business affairs
and legal counsel for CHUM Television; Mr. Bruce Cowan, manager of engineering
for CHUM Television; and Mr. Jay Switzer, vice-president programming for CHUM
Television. Mr. Raphaelson's evidence included a two-day computer presentation
of CityInteractive's main products, with graphic descriptions of various digital
uses and applications on the Internet and America Online ("AOL"). CEP called two
witnesses, Ms. Marnie Genetti, floor director and producer of MuchMusic's Go
with the Flow program, and Mr. Raja Shankar, Citylnteractive's systems
13. The record was completed by the filing of over 100 exhibits. These
included various charts, internal administrative forms and lists, employment
contracts, collective agreements, Canadian Radio-Television and Communications
Commission ("CRTC") documents, financial statements, promotional material
(videotapes and folders including various press releases, magazine and newspaper
articles), several videotapes of television shows, mission statements, hard
copies of Web pages from CityInteractive's Web sites (CITY-TV, MuchMusic,
Bravo!, Space, The NewVR, [*9] CablePulse24, CityStore), and hard copies of
internal e-mails. Some of these documents were admitted subject to a
14. In the course of final argument, counsel for CEP sought to file two
articles dealing with legal issues relating to the regulation of content
distributed over the Internet: M. S. Koch, Square Pegs and Round Holes: CRTC
Regulation of the Internet (Toronto: Smith Lyons, 1999); and C. Pinsky, legal
counsel, CRTC, "The Internet: Brave New World or Same Old Thing? -- A survey of
legal issues relating to the regulation of content distributed over the
15. Counsel for the respondent objected to the filing of these documents on
the grounds that they constituted new evidence, the validity and accuracy of
which they had had no opportunity to challenge. In their view, these articles
contained factual assumptions that had not been proven before providing analysis
with respect to whether certain aspects of the Internet were subject to
regulation under the Broadcasting Act, S.C. 1991, c. 11, or the
Telecommunications Act, S.C. 1993, c. 38. They argued, moreover, that due to the
tardiness of the filing, the fair presentation of their case would [*10] be
compromised should the Board accept such material as they were not in a position
to comment on these documents. The Board took the objection under advisement and
directed the parties to review the material and to file their submissions and
comments with the Board in writing.
16. The Board, after considering the parties' written submissions, determined
that it would accept the two articles. Although s. 16(c) of the Code empowers
the Board to receive and accept such evidence and information as it sees fit,
whether admissible in a court of law or not, the purpose of these articles is
not to add to the evidence on record, but to assist the Board in its
understanding of the regulatory framework bearing upon the Internet and related
applications. It follows, therefore, that the Board may rely upon such secondary
sources, provided that, and only insofar as, the factual assumptions and
descriptions that they make, match the evidence on record.
III. Constitutional Facts
17. From the evidence on record, these are the constitutional facts before
A. CHUM Limited's Business
18. CHUM operates a broadcasting business through ownership and operation of
some nine television and 24 [*11] radio stations across the country. All
stations operate as divisions or branches of the company and are grouped under
two umbrellas or major divisions: the CHUM Television Division (CHUM Television)
and the CHUM Radio Division (CHUM Radio). With the exception of a few stations
in which CHUM has only a partial interest, all these stations are owned and
controlled by CHUM and each station is operated pursuant to a licence issued by
the CRTC issued under CHUM's name.
19. The CHUM organization operates under one single corporate entity, CHUM
Limited, which is incorporated under the Ontario Business Corporations Act,
R.S.O. 1990, c. B.16. The various activities carried on by CHUM are structured
within the single corporate entity as departments or businesses and,
operationally, they are all grouped under either CHUM Television or CHUM Radio.
Exceptions to this are in cases where CHUM holds a minority interest in a
business. For example, CHUM, through a subsidiary (CHUM U.S.A., incorporated in
New York), operates a business under the name MuchMusic U.S.A. in partnership
with Rainbow Programming Holdings Inc., a U.S.-based corporation owned by
Cablevision Systems Corporation. The partnership's [*12] business is
distribution of MuchMusic programming on cable systems throughout the United
States and on DirecTV.
20. CHUM Limited's executive committee includes several members of the Waters
family. Mr. Alan Waters is the chairman of CHUM Limited and the principal
shareholder. Mrs. Marjorie Waters also plays an ongoing role in the company's
management. Messrs. James and Ron Waters are president of CHUM Radio and
president of CHUM Television, respectively.
21. In addition to the television and radio stations it owns and operates
across Canada, CHUM has international business interests and is actively
involved in marketing its products and brands across Canada and around the
world. CHUM is also engaged in activities related to broadcasting that require
no licensing authority from the CRTC. For example, through its division known as
CHUM Television Sales, CHUM engages in the packaging of air time, for CHUM-owned
television stations and other Canadian television broadcasters.
22. On the television side of its business, CHUM operates both general
services channels and national specialty services channels. General services
channels include CITY-TV (Toronto, Woodstock and Ottawa), The New [*13] VR
(Barrie), The New RO (Ottawa/Pembroke), CFPL-TV (London), CKNX-TV (Wingham) and
CHWI-TV (Windsor). National specialty television channels include MuchMusic,
Bravo!, Space, The Imagination Station, Cable Pulse 24, MusiquePlus and MusiMax.
At the time of these hearings, CHUM had also received CRTC approval for
additional specialty channels (MuchMoreMusic, Star Entertainment and Canadian
Learning Television), but they had not yet been launched.
23. The general broadcast operation of CITY-TV and the specialty channels of
MuchMusic, Bravo!, Space and Cable Pulse 24 are all housed in the ChumCity
building located on Queen Street West in Toronto. This building, which is owned
by CHUM, also houses a number of departments which provide support services to
the television broadcast operation. The departments providing non-operational
services to the television operation include ChumCity International and the
business and legal affairs department. Operational support departments include
the engineering and technical operations department (the "engineering
department"), the information technology department (the "IT department") and
the design department. The building also houses CityInteractive [*14] and the
CityStore, which sells various articles featuring the CHUM television brands.
24. Organizationally, CHUM has grouped the business and legal affairs
department, the "CityInteractive, Multimedia Department" and ChumCity
International under the umbrella of ChumCity Productions. ChumCity Productions
is not a separate legal entity. It was separately incorporated in the 1970s but
the company was dissolved in 1983. Mr. Lewis explained that CHUM kept the
ChumCity Productions banner for reasons of convenience. However, he could not
explain why every collective agreement still referred to ChumCity Productions
Limited, even after its dissolution.
25. The business and legal affairs department provides legal and commercial
advice to every segment of the television operation. Mr. Lewis, who heads the
department, provides legal counsel on everything from CRTC matters to production
contracting, to every regulated and non-regulated division, branch or department
of CHUM's television operation. This includes the television stations, CHUM
Television Sales, the CityStore and CityInteractive. For example, the legal
department assisted and advised Mr. Raphaelson when he hired Mr. Shankar as
technical [*15] specialist. Mr. Lewis has also advised CityInteractive on
various legal issues dealing with the Internet and he was involved in the
original negotiations for the joint venture between Unapix and CHUM that led to
the creation of CityInteractive. Mr. Lewis also drafted the documents confirming
the joint venture's dissolution, as well as the agreement formalizing CHUM's
relationship with Mr. Raphaelson.
26. Legal affairs is also involved in collective agreement negotiations. Mr.
Lewis signed the most recent collective agreement and the memorandum of
agreement that preceded it in June 1997. In cross-examination, Mr. Lewis
conceded that there is flexibility in the collective agreement to ensure
employee mobility and interchangeability, and that this reflects the informal
nature of the CHUM's operation. Moreover, Mr. Lewis confirmed that the job
classifications covered by the collective agreement include the employees
working in the IT department, those working in the CityStore, as well as
maintenance, administration and sales employees. In other words, the collective
agreement covers all CHUM employees not specifically excluded by the Board's
certificate who work at the ChumCity building, [*16] except those working in
27. ChumCity International is involved in distributing television brands and
programs across Canada and abroad. This is done through licensing the use of the
brand names, art works and trademarks that are copyrighted (such as CITY-TV or
MuchMusic), as well as production techniques (know-how).
28. As previously indicated, CityInteractive is also found under the
ChumCityProductions banner. Mr. Lewis testified that this was primarily due to
the origins of the business arrangement that preceded the formation of
CityInteractive, as it is now known. It was because the business -- then a joint
venture -- was, from a CRTC standpoint, non-regulated, that the operation was
placed under ChumCity Productions.
29. The CityStore is located on the main floor of the ChumCity building.
Counsel for the applicant adduced evidence showing that items sold included
items featuring the Web site addresses of the CHUM television brands, such as
<www.muchmusic.com> for MuchMusic. The store, like each branch located at 299
Queen Street, has a manager, employees and a budget.
30. The engineering department, which is located in the basement of the
building, is responsible [*17] for acquiring products -- any technical
equipment that is used in the broadcast operation -- such as video cameras,
production control equipment, videotape machines and broadcast transmitters. It
is also responsible for installing and maintaining all broadcast equipment at
299 Queen Street, and for setting up cameras and video monitors and other
broadcast equipment necessary for a production.
31. The IT department, which is also located in the basement, is essentially
CHUM Television's informatics division. It is responsible for the ChumCity
building's internal computer network (local area network or "LAN") and for CHUM
Television's domain name server ("DNS"). The LAN allows for desktop
applications, internal communication by e-mail and other forms of data
transmission such as spread sheets and graphic designs. The IT department
provides technical support in relation to the LAN and informatics to every
segment of CHUM located in the ChumCity building, including CityInteractive.
B. From City OnLine to CityInteractive
32. CityInteractive originated from a joint venture between CHUM and Unapix,
an American company specializing in the distribution of syndicated television
programming. [*18] The unit was originally formed in March 1994, primarily on
the recommendation of Mr. Switzer, vice-president programming for CHUM
Television. According to Mr. Raphaelson, who has been heading the unit since its
inception, the joint venture was created for the purpose of exploiting CHUM's
brands and products on the Internet and other on-line networks, such as AOL,
E-World and CompuServe. As on-line networks emerged, the digital arena was
perceived as a potentially lucrative new platform for the exploitation of brands
33. The understanding was that Unapix and CHUM would share the risks and
expenses of testing the waters of this new digital interactive world. Under the
arrangement, Unapix would pay all direct costs. In return, CHUM would give the
venture exclusive rights to use and exploit, within the interactive market, the
CHUM brands (such as CITY-TV, MuchMusic and Bravo!) and products under the
responsibility of its ChumCity Productions division. Mr. Lewis explained that
under the agreement, the joint venture would have access to the CHUM brands and
various intellectual property controlled
by CHUM, to the extent that they could be licensed for interactive use.
34. [*19] Messrs. Josh Raphaelson, David Hutchinson and Sam Zappas, who
were all then residents of the United States, were retained by the partners to
explore this new business opportunity. The new operation was initially named
"City OnLine". Approximately one year later, it was renamed
"CityInteractive" when CITY-TV's news department, CityPulse, decided to create a
television show called "CityOnline".
35. The first two employees were hired in late 1994, primarily to begin
writing code in hypertext mark-up language ("HTML") format and to design
Internet pages. They were to create Web sites based on the CHUM brands. These
employees, as all other CityInteractive employees, were paid by CHUM. A Web site
was set up, and its server (the computer used to store the content of the Web
sites) and equipment were housed on the third floor of the ChumCity building in
Toronto. CityInteractive's first Web pages were put on the server and made
available to the public in March 1995.
36. CityInteractive contracted with a large CD-ROM company in the United
States to distribute the company's titles to Canadian stores using the new brand
they had created called CITY-ROM. CD-ROMs are compact disks ("CD") with
read-only [*20] memory ("ROM") capable of storing large amounts of electronic
data. For distributing the CD-ROM product to software stores and large consumer
chain stores, CityInteractive contracted with a Canadian company involved in
home video distribution.
37. CityInteractive also concluded an agreement with AOL, a private computer
network with approximately 11 million members worldwide, to develop content
based on the CHUM brands to run on the AOL platform. As Mr. Raphaelson put it
(transcripts, pp. 26-27):
"Again, the relationship with AOL was essentially that we would create
content for them in an area called, I believe, MuchMusic . . . Its just not
clear to me if it's called the MuchMusic Site or the MuchMusic area. . . . And
another one that also trades off of a CHUM-CITY brand, which is CITY-TV.
In the MuchMusic one, we would provide images, information, from -- based on
the MuchMusic brand and information about artists and images of artists and some
sound files and potentially short video clips.
In the CITY area, we would provide some news and other kinds of information
relating to CITY-TV brands. AOL would charge subscribers for their time
connecting to the service, and they would share [*21] that with us, that
revenue. So our goal was to provide content that would excite people and want
them to stay connected to our area longer."
38. The agreement provided for revenue-sharing based on the length of time
spent by users in CityInteractive's area versus other areas on AOL.
CityInteractive would also share in revenues based on advertising sales for its
area and based on products sold within its AOL area.
39. In addition to growing rapidly in size, the Web pages became more
sophisticated with the inclusion of complex interactive elements, attractive
designs, and short video and audio segments. CityInteractive also began to sell
and develop advertising products that would appear on the Web sites, such as
games and banner ads. This involved a different type of advertising since time
is not medium currency on the Internet. As a result, the CityInteractive team
expanded. Some of the individuals engaged were already working for CHUM at the
ChumCity building, either part-time or as volunteers. This, according to Mr.
Raphaelson, was a plus since these individuals were already familiar with the
CHUM television brands.
40. In early 1996, it became clear that CHUM's interests in the [*22]
interactive and digital business were different from
those of Unapix and they came to an agreement where
CHUM bought out Unapix's interest and the joint venture was dissolved.
41. Following the joint venture's termination, CHUM's executive committee
decided to continue to operate and fund the interactive business. At this time,
the employment relationships between CHUM and Messrs. Raphaelson and Hutchinson
were formalized. Referring to the employment agreement he negotiated, Mr.
Switzer indicated "[i]t was specifically negotiated and specifically approved by
CHUM Television and by my boss [Mr. Ron Waters, president of CHUM Television]
because of the special and unusual nature of this interactive business" (p. 1334
C. CityInteractive's Administrative and Operational Structure
42. At present, CityInteractive's staff consists of a general manager, an
associate general manager, an executive assistant, a system administrator
(formerly the position of technical specialist), an advertising sales manager, a
sales representative, a senior graphic designer, and approximately seven
full-time and part-time Web site designers and interactive developers.
43. CHUM's 1996 annual [*23] report describes CityInteractive's business as
follows (p. 9):
"Established on a small scale in 1994, CHUMCity Interactive continues to keep
the Company on the leading edge of new technologies. The operation's current
work includes distributing live audio, video and multimedia content over the
Internet and merging interactive programming into television broadcasts. Three
of Canada's most widely accessed Web sites, CITY-TV, MuchMusic and Bravo!, are
maintained by this operation. Recent alliances with America Online and
CompuServe have expanded the export market for CHUMCity content to over 12
million online subscribers worldwide."
44. CityInteractive's general manager reports to senior executives of CHUM
Television. Mr. Raphaelson used to report primarily to Mr. Switzer,
vice-president of programming for CHUM Television, and to Mr. Znaimer, president
and executive producer of each of the television stations. He now reports
primarily to Mr. Znaimer and to Mr. Mark Rubinstein, vice-president and general
manager of CHUM Television, whose responsibilities also include the CityStore.
45. When CityInteractive incurs an expense, the invoice submitted is paid by
CHUM using a CHUM cheque [*24] prepared and sent by CHUM's accounting people.
As far as payroll is concerned, CityInteractive is simply a separate heading in
the overall payroll for the bargaining-unit and non-bargaining-unit employees of
CHUM working at the ChumCity building. CityInteractive has been assigned its own
equipment (computer equipment and software, telephone, digital cameras, etc.),
but it is all owned by CHUM, and all items purchased by CityInteractive must
fall within the capital budget that has been approved by CHUM. Purchasing
authority is restricted and subject to approval by CHUM Television engineering
department's or CHUM Television IT department's director. Furthermore, all
computer purchases must be approved by the head of CHUM's IT department.
46. CityInteractive's budget must also be approved by CHUM Television's
vice-president of programming and CHUM Television's vice-president and general
manager. These individuals receive monthly reports from Mr. Raphaelson, who must
discuss with them any problematic or controversial issue. At the initiative of
CHUM Television's vice-president of programming, CityInteractive's budget year
was moved to a regular broadcast year budget cycle.
47. CityInteractive [*25] has its own logo and letterhead, and the employees
have their own business cards identifying themselves as such. However, the
various logos of the television stations housed in the ChumCity building also
appear on each of these materials which, incidentally, were all printed after
these hearings began. Prior to this, CityInteractive personnel used the same
business cards as the television people.
48. There is no lease or special arrangement between CityInteractive and CHUM
for the premises it occupies at the ChumCity building, and CityInteractive is
not billed by CHUM for occupying this space. Although CityInteractive has its
own telephone lines, the television stations and CityInteractive share the same
telephone system and are integrated on a common telephone list. A number of
non-CHUM entities are also located on the fifth floor. However, unlike
CityInteractive, which uses the 299 Queen Street address like any other CHUM
entity within the building, the non-CHUM entities have a different street
address -- 151 John Street -- and access the building from a different elevator.
49. Hours worked by CityInteractive personnel and television staff are not
the same because in some instances [*26] the latter are on the air 24 hours a
day. Although infrequent due to the nature of the employees' work, transfers
between CityInteractive and other departments of CHUM can and do occur. In their
day-to-day operations, CityInteractive employees are largely self-sufficient.
However, as our review of CityInteractive's activities will demonstrate, there
are also ongoing intimate interconnections between regular television station
work and CityInteractive work.
50. Like other departments of CHUM located in the ChumCity building,
CityInteractive is integrated in the ChumCity building LAN and uses the same
e-mail system. This internal computer network is protected from outside access
and interference through a firewall, a device that identifies incoming users by
their address and automatically directs the communication to the CityInteractive
server or the CITY-TV server (the television stations' server), as the case may
51. The television side, which also requires outside access to Web sites or
Internet mail, shares a common Internet connection with CityInteractive. In
addition to accessing the Internet through the same Internet service provider
("ISP") server (known as the CITY-TV ISP [*27] server), CityInteractive and the
television people access the same domain name server ("DNS"). This piece of
computer equipment is the main hub of the building's computer systems. It
contains the firewall, and e-mails received from the outside first come into the
CITY-TV ISP server and are stored there until called up via computer. The
e-mails then flow through the DNS, which filters the messages and routes them
according to their destination, CityInteractive or the television stations.
52. The servers used for the LAN and the television stations' server for
Internet access are housed on IT's premises in the basement.
CityInteractive's servers are located on the fifth floor of the building. To set
up e-mail addresses, CityInteractive's system administrator must go to the IT
area. This operation is performed by IT staff. Mr. Shankar, who was trained by
the head of the IT department, must also go to the IT department to set up
pointers, the icons that create the hyperlink that links Web pages together,
whenever a new Web page has been designed by CityInteractive.
53. Even though CityInteractive's systems administrator does most of the work
related to the maintenance of the CityInteractive [*28] servers, the IT people
are also involved in the support and maintenance of CityInteractive's servers,
in addition to maintaining CityInteractive's e-mail system. IT also provides
CityInteractive with software support for business applications on desktop. If
CityInteractive runs into a technical problem with the computer equipment,
technicians from the IT department may be called upon to assist.
54. As far as CityInteractive's marketing efforts are concerned, Mr.
Raphaelson readily admitted that it is common practice for
CityInteractive's sales and marketing people to attend sales meetings with the
television sales staff. They make joint pitches, carry on joint promotional
efforts and take advantage of cross-promotional opportunities from commercials
to on-air mentions. As Mr. Raphaelson put it, they have a "co-promotional
relationship". Rather than operating as separate teams, the television sales
people and the CityInteractive sales staff give every appearance of being
thoroughly intermingled during joint promotional sessions with potential
advertisers. Sales efforts are frequently coordinated and there is ongoing
cooperation between the two groups who promote each other's platform [*29] and
refer clients to each other whenever possible. About 15% of
CityInteractive's advertising revenues come from take-outs that occur when
advertisers buy both television and Internet advertising and require a single
bill. In addition, Mr. Raphaelson testified that they often get prospects passed
on by the television side. When one of those advertisers indicates an interest
in the Web sites, CityInteractive sales people negotiate a package with them.
When asked whether this amounted to CityInteractive piggybacking on the
television stations' advertisers, Mr. Raphaelson stated: "I don't know how you
define piggyback, but certainly it is true that we have got a substantial number
of individual buys from advertisers who were also at the same time negotiating
something with the TV station" (p. 724 of transcripts).
55. This joint and cross-promotional approach is also echoed in the marketing
materials used by the television stations. For example, The NewVR promotional
booklet produced by CHUM Television Sales contains a section dealing with
CityInteractive. In cross-examination, Mr. Raphaelson admitted that this
promotional material had been prepared by CityInteractive for the NewVR: "We
[*30] prepared some information for them and gave it to the person who was
doing this for CITY-TV and NewVR" (p. 729 of transcripts). The last tab of the
booklet, which is labeled "CityInteractive", includes hard copies of CITY-TV and
The NewVR's home pages and gives examples of what they have called "integrated
advertising", that is to say, on-line advertising coordinated with on-air
sponsorship and on-line events integrated with extensive television promotion.
For details, advertisers are invited to contact CityInteractive's sales and
marketing manager. Another page of the television station's promotional booklet,
which is devoted to promoting advertising on the CITY-TV and The NewVR Web
sites, reads as follows:
Citytv and The New Vr
Get Interactive NOW!
"The world's most interactive broadcaster"
was Canada's first commercial TV station on the Internet in 1995.
CityInteractive helps you reach Citytv and The New VR audiences on the Net
and adds interactivity for a more impactful ad campaign.
Check us out at www.citytv.com and www.thenewvr.ca and on AOL (Keyword:
Enjoy the dynamic advantages of interactive advertising:
-- Direct relationships with key customers [*31]
-- Memorable brand experiences
-- Added depth to your marketing message
-- Enhanced leading-edge brand image
-- Immediate feedback, measurable results
Get interactive the easy way with CityInteractive's turn-key solutions,
-- Customized brand-sell, from billboards to original promotions, contests
and in-store POS
-- Customized response forms for information gathering
-- Links to your corporate web sites
-- Integration with TV campaigns and program sponsorships.
[Emphasis in original]"
D. CityInteractive's Activities
56. CityInteractive's primary activity is to design, produce and maintain Web
sites based on the CHUM television brands. The sites relate to a great extent to
the programming aired on television, and the various television brands are
integrated conceptually and functionally with the content of the Web sites.
CityInteractive has what it calls an Internet product and an AOL product. The
creation, maintenance and operation of these sites involves the retrieval of
data originating from the television stations, its conversion in digital form
using appropriate codes and programming means, and its transmission on-line
using appropriate protocols via telephone and [*32] satellite linkage to users
anywhere in the world. Site content includes test images, static and moving,
audio, and integrates various interactive elements.
57. These activities consume the greatest portion of the employees' time.
According to Mr. Raphaelson's estimates, the most time-consuming activity is the
creation of original Internet content, which accounts for about 50% of
CityInteractive's total work. In addition to this, about 20% of the employees'
time is spent on on-line service content creation for AOL and other member-based
on-line services, which have their own specific code, thus requiring the
production of content in a different way from the Internet. Updating television
show pages (Web pages providing information about programming on different CHUM
channels, such as what is coming up on CITY-TV or MuchMusic), takes up
approximately 10% of the employees' time, and gathering that data from the
television stations' accounts for about 5%. Technical support and maintaining
equipment and software make up about 10% of CityInteractive's total work.
58. The work performed by CityInteractive people has also expanded beyond the
creation and maintenance of Web sites based on the [*33] CHUM brands and the
distribution of CD-ROMs. It has included for some time now interactive services
that are performed in conjunction with, or as a part of, CHUM's television
programming. Such services include the supply, to the television stations, of
live on-line chat services and other interactive products such as digital
photographs in JPEG or GIF format. From time to time, at the television
stations' request, CityInteractive also broadcasts on the Internet certain
televised events, an operation known as "netcasting" or "webcasting".
59. These interactive activities account for about 10% of the department's
total work. This figure includes out-of-office computer set-up and computer chat
monitoring, as well as the updating of systems, the installation and maintenance
of machines, and the replacement of software. Time is also spent implementing
new features on the servers.
60. CityInteractive is also involved in the design of interactive marketing
materials for the purpose of print as opposed to on-line. CityInteractive
advertises in different trade magazines and creates packaging materials for its
CD-ROMs, and the design of such materials generally begins in the
CityInteractive [*34] department with its designers. This activity accounts for
approximately 2% of CityInteractive's total work.
61. Lastly, CityInteractive is involved in e-commerce activities, through the
incorporation of retail areas on the Web sites and on its AOL areas. For
example, CityInteractive has developed a Web site for the CityStore based on the
CityStore brand, to sell CityStore items on the Internet. Although this site was
not operational at the time these hearings took place, Mr. Raphaelson testified
that it was nearly completed and would shortly offer items bearing CHUM brand
names. CityInteractive made an arrangement with the CityStore to take a 20%
commission on all sales, and the filling of orders was contracted out to a third
party. Mr. Raphaelson referred to this site as CityInteractive's "Internet
store", while pointing out that the items that had been selected for it were "a
subset of what is sold at the CityStore".
62. Approximately 20% of CityInteractive's revenues come from on-line
services such as the AOL arrangement. Another 20% comes from production fees
(MuchUSA, New VR, etc.), and about 9% from the CD-ROM sales. The balance of
revenues is derived from the sale of Internet [*35] ads. CityInteractive has
some 80 or more sponsors and was required to produce sites for the majority of
63. CityInteractive does not derive any revenue from CHUM for developing and
updating the CHUM sites that market the television brands and promote the
television stations on the digital platform. Nor does CityInteractive receive
any compensation from CHUM for the interactive services it provides to the
television operation, such as the live on-line chat or webcasting televised
64. According to Mr. Raphaelson's estimates, there are approximately 100,000
views of the CityInteractive home page per week, and AOL and the Internet
generate very similar amounts of overall traffic. Mr. Raphaelson believes that
in a month, in rough and ready figures, about five million Internet and AOL
pages are viewed. On the Web, approximately 70% of the audience is from Canada,
and the balance is from anywhere else around the world. On AOL, the viewers are
(1) CityInteractive's Internet product
65. As Mr. Cowan put it, the Internet "is a mass of computers and
interconnections that is not easily defined, nor is it possible really to define
the exact route which information [*36] may flow on" (p. 1202 of transcripts).
In her article entitled "The Internet: Brave New World or Same Old Thing?",
supra, Ms. Carolyn Pinsky offered a similar yet more comprehensive definition of
the concept (p. 3):
"The Internet essentially consists of a network of computer networks
interconnected by means of telecommunication transmission facilities using
common protocol and standards that allow for the exchange of information between
each connected computer. Due to the architecture of the network, which can be
likened to a spider web, information can be routed through almost an infinite
number of paths, and thus relayed through a number of computers around the
world, before it reaches its ultimate destination. According to the Canadian
Internet Handbook [J. Carrol and R. Broadhead, 1996 Canadian Internet Handbook
(Scarborough: Prentice Hall Canada Inc., 1996)], the Internet is the world's
largest computer network, linking mainframes, minicomputers, personal computers,
and networks around the world."
66. The World Wide Web (the "Web") is a special Internet service that can
display information in a variety of forms, including styled text, graphics,
still and moving images and/or [*37] sound and video. The information is made
available by way of "sites" that can be accessed by end-users. Web sites usually
contain "hypertext" that provide users with direct access to other sites.
67. The Web sites developed by CityInteractive employees are made up of over
2,000 pages. All sites feature the CHUM television brands. The Web pages are
grouped together as sites and put on one of Citylnteractive's servers. These
sites are assigned a Web address or domain name, which identifies them with a
Web domain and enables end-users to access them. End-users access the Web sites
on the Internet by dialing into an ISP with a modem and telephone line or cable
modem. Once the connection to the Internet is established, end-users, using a
search program known as a "browser", can access a site by typing its address and
pulling the selected pages into their computer to look at them. For example,
typing in <www.muchmusic.com> will take the viewers to the MuchMusic Web site
and <www.citytv.com>, to the CITY-TV Web site.
68. CityInteractive's Internet-related work is not limited to developing and
updating the sites. CityInteractive is in every respect the Web master of the
sites. Although it [*38] does not itself act as an ISP, it is nevertheless
responsible for running the sites and that includes making the necessary
arrangements with an ISP to ensure that the sites are connected to the Internet.
The department has its own servers, maintains the sites and does all required
work to ensure that the sites are operational. CityInteractive is also
responsible for ensuring that the sites' content does not infringe on any
intellectual property rights and licence restrictions or violate any legislative
standard for which CHUM might be held liable. CityInteractive plays an active
role in monitoring the sites' virtual chat area to ensure that neither coarse or
obscene language, nor derogatory or heinous comments appear. When problems
occur, Mr. Raphaelson consults with Mr. Lewis at legal affairs or Mr. Switzer,
to determine how to handle the matter. Mr. Raphaelson testified that although
there are no regulatory requirements with respect to what they can advertise on
the Internet, "[i]t's really a matter of how I want to portray our brand on the
Internet" (p. 103 of transcripts). Mr. Raphaelson observed that, as ultimate
arbiter of what goes on the sites, they follow CHUM's standards [*39] to ensure
that they provide the type of environment that the CHUM audience has come to
69. The sites featuring the CHUM brands are all linked together by a central
home page, known as the "WHERE IT'S @" home page. This page, which Mr.
Raphaelson called "CityInteractive's home page", is essentially CHUM
Television's central home page. By typing any of the addresses associated with
the television brands, such as the ones listed above, or by typing
<www.chumcity.com>, or <www.cityinteractive.com>, the viewers are taken to this
central home page. There is also a specific home page and Web site address for
each brand. For example, the address providing direct access to the CITY-TV Web
site is <www.citytv.com/citytv>.
70. All the different CHUM television brands are represented on the central
home page along with their respective logos, and the page contains various
features for fans of the television stations, such as information about what is
on the television stations as well as special features on the brands. The top
portion of the WHERE IT'S @ page shows a picture of the ChumCity building on the
left, and the CityInteractive logo on the right. Immediately below
CityInteractive's [*40] logo -- a computer shaped along the lines of the
ChumCity building -- we see the labels for the CHUM brands, CITY-TV, MuchMusic,
Bravo!, Space, The NewVR and Chum Radio. They all have Web sites linked to this
central home page. Underneath the top banner, we find again reference to the
various television brands identified with their respective logos. The name of
each brand appears in a separate box, with a list of television shows associated
with that brand. All these areas are icons on which the viewer can click to
access a specific sub-site that deals with the subject-matter indicated.
71. Each Web site featuring a CHUM television brand contains information
about television programming by showcasing program line-ups, posting schedules
and providing episodic summaries. There are also pages about the programs
themselves, pages containing information on different episodes, and a retail
area where you can purchase copies of videotapes. The sites also contain various
interactive features such as virtual chat rooms. On Thursday nights a MuchMusic
video-jockey ("VJ") from the television station comes to the CityInteractive
department to visit the virtual chat room and chat with members [*41] of the
audience who come on-line to meet the VJ.
72. CityInteractive has also extended to the Internet a CITY-TV cornerstone,
Speaker's Corner, by incorporating it on the Web sites. This is both a chatting
area where people can discuss the programs and a feedback area where viewers can
make suggestions with respect to programming and other matters of interest.
Viewers can make requests such as videos they would like to see aired on
television, and they are invited to send their requests and suggestions directly
to the television stations or to someone at CityInteractive who will forward the
information to the television station concerned. E-mail addresses are provided
for that purpose. For example, the Bravo! Web site, which features the CHUM
brand for its Bravo! New Style Arts Channel, contains a feedback area with
information about e-mail addresses for response. The call for comments is worded
"Please send us your comments. We would love to hear what you think of this
site and the channel itself. Your input helps us to bring you more of what you
73. The CityInteractive home page also features an icon identified as CHUM
Radio. This icon takes the viewer to a Web [*42] site for a CHUM radio station
called 1050 CHUM. That site was originally created by an outside party. CHUM
Radio then hired CityInteractive for approximately one year to maintain this
area and to add new information. CHUM Radio ultimately decided to contract with
another party for maintaining and updating the information on the site.
74. All of these sites, the home pages and the pages that are grouped under
them, are frequently and regularly updated by CityInteractive employees. Some
pages are updated every hour, others every day, or every week, depending on the
type of information displayed. Typically, someone from CityInteractive goes to
the television studio and pulls the required data. The data retrieved is then
converted into an HTML format by CityInteractive staff to display it on the Web
site. In other cases, the
Web pages are updated directly by television people without
the involvement of CityInteractive, through a feed that links
the television stations to the CityInteractive server. Some television stations
use a submitter to put information directly on the Web pages.
75. For the purpose of designing the sites, CityInteractive employees have
full access at no charge [*43] to the CHUM logos and art works done in
connection with the CHUM brands by CHUM Television's design department.
CityInteractive can obtain the graphics via e-mail, through the ChumCity
building's LAN or by picking them up at the design department located on a lower
floor of the building. The graphics are then scanned and adapted by
CityInteractive employees to fit the computer screen.
76. CityInteractive also has full access at no charge to CHUM Television
archives and videos used in television shows and can use them to the extent that
such use is not prohibited by licensing rights held by CHUM over these
materials. For the most part, these materials are stored in CHUM Television's
libraries. CityInteractive can show short clips from these videos without
infringing on licensing rights held by CHUM, and this has been its practice. The
video clip excerpts used are systematically identified with one of the CHUM
brands. According to Mr. Raphaelson, this is done to ensure that the video clip
excerpts are "identifiable with us or with one of our brands" (p. 33 of
77. CityInteractive has also built a Web site for the MuchMusic USA channel,
which is available in approximately [*44] 11 million households in the United
States, and receives a monthly fee from the CHUM-Rainbow joint venture to
maintain the site. Like the MuchMusic Web site, the MuchMusic USA site contains
downloads, countdowns and concert listings. It also offers interactive games and
chat areas, and provides marketing information about cable systems that carry
MuchMusic in the United States. In the U.S. market, MuchMusic competes with MTV,
and Mr. Raphaelson noted that the situation is the same in the digital market:
"We feel that in the international Internet market we also compete with MTV
Interactive, if you will" (p. 295 of transcripts).
78. CityInteractive also has a revenue-generating arrangement for The New VR,
a CHUM-owned general services television station located in Barrie, Ontario.
Pursuant to that arrangement, the station paid CityInteractive an initial
development fee to create a Web site for the station and pays a monthly fee to
maintain it. The television station shares in any advertising revenue with
(2) CityInteractive's AOL product
79. As previously indicated, CityInteractive contracted with AOL to produce
materials specifically for its network and to develop [*45] content to run on
the AOL platform. AOL subscribers can access the network's "channels" or areas
of interest by dialing into an AOL server.
80. CityInteractive has two AOL sites, one branded MuchMusic and the other
CITY-TV. The MuchMusic site takes the viewer inside the MuchMusic environment,
where there are various icons that can be used to access features, including
video and audio clips. There is a neon sign that says Rumpus Room, which takes
the viewer to a chat area and a Speakers' Corner area that operates in a way
similar to that found on the Internet sites. There is an icon with the MuchMusic
logo at the top of the picture of the ChumCity building, which provides
information about MuchMusic and MuchInteractive (another name commonly used for
the MuchMusic site).
81. The CITY-TV site is accessible by clicking on the CITY-TV logo, a
streetcar that appears under a street sign that says Queen Street. It deals with
some of the CHUM television brands like Mediatelevision and CityPulse, and it
has features that are based predominantly on CITY-TV brands. There is a link
from the CITY-TV site to a CityStore site where one can buy merchandise
featuring the CHUM brands.
(3) CityInteractive's [*46] interactive services
82. The department's interactive services cover both sides of the interactive
media spectrum. Some services, such as live on-line chat and presentation of
digital material on the air, involve taking the Internet to television, while
others, such as webcasting, involve taking television on-line. Besides on-line
chat services, CityInteractive provides the television operation with
interactive materials such as digital photographs in JPEG or GIF format that can
be aired during the television program. This operation involves arranging for
the receipt on-line of digital photographs from viewers and their subsequent
on-air transmission during a television show.
(a) On-line chat services
83. Since the early part of 1997, live on-line chat has become an integral
part of two CHUM television programs, Electric Circus, a weekly dance show on
MuchMusic and CITY-TV, and Go With the Flow, a weekly computer and video show on
MuchMusic. CityInteractive provides this element of the show and its staff take
an active part in the shows by serving on a regular basis as hosts for the chat,
which appears live on the television screen throughout the program.
CityInteractive people host [*47] and monitor the live chat from the
department's offices upstairs, as well as on location, in the television studio.
As the videotapes of Electric Circus and Go With the Flow programs filed as
exhibits reveal, CityInteractive people even appear from time to time on the
television show. Nearly everyone in the department has been involved in
monitoring the Internet chat set-up for a television show at one point or
another and, until the hearings into this case began,
CityInteractive's contribution was acknowledged as a matter of course in the
84. CityInteractive employees also provide technical support. Typically,
before the beginning of a show that incorporates live chat, a CityInteractive
employee will take the equipment required down to the television studio, prepare
the computers for the airing of the on-line chat by making the appropriate
connections, and ensure that the chat program runs properly. During the show, an
employee from CityInteractive will remain on stand-by to provide assistance in
case of a technical problem such as crashing of the server.
85. During Electric Circus, which has included live on-line chat as an
integral part of the show since March 7, [*48] 1987, the host, Juliette
Powell, regularly promotes and emphasizes the importance of this aspect of the
show. Throughout the program, she is heard making statements like, "this is live
interactive television", or "we are doing this live every Friday night during
the show so chat live with us here; or chat with us 24 hours a day if you want",
86. On-line chat has also been a regular feature of Go With the Flow since
the show aired for the first time on February 28, 1997. Mr. Rubinstein
acknowledged this and admitted that the show itself had been initiated by
CityInteractive's David Hutchinson. This was also confirmed by Ms. Genetti, the
show's current producer. She testified that, in the early stages, Mr. Hutchinson
had even acted as a sort of producer of the show and that he was still taking a
very active part in the show. That perception was also shared by Mr. Shankar.
The e-mail correspondence between Ms. Genetti and Mr. Hutchinson filed in
evidence also reveals the extent of Mr. Hutchinson's involvement in the
production of this particular television program. In fact, in one of these
e-mails, Mr. Hutchinson is described as the producer of the show. This
correspondence also [*49] confirms that equipment, such as a keyboard for the
television show, was obtained through the CityInteractive department, and that
Mr. Hutchinson regularly dictates the content of the show and supplies Ms.
Genetti with ideas. Furthermore, Ms. Genetti testified that when she is away, on
vacation or otherwise, it is Mr. Hutchinson who runs the show. She stated in
unequivocal terms that, in her view, CityInteractive is integral to the show Go
With the Flow to which it provides, among other things, the chat, its
monitoring, new technology, as well as ideas to improve the show.
87. The display of on-line chat on television is made possible by connecting
the Web pages running off the CityInteractive server into the television feed,
and by connecting this feed to a specially programmed computer located in the
television studio. Mr. Cowan explained that the live Internet chat could appear
on the television screen by installing a video card that generated NTSC video in
the computer. This allowed the television people to take that computer video and
provide it as a source to the switcher. The signal was patched into the
production switcher so that it could be used during the broadcast. In
cross-examination, [*50] Mr. Cowan admitted that, for on-line chat, the source
of the signal fed into the production control room was CityInteractive and that,
in such a case, CityInteractive constituted a source like any other source, such
as television cameras, that is fed to the production switcher of the television
control room in order to produce a television broadcast.
88. CityInteractive did its first webcast of a live television show in June
1996 for a CHUM event known as the Festival North by Northeast. The next webcast
occurred in September 1996 for the MuchMusic Video Awards. Since then,
CityInteractive has done other webcasts of live television events aired by CHUM
such as the Schmoozefest. CityInteractive also did several webcasts of televised
performances from Intimate and Interactive, a series broadcast by MuchMusic
approximately once a month. Mr. Raphaelson testified that CityInteractive would
"netcast or webcast that show" if it was successful in obtaining the separate
rights for casting it on the Internet, but stressed that, given their actual
system capability, digital broadcasts could only be accessed by a small number
of viewers at any given time. In a MuchMusic press release [*51] issued on
September 29, 1997, these webcasts were advertised as a signature event of the
MuchMusic Web site:
"MuchInteractive produced over two dozen critically-acclaimed netcasts last
year, including performances by [emphasis ends]No Doubt, Bryan Adams, Sammy
Hagar, Moist, Age of Electric, Headstones and Wide Mouth Mason. The recent
MuchMusic Video Awards [emphasis ends] program on September 18th, showcasing top
artists including [emphasis starts] Blur, Bush, Our Lady Peace and The Tea Party
was the first MuchInteractive netcast to feature commercial insertions into a
live video program [emphasis ends] -- incorporating the spots from Motorola
Modems division. Toronto-based network service provider, iSTAR managed technical
support for the netcast.
On September 30th @ 8:00 pm ET MuchInteractive will showcase an exclusive
one-hour performance by Sarah McLachlan originally recorded last June at
MuchMusic, now to be netcast on the Much website (www.muchmusic.com). The
program will be sponsored by Microsoft and will feature commercials for the new
Internet Explorer 4.0 Browser. In addition, this MuchExclusive netcast will
utilize Microsoft's "NetShow" streaming media player for both [*52] audio and
video. [Emphasis in original]"
89. The following excerpt from a newspaper article on one of these Intimate
and Interactive webcasts, published on May 13, 1997, explains the nature and
purpose of webcasting from a television standpoint:
"When MuchMusic, Canada's music-video network, airs a live concert by the
chart-topping alternative rockers No Doubt tonight, the program will also be a
live, interactive audio-visual event on the World Wide Web. . . .
[emphasis starts] "We wanted to make it global and exotic", says Denise
Donlon, MuchMusic's director of music programming, [emphasis ends] who says Much
veejays will also report live from U.S., Australian and Far East locales during
the 90-minute Intimate and Interactive show.
[emphasis starts] Here's how it works. Fans can access the MuchMusic website
(www.muchmusic.com) and download software required to view the show online in
color and stereo. They will also be able to converse via phone, fax and
Internet. A 30-minute net chat will follow the show, too.[emphasis ends]
Donlon says the picture quality on-line will be much better than usual Net
images but won't be perfect.
"The ISDN feed is going to give use 15 frames per [*53] second, so it's not
going to look like full broadcast pictures that you're used to. It will be a
little bit stop and starty."
But she feels that will also give the event an air of excitement. [Emphasis
("No Doubt and MuchMusic unite in worldwide webcast", Canadian Press, May 13,
90. Broadcasting a television program on the Web entails taking the video and
audio feed from a television show and connecting it to CityInteractive's server
so that it can be transmitted on the Internet. In order to access the signal,
end-users must access the Internet through an ISP, using a telephone line or
cable. In this regard, Mr. Cowan acknowledged that there were similarities
between digital transmission and traditional broadcast. For instance, he
admitted that the notion of "server" also applied to describe the vehicle used
to bring the television signal into homes. He observed that in the case of
CITY-TV, for example (which is licensed to transmit over the air), the "server"
was the antenna. He admitted as well that, in cases where the television signal
could not be received directly with an antenna, viewers, as is the case for
access to the Internet, had to go through a licensed [*54] service to access
the signal, which, in that case was a cable television service provider rather
than an ISP.
91. Mr. Cowan testified that for webcasting, the source of the feed of the
live television show (such as a MuchMusic program) connected to the
CityInteractive system was a VCR being fed by cable television, as opposed to a
live feed provided directly by the engineering department. CityInteractive would
take the audio and video feeds out of the VCR and connect them to the
CityInteractive server in order to bring about the simultaneous broadcast of the
television program on the Web. He stated that the reason for this was that the
engineering department did not have an interconnect to feed CityInteractive
audio. In cases where CityInteractive wanted to webcast the video-only portion
of a live television broadcast, however, Mr. Cowan conceded that the video-only
live feeds of the television broadcast connected to the CityInteractive server
were provided to CityInteractive by the engineering department.
92. In cross-examination, Mr. Cowan admitted that the engineering department
provided these video feeds to CityInteractive at its request and that his staff
then made the necessary [*55] connections. For example, the engineering
department was responsible for getting three video feeds from the output of the
production control room up to the CityInteractive department for the Festival
Shmooze television program. Shmoozefest is a yearly event organized by CHUM in
the parking lot at 299 Queen Street to celebrate the Toronto film festival. In
this particular case, the video feeds came primarily from eight cameras
temporarily installed throughout the building.
93. In examination-in-chief, Mr. Raphaelson advanced the position that
webcasts were done by CityInteractive on an experimental basis and that
CityInteractive had done this less than ten times in the last two years. In
cross-examination, however, the alleged experimental nature of the webcasts
became questionable. Mr. Raphaelson conceded that his characterization of the
limited extent of CityInteractive webcasting activities ran against the
television stations' portrayal of the situation in their promotional materials.
He also acknowledged that, if webcasts occurred infrequently, it was because a
number of legal and technical conditions had to be met before they could take
place. First, CityInteractive had to be [*56] authorized by the artists
involved, music publishing companies, etc. (anyone owning separate rights in the
product), to do this special application on the Internet and, for intellectual
property considerations, authorizations to broadcast on the Internet were
difficult to secure. Second, in order to do a simultaneous webcast of a live
event aired on television, CityInteractive needed sufficient advance notice to
be technically ready to perform the service. In the case of video-only
broadcasts, the engineering department also needed advance notice in order to be
able to provide the live feed to CityInteractive in a timely manner. On the
basis of these facts, therefore, it was clear to the Board that the regularity
and continuity of webcasts depended more on these objective conditions being
met, than on some undisclosed intent to limit the performance of these services
to casual and unscheduled occurrences.
IV. Relevant Constitutional and Statutory Provisions
94. The Board's constitutional jurisdiction to deal with the labour relations
of an undertaking and the employees employed in connection with the operation of
that undertaking is set out in s. 4 of the Canada Labour Code:
"4. [*57] This Part applies in respect of employees who are employed on or
in connection with the operation of any federal work, undertaking or business,
in respect of the employers of all such employees in their relations with those
employees and in respect of trade unions and employers' organizations composed
of those employees or employers."
95. Section 2 of the Code defines "federal work, undertaking or business". Of
particular relevance are the following paragraphs:
"2. In this Act,
"federal work, undertaking or business" means any work, undertaking or
business that is within the legislative authority of Parliament, including,
without restricting the generality of the foregoing,
(b) a railway, canal, telegraph or other work or undertaking connecting any
province with any other province, or extending beyond the limits of a province,
(f) a radio broadcasting station,
(i) a work, undertaking or business outside the exclusive legislative
authority of the legislatures of the provinces."
96. Parliament's statutory authority to enact these definitions originates
from the Constitution Act, 1867, as interpreted over the years by the Privy
Council and the Supreme Court of [*58] Canada. The provisions of the
Constitution Act, 1867, which establish that the activities listed in the above
definitions properly fall under federal jurisdiction read as follows:
"VI. Distribution of Legislative Powers
Powers of the Parliament
91. It shall be lawful for the Queen, by and with the Advice and Consent of
the Senate and House of Commons, to make Laws for the Peace, Order, and good
Government of Canada, in relation to all Matters not coming within the Classes
of Subjects by this Act assigned exclusively to the Legislatures of the
Provinces; and for greater Certainty, but not so as to restrict the Generality
of the foregoing Terms of this Section, it is hereby declared that (
notwithstanding anything in this Act) the exclusive Legislative Authority of the
Parliament of Canada extends to all Matters coming within the Classes of
Subjects next herein-after enumerated; that is to say, --
29. Such Classes of Subjects as are expressly excepted in the Enumeration of
the Classes of Subjects by this Act assigned exclusively to the Legislatures of
And any Matter coming within any of the Classes of Subjects enumerated in
this Section shall not be deemed to [*59] come within the Class of Matters of a
local or private Nature comprised in the Enumeration of the Classes of Subjects
by this Act assigned exclusively to the Legislatures of the Provinces.
Exclusive Powers of Provincial Legislatures
92. In each Province the Legislature may exclusively make Laws in relation
to Matters coming within the Classes of Subjects next herein-after enumerated;
that is to say, --
10. Local Works and Undertakings other than such as are of the following
a. Lines of Steam or other Ships, Railways, Canals, Telegraphs, and other
Works and Undertakings connecting the Province with any other or others of the
Provinces, or extending beyond the Limits of the Province."
V. Constitutional Tests
97. It is well established in Canadian law that primary competence over
labour relations matters rests within provincial jurisdiction as a matter of
property and civil rights. Parliament may only assert exclusive jurisdiction
over labour relations if it is shown that it is an integral part of its primary
competence over some other single federal subject: see Toronto Electric
Commissioners v. Snider,  2 D.L.R. 5,  A.C. 396,  1 W.W.R.
[*60] 785 (P.C.); and Reference re Validity of the Industrial Relations and
Disputes Investigation Act (Canada),  S.C.R. 529,  3 D.L.R. 721, 55
CLLC P15,223 [the "Stevedores Reference"]). In respect of works or undertakings
extending beyond the limits of a province, or connecting a province with any
other province, the combined effect of ss. 91(29) and 92(10)(a) of the
Constitution Act, 1867, creates an exception whereby Parliament has exclusive
jurisdiction over intra-provincial transportation and communication works and
98. There are essentially two possible bases for finding that the labour
relations of CityInteractive come within federal jurisdiction. Firstly,
CityInteractive may be subject to federal jurisdiction if it is itself found to
be a work or undertaking carrying on federal activities such as broadcasting or
communication activities that extend beyond the limits of a province (in the
broadcasting context, see Re Regulation and Control of Radio Communication in
Canada,  A.C. 304,  2 D.L.R. 81,  1 W.W.R. 563, 39 C.R.C. 49
(P.C.) [the "Radio case"]; Capital Cities Communications Inc. v. Canada
(Radio-Television & Telecomunications Commission), [*61]  2 S.C.R. 141,
81 D.L.R. (3d) 609, 18 N.R. 181, 36 C.P.R. (2d) 1 ["Capital Cities
Communications"]; and Quebec (Public Service Board) v. Dionne,  2 S.C.R.
178, 83 D.L.R. (3d) 178, 18 N.R. 271, 38 C.P.R. (2d) 1 ["Dionne"].
99. CityInteractive may also be federal on its own account, and thus come
under federal jurisdiction, if it is found to be part of a broader federal
undertaking. There are two ways in which this may occur. On the one hand, the
disputed operation may be found to be a mere label for a team operating within
the core federal undertaking as a non-severable part of the federal whole. This
would occur if the initial finding is that there is no separate undertaking in
the first place: see Ontario (Attorney-General) v. Winner,  A.C. 541,
 4 D.L.R. 657, 13 W.W.R. 657 sub nom. S.M.T. (Eastern) Ltd. v. Winner, 71
C.R.T.C. 225 ["Winner"]; C.A.L.E.A. v. Wardair Canada (1975) Ltd.,  2 F.C.
91, 25 N.R. 613 (Fed. C.A.) ["Wardair"]; and Shamrock Television System Inc.,
CKOS-TV & CICC-TV and N.A.B.E.T. (1987), 17 CLRBR (NS) 205, 70 di 168 (CLRB No.
639) ["Shamrock Television"]. On the other hand, the disputed operation may also
be found to be part of a [*62] broader federal undertaking, notwithstanding its
structure as a distinct undertaking performing essentially local activities, if
it can be shown that it is operated in common with a federal undertaking as a
single enterprise. For a local and federal undertaking to be found to be a
single federal enterprise for constitutional purposes, there must be substantial
integration of the management and operation of the two undertakings: see
Westcoast Energy Inc. v. Canada (National Energy Board),  1 S.C.R. 322,
156 D.L.R. (4th) 456, 223 N.R. 241, 3 Admin. L.R. (3d) 163 ["Westcoast Energy"];
and Exalta Transport Corp. and General Teamsters, Local 362 (1995), 98 di 6
(CLRB No. 1117).
100. Secondly, if CityInteractive is not federal on its own account, then it
may also come under federal jurisdiction if it is found to be integral, vital or
essential to a core federal work or undertaking in a regulatory sense. This
would occur if it can be shown that an existing federal undertaking is dependent
upon the local undertaking for the performance of an essential part of its
operations: see U.T.A. v. Central Western Railway Corp.,  3 S.C.R. 1112,
76 D.L.R. (4th) 1, 119 N.R. 1, 9 CLLC P14,006 [*63] ["Central Western
Railway"]; the Stevedores Reference, supra; Northern Telecom Ltd. v. C.W.O.C.,
 1 S.C.R. 115, 98 D.L.R. (3d) 1, 28 N.R. 107, 79 CLLC P14,211 ["Northern
Telecom No. 1"]; and Northern Telecom Canada Ltd. v. C.W.O.C.,  1 S.C.R.
733, 147 D.L.R. (3d) 1, 48 N.R. 161, 83 CLLC P14,048 ["Northern Telecom No.
2"]). "Essential" in this context has been interpreted to include the extended
meaning of "reasonably necessary": see Wardair, supra.
101. The "single enterprise" test and the "vital and integral" test, though
not unrelated, are distinct from one another. Although in both cases, the local
operation must be joined to an interprovincial undertaking through a necessary
nexus, for the former, the emphasis must be on determining whether the separate
operation, together with the main federal undertaking, forms a single integrated
interprovincial undertaking. The single enterprise test was articulated by the
Supreme Court of Canada in Westcoast Energy, supra, at p. 359 S.C.R., as
"[emphasis starts] In order for several operations to be considered a single
federal undertaking for the purposes of s. 92(10)(a), they must be functionally
integrated and subject [*64] to common management, control and direction.
Professor Hogg states, at p. 22-10 that "[i]t is the degree to which the
[various business] operations are integrated in a functional or business sense
that will determine whether they constitute one undertaking or not". [emphasis
ends] He adds, at p. 22-11, that the various operations will form a single
undertaking if they are "actually operated in common as a single enterprise". In
other words, common ownership must be coupled with functional integration and
common management. A physical connection must be coupled with an operational
connection. A close commercial relationship is insufficient. See Central
Western, supra, at p. 1132. [Emphasis added]"
102. The key requisite elements of the single enterprise test are thus that
the two operations must be functionally integrated and subject to common
management, control and direction. Under the vital and integral test,
jurisdiction depends also partially on the manner in which the businesses are
operated and the degree to which they are integrated in a functional or business
sense. However, jurisdiction here is focused upon whether the regulation of the
subject-matter in question is integral [*65] to a core federal work or
undertaking: see Central Western Railway, supra, at pp. 1124-1125 S.C.R.; and
Westcoast Energy, supra, at p. 357 S.C.R.
103. These approaches for determining whether a disputed operation comes
within federal jurisdiction were developed primarily to address the difficulties
of assessing the constitutional character of an enterprise. Indeed, a single
corporate entity may carry on more than one undertaking, one provincial and the
other federal, and two separate corporate entities may be found to constitute
one single federal undertaking: see Canadian Pacific Railway Co. v. British
Columbia (Attorney General),  A.C. 122,  1 W.W.R. 220 sub nom.
Reference re Application of Hours of Work Act (British Columbia) to Employees of
the Canadian Pacific Railway in Empress Hotel, Victoria (City),  1 D.L.R.
721, 64 C.R.T.C. 266 (P.C.) [the "Empress Hotel case"], where Canadian Pacific
Railway's Empress Hotel was found to be an undertaking separate and independent
from the railway undertaking.
104. This is the respondent's contention here. CHUM Television asserts that
CityInteractive is a separate and divisible business of CHUM, and one that is
neither in [*66] itself a federal undertaking, nor an operation that is
integral to CHUM's federal broadcasting undertaking. Focusing on
CityInteractive's activities, the respondent asserts that the pith and substance
of the department's business is production and marketing. Since such a sector
has been found in the past to be intra-provincial (see Canada (Labour Relations
Board) v. Paul L'Anglais Inc.,  1 S.C.R. 147, 146 D.L.R. (3d) 202, 87 N.R.
351, 83 CLLC P14,033), CHUM Television contends that CityInteractive does not
constitute a "federal work, undertaking or business" within the meaning of the
105. CEP argues the opposite view, namely that CityInteractive is not a
stand-alone operation, but rather constitutes a non-severable part of CHUM's
television operation, which is unquestionably federally regulated.
VI. Principle of Indivisibility of the Undertaking
106. As the authorities suggest, the question of whether an undertaking is
federal, depends on the nature of the operation and, in order to determine the
nature of the operation, one must look at the normal or habitual activities of
the undertaking as those of a going concern, without regard for exceptional or
casual factors: [*67] Northern Telecom No. 1, supra, at p. 135 S.C.R.; and
Northern Telecom No. 2, supra, at p. 753 S.C.R. The decisive criterion in
determining constitutional jurisdiction is not the work performed by individual
employees, but the nature of the activities of the going concern that employs
them: see the Stevedores Reference, supra; Northern Telecom No. 1, supra, and
Alberta Government Telephones v. Canada (Canadian Radio-Television &
Telecommunications Commission),  2 S.C.R. 225, 68 Alta. L.R. (2d) 1, 61
D.L.R. (4th) 193, 98 N.R. 161 sub nom. Canadian National/Canadian Pacific
Telecommunications v. Alberta Government Telephones,  5 W.W.R. 385, 26
C.P.R. (3d) 289. Furthermore, the manner in which the undertaking is structured
is not determinative: see Westcoast Energy, supra, at p. 361 S.C.R.; and Winner,
supra, at pp. 581 - 582 A.C.
107. In the case before us, the problem does not lie in identifying the core
federal undertaking, but in determining how extensive it is: see Stern Transport
Ltd. and General Teamsters, Local 362 (1986), 12 CLRBR (NS) 236, 65 di 127 (CLRB
No. 571). The respondent does not dispute that there is a core federal
undertaking, that being CHUM's radio and [*68] television broadcasting
business. Radio and television broadcasting undertakings, including cable
television undertakings, have been found to come under federal jurisdiction
pursuant to ss. 91 and 92(10)(a) of the Constitution Act, 1867: see the Radio
case, supra; Capital Cities Communication, supra; and Dionne, supra. What the
respondent asserts is that CHUM can and should be split up for constitutional
108. It is well established that, in the process of determining whether a
disputed operation is a severable part of a core federal undertaking, the focus
should not be on the "branch operations", to identify what portions of the
federal undertaking can be extracted without interfering with the activity
altogether. Rather, the focus should be on determining what is the undertaking
which is in fact being carried on. The principle which underlies this is the
indivisibility of the undertaking. It was originally developed in the context of
cases dealing with undertakings that carried on interprovincial as well as
interprovincial activities [sic]. The first case in which this notion was
articulated was Toronto (City) v. Bell Telephone Co. of Canada,  A.C. 52
(P.C.). In that [*69] case, the Privy Council rejected the suggestion that Bell
Telephone carried on two distinct enterprises, one a long-distance telephone
service and the other a local telephone service. In so holding, their Lordships
stated (at p. 59):
"The undertaking authorized by the Act of 1880 was one single undertaking,
though for certain purposes its business may be regarded as falling under
different branches or heads. The undertaking of the Bell Telephone Company was
no more a collection of separate and distinct businesses than the undertaking of
a telegraph company which has a long-distance line combined with local
businesses, or the undertaking of a railway company which may have a large
suburban traffic and miles of railway communicating with distant places. The
special case contains a description of the company's business which seems to be
a complete answer to the ingenious suggestion put forward on behalf of the
109. The principle against dismemberment of an undertaking according to
specific activities or job functions performed within the undertaking was
further developed in the Winner case, supra. In that case, the Privy Council
articulated the notion that the constitutional [*70] characterization attaches
to the whole of the undertaking. Their Lordships wrote (at pp. 678-680 D.L.R.):
"Their Lordships however cannot see any evidence of such a dual enterprise.
The same buses carried both types of passengers along the same routes; the
journeys may have been different, in that one was partly outside the Province
and the other wholly within, but it was the same undertaking which was engaged
in both activities.
The Supreme Court however approached the question from a different angle. To
them a distinction should be drawn between what was an essential and what an
incidental portion of the enterprise. In their view the portion which could be
shed without putting an end to it did not constitute an essential part of the
undertaking and therefore could be dealt with by the Province, leaving only the
essential part for the Dominion's jurisdiction.
Their Lordships are of opinion that this method of approach results from a
misapprehension of the true construction of s. 92(10)(a) of the B.N.A. Act. The
question is not what portions of the undertaking can be stripped from it without
interfering with the activity altogether: it is rather what is the undertaking
which [*71] is in fact being carried on. Is there one undertaking, and as part
of that one undertaking does the respondent carry passengers between two points
both within the Province, or are there two?
"No doubt the taking up and setting down of passengers journeying wholly
within the Province could be severed from the rest of Mr. Winner's undertaking
but so to treat the question is not to ask is there an undertaking and does it
form a connection with other countries or other Provinces but can you emasculate
the actual undertaking and yet leave it the same undertaking or so divide it
that part of it can be regarded as interprovincial and the other part as
[emphasis starts] The undertaking in question is in fact one and
indivisible. It is true that it might have been carried on differently and might
have been limited to activities within or without the Province, but it is not,
and their Lordships do not agree that the fact that it might be carried on
otherwise than it is makes it or any part of it any the less an interconnecting
undertaking. [emphasis ends] [Emphasis added]"
110. The notion that an enterprise must be viewed as the sum of its parts,
i.e., its incidental [*72] as well as its essential components, was fully
developed by the Federal Court of Appeal in Wardair, supra, where the union
sought to include the employees of a tour operator (Intervac), which handled the
sale of seats for Wardair. The court noted that if the sale of seats was done by
Wardair employees as an integral part of the air carrier's business, they would
be swept into the federal realm, as such an activity would ordinarily be
reasonably incidental to the operation of the air carrier's business. However,
since the activity was carried on by a separate undertaking, it became a local
111. In outlining the various types of problems that arise in the course of
assessing the constitutional character of an enterprise, the court observed
that, generally speaking, where a particular activity that may be reasonably
incidental to the operation of a federal undertaking, without being an essential
component of such operation, is carried on by the operator of the federal
undertaking as an integral part thereof, it is indeed a part of the operation of
the federal undertaking (at pp. 96-97 F.C.):
"[emphasis starts] A particular activity may be reasonably incidental to the
operation [*73] of a federal work, undertaking or business without being an
essential component of such operation. [emphasis ends] For example, an
interprovincial railway may have its own laundry facilities or its own
arrangement for preparing food for passengers, or, alternatively, it may send
its dirty linen to an outside laundry or buy prepared food. [emphasis starts]
Generally speaking, where such an activity is carried on by the operator of the
federal work, undertaking or business as an integral part thereof, it is indeed
a part of the operation of the federal work, undertaking or business. [emphasis
ends] Where, however, the operator of the federal work, undertaking or business
carries on the operation thereof by paying ordinary local businessmen for
performing such services or for supplying such commodities, the business of the
person performing the service or preparing the commodities does not thereby
automatically become transformed into a business subject to federal regulation.
Compare the decision of the Supreme Court of Canada in the Montcalm Construction
Inc. case (1979), 25 N.R. 1, that was delivered last December.
To sum up with reference to Classes (c) and (d), as I understand the [*74]
law, where something is done as an integral part of the operation of a federal
work, undertaking or business and that something is [emphasis starts] reasonably
incidental [emphasis ends] to such operation, it may be regulated by Parliament
as part of the regulation of that work, undertaking or business even though it
is not essential to the operation of such a work, undertaking or business; but
where such a thing is made the subject of a separate local business or
businesses, it cannot be regulated by Parliament merely because, if it were done
as an integral part of operating a federal work, undertaking or business, it
could, as such, be regulated by Parliament. [Emphasis added]"
112. According to that reasoning, it follows that, even if employees are
doing non-essential work as part and parcel of the main federal undertaking,
they are included in the federal undertaking, and where that same work is
performed by a subsidiary or unrelated undertaking, it may well be provincial,
unless the local operation is found to be operated together with the core
federal undertaking as a single enterprise: see Westcoast Energy, supra.
113. In looking at the normal or habitual activities of CHUM's [*75]
broadcasting undertaking as a going concern, without regard for exceptional or
casual factors, we must therefore consider all aspects of the business carried
on as non-severable parts, i.e., the essential as well as the reasonably
incidental components of CHUM's business.
A. Indivisibility of the Undertaking in the Broadcasting Context
114. The Board has been called upon to apply the principle of indivisibility
of the undertaking in the broadcasting industry in many instances. These cases
arose in the context of arguments similar to the ones made here by the
respondent. The assertion was that the broadcasting undertaking could be
segmented into provincial components on the basis that certain activities, which
were not per se essential to broadcasting, were being carried on as separate
businesses, severable from the core broadcasting undertaking.
115. When the non-essential activities were carried on by a separate company,
the Board generally found the separate operation to be outside federal
jurisdiction. For example, in CFCN Television and N.A.B.E.T. (1991), 15 CLRBR
(2d) 93, 83 di 205 (CLRB No. 844) ["CFCN Television"], CFCN-TV, a broadcaster,
had created a separate [*76] business entity, White Iron Film and Video
Productions ("White Iron"), to make film and video programs that were not
intended for broadcast. The television station maintained its own production
department separate from White Iron. The Board held that White Iron was
provincial because the constitutional facts failed to show a sufficient degree
of operational and functional integration between the two operations to support
a finding that White Iron was a part of CFCN-TV's core federal undertaking.
CFCN-TV did not depend in any way on White Iron's service and would not have
been disadvantaged vis-a-vis its broadcasting capability if White Iron had
ceased its operations.
116. What distinguishes CFCN Television, supra, from the instant case is
that, unlike CityInteractive, White Iron was a separate company whose production
work was not primarily dedicated to the broadcast operations of the core
undertaking. Moreover, unlike CityInteractive, White Iron provided no services
to the television operation. The Board observed in that case (at p. 101 CLRBR,
p. 214 di):
"Here, in our respectful opinion, the necessary degree of operational and
functional integration is not present. Nothing flows [*77] from White Iron to
CFCN-Television of an operational or functional nature. White Iron provides no
services to CFCN-Television. Some productions of White Iron may be aired on
television by CFCN-Television or by other television networks but this does not
make White Iron federal."
117. On the other hand, in cases involving production operations where there
was no distinguishable production undertaking, the Board found that these
activities came under federal jurisdiction as integral and non-severable parts
of the core broadcasting undertaking. This was the whole thrust of Shamrock
Television, supra, where an allegedly segregated production division was found
to be an integral part of a broadcasting undertaking, along with departments
involved in the sale of air time and office administration. The Board held that
these activities, secondary to the operation of a core broadcasting undertaking,
were sufficiently integrated with the federal undertaking to become subject to
the provisions of the Code. The Board looked at the activities in question
(image creative services, sale of air time and office administration of a
television station), considered the degree of functional and operational [*78]
integration (no separate lease, common telephone system, similar employment
terms, similar invoicing, etc.), and concluded that the illusion of a separate
operation was not one of substance and that the reality was that this operation
was a non-severable part of the broadcasting whole. With respect to the Image
Creative Services department ("ICS"), which carried on production work for
Shamrock, the Board observed that ICS was simply a label for a team of employees
who did some particular work, and that, while Shamrock could live and operate
without this group, it was clear that it was functionally dependent on it in the
day-to-day task of creating material for television transmission and was
dependent to a considerable degree upon the skills of individuals in the ICS
group operating the specialized equipment assigned to ICS.
118. Similarly, in Television Saint-Maurice Inc. and Syndicat des
employes(es) de Television St-Maurice Inc. (1990), 15 CLRBR (2d) 81, 83 di 179,
91 CLLC P16,041 (CLRB No. 841), the Board found that the sale of air time
properly fell within federal jurisdiction as being carried on as a non-severable
part of the employer's broadcasting operation. In Television [*79]
Saint-Maurice, supra, the employer argued that the Board had no jurisdiction
over its advertising sales service because the sale of advertising was a
provincial matter. In rejecting that argument, the Board stated (at p. 84 CLRBR,
p. 182 di, p. 14,433 CLLC):
"In Canadian Broadcasting Corporation and Syndicat des employes de
production du Quebec et de l'Acadie (1987), 71 di 12 (CLRB No. 646), the Board,
applying the same rules, dismissed an application precisely because the
undertaking in question was not integrated.
As was the case in Shamrock, supra, the employer sells its own advertising
through an integrated advertising sales service. This is sufficient to enable
the Board to conclude that, in this case, there is a single, integrated and
indivisible broadcasting undertaking -- in other words, a federal undertaking."
119. In their submissions, counsel for the respondent relied principally on
CFCN Television, supra, and the judgment of the Supreme Court of Canada in Paul
L'Anglais, supra. The Paul L'Anglais case, like the Board's decision in CFCN
Television, supra, can be easily distinguished from the facts before the Board
in this instance. In Paul L'Anglais, Tele-Metropole [*80] Inc., the core
federal broadcaster, had set up two companies, Paul L'Anglais Inc. and JPL
Productions Inc., to sell commercial air time and to produce commercials. These
wholly owned subsidiary companies had their own employees and had clients
unrelated to the parent company. Thus, as was the case in CFCN Television,
supra, in Paul L'Anglais, there were distinguishable undertakings performing
secondary activities and these activities were not primarily dedicated to the
operation of the core federal undertaking.
120. As the Board noted in Shamrock Television, supra, at p. 216 CLRBR, p.
178 di, the Supreme Court's ruling in Paul L'Anglais has limited bearing on the
situation, such as the one before us, involving the carrying on of secondary
activities by the broadcasting company in the pursuit of its broadcasting
"The one question which Chouinard J. did not address is whether the
production and sale of air time, although "not indispensable" to broadcasting
are nonetheless [emphasis starts] reasonably incidental [emphasis ends] to
broadcasting [emphasis starts] when carried on by the broadcasting company
itself in pursuit of its broadcasting purposes. [emphasis ends][Emphasis [*81]
121. Furthermore, in the Board's respectful opinion, Paul
L'Anglais, supra, has limited bearing on the instant case as the constitutional
status of the two subsidiaries of Tele-Metropole was considered by the Supreme
Court on the basis of limited facts. The Supreme Court's assessment of the two
subsidiaries' constitutional status in Paul L'Anglais occurred in the context of
an application to overturn the granting of a motion for the issuance of a writ
of evocation in the Quebec Superior Court. As it upheld the granting of the
motion, the Supreme Court commented on the constitutional status of the three
companies on the basis of the facts alleged in the affidavits in support of the
original application, not on the basis of the facts as found by the Board, whose
decision was being challenged. The facts alleged in the affidavits were confined
to describing the subsidiaries' activities without regard to the manner in which
they were operated and managed. The next stage would have been a hearing on the
constitutional issue in Superior Court during which the sum of the evidence
adduced before the Board (including evidence pertaining to the subsidiaries'
functional and operational [*82] integration with Tele-Metropole's core federal
undertaking) would have been examined. However, this never happened and the
union eventually withdrew its applications before the Board.
122. The present case can also be distinguished from the Empress Hotel case,
supra, where the Privy Council held that the Empress Hotel in Victoria, British
Columbia, although owned by the Canadian Pacific Railway Company, was
constitutionally divisible from the company's federal railway undertaking. In so
holding, the court observed, in obiter dicta, that a hotel built by the railway
to serve its passengers could form part of the company's interprovincial railway
undertaking (at p. 144 A.C.):
"It appears from the facts stated in the order of reference that the
appellant has so interpreted its powers and that in the Empress Hotel it does
carry on general hotel business. [emphasis starts] It may be that, if the
appellant chose to conduct a hotel solely or even principally for the benefit of
travellers on its system, that hotel would be a part of its railway undertaking.
[emphasis ends] Their Lordships do not doubt that the provision of meals and
rest for travellers on the appellant's system may be a [*83] part of its
railway undertaking whether that provision is made in trains or at stations, and
such provision might be made in a hotel. But the Empress Hotel differs markedly
from such a hotel. Indeed, there is little, if anything, in the facts stated to
distinguish it from an independently owned hotel in a similar position. No doubt
the fact that there is a large and well-managed hotel at Victoria tends to
increase the traffic on the appellant's system; it may be that the appellant's
railway business and hotel business help each other, but that does not prevent
them from being separate businesses or undertakings. [Emphasis added]"
123. This distinction is directly relevant to the factual situation in the
present case and to the questions raised, that is, the employees of a department
primarily engaged in the production and marketing of Web sites as a component of
a broadcasting enterprise. The instant case comes very close to the type of
situation suggested by the Privy Council, since, in the Board's view, the
evidence shows that CityInteractive's operation is dedicated exclusively to
CHUM's television broadcasting operation.
124. In this regard, the Board's analysis in Shamrock [*84] Television,
supra, at pp. 221-222 CLRBR, pp. 183-184 di, of the distinction between the
Empress Hotel case and the three disputed Shamrock divisions fully relates to
the instant case:
"The employees at the Empress Hotel were employees of Canadian Pacific, a
federal undertaking at least in respect of its railway. The employees in the
ICS, the sales department and the office administration are employees of
Shamrock Television System Inc., which is within federal jurisdiction, at least
insofar as its television broadcasting business is concerned. However, the facts
suggest that this is approximately where the similarity between the two cases
[emphasis starts] The Empress Hotel's activities were such as to make it much
more than simply part of the railway undertaking. It was in fact
indistinguishable from any hotel owned by any other interest and which was
clearly within provincial jurisdiction. The three disputed divisions of Shamrock
are in fact nothing more than portions of the single broadcasting enterprise.
The instant case comes very close to the kind of situation cited by the
Federal Court of Appeal in Wardair, supra. In effect, where an airline has
another undertaking [*85] sell tickets for it, that undertaking does not
necessarily come under federal labour relations jurisdiction. But where the
airline employs people directly to sell tickets, "as an integral part" of the
airline undertaking, that group does come under federal labour relations
jurisdictions. [emphasis ends]
Jurisdiction flows, not from the actual work performed by an employee, but
rather from the work of the undertaking within which those employees function.
This principle was clearly established by the Supreme Court in Reference re
Industrial Relations and Disputes Act,  S.C.R. 529, where it was
determined that office employees of stevedoring companies, although strictly
speaking not involved in loading and unloading ships, should nevertheless be
treated as necessarily and integrally related to the federal regulation of
The Board concludes, on the basis of the facts and the law, that these three
divisions or departments of Shamrock at Yorkton -- Image Creative Services,
sales department and office administration -- are within federal labour
relations jurisdiction. [Emphasis added]"
125. That distinction was reiterated in Westcoast Energy, supra, where the
Supreme [*86] Court of Canada determined that even a separate corporate entity
performing secondary functions for a core federal undertaking would be subsumed
into the federal sphere if it were found to be operated in common with the
federal undertaking as a single federal enterprise.
126. In that case, some of the pipeline facilities and processing plants that
were found to be operated in common with Westcoast's main transmission pipeline
as a single federal undertaking, were owned by wholly owned subsidiaries of
Westcoast. The court held that these gathering pipelines and processing
facilities were an integral part of Westcoast's mainline pipeline because they
were under common control, direction and management, and were conducted in a
coordinated and functionally integrated manner. In so holding, the court noted
the importance of primary dedication of the secondary business to the operation
of the core federal undertaking as an indication of the type of functional
integration that is necessary for finding a single federal enterprise (Westcoast
Energy, supra, at p. 362 S.C.R.):
"[emphasis starts]The fact that one aspect of a business is dedicated
exclusively or even primarily to the operation [*87] of the core
interprovincial undertaking is an indication of the type of functional
integration that is necessary for a single undertaking to exist. [emphasis ends]
127. As the Board did in Shamrock Television, supra, the Supreme Court in
Westcoast Energy, supra, at p. 366 S.C.R., distinguished the Empress Hotel case
on that basis:
"[T]he finding that the hotel was a separate undertaking was based on the
fact that it was not dedicated primarily to the railway undertaking. It was no
different from any other hotel."
(See also to the same effect, Dome Petroleum Ltd. v. National Energy Board
(1987), 73 N.R. 135 at pp. 139-140 (Fed. C.A.))
B. Application of These Principles to the Constitutional Facts
128. It is against that background that we must consider the issue before us,
namely, whether CityInteractive is a non-severable part of CHUM's federal
129. The Board heard a great deal of testimony designed to show that
CityInteractive was a distinct entity that stood or fell quite separately from
the activities and the fortunes of CHUM's television operation. The respondent's
counsel put their best case forward in attempting to demonstrate [*88] that
CityInteractive was a distinct and self-sufficient operation that carried on
activities completely unrelated to and independent from broadcasting. However,
as the hearing delved further into the nature of the work carried on by
CityInteractive and its relationship to the television operation, this theory
became increasingly less persuasive.
130. In support of its contention that CityInteractive is a stand-alone
operation, separate and distinct from the television operation, the respondent
adduced evidence to show that, operationally, CHUM treats all of its
departments, divisions and branches as separate businesses, each having its own
manager, budget and staff. However, once all the evidence was in, it became
clear to the Board that this was more apparent than real. In practice, the lines
between the various segments of CHUM's overall business are not so clearly
drawn. For example, although CHUM does treat each of the television stations
housed in the ChumCity building as separate businesses to monitor their relative
profitability and performance as well as to comply with CRTC licensing
requirements, in practice, they are managed in common and are under common
control and direction. [*89] The television stations are all headed by the
same individual, Mr. Moses Znaimer, and they are all under the responsibility of
Messrs. Switzer, Rubinstein and Ron Waters. The situation is no different for
CityInteractive. The department has its own general manager, Mr. Raphaelson, who
reports to Mr. Znaimer and the other television executives mentioned above. The
same holds true for the CityStore, with the exception that Messrs. Znaimer and
Switzer are not directly involved.
131. The television stations and CityInteractive are also
administratively and operationally integrated in a functional or business sense.
They share common resources and equipment and use similar support services. They
all consult the same legal affairs and business department, labour relations
department, engineering department, IT department and design department.
Similarly, they all share the same accounting and payroll system and services,
and use the same requisition forms, shipping and receiving forms, statement of
earnings and deduction sheets, bulletin boards, telephone system, receptionist
and switchboard, e-mail system, and system for access and security.
132. As revenue-generating operations of CHUM [*90] housed in the ChumCity
building and carrying on activities directly connected to the television
operation, administratively, CityInteractive and the CityStore are governed by
the same rules and administrative practices as any of the television stations
housed in that building. CityInteractive, whether viewed as a separate business
unit or as an administrative division, is as operationally integrated to CHUM's
television operation as any other CHUM division or business unit that is housed
in the ChumCity building. The logos of all CHUM television brands appear on
every document used by CityInteractive, including business cards and note pads.
133. The evidence is clear that CHUM's business is divided into television
and radio operations and that everything that CHUM does comes under either one
of these two main divisions. The alleged self-containment and uniqueness of
CityInteractive versus the television operation cannot be reconciled with the
reality of the situation, which Mr. Switzer could not have described more
explicitly when he said: "There is only radio and television inside our company,
so when we have a new project we have to decide does it go under radio master
umbrella [*91] or television master umbrella. We are too small yet to have a
true third umbrella of other things" (p. 1373 of transcripts). Mr. Switzer
confirmed that CityInteractive did not escape the organization's practice of
classifying everything it does under either one of its main divisions:
television or radio.
134. CityInteractive is grouped by CHUM under its television umbrella, like
any other department or division that is physically located at the ChumCity
building. When cross-examined about the status of CityInteractive, Mr. Switzer
compared it to the CityStore which, by the respondent's own admission, comes
under CHUM Television's umbrella and whose staff is covered by the CHUM
Television collective agreement. He observed: "[The CityStore] falls under CHUM
Television. Obviously selling cookbooks and T-shirts isn't the television
business, but we group it inside the family of businesses that are CHUM
Television in the same way we at this point decided to group the interactive
business" (page 1370 of transcripts). Mr. Switzer was also very clear on his
understanding of CityInteractive's status: "[T]his began as an experiment of a
new unit . . . it is and remains a small and not significant [*92] part of our
overall television machine" (p. 1340 of transcripts).
135. In this regard, the fact that, on the respondent's organizational
charts, CityInteractive appears under the umbrella of ChumCity Productions,
which is in turn found under a division entitled "Unregulated Entities", bears
little significance to the issue of CityInteractive's status as an integral part
of CHUM's television operation. In cross-examination, Mr. Lewis admitted that
these charts, which he had prepared for the purposes of this case, reflected
more his view of CHUM's business as structured along CRTC licensing requirement
lines, than true operational divisions. Indeed, the CityStore, whose retail
business generates for CHUM annual revenues of half a million dollars, does not
appear on the respondent's organizational charts and the same charts make no
reference either to CHUM Television's engineering department, IT department or
design department. Administrative services, such as accounting and payroll, are
also absent from the charts, thus leaving the distinct impression that the
structure they illustrate is more illusory than real.
136. In the Board's view, the employees in the CityInteractive department
[*93] are clearly CHUM employees working within its television division as much
as are the individuals whose status is not in dispute and who have been included
in the scope of the collective agreement by the certification order or with the
respondent's consent. This is evidenced not only by the facts as they relate to
the traditional criteria for determining the employer's identity, but also by
the very terms of CityInteractive staff employment contracts. For example, Mr.
Shankar's employment contract was entered into with "CityInteractive, a division
of CHUM Limited", which leaves no doubt as to CHUM's identity as the employer.
137. As in Shamrock Television, supra, none of the factors that governed the
decision in Paul L'Anglais, supra, and CFCN Television, supra, are present in
this case. The functions that are at issue here, that is, production and design
of Web sites, distribution of CD-ROMs, e-commerce activities and interactive
services, are all performed by CHUM employees. CityInteractive employees are not
slotted into narrowly defined jobs and they often perform a number of different
tasks that service, or are supportive of, more than one television station. They
are administratively [*94] and functionally integrated with the other employees
of the television operation. In some instances, the work at issue, such as the
updating of Web sites, is performed by employees who work in other CHUM
departments. In other instances, it is television station work that is performed
by CityInteractive people, as in the case of on-line chat. In such cases, CHUM
depends upon the technical skills of CityInteractive's staff in the digital
domain for the interactive elements incorporated into the television shows.
Conversely, CityInteractive also depends on the skills and technical support of
employees of various CHUM departments, such as the IT department and the
engineering department, in the performance of several functions.
138. As in Shamrock Television, supra, CityInteractive is simply a label for
a team of employees who do some particular work, but who must rely on others to
produce or update the product and who in turn are relied upon by the clearly
federal operations of CHUM for services and support. The CityInteractive team is
fully integrated to the overall CHUM organization and more particularly, to its
television operation as is, for example, the unit of IT people who provide [*95]
informatics support and services to CHUM's television operation in the ChumCity
building. Functional integration is perhaps best evidenced by the fact that
CityInteractive participates on a regular and continuous basis in two television
shows, Go With the Flow and Electric Circus, as an integral part of these shows.
139. CityInteractive and the television stations are also physically and
operationally interconnected. They share a common Internet connection and DNS,
and submitters connect the television stations to CityInteractive on a permanent
basis for the purposes of updating the Web sites. Physical connections are also
made to allow CityInteractive to provide its interactive services to the
television operation. Live feeds are provided to CityInteractive by the
engineering department in the case of video-only webcasts and, in the case of
on-line chat, CityInteractive's electronic signal is patched into the production
switcher of the television operation's production control room so that it can be
incorporated in the broadcast. CityInteractive is also physically integrated to
the television operation in an operational and practical sense through its
inclusion in the ChumCity building [*96] LAN and telephone system. In this
context, therefore, the fact that CityInteractive is assigned space on a top
floor of the building away from the bulk of the bargaining unit, and has a
separate computer system to carry on its Internet-related work, are not matters
of significance. What is significant, is that every segment of CHUM Television
housed in the ChumCity building, including CityInteractive, is physically,
functionally and operationally integrated.
140. CityInteractive's integration to CHUM's broadcasting undertaking is also
evidenced by the absence of any billing by CHUM for what would normally be
significant operational expenses, such as rent and use of valuable intellectual
property. CityInteractive is neither charged for the right to use CHUM's popular
television brands and logos, nor limited in any way in the use it makes of them.
Yet, CHUM has set up a department, ChumCity International, precisely for the
purpose of exploiting these assets and has given business and legal affairs the
responsibility for ensuring their protection.
141. Another striking feature indicating that CityInteractive's work is done
for CHUM, by employees of CHUM, as part and parcel of its core [*97] television
operation, is that none of CityInteractive's work for CHUM's core television
operation is accounted for as revenue in CityInteractive's statement of
earnings. The statement of earnings lists a number of expenses incurred by
CityInteractive for operating the Web sites, but shows no comparable entries in
the revenue category for the work done by CityInteractive to put the television
stations on the Internet and for the length of time spent by users in visiting
the sites. Yet, we know from Mr. Raphaelson that some five million Internet and
AOL pages featuring the CHUM Television brands are viewed in a month.
142. The reason for this discrepancy is that one does not pay for what one
already owns. CHUM is not a client here. CityInteractive is a department of CHUM
that exists to assist CHUM in the pursuit of its broadcasting objectives. CHUM
does not contract out, or contract in, the production of its Web sites. It pays
its own employees to do this work.
143. CityInteractive's work for CHUM's television broadcasting business
generates revenue in the case of MuchMusic USA and The New VR. However, these
special arrangements, which are clearly the exception, are justified by internal
[*98] accounting considerations, as both stations are located outside the
ChumCity building, and MuchMusic USA is a separate corporate entity.
144. The extent of the functional integration between CityInteractive and the
television operation is also reflected in CityInteractive's products. CHUM has
taken the new interactive media and made it a vehicle that converges television
and the Internet. Television viewers are accessing television programs by means
of the Internet and as a result of CityInteractive's promotion on the Web and on
AOL. The content of the Web sites is integrated conceptually and functionally
with the television broadcast operation and the sites relate mostly to the
programming aired by the television stations. There is no firewall or any other
wall between the television stations and CityInteractive. In fact, it is just
the opposite. CityInteractive is a vital extension of the television channels on
the Internet. CHUM heavily markets its popular television brands to preserve and
expand its market share and, in the television context, the Internet serves as
an essential tool for promoting broadcast offerings by showcasing program
line-ups, posting schedules and providing [*99] episodic summaries. CHUM is
clearly a Canadian broadcaster on the Internet. Interactive features, such as
CITY-TV's popular Speaker's Corner, have been extended on-line, to connect the
Web sites to the television stations on a regular and ongoing basis. The Web
sites serve to strengthen the ties between the audience and the stations by
serving as a gateway through e-mail links to on-air personalities, programs and
145. Throughout his testimony, Mr. Raphaelson consistently affirmed that
CityInteractive's reliance on the CHUM brands merely served
CityInteractive's promotional efforts and that the relationship between the CHUM
Television and CityInteractive was, at best, one of mutually advantageous
cross-promotion. The television brands, he maintained, were used by
CityInteractive to generate revenues by favouring the sale of advertising
products on the Internet through their association with these brands. While we
do not dispute that this is a function served by the use of the brands, we are
not convinced that this is the main purpose of their use. On the contrary, the
evidence compellingly shows that these sites are essentially broadcasting Web
sites, whose primary [*100] function is to promote the television channels. The
main purpose of the Web sites is not to exploit the CHUM brands to generate
advertising revenues by association with them; it is to market them to promote
the television stations. This, as we have seen, is also confirmed by
CityInteractive's statement of earnings.
146. As a tool for promoting viewers' interactivity, the Web sites serve
CHUM's overall objective to preserve and increase television viewership. Mr.
Switzer confirmed it when he testified that CHUM Television's intent was to get
as much of the viewers' leisure time as possible per week. He explained that
this was achieved by establishing a vital connection between television and the
Internet. Bringing the two mediums as close together as possible, he explained,
helped maintain that connection. Viewers went to the Internet to relate to the
brands or the Internet directed them to the television programs.
147. Interactivity is unquestionably an integral part of CHUM's overall
strategy to preserve and expand its share of the television market by maximizing
communication with viewers. This is what CHUM seeks and how it sees the future
evolving in terms of remaining on the leading [*101] edge of modern television.
This objective is achieved by ensuring CHUM's presence on the Internet, where
interactivity is of the essence, and by introducing interactive elements in its
television shows. Indeed, when asked about the role played by CityInteractive
vis-a-vis the television operation and the purpose served by interactivity in
television shows such as MuchMusic's Electric Circus program, Mr. Switzer
observed (pp. 1349 and 1353 of transcripts):
"We use a small amount of interactivity in Electric Circus to add a little
bit of pizzazz, to add a little bit of marketing sparkle, to add a little bit of
buzz to what we are doing and to improve the communication with our viewers.
[Our interactive business] helps us because it gives us the perception of
doing something that's modern, connecting with our viewers. Frankly, in part it
is defensive because if we are going to lose some viewers from our television
business to these other media, we would very much like to have a piece of these
Part of the reason for doing this business was defensive and part of it was
because we legitimately believe there is a business here, but to be precise,
although all money [*102] is appreciated, I would have to say it is
148. This echoes the views of Mr. Znaimer, the president and executive
producer of CITY-TV, MuchMusic and Bravo!, reproduced in a press release dated
January 31, 1996, launching the AOL sites on CITY-TV and MuchMusic. In this
regard, it is not without significance that, in referring to CHUM's involvement
in the digital platform, he described it as "interactive television":
"[emphasis starts] We are recognized as having been, from our very
beginnings, highly interested in interactive television . . . [emphasis ends]
AOL's global audience can now experience, in the digital domain, something of
the same innovation and participatory style of television our analog audiences
have been enjoying on City/Much/Bravo! [Emphasis added]"
149. Mr. Znaimer's comments in CityInteractive's promotional videotape are
also indicative of the extent of CityInteractive's involvement within CHUM's
broadcasting operation and of the importance of interactivity to the television
operation. In this case, he speaks of "media television":
"[emphasis starts] Our early success with audience interactivity made us that
much more keenly aware of developments [*103] in the digital domain and led
City-TV naturally to the creation of media television. [emphasis ends]
Our approach at City is to try and fuse together analogue attitude with
digital potential . . . what we are doing is creating a new genre of parallel
and simultaneous events. [Emphasis added]"
150. In that same promotional video, Mr. Raphaelson confirms this as well by
observing that "viewers are aware of Interactive by the TV. As this is
happening, they are also changing the TV programs and they are evolving as
151. The deliberate extension of CHUM's television broadcasting operation on
the Internet is also abundantly reflected in the promotional materials filed as
exhibits, which consistently emphasize the intricate connection between the Web
sites and the television stations. For example, CityInteractive's promotional
videotape is full of statements and images that unequivocally show the
functional integration of the digital platform with the television operation.
The MuchInteractive promotional video produced by CityInteractive to promote the
MuchMusic Web site is, to all intents and purposes, a carbon copy of
CityInteractive's own promotional video, with similar presentation [*104] and
format, identical excerpts from television shows and quotes from various
individuals, including Messrs. Znaimer and Raphaelson.
152. The various press releases and advertising material found in
CityInteractive's promotional folder also abundantly illustrate the deliberate
merging of identities between CityInteractive, the CHUM brands and the
television stations. For example, the press release announcing the launch of the
AOL sites developed by CityInteractive, which features the CITY-TV and MuchMusic
brands, describes the on-line partnership with AOL as being with "CITY-TV and
MuchMusic". Yet, for further information, people are invited to contact Josh
Raphaelson of "ChumCity Interactive". Another significant example is the
MuchMusic press release announcing the launch of its Web site, where the
confusion is again complete with a reference to Mr. Raphaelson as
"MuchInteractive's General Manager":
""With this new capability, we can give advertisers added value to their
sponsorships on our site", said Josh Raphaelson, MuchInteractive's General
Manager. "Today, our programming provides a perfect environment for their TV
creative. In the near future, we can bring games, multimedia [*105] or any kind
of interactive ads into the mix.""
153. Moreover, it is not again without significance that the same press
release refers to "MuchInteractive" as the "interactive arm" of MuchMusic
("MuchInteractive To Add Commercial Television Spots To Live 'Netcast'
"September 29th, 1997 Toronto: In a move signalling the growing importance of
multimedia in internet advertising, [emphasis starts] MuchInteractive, the
interactive arm of MuchMusic, [emphasis ends] announced it will offer
advertisers audio and video commercial space in its exclusive multimedia
programs "netcast" over the internet. [Emphasis added]"
154. CityInteractive is clearly the "interactive arm" of the television
broadcasting operation to which it is, in every respect -- conceptually,
functionally, operationally and physically -- integrated. Furthermore,
CityInteractive's work is almost entirely dedicated to CHUM's television
operation, which, as the authorities suggest, is a clear indication of
155. The foregoing analysis demonstrates that CityInteractive is
unquestionably an integral part of CHUM's broadcasting operation. While this is
sufficient to dispose of the constitutional [*106] issue, one last point needs
to be addressed.
156. The respondent sought to show CityInteractive as separate from CHUM's
broadcasting business by arguing that CityInteractive was not engaged in
broadcasting. CHUM Television argued that CityInteractive's role on the Internet
was similar to that of a publisher. In support of this contention, the
respondent relied on the fact that the core of CityInteractive's work was the
design, production and marketing of Web sites and that these activities were
carried on by CityInteractive without a CRTC-issued broadcasting licence. Mr.
Lewis testified that, in his capacity as legal advisor for the CHUM
organization, he had determined that there was no class of licence presently
issued by the CRTC, nor were there any broadcasting regulations pertaining to
the operation of Internet Web sites. Mr. Lewis stated that he had reviewed the
operations of CityInteractive and determined that the operation of Web sites was
not a broadcasting undertaking, as defined in the Broadcasting Act, S.C. 1991,
c. 11. He stressed that the requirement under the Broadcasting Act for any
television station (such as CITY-TV or MuchMusic) to be licensed turned on the
threshold [*107] question of whether there was a "broadcasting undertaking"
being carried on. The relevant definitions of the Broadcasting Act [am. S.C.
1993, c. 38, s. 81] read as follows:
"2. (1) In this Act,
"broadcasting" means [emphasis starts] any transmission of programs,
[emphasis ends] whether or not encrypted, by radio waves or other means of
telecommunication for reception by the public by means of broadcasting receiving
apparatus, but does not include any such transmission of programs that is made
solely for performance or display in a public place;
"broadcasting undertaking" includes a distribution undertaking, a programming
undertaking and a network;
"distribution undertaking" means an undertaking for the reception of
broadcasting and the retransmission thereof by radio waves or other means of
telecommunication to more than one permanent or temporary residence or dwelling
unit or to another such undertaking;
"licence" means a licence to carry on a broadcasting undertaking issued by
the Commission under this Act;
"program" means sounds or visual images, or a combination of sounds and
visual images, that are intended to inform, enlighten or entertain, [emphasis
[*108] starts] but does not include visual images, whether or not combined with
sounds, that consist predominantly of alphanumeric text; [emphasis ends]
"programming undertaking" means an undertaking for the transmission of
programs, either directly by radio waves or other means of telecommunication or
indirectly through a distribution undertaking, for reception by the public by
means of broadcasting receiving apparatus;
(2) For the purposes of this Act, [emphasis starts] "other means of
telecommunication" [emphasis ends] means any wire, cable, radio, optical or
other electromagnetic system, or any similar technical system. [Emphasis added]"
157. As appears from the above definitions, the determination of whether a
service is "broadcasting" under the Broadcasting Act does not depend on the type
of technology that is used for its transmission, but rather, on whether it
consists of "programs" that are "transmitted for reception by the public". In
this regard, Mr. Lewis stressed that the definition of "programs" in s. 2 of the
Broadcasting Act excluded "visual images, whether or not combined with sounds,
that consist predominantly of alphanumeric text", and there was little doubt
that [*109] the data transmitted by CityInteractive by digital means consisted
predominantly of alphanumeric text.
158. The argument that an undertaking does not exist until a licence is
granted and until the activity is carried into effect, or is capable of being
lawfully carried out, was expressly rejected by the Privy Council in Winner,
supra. Furthermore, the determination of CityInteractive's jurisdictional status
does not turn on whether it is engaged in broadcasting in a statutory sense or,
in any particular sense. It is well established that all aspects of a company's
work need not be of the same type in order to come under the same operation.
That principle was reiterated recently in Westcoast Energy, supra, in the
context of the single enterprise test. The court observed that a number of cases
stated that a single federal undertaking could exist notwithstanding that it was
engaged in different activities and one of them was not transportation or
communication (pp. 367-368 S.C.R.):
"In Empress Hotel, supra, the Privy Council stated in obiter dicta that a
hotel set up exclusively to serve the railway's passengers could form part of a
federal railway undertaking. In The King v. Eastern [*110] Terminal Elevator
Co.,  S.C.R. 434, Duff J. stated at p. 447 in obiter dicta that a grain
elevator could form part of a federal railway or shipping undertaking. In Dome
Petroleum, supra, underground storage caverns were held to form part of an
interprovincial pipeline undertaking. This was also the view of Gerard V. La
Forest in Water Law in Canada: The Atlantic Provinces (1973), at pp. 49-50:
". . . there may be situations where a single business enterprise may carry
on several undertakings. This is evident from Canadian Pacific Railway v.
Attorney-General of British Columbia where the Empress Hotel operated by the
C.P.R. like any other large hotel was held to be a separate undertaking from the
company's railway operations. [emphasis starts] This by no means indicates that
all aspects of a company's work must be of the same kind, as in Bell Telephone
Co. and Winner cases, to come within the same operation. [emphasis ends] In the
Empress Hotel case the court conceded that a hotel or restaurant maintained as
an adjunct to the company's railway business for the benefit of passengers
travelling on its lines could certainly be part of its railway undertaking.
[Emphasis added.]" [*111]
[emphasis starts] In our opinion, the fact that an activity or service is
not of a transportation or communications character does not preclude a finding
that it forms part of a single federal undertaking for the purposes of s.
92(10)(a) under the first test in Central Western, supra. The test remains a
fact-based one. [emphasis ends] [Emphasis added]"
159. In any event, in the Board's opinion, the argument that CityInteractive
does not broadcast is unfounded. The absence of licensing requirements for
carrying on CityInteractive's activities does not persuade us that some of
CityInteractive's activities do not amount to a form of broadcasting, i.e., the
transmission of programs by means of telecommunication for reception by the
public. Webcasts, for example, involve the transmission of audio/visual signals
to members of the public situated anywhere in the world.
160. On the other hand, to conclude that CityInteractive does not engage in
broadcasting does not fully answer the question, since some of its Internet
-related activities may amount to communication activities extending beyond the
limits of a province, pursuant to s. 92(10)(a) of the Constitution Act, 1867.
Indeed, whether [*112] CityInteractive's activities on the digital platform
meet or do not meet the existing statutory definition of broadcasting does not
necessarily mean that CityInteractive does not engage in "broadcasting" in a
non-statutory sense, or that it does not otherwise carry on interprovincial
communications activities. The general exclusion of the on-line platform from
the regulating scope of the CRTC, due to the definition of "program" in the
Broadcasting Act, reflects policy considerations, not the extent of Parliament's
constitutional jurisdiction over novel forms of telecommunications and
broadcasting. The broadcasting and telecommunications fields are being rapidly
transformed by the technological advances witnessed in the digital arena and the
emergence of new media services, and the precise nature of these services has
yet to be determined.
161. The CRTC has implicitly acknowledged this, as well as the fact that, to
date, there has been uncertainty about whether services delivered over the
Internet constitute broadcasting or telecommunications services. On July 31,
1998, in Broadcasting Public Notice CRTC 1998-2 and Telecom Public Notice CRTC
98-20 ("the public notice"), the CRTC announced [*113] that it was initiating a
proceeding under both the Broadcasting Act and the Telecommunications Act
calling for comments on the rapidly expanding and increasingly available range
of communications services collectively referred to as "new media". In the
public notice, the CRTC proposed the following working definition of the notion
of new media:
"New media can be described as encompassing, singly or in combination, and
whether interactive or not, services and products that make use of video, audio,
graphics and alphanumeric text; and involving, along with other, more
traditional means of distribution, digital delivery over networks interconnected
on a local or global scale."
162. While noting that "under such a description, virtually all services
found on the Internet could be considered as forms of new media", the CRTC
requested submissions for the purpose of answering the following questions:
"a) In what ways, and to what extent, do new media affect, or are they likely
to affect, the broadcasting and telecommunications undertakings now regulated by
b) In what ways, and to what extent, are some or any of the new media either
broadcasting or telecommunications [*114] services?
c) To the extent that any of the new media are broadcasting or
telecommunications, to what extent should the Commission regulate and supervise
them pursuant to the Broadcasting Act and the Telecommunications Act?
d) Do the new media raise any other broad policy issues of national interest?
163. Thus, apart from the Board's finding that CityInteractive is a
non-severable part of CHUM's federal broadcasting operation whether or not it
itself carries on broadcasting activities or communication activities that
extend beyond the limits of a province, there is more support for concluding
that CityInteractive properly falls within the federal realm.
164. Based on the evidence, in the Board's respectful opinion, there is
little doubt that, even if the respondent's interactive business could be viewed
as a separate operation, severable from CHUM's core broadcasting undertaking,
that operation would also come under federal jurisdiction on its own account. In
the Board's view, the webcasting services currently [*115] performed by
CityInteractive amount to a form of broadcasting, and the other interactive
services it provides are interprovincial in nature. All of these services are
performed on a regular and continuous basis as an integral part of
CityInteractive's new media services operation. The fact that the design and
marketing of Web sites and the posting of information on the Web constitute
CityInteractive's primary activity, and that such an activity may not itself be
federally regulated, is not determinative. What is significant, is that the
extra-provincial activities performed by CityInteractive as an integral part of
its operation are regular and continuous. Authorities have rejected a
quantitative approach which would determine the result based upon a comparison
of the extra-provincial business to the business carried on within the province:
see Ottawa-Carleton Regional Transit Commission v. A.T.U., Local 279,  4
D.L.R. (4th) 452, 44 O.R. (2d) 560, 1 O.A.C. 177, 84 CLLC P14,006, 24 M.P.L.R.
165. The test for determining whether CityInteractive is an interprovincial
undertaking on its own account boils down to the question of "what is the
ordinary business of CityInteractive?" [*116] The answer to that question
leads to the conclusion that CityInteractive's ordinary business connects
provinces on a regular and continuous basis, rendering it federal in nature.
CityInteractive is not a mere publisher on the Web. It carries on activities
that in effect take television on-line and the Internet to the air. The scope
and complexity of the Internet as "a network of computer networks interconnected
by means of telecommunications facilities using common protocols and standards
that allow for the exchange of information between each connected computer" (C.
Pinsky, supra, p. 3), and the instantaneous, ubiquitous and borderless nature
that characterizes digital communications, lead to the natural conclusion that
these activities, viewed functionally and realistically, bear a clear
interprovincial communication stamp.
166. In the context of webcasting, CityInteractive is an essential link in
the broadcasting chain. CHUM's television operation turns to CityInteractive to
carry its signal to the world over the Internet. The reverse is also true in the
context of on-line chat. In that case, CityInteractive is an essential link in
the broadcasting chain by providing the digital [*117] signal to the television
operation and making the necessary connections to ensure its on-air
transmission. The fact that CityInteractive's signal is carried on the Internet
through an ISP does not change the nature of its day-to-day operations for
167. In this respect, an analogy may be drawn between the present case and
The Shopping Channel and C.E.P.U. (1997), 35 CLRBR (2d) 204, 104 di 24 (CLRB No.
1200). In that case, the employer, The Shopping Channel ("TSC"), was essentially
engaged in retail sales. In order to display its goods, however, TSC relied
heavily on broadcasting images of those goods on television screens across
Canada. Viewers who wished to purchase a particular item generally did so by
telephone. Such goods were then mailed to the purchaser by TSC's warehouse
168. Before the Board, TSC sought to separate itself from broadcasting by
arguing that it did not broadcast, but rather produced in-house infomercials,
and paid Rogers Network Services ("RNS") and other companies to distribute them.
The CRTC had earlier determined that TSC's normal activities complied with the
definition of a "programming undertaking", and regulated TSC's [*118]
operation by exempting it from licensing requirements, provided it continued to
meet certain conditions. The Board indicated that it saw no reason to disagree
with the CRTC's determination and determined that the employer's normal
activities amounted to broadcasting and was clearly a programming undertaking
for the purposes of the Broadcasting Act. In so holding, the Board relied on
Capital Cities Communications, supra, and Dionne, supra, and observed (at p. 212
CLRBR, p. 31 di):
"These cases endorse the proposition that, leaving aside the question of
closed-circuit television within the boundaries of a province, broadcasting is
subject to federal regulation from transmission to reception. According to that
reasoning, federal competence over broadcasting cannot be avoided by using
different corporate entities to carry out the necessary steps to broadcast
programming. Here, RNS, as a mere conduit for TSC's transmissions, is subject to
federal regulation, but not to the exclusion of TSC.
Similarly, the fact that TSC pays RNS and Rogers Cable to carry its signal
does not change the nature of its day-to-day operations for constitutional
purposes. Once it is established that TSC is [*119] an essential broadcasting
link, the particular commercial arrangements it has entered into do not make it
any less a federal undertaking. The Board sees no difference, for example,
between TSC and a licensed specialty channel which, presumably, Rogers would pay
for the privilege of carrying its programming. In both cases, the decision
whether or not to transmit and the day-to-day control over the content of the
transmission lie with the programming undertaking at the origin of the
transmission. Following the reasoning of the Supreme Court of Canada, both
undertakings would necessarily be engaged in broadcasting."
169. For all of the foregoing reasons, the Board finds that the evidence
establishes that CHUM operates its broadcasting business in an integrated
fashion and that CityInteractive is part and parcel of the CHUM whole, as a
fully integrated component of the television side of its broadcasting operation.
As in Shamrock Television, supra, the disputed operation is an indivisible part
of a broader federal undertaking. Thus, the Board concludes that CityInteractive
falls within federal jurisdiction and that the Code applies to CityInteractive
in the regulation [*120] of its labour relations.
170. Given the Board's decision that it has jurisdiction over this matter,
the Board may now proceed with the review of the bargaining unit's description
in the existing certificate, and hear the unfair labour practice complaint.
Accordingly, the normal administrative processing of these matters will follow.