Broadcasting Notice of Consultation CRTC 2017-429
Jan 19, 2018
Reconsideration of the licence renewal decisions for the large English-language television groups
1. FRIENDS appreciates this opportunity to provide this intervention on the issues raised by Order in Council P.C. 2017-1060 (the OIC), dated 14 August 2017, as set out and expended by the Commission in CRTC Notice of Consultation 2017-429.
2. In the OIC, the Governor in Council references Broadcasting Decisions CRTC 2017-143 to 2017-151 of May 15, 2017, in which the Commission renewed the broadcasting licences for the television services of large French-language ownership groups and large English-language ownership groups (the decisions or group renewal decisions), and finds that “the decisions derogate from the attainment of the objectives of the broadcasting policy for Canada set out in subsection 3(1) of the Broadcasting Act, and in particular paragraph 3(1)(s) of that Act”.
3. Pursuant to section 28 of the Broadcasting Act, the Governor in Council accordingly:
a. referred back to the Commission for reconsideration and hearing the decisions, contained in Broadcasting Decisions CRTC 2017-143 to 2017-151 of May 15, 2017, to renew the broadcasting licences for the television services of large French-language ownership groups and large English-language ownership groups; and
b. expressed the opinion that it is material to the reconsideration and hearing that the Commission
i. in respect of the decisions, contained in Broadcasting Decisions CRTC 2017-143 to 2017-147 of May 15, 2017, to renew the broadcasting licences for the television services of large French-language ownership groups, consider how it can be ensured that significant contributions are made to the creation and presentation of original French-language programming and music programming, and
ii. in respect of the decisions, contained in Broadcasting Decisions CRTC 2017-148 to 2017-151 of May 15, 2017, to renew the broadcasting licences for the television services of large English-language ownership groups, consider how it can be ensured that significant contributions are made to the creation and presentation of programs of national interest, music programming, short films and short-form documentaries, and
iii. take into consideration that creators of Canadian programming are key to the Canadian broadcasting system and that, while the industry is going through a transformation, Canadian programming and a dynamic creative sector are vital to the system’s competitiveness and contribute to Canada’s economy.
4. This kind of proceeding is relatively rare. In the last 25 years, there have been little more than 70 recorded petitions to the Governor in Council pursuant to sections 28 and 29 of the Broadcasting Act, of which only ten have resulted in referrals back to the Commission.1
5. FRIENDS was not itself a Petitioner in respect of this OIC, but understands that the Governor in Council received numerous petitions from stakeholders in English and French Canada, representing unions, guilds, producers and other creators.
6. As is evident from the record of the licence renewal proceedings, in respect of support for the genres of programming identified in the OIC, the Commission’s decisions significantly and injuriously departed from previous policy and precedent. This is what the Governor in Council has found to derogate from the attainment of the objectives of the broadcasting policy as set out in the Act.
7. Unfortunately, as FRIENDS has earlier demonstrated2, this pattern of damaging departures from established policy was endemic to the Commission, as it was then led by Chairperson Jean-Pierre Blais, in the few years leading up to the large group licence renewals.
8. The fact that the Government has referred the license renewal decisions back for reconsideration, and appointed a new Chairperson, Ian Scott, therefore bodes well for more sensible decisions and policy going forward.
9. In the broader context, however, one cannot ignore the reality that:
- The broadcasting environment appears to be in sustained decline;
- The system is losing its way; and
- There is desperate need for concerted action on numerous fronts.
10. This proceeding is therefore an important start to stemming unnecessary declines in Canadian programming, particularly by maintaining maximum support for programs of national interest (PNI) through the next three to five years.
11. The companion s.15 future distribution model proceeding attests to the fact that without concerted action, the ability of the system to support Canadian programming will be severely compromised over the medium to long term.
12. FRIENDS answers the Commission’s questions related to the OIC below.
13. FRIENDS notes that the groups have made a number of licence amendment requests concerning which the Commission has asked no questions. These include CPE level, the 75% PNI independent production commitment, and a shorter licence term. As these matters are outside of the scope of the OIC, would represent departures from existing policy and/or practice, and could only be fairly addressed in a more expansive process, FRIENDS supports the Commission’s decision not to consider them.
Q1. If the Commission decides to make changes to the requirements imposed on large English-language ownership groups regarding programs of national interest, what would be an appropriate expenditure level for each individual group or for all groups?
14. Notwithstanding its prior policy decision to “maintain” existing PNI requirements3, in the group renewal decisions the Commission reduced PNI requirements from historical levels in order to “standardize” PNI levels among the major broadcast groups.
15. The net effect was to reduce historical average PNI levels of 8% for Bell and Corus to 5%, so that they would match Rogers and its historic 5% average. In other words, Corus and Bell received an almost 40% reduction in PNI requirements for the purpose of allowing Corus and Bell to “compete on an equal footing” with Rogers.
16. This was a stupendous approach. It took the Broadcasting Act’s key policy objective of maximizing support for Canadian programming and made it subservient to administrative convenience and theoretical construct. The OIC recognizes this fact.
17. As Rogers notes, its historic spending on PNI actually increased from 3.8% of gross revenues in 2012-2014 to 5% in 2014-17. The Rogers services always spent comparatively less on PNI because of their relatively greater spending on local news.
18. Moreover, as Rogers makes clear, the answer is not to raise Rogers PNI requirements, along with Corus and Bell:
“If the Commission were to amend its policy and require Rogers to increase its PNI spend to the level that Bell Media or Corus Entertainment has historically achieved, our increased programming costs would come at the expense of local programming. Any increase in PNI expenditures would necessarily result in a corresponding reduction in spending on local news. …
“Any decision in this proceeding that would require the Rogers Group to contribute more funding to PNI beyond our historical levels would likely require us to seek relief with respect to our current local programming and local news conditions of licence. In particular, the level of locally reflective news we are required to deliver in each market could not be sustained if we are required to redirect more funding to PNI.”4
19. Contrary to the Commission’s earlier rationale, leaving Rogers PNI requirements unchanged while re-establishing historic requirements for Bell and Corus would be entirely consistent with the Commission’s determinations in the Let’s Talk TV proceeding and the group-based policy – as expressed in the French-language group renewals:
“In Broadcasting Regulatory Policy 2015-86, the Commission said it would establish Canadian programming funding levels for services that wish to be recognized as designated groups on a case-by-case basis at licence renewal. Consequently, in their applications, the French-language groups proposed different CPE and PNI requirements based on their respective situations. The Commission considers that expenditure levels for the groups should be determined on a case-by-case basis rather than by applying a standard level for all groups. While they share the same economic and technological context and must face the same digital challenges, the French-language groups differ greatly in terms of their financial situation, market share, composition and current regulatory requirements.5
20. There is no doubt that Rogers differs greatly from Bell and Corus in terms of its financial situation, market share, composition and current regulatory requirements.
21. The clear answer is therefore to leave Rogers PNI requirements at 5% and raise Corus and Bell’s PNI requirements to where they should have been in the first place – their 8% historic levels.
Q2. What approach should the Commission take to ensure support for music programming, short films and short-form documentaries?
Q.3 If the Commission decides to reinstate contribution requirements imposed on services to support music programming, short films and short-form documentaries, which requirements should be reinstated, and to what group or groups should they apply?
Q4. If the Commission decides to implement new measures to ensure support for the creation and presentation of music programming, short films and short-form documentaries on all platforms:
- What should those measures be?
- To what groups should they apply?
22. FRIENDS believes that, notwithstanding the absence of genre exclusivity, if a service or television group provides programming in, or related to, a given genre, it is appropriate for the Commission to impose specific contribution requirements related to that genre.
23. Given the OIC direction, the Commission should therefore re-impose the following contribution requirements that were eliminated in the current renewals6:
- A condition of licence on Bravo! requiring the licensee to contribute the greater of $600,000 or 5% of gross revenues from the previous broadcast year to Bravo!FACT
- A condition of licence on Much requiring the licensee to contribute 7% of revenues from the previous broadcast year to MuchFACT for the development and production of Canadian music videos.
- A condition of licence on CMT requiring the licensee to allocate no less than 11% of gross revenues from the previous year to the development and production of Canadian music videos
Q5. Section 3(1)(c) of the Act states that “English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements.” In light of this objective, do you think that the Commission should adopt a different approach to each linguistic market to support the creation and presentation of music and music video programming? Please justify your answer.
24. We believe that, consistent with Section 3(1)(c) of the Act, the Commission should adopt a different approach to each linguistic market to support the creation and presentation of music and music video programming where circumstances merit, and that that is the case with respect to music and video programming.
1 https://www.canada.ca/en/canadian-heritage/services/petitions-governor-council.html. The site does not identify Orders in Council after 2017. There may also be Petitions for which no Order in Council was ever rendered.
2 See, for example, Canadian Television 2020: Technological and Regulatory Impacts, Nordicity & Miller, January 2016.
3 Broadcasting Regulatory Policy CRTC 2015-86.
4 Rogers Response Letter, October 31, 2017, Q.2.
6 M3 also had a commitment to MuchFact, but as M3 is now Gusto, such a commitment would no longer seem appropriate.