Sun News CRTC Application by Blazingcatfur

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An Application to the CRTC on behalf of Sun News Network

                  Supplementary Brief

                                                    May 30, 2012
Sun News Network produces

hours / week
of original Canadian television content
Table Of Contents

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

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

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

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

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

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

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

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

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

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

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

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

13. About Us ............................................................................. 21
“The theory of the free press
 is not that the truth will be
 presented completely or
 perfectly in any one instance,
 but that the truth will emerge
 from free discussion.”
              - Walter Lipmann
1. Introduction

1.1   In July 2010, Groupe TVA and Sun Media made       1.7 In our initial application, we requested mandatory
      an application to the CRTC for a license for a        distribution for Sun News for a period of three
      new English language national news specialty          years.
      service – Sun TV News.
                                                        1.8 This was in recognition that the all-news market
1.2 In that application we stated our intent to:            that we were launching into was a mature
                                                            market. Moreover, our competitors had enjoyed
           i   Produce and broadcast 100%                   highly preferential rules compared to the rules
               Canadian television.                         we were being asked to operate under. CTV
                                                            News Channel and CBC News Network had
          ii   Cover stories and issues ignored by          enjoyed mandatory distribution, preferential dial
               others in the Canadian news media.           placement and mandated subscription fees for
                                                            13 and 21 years respectively.
         iii   Broaden the range of opinion in the
                                                        1.9 Sun News on the other hand, is distributed like
               Canadian media.
                                                            a third-rate foreign news service – available in
1.3 After one year on air, we have delivered on these       only 4 out of 10 households with major BDUs like
    commitments in spades.                                  Telus and MTS not even offering it. This situation
                                                            is unsustainable.
1.4 We are a Canadian content powerhouse. Not
    including elections and other news specials, we     1.10 The CRTC indicated it was not considering
    produce 96 hours/week of Canadian content.               mandatory distribution for any channels at the
    Our news is of, by and for the Canadian people.          time of our initial application, but would have
                                                             a process opening in 2012 under which such
1.5 We are punching above our weight when it                 requests would be considered. (Broadcasting
    comes to news - whether it is breaking stories           Regulatory Policy CRTC 2010-629)
    about wanted war criminals roaming our streets,
    being the exclusive broadcaster of the Trudeau/     1.11 It is through this process that Sun News is
    Brazeau Fight for the Cure, or by being the              applying for mandatory distribution
    only national cable news network to have live            on analog and digital basic service in
    coverage of election nights in Saskatchewan              Canada.
    and Manitoba.

1.6 Gone are the days of boring talking heads
    and tired talking points. Debate on Sun News
    has lived up to its promise of being raw and
    edgy. Love them or hate them, our hosts and
    commentators swing for the fences every night.
    Caryn Lieberman,
    Host of Right Now

     FIGURE 2.1:
    Eight in ten Canadians, surveyed by Abacus Data, agreed that “all Canadians
            should have access to every Canadian cable all-news channel.”

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

2. Proudly Canadian

2.1                                                       Sun News is 100% Canadian (and proud of it).                              2.3 Sun News produces more Canadian content
                                                          Not only is our content Canadian, but so is our                               than almost any other network in the Canadian
                                                          ownership. More than any other private network,                               specialty service universe. (Figure 2.2)
                                                          our parent companies TVA and Quebecor have
                                                                                                                                    2.4 As proud Canadians, we agree with the CRTC
                                                          been on the forefront of producing original,
                                                                                                                                        that Canadian content matters. That Canadian
                                                          Canadian television. Moreover, LCN produces
                                                                                                                                        news – of, by and for Canadians – needs to have
                                                          98 hours of original Canadian news
                                                                                                                                        a place at the centre of our television landscape.
                                                          programming every week.
                                                                                                                                    2.5 And so do Canadians. (Figure 2.1).
2.2 And Sun News contributes to that strong
    tradition. We are producing 11 unique shows
    that offer 96 hours/week of original television
    programming – every second of it Canadian.

Sun News is a Canadian Content Powerhouse
                                                          FIGURE 2.2: ESTIMATED WEEKLY HOURS OF CANADIAN CONTENT BY NETWORK


                                                                                                                            91.5 hours

                                                                                                                    T hat’s
 Hours of originally produced Canadian content per week

                                                                                                                     more  than Oprah!


                                                                                             2.5                    4.5                       7
                                                                  BRAVO                     OUT                    OWN                 DISCOVERY                  APTN         SUN

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


CANADA IS                                              3. Canadians Want More Voices
DOMINATED                                              3.1 Since before its launch, Sun News has promised to

BY A FEW                                                    shake up the media consensus - to bring to the forefront
                                                            new voices and views that are often ignored by others.

VOICES WHO                                                  We believe our programming has lived up to that

ALL THINK                                              3.2 Our desire for more diversity in Canadian media is

ALIKE.                                                      shared by the public. A large majority of Canadians
                                                            believe the media is dominated by a few voices that all
                                                            think alike (Figure 3.1). And an overwhelming majority
                                                            wants to see more voices in the media1.

                                                       3.3 This desire by Canadians for more voices confirms

                    57%                                     Walter Lippman’s famous observation that: “The theory
                                                            of the free press is not that the truth will be presented
                                                            completely or perfectly in any one instance, but that the
                                                            truth will emerge from free discussion.”

  57% OF CANADIANS AGREE                               3.4 It is our belief that no single media source, or news
                                                            channel, will ever be able to perfectly reflect the views
                                                            and news interests of a country as diverse as Canada.
                                                            And Sun News is improving our media by adding to its
                                                            diversity and ensuring stories ignored by other media

                   23%                                      outlets are given fair voice.

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

                                                                                             A B A C U S DATA


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

Industry. Abacus Data Inc. 2012   A B A C U S DATA

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

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

                           Jack Layton on the role of the CRTC
                                  NDP.CA -

                          FIGURE 4.1:

                                                                                                                                   4/10 HOUSEHOLDS
                                11.6 Million                               6.7 Million                       5.1 Million
                            TOTAL MARKET                             SUN ON ANALOG                          SUN TODAY
                              (CBC’S NEWS CHANNEL
                                                                     & FREE PREVIEW

                      4. Carriage Chaos

                     4.1    Despite this strong thirst for news alternatives in       their own all-news channel (City News Channel).
                            the market, Sun News has encountered enormous             Ironically, the ratings for City News Channel are
                            resistance from Canadian cable and satellite              significantly less than those Sun News was getting
                            providers when it comes to making the channel             when it occupied that dial placement. (Figure 4.2)
                            available to Canadians. In fact, Sun News is only
                                                                                  4.3 While Sun News has chosen not to pursue an
                            available in 4 out of 10 households. (Figure 4.1)
                                                                                      “undue preference” complaint against Rogers for
                     4.2 What is even more concerning is distribution has             this action, it speaks strongly to the challenges
                            declined since its launch. Until October 2011, Sun        we have faced when dealing with major Canadian
                            News was still operating its over the air broadcast       cable and satellite providers.
                            towers in Ontario, which compelled Rogers,
                                                                                  4.4 Even more surprising, BDUs like MTS and Telus
                            Bell Fibe and Cogeco to carry Sun News on
                                                                                      are not offering Sun News at all! In case you were
                            analog digital basic cable service in most Ontario
                                                                                      wondering, both Telus and MTS offer Al Jazeera,
                            markets. Since shutting down our towers, Rogers
                                                                                      BBC World News and other foreign
                            has replaced Sun News on Channel 15 with
                                                                                      all-news channels.

Krista Erickson,
Host of Canada Live

   FIGURE 4.2:

                                                                       Average Minute Audience

   APR 18, 2011 -
   OCT 31, 2011
   OCT 31, 2011 -

   DEC 31, 2011

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

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

    FIGURE 5.1:

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

   FIGURE 5.2:

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

                 22%                                                                                                          26%
                                                                        34%                                             22%


Fig 6.1. p 28. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A
                                                                                                      ATA                                     9
     6. Seeing Is Believing

     6.1 We are proud to be following in the footsteps of
         Canadian broadcasting legends like Moses Znaimer
         by offering viewers radically different approaches to
         news television. Our hard news and straight talk is a
         huge departure from the safe, traditional approach
         to news taken by our competition.

     6.2 While Sun News is not for everyone, it is for many
         of the Canadians that are frustrated with the lack of
         diversity in the current news options.

     6.3 Our research shows that seeing is believing. Once
         these discontent news viewers have been exposed
         to our approach to news, they like it.                                                                        Ezra Levant, Host of The Source

         FIGURE 6.1:

                                                                                                                           “Despite being in
          Demographic Group                                               Sun News Viewership                              the typical Sun News
                                                                                                                           viewer demographic,
           Male                                                                          66%
                                                                                                                           most focus group
                                                                                                                           participants had never
           Female                                                                         34%
                                                                                                                           heard of the Sun News
           18 to 29                                                                        9%                              Network prior to the
                                                                                                                           focus group session.
           30 to 44                                                                       21%                              When shown three
                                                                                                                           clips from various
           45 to 59                                                                      39%                               prime time programs,
                                                                                                                           almost all said they
           60 and over                                                                    31%                              would watch Sun
                                                                                                                           News if they could get
           Income less than $50k                                                         39%                               access to it.”

           Income $50k to $100k                                                          40%                               p 30. Cable News and the Cable and Satellite

                                                                                                                           Industry. Abacus Data Inc. 2012   A B A C U S D AT A

           Income over $100k                                                              21%
           Specific Subgroups
                                                                                                                                    ly analo r s!
                                                                                                                                Like t ome
                                                                                                                                 cable cu
           Low Income Seniors                                                             12%
        Table 6.0. p 29. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A

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

Brian Lilley,
Host of Byline

7. Distribution + Dial Position = Ratings

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

7.2 When Sun News went from 6.7 million households to                        96%
    5.1 million households it had a dramatic, negative effect                                            89%
    on ratings, because the channel was no longer carried
    on analog and digital basic service. They went from an
    average of 27,400 before to 13,000 after (Figure 7.2) 2+
    prime-time from launch until December 31, 2011.

7.3   The move from Channel 15 on Rogers to Channel 142
      had a particularly negative impact.
7.4   None of this is surprising. You can’t watch a channel you
      don’t get, and you are less likely to watch a channel that
      is in the stratosphere than one that is lower on the dial.

7.5   With all of this in mind, it is not a mystery that Sun News
      is not well known in the market place. Just over one in
      three Canadians have even heard of Sun News. Less
      than half that number has watched.                              Fig 6.0. p 27. Cable News and the Cable and Satellite Industry. Abacus

                                                                             Data Inc. 2012   A B A C U S D AT A
                   FIGURE 7.2:

                                                 WITH ANALOG
Sun News Network Weekly Audience

                                                                             WITHOUT ANALOG

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

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

8. Fair Is Fair
8.1 None of these challenges existed for Sun News’             8.4 When it comes to the amount BDUs pay for Canadian
    competitors when they launched. When CBC                       cable news services, a further discrepancy exists.
    Newsworld was granted a license in 1987, it was given          Cable and satellite providers paid CBC Newsworld
    mandatory distribution in every Canadian household,            $0.63/month per subscriber. It is worth noting the
    and dial placement that was superior to that of its main       CBC amount was over and above the existing taxpayer
    competitor, the American news channel CNN. CTV                 subsidies paid to the state broadcaster.
    News Channel had similar advantages when it launched
    in 1997.
                                                                    FIGURE 8.1:
8.2 This preferential treatment continued for 21-years              BDU CARRIAGE FEES
    for CBC News Network and 13-years for CTV News

                                                                           63 ¢
    Channel. That was the decision of the CRTC at the
    time, and it was the right decision. Without ensuring
    access to the market, cable news in Canada would have
    continued to be dominated by American news channels.

8.3 The challenges of launching a new Canadian cable
    news channel have evolved, but they have not
    diminished over the years. A larger television universe
    means Canadian channels need to compete with a host
                                                                                                   18 ¢
    of foreign news channels – Fox News, MSNBC, HLN,
    Bloomberg, CNBC, BBC World News, etc.                              CBC NEWS NETWORK        SUN NEWS NETWORK

     FIGURE 8.2:

                       1987                                                            2012
 When CBC Newsworld was granted a licence in 1987
            the CRTC cited the need to maintain our
“Information sovereignty”. That need continues today.

                                                                                                    Decision CRTC 87-904

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


Fig. 5.7 p 25. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A
                                                                                                             NO       15
9. Strong Role For The CRTC
9.1   The challenges of launching new Canadian channels                                   9.4 In the past the CRTC has not only demonstrated
      has not diminished, nor has the important role the CRTC                                 steadfast support for original Canadian content, but in
      plays in ensuring Canadian content finds a place on                                     ensuring new Canadian entrants have an opportunity
      Canadian television. As Pierre Juneau said: “Canadian                                   to enter the market – thus enhancing choice and
      broadcasting should be Canadian.”                                                       competition. The most recent example would be the
                                                                                              Canadian Government`s decision to reserve a portion of
9.2 While the CRTC does not rule on the basis of public                                       the wireless spectrum for “new entrants” to the market.
    opinion, it is worth noting there is strong public support
    for the Commission’s core mandate of ensuring original                                9.5 A lot has changed since 1987 when the CRTC granted a
    Canadian programming does not get sidelined                                               license to CBC Newsworld with mandatory distribution.
    (Figure 9.1).                                                                             The cable news market today is crowded with foreign
                                                                                              cable news channels – particularly American news
9.3 Opinion research also demonstrates the public is                                          channels.
    skeptical about Cable and Satellite providers when it
    comes to offering a choice of channels (Figure 9.2).                                  9.6 The one thing that has not changed is the importance
                                                                                              that Canadian news channels be made available to ALL

      FIGURE 9.1
      How important is the CRTC in ensuring Canadian cable and satellite
      subscribers have access to Canadian television programming?

         51%                                                                             36%                                    7%     3% 3%

                   Very Important                                             Somewhat Important

                   Not that important                                         Not at all important                            Unsure

       Fig. 4.0 p 13. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A


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

                It is an uncompetitive market where a                                                        It is a highly competitive market
                few companies can limit choice and                                                           giving consumers like you choice
                charge high prices to consumers.                                                             and fair prices.

71                  %                                                                                                       18          %

Fig. 3.0 p 11. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A

10. Financial Considerations

10.1 The business model for Sun News is similar to that                                           the anglophone market has been $0.63/month per
     of other all-news channels. Approximately 72%                                                subscriber.
     of our expenses are directly related to the cost of
                                                                                        10.4 While it is an amount less than 1/3 what CBC
     producing 96 hours/week of original television content
                                                                                             Newsworld was granted, we believe Sun News can
     – everything from salaries for news coverage across
                                                                                             be financially viable with mandatory distribution to all
     the country to technical production staff and the cost
                                                                                             analog and digital households with a distribution fee
     of operating our studios. Our revenues come from two
                                                                                             of $0.18/month per subscriber.
     sources: distribution fees paid by cable and satellite
     providers (BDUs) and advertising revenues.                                         10.5 Sun News, and its parent companies, will continue
                                                                                             to assume a great deal of risk in this project. Our
10.2 The current distribution agreements Sun News has
                                                                                             projections show that if we are able to achieve
     with cable and satellite providers are inadequate
                                                                                             our aggressive advertising goals, Sun News will
     to support the channel, both in terms of price
                                                                                             generate a modest operating margin of 2.9% in 2014,
     and penetration rate (only offered in 4 out of 10
                                                                                             increasing to just over 9 % in 2017 (year five). Due to
     households). Additionally, the distribution challenges
                                                                                             the large capital investments needed to start up a new
     also negatively impact advertising revenues. As a
                                                                                             television network, we would not achieve a positive
     result we project an operating loss of $17 million in
                                                                                             net income until 2020 (year 7).
     2012, with further losses going forward. This is clearly
     unsustainable.                                                                     10.6 Should the cable and satellite providers choose to
                                                                                             pass the full cost of Sun News to their customers,
10.3 Should Sun News be successful in obtaining a
                                                                                             the financial impact on the basic service would be
     mandatory distribution order, the CRTC would be
                                                                                             negligible – only $2.16/year per household.*
     responsible for setting the distribution fees paid
     by cable and satellite providers. For instance: in
                                                                                                  *The cost would be $1.08/year per
     the past the distribution fee for CBC Newsworld in
                                                                                                  francophone households.

     FIGURE 10.1:
     New Canadian all-news channels should get the same advantages that
     channels before them received in terms of placement on the dial and
     subscription fees.

                      71% AGREE

                                                                                              9% DISAGREE
      Fig. 5.0 p 19. Cable News and the Cable and Satellite Industry. Abacus Data Inc. 2012   A B A C U S D AT A

11. Sun News Meets All Criteria
11.1 Sun News actively and enthusiastically contributes         to promote the multicultural, multiracial nature of
     to the goals laid out in the Broadcasting Act.             Canadian society and the special place of aboriginal
     Perhaps the most important demonstration of this is        peoples within that society.
     the sheer volume of original Canadian broadcasting
                                                           11.5 As a subsidiary of Quebec’s largest media
     we are producing – 96 hours per week.
                                                                company, we appreciate the importance of
11.2 We “serve, safeguard, enrich and strengthen the            Canada’s linguistic duality. In fact we live it every
     political, social, cultural and economic fabric of         day as we work with our colleagues in TVA and
     Canada” by offering voice to a wide range of views         Quebecor Media to share stories with our audience
     – from Ezra Levant to Warren Kinsella and every            from coast to coast and in both official languages.
     point of view in between!
                                                           11.6 And we celebrate the values that make Canada
11.3 In addition we are among Canada’s most outspoken           great. Not just those laid out in the Broadcasting
     advocates for freedom of speech, which helps to            Act, but others that go beyond that; such as:
     ensure every point of view has an opportunity to           hard work, patriotism, strong families and healthy
     be shared, regardless of fashion or controversy.           communities.
     We believe free speech and a free, diverse media
     are the foundation on which a stable, vibrant
     democracy is built.

11.4 We are all about Canadian points of view. Our
     programming highlights the best of Canadian talent
     with hosts, commentators and contributors that
     reflect the diversity of this great country – be it
     by gender, race, region or religion. We are proud

    As Pierre Juneau said:
 “Canadian broadcasting
  should be Canadian.”

12. Our Ask

     12.1 In keeping with its proud history, we              12.3 i Canadian TV First
          encourage the CRTC to reaffirm its role as
          the champion of original Canadian television            Virtually no channel on cable today can
          content. To this end we request:                        compete with Sun News when it comes
                                                                  to generating 100% original Canadian
          i. Mandatory distribution of Sun News on all            programming. We are making 96 hours/week
             analog and digital basic service in Canada,          of new content that is of, by and for Canadians.
             from January 1, 2013 until December 31,              And we are doing it without receiving a dime of
             2017. After this five-year period has ended,         taxpayer money. Not bad, eh?
             Sun News would be treated like other
             “Category C” services.                               ii Fairness

          ii. The rate paid to Sun News by Canadian               Our plan would allow Sun News to establish an
              BDUs would be set at $0.18/month                    audience under similar rules and regulations
              per subscriber. *                                   to those afforded CBC Newsworld and CTV
                                                                  News Channel for 21 and 13 years respectively.
          iii. Distribution in a lower dial placement than        We don’t begrudge our competitors in any
               American and other foreign news channels.          way, we simply want the same rules that they
                                                                  enjoyed – at least for the next 5-years
 12.2 We strongly believe Sun News meets all the
      criteria laid out in the commission policy for              iii Diversity
      channels seeking mandatory distribution
      on the basic service. The approach we are                   Sun News greatly enhances news diversity in
      recommending passes other tests as well:                    Canada. We expand debate, cover different
                                                                  news stories, and bring new Canadian voices
                                                                  to our public discourse. And all of that is
                                                                  healthy for our media and for our democracy.

                                                                  iv Precedence

                                                                  We also believe our plan is in keeping with the
                                                                  approach taken by the Canadian Government
                                                                  in allowing different rules for “new entrants” in
                                                                  the wireless spectrum auction. The Canadian
                                                                  Government made the right decision to bring
                                                                  new wireless players into the market then, and
                                                                  they would be right now to do the same for
                                                                  Canadian all-news channels!

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

13. About Us

13.1 Quebecor Media a subsidiary of Quebecor          Nurun Inc., is a major interactive technologies and
     Inc. (TSX:QBR.A) (TSX:QBR.B), one of Canada’s           communications agency with offices in Canada, the
     most important holding company operating in the         United States, Europe and Asia. Quebecor Media
     telecommunications and media businesses. With           Inc. is also active in magazine publishing (TVA
     more than 16,000 employees, Quebecor Media              Publishing Inc.), book publishing and distribution
     Inc., through its subsidiary Videotron Ltd., is an      (Sogides Group Inc. and CEC Publishing Inc.), the
     integrated communications company engaged in            production, distribution and retailing of cultural
     cable television, interactive multimedia development,   products (Archambault Group Inc. and TVA Films),
     Internet access services, cable telephone services      video game development (BlooBuzzStudios Inc.),
     and mobile telephone services.                          DVD, Blu-ray disc and videogame rental and
                                                             retailing (LeSuperClub Vidéotron Ltd), the printing
13.2 Through Sun Media Corporation, Quebecor Media           and distribution of regional newspapers and flyers
     Inc. is the largest publisher of newspapers in          (Quebecor Media Printing Inc. and Quebecor
     Canada. It also operates and its network       Media Network Inc.), news content production and
     of English and French language Internet properties      distribution (QMI Agency), multiplatform advertising
     in Canada. In the broadcasting sector, Quebecor         solutions (QMI Sales) and the publishing of printed
     Media Inc. operates, through TVA Group Inc., the        and online directories, through Quebecor Media
     number one French language general interest             Pages TM.
     television network in Québec, a number of specialty
     channels and the SUN News English language
     channel. Another subsidiary of Quebecor Media Inc.,


     Washington, DC


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