Statement to the CRTC
by Ian Morrison
Spokesperson
FRIENDS of Canadian Broadcasting

  Listen to Statement - 3.5 MB runs 16:26

  Read the full transcript - 48 KB

Gatineau, May 15, 2006

Re: Review of Commercial Radio Policy [PN CRTC 2006-1]

FRIENDS of Canadian Broadcasting thanks the Commission for the opportunity to participate in this review of commercial radio policy. As you know, FRIENDS is a watchdog group supported by 100,000 Canadians. Our mission is to defend and enhance Canadian programming.

We endorse the objectives of this review, in particular the principle that a well-financed commercial radio sector should contribute according to its means to the fulfillment of the policy objectives of the Broadcasting Act, that it should make effective contributions to Canadian artists through airplay of Canadian music and Canadian talent development, and that it should provide listeners with greater diversity of musical genres and airplay for a greater variety of Canadian artists.

In a recent McKinsey Quarterly article entitled “Regulation that’s good for competition”, Scott Beardsley and Diana Farrell write that “crafting regulations that encourage rather than hinder competition and growth is increasingly tough at a time of accelerating technological change and economic uncertainty. Politicians are under pressure to protect troubled industries and to safeguard jobs. The work of regulators is ever more complex – which makes it ever more vital that they make wise choices.” [Footnote 1: McKinsey Quarterly 2005:2].

Our advice to the Commission is that it should not lose sight of repetitive evidence from the broadcast sector that regulation can facilitate markets and is a necessary tool to ensure that the Act's objectives are attained. In this regard, the Canadian public, listeners and viewers, view your policies and procedures as a means to assure themselves of the quality and variety they expect from their public airwaves. Parliament has charged you with stewardship of the public interest in an environment where it is unreasonable to expect that commercial interests and the public interest can ever completely align.

FRIENDS believes that the Commission's current policies with respect to concentration of ownership in a given market, between formats therein, and in the overall Canadian marketplace are functional. You should beware of comments from vested interests seeking to persuade you to permit still further concentration.

According to Saint Luke, “those to whom much has been given, of them much is also expected”. [Footnote 2: Luke 12:48]. The profit data reflected in the Commission’s recent annual reports suggest that you are dealing in the aggregate with a healthy industry, and one capable of making substantial contributions towards Parliament’s goals on behalf of the listening audience as reflected in the Act. And this health is important, because only financially healthy radio broadcasters will be in a position to contribute substantially to the goals of the Act you are charged with advancing.

The vast majority of Canadian radio stations, especially those in major markets, are owned by public companies that must compete with all other public companies for investment. We recognize, therefore, that their returns need to be competitive to those in other industries.

Canadians want and need a distinctively Canadian presence on Canadian radio. At the same time, we need to take account of the economic and business realities of a changing technological landscape. FRIENDS recognizes that, in common with conventional television, radio is facing many sources of audience fragmentation, including:

• iPods capable of holding thousands of songs;
• the introduction of iPod-like phones which will exacerbate this tendency;
• the Internet, not only because of the amount of time dedicated to the Net, especially by younger listeners, but because of the creation of hundreds of alternative sources of music and Internet radio stations, including peer-to-peer downloading of music; and
• the arrival of satellite radio will also impact older listeners as it is expected that the cost of satellite radio equipment and ongoing subscription costs may create a slightly older audience skew.

To a large extent, our Canadian broadcasting system is based on a cross-subsidization model. In the case of radio, exclusive frequency franchises have been approved by the Commission in exchange for specific commitments to Canadian content and the development of Canadian artists. We note, however, that the new content providers now have both at home and mobile access to the Canadian population without any substantial commitment to the Canadian broadcasting system.

Where possible, these new platforms need to make a contribution to the Canadian broadcasting system and not just gobble audience and revenue. Cell phone companies will clearly profit from the downloading of music and digital content to cell phones as well as iPod-like cell phones. A percentage of these revenues should be put back into the Canadian broadcasting system through Factor or similar mechanisms the Commission should mandate.

With respect to Local Management and Sales Agreements, FRIENDS’ advice to the Commission is that such arrangements, which inherently reduce competition and diversity, should be employed only on an exceptional basis, and in those circumstances require substantial supervision to ensure that the parties respect their public obligations. We remind the Commission of our intervention regarding the Sudbury market where our supporters detected abusive masquerading by two of the dominant industrial players in recent years: Rogers and NewCap [Footnote 3]. Their behaviour amply demonstrated the need for effective regulation in an ownership-concentrated radio broadcasting system.

The 1998 Policy’s Canadian content regulations have been a great success. Owing to turnover in your leadership, there may currently be only a few Commissioners who experienced directly the pressure from the CAB lobby when your Commission decided in 1998 to raise the bar for Canadian music. It was intense, repugnant and entirely without merit, as subsequent experience has made clear. We recommend mature skepticism to similar entreaties during the 2006 review process.

We also recommend that you raise the bar for category 2 popular music to 40% on a daily 6 am to 6 pm basis in the new policy, with at least one quarter of this minimum for new and emerging genres and artists.

Recent statistics on the fragile health of the Canadian music industry suggest that this recommendation is desirable both from an industrial and a listener point of view.

FRIENDS supports the logic of a 10% Canadian Talent Development benefit upon transfers (or changes) of ownership and control of radio licensees.

The commercial radio sector is a vital part of the communications infrastructure in communities across the land. The Commission should beware of any proposals to reduce the obligation of commercial radio stations to present substantial amounts of locally-produced news and information programming. This should apply to all stations, without exception.

If any changes are desirable, they should move in the direction of strengthening these obligations. Leaving this obligation to voluntary commitment is not warranted in view of the conflict of interest inherent where commercial radio undertakings seek to reduce local labour costs and import content from distant, often non-Canadian locations. This factor is of greatest concern in small and medium-sized markets, where fewer alternative sources of local news and information are available. Strengthening local programming is also a front line in the defence of commercial radio from its distance-free competitors. It is a feature that advances commercial radio’s competitive advantage.

In the transition from analog to digital formats, the Commission should follow the principle that its prime duty is to ensure that the policy objectives of the Act prevail over technological considerations.

The Commission should articulate a policy on radio infomercials akin to those in its Television Policy. In considering representations from commercial radio interests, the Commission should bear in mind that only its Policy protects the listening public from abuse. If a licensee were to state that such regulation is neither necessary nor desirable, the question that must be answered is: ”How could it ever be appropriate and in the listeners’ interest for an infomercial to be broadcast without being clearly identified as paid commercial programming?”

The Commission’s radio policy is a buttress for democratic participation and cultural sovereignty in a country with a relatively small population, sharing the North American continent with the United States of America. As Canada’s economic relationship with the US draws closer, it becomes more important than ever to strengthen Canadian cultural sovereignty. This may be only an opinion, but it is one shared by 87% of Canadians. [Footnote 4: In a survey of 1,100 Canadians conducted by Ipsos-Reid in May 2004 on FRIENDS' behalf, 87% of Canadians agreed with the following statement: “As Canada’s economic ties with the United States increase, it is becoming more important to strengthen Canadian culture and identity”.]

Radio policy is an important component of this task. We wish the Commission well in addressing this challenge and look forward to contributing further to the process.

– 30 –

For information:

Jim Thompson 613-447-9592

Related Documents