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Broadcasting Notice of Consultation CRTC 2016-225

Aug 15, 2016

Renewal of television licences held by large English- and French-language ownership groups

1. FRIENDS of Canadian Broadcasting is an independent watchdog for Canadian programming, primarily in the English-language audio-visual system, supported by 364,000 Canadians, and is not affiliated with any broadcaster or political party.

2. We welcome the opportunity to comment on the renewal of licences for the large television groups, specifically those issues set out in the notice that, in the words of the Commission, “implement certain policy decisions set out in the Broadcasting Regulatory Policy 2015-86.”

3. FRIENDS does not seek to appear before the Commission during the hearing set to begin November 22, 2016.

4. FRIENDS’ comments herein apply specifically to the channels of the three English-language groups, excluding national news or mainstream sports services.

Context

5. This licence renewal hearing occurs at a time of great challenge for Canadian television. Internet advertising and over the top television (OTT) services are having a demonstrable negative impact, that is expected to accelerate.

6. FRIENDS has previously submitted evidence that significant components of the new policy framework established in the Let’s Talk TV Decisions, of which Broadcasting Regulatory Policy 2015-86 is one, will accelerate this negative impact.1

7. We have also expressed particular concern about the precarious position of local TV.

8. Television remains the most important source of local news in Canada. A December 2015 survey by ThinkTV asked Canadian adults: “Which one of the following media is your primary source of local news?” At 36%, television eclipsed newspapers (23%), radio (20%) and the internet (18%)”.2

9. Local TV news supplies oxygen for Canadian democracy, offering citizens the information they need to make informed judgments and decisions, while connecting them to their communities and local leaders in municipal, provincial and federal political circles.

10. The CRTC’s new policy for local TV news3 released on June 15th may forestall local station closures for the groups within this proceeding.  We have grave doubts, however, that it will serve as more than a stop-gap solution, and we remain particularly concerned about independent stations in small markets.4 

The Move Away from Exhibition Requirements

11. The Commission has clearly recognized the coming shift away from “linear” television programming to “on-demand” or “viewer directed” use of television. The conclusion drawn by the Commission is that this will require an emphasis on “quality over quantity” in order to attract and retain viewers. In so doing, the Commission has proposed a shift away from the “traditional” requirements of “exhibition require-ments” (by hours and/or percentages) towards “expenditure requirements”.

12. This shift in the basic approach to ‘Canadian content’ requires careful consideration to ensure that Broadcasting Act objectives are achieved. While FRIENDS accepts that the general direction being taken by the Commission may be appropriate, we have concerns regarding the timing and pace of this transition, as outlined below.

13. In particular, we note that linear television is far from “dead” and can be expected to be at least a material, and likely a significant, even predominant part of the way Canadians experience television for the foreseeable future.  Traditional viewing – particularly in prime-time – of linear channels will continue well into the next decade.  Thus, in moving too far, too fast, the Commission risks undermining the Canadian television system and core Broadcasting Act objectives designed to support Canadian programming.

14. Moreover, the loss of a predominant Canadian “face” on Canadian television would, in FRIENDS view, be inconsistent with the objectives of the Act, and Canadians’ expectations for their television system.

The Commission’s Proposals – Exhibition Requirement

15. Fortunately, the Commission has not proposed to abandon completely the current regime for exhibition requirements.

16. For conventional (OTA) channels, the Commission has proposed eliminating the “overall” requirement (currently 55%), retaining exhibition requirements only during the evening viewing period (50%). For discretionary services, the Commission has proposed a standard “overall’ requirement of 35% with no requirement during the evening period. (Note that the Commission has recognized that there are some services where this “standard level” of Canadian content may be inappropriate – specifically children’s and youth services, that would be considered on a case-by-case basis.)

17. It is clear that this change (from exhibition hours to CPE only) will result in significantly less time devoted to Canadian programming on-air. The Commission notes that well over 50% of Canadian program-ming broadcast on all services in both English- and French-language markets is repeated on the same service or “recycled” from other services.  For some services, more than 90% of Canadian programming is repeat (or recycled) programming.

18. While, with the Commission’s proposed changes, one would not necessarily expect all 90% of repeat or recycled programming to be eliminated from the schedule, clearly the overall time devoted to Canadian programming may be expected to drop precipitously.

19. Moreover, there is no doubt that repeating Canadian programming benefits certain viewers – and the system as a whole.

20. Therefore, given the uncertainty over the impact of the removal of exhibition requirements on Canadian programming, and the lack of any compelling immediate requirement to move ‘so far, so fast’, FRIENDS urges the Commission to retain a predominant level (50%) exhibition requirement for the overall period for OTA (conventional) channels as well as the peak periods for specialty channels.

21. FRIENDS recommends that, at the very least, a 35% floor should be applied to all periods (overall and evening viewing periods) for all affected channels.

The Commission’s Proposals – CPE

22. The three English language groups have proposed differing CPE percentages (Corus: 27%, Bell: 32%, Rogers: 30%). While it is true that there is a different mix of specialty services within each group, FRIENDS recommends that, overall, it is consistent with the Commission’s desire for standardization and transparency to set the same required percentages for all channels and all groups. FRIENDS recommends a minimum CPE of 30% for all channels in each group.

23. In addition, we believe that there is no reason why non-exempt channels that are part of a group should not meet the same objective.

The Commission’s Proposals ­– Programs of National Interest

24. All three English language groups have proposed ‘program of national interest’ (PNI) expenditures of 5%. The Commission has stated that “Given the relatively short timeframe in which the PNI requirements have been in place, the Commission considers it would be premature to alter the policy at this time. The current requirements relating to PNI… will therefore be maintained.”  

25. Therefore, FRIENDS recommends that the PNI requirement for each group be calculated as a function of existing requirements (based on existing and acquired licences.)

The Commission’s Proposals – Independent Production

26. FRIENDS believes that it is vital to preserve the ‘independence’ of the independent production community.

27. When vertically integrated broadcasters license long-term program rights over many platforms, they exercise pricing leverage and creative control that, among other things, adversely affect subsequent sales in international markets.  Moreover, depending on the control exercised by the broadcaster, and rights obtained, the very independence of producers can easily be undermined. This is especially true in the absence of Terms of Trade agreements.

28. The Commission has recognized the systemic challenges facing the independent production community under the existing system and is looking to encourage better-capitalized companies capable of better competing in international markets.

29. FRIENDS shares the Commission’s concern that the independent producers could become no more than “service producers” for the major vertically integrated broadcasters.

30. Without Terms of Trade, the Commission will have to find other ways to address this challenge.  One approach may be through a new and clearer definition of ‘independent’.

31. All three groups have appropriately proposed that at least 75% of PNI expenditures be allocated to independent producers.  FRIENDS notes also the proposals of the groups to eliminate the requirements (on specific channels) for specific support to independent producers. (This was generally in the form that some percentage (commonly 25%) of content aired be produced by and/or obtained from independent producers.) This would leave the PNI requirement as the ONLY support for independents (and only for PNI programming).

32. Under this scenario, independents would be competing for 75% of 5% of  the previous year’s gross. This means that independent producers would be sharing in 3.75% of gross.  

33. FRIENDS recommends that, in addition to the support expressed as a portion of PNI expenditures, the existing requirements on the various channels in support of independent producers should be maintained, unless there are compelling reasons (such as change in genre) not to do so.

The Commission’s Proposals - News and Current Affairs

34. FRIENDS endorses the Commission’s approach to defining “locally relevant and reflective programming”.  We strongly encourage the Commission to enact its proposed changes to Schedule I of the Television Broadcasting Regulations (1987) to ensure transparency and proper reporting of these Conditions.

35. The Commission’s proposals imply two separate conditions:

First, a “standard” Condition of Licence (CoL) at 7 or 14 hours of “locally relevant” programming. (We note that this is a new definition, and therefore not a simple continuation of the previous requirement for “local” programming.)

Second, the Commission asks for a commitment that could be imposed as a CoL for expenditures and exhibition on “locally reflective news”.

36. These are two different things.

37. The definition of “locally reflective news” is certainly open to interpretation. However, we take it that a locally-produced news cast – including international, national, regional and local reports – will qualify as “locally reflective and relevant news”. 

38. On the other hand, the Commission has assumed that this second requirement is based on the duration of “segments” (not counting commercial time) and not on running time of the program itself. It is also assumed that this “segment counting” method applies to part 2 above, but not to the first paragraph.

Segment Duration or Program Duration

39. Basing a condition such as this on “segment time”, while perfectly possible and practical, introduces a distinct and different method of calculation than that used for the vast majority of log analysis. Most of the conditions on most licensees calculate using “program duration” (which includes commercial and other content.)

40. The equivalent duration for 14 hours per week using “segment times” only would be approximately 11 hours and 12 minutes per week (80% assuming a commercial load of 12 minutes per hour.)  

41. FRIENDS recommends that staying with the current method of using “program times” would make more sense while keeping reporting requirements consistent. Furthermore the move to “segment times” serves no useful purpose. The comparison between “local reflection” (at 14 hours) and “local news” (at say, 12 hours) would be more readily understandable – and simply make more sense.

42. Given that this proposal is for a new Condition imposed on top of the 14 (or 7) hours per week of locally reflective programming, it may be reasonable for the licensees to suggest that 90% of the required local programming consist of news. Given some leeway and rounding, the proposal of 10.8 (or 5.4) hours seems to be a reasonable minimum. Of course, should the Commission decide that “program duration” is a better method of defining the Condition, the equivalent numbers would be 12.6 (or 6.3).

43. The Commission hasasked for a report on “historical… exhibition levels of locally reflective and relevant news.” FRIENDS finds this problematic, given that the current logging practices call for different definitions of “local news” than the proposals contained in Broadcasting Regulatory Policy 2015-86. While perhaps useful as a guideline, it is not appropriate to simply base a new condition on the previous numbers.

44. Given the importance of local TV news to Canadians, as noted above, and the incentive to broadcast local news that arises from new local TV news funding, FRIENDS supports appropriate definitions, transparency and proper reporting.

All of which is respectfully submitted.

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For information: Jim Thompson (613) 567-9592


1 This research study was sponsored by FRIENDS in collaboration with ACTRA, CMG, DGC and Unifor: http://www.friends.ca/pub/13491
http://www.friends.ca/node/13490
http://www.les-amis.ca/node/13639 

2 nlogic Thinktv OmniVu Survey, December 2015, National A 18+ (Previously known as the TV Bureau of Canada.)

3 Broadcasting Regulatory Policy CRTC 2016-224 http://www.crtc.gc.ca/eng/archive/2016/2016-224.htm?_ga=1.8811443.701070408.1365596358

4 Support for independent stations is not scheduled to kick in until September 2017 – despite independent local stations declaring an emergency eleven months ago http://www.friends.ca/files/PDF/smits-letter-to-crtc-re-interim-local-tv-fund-final-09-03-15-3.pdf