Speech by Tom Pentefountas, Vice-Chairman, Broadcasting, Canadian Radio-television and Telecommunications Commission

To the Broadcasting Invitational Summit

Cambridge, Ontario
May 3, 2012

Check against delivery

 

Thank you very much.

I've now been in my job for a year. So I'd like to talk about some of the things I've learned so far. I'd also like to offer some ideas about the kind of regulation that will work best in the future.

It's clear to me that the regulatory approach that worked in the past is obsolete. The Commission can no longer achieve its purposes by functioning as a gatekeeper.

For many years the regulator controlled access to the system. It allowed entry to conventional broadcasters operating under detailed regulation.

That exclusive access assured broadcasters of large audiences across the country. This provided the advertising revenues that were needed to support Canadian content.

But the growth of specialty and pay channels has fragmented those audiences and pulled away much of those revenues. Consumers also have access to digital media alternatives, which are allowing content to flow freely across our borders.

Meanwhile technological convergence and corporate consolidation have completely changed the landscape.

What we need now is a less dogmatic approach to regulation.

We need an approach that's more flexible. It should take advantage of innovation from both the business and creative communities.

We need to make sure that the players in the broadcasting industry have all the oxygen they need to make the system flourish. This will enable them to create win-win situations as often as possible.

The regulator should lay out the lines of the big picture, and leave it to the members of the industry to make the actual choices within that big picture. We are not here to micro-manage your businesses. That should be left to those who have their shareholders' money on the line.

A good example of this approach to regulation is our recent French-language television licence renewals.

Licence renewals - French-language services

Last week, we renewed the licences of most of the French-language private television services. These renewals covered the services of the TVA Group and those of Astral Media. We also maintained the existing conditions of licence for V.

It's our central responsibility to ensure that the entire Canadian broadcasting system produces a steady stream of high-quality Canadian content.

The French-language market offers particular opportunities to achieve this.

Francophone viewers have always demanded a lot of home-grown material in French. Broadcasters have always been ready to deliver it. And we're confident that they'll continue to deliver it because of its continuing popularity.

So we don't feel the need to dictate to them exactly how to go about meeting their obligations. We're happy to allow them more flexibility to serve their viewers as they see fit. This approach reflects economic realities and past levels of achievement.

TVA

Over the past three years, TVA has invested an average of 45% of its gross annual revenues in the production of Canadian programming. Given this solid performance, we have approved TVA's request to remove any requirements for the type of programming it broadcasts. We expect it to continue providing its current quantity of drama, documentary, music and variety programs.

And as a condition of licence, we required it to devote 80% of its programming expenditures to Canadian shows. This works out to an average of over $110 million annually.   

Since we have granted TVA a high degree of flexibility in meeting its obligations, we've limited the licence term to three years.

This will give us an earlier opportunity to assess TVA's performance under the new flexible approach.

Astral

The Astral Media group includes both French- and English-language pay and specialty services. We have taken the group-based approach to its Canadian content spending obligations. Astral will have the flexibility to meet those obligations by allocating its financial resources among all its TV services regardless of language.

Astral Media must spend at least 30% of its gross annual revenues on the production of Canadian programming, including 16% on programs of national interest. This is expected to inject more than $150 million into the Canadian broadcasting system over the next year.

The Astral licences will expire in 2017.

V

In 2008, the Commission approved the acquisition of V, which was then TQS, by Remstar Diffusion. We agreed to special conditions of licence with reduced requirements for local and priority programming. We have now decided to maintain the same conditions until the next licence renewal in 2015. However, Remstar has made a commitment to increase the length of local newscasts and the local news segments within them.

Lighter regulation

These French-language licence renewals point the way towards a lighter kind of regulation.

The people who are actually creating, producing, broadcasting and distributing the programming are in the best position to know what their markets demand.

As far as possible, the regulator should set the rules of the game and then referee it without blowing the whistle too much.

Let the players play, and let the talent determine who wins.

Over-the-top services

For several years the Commission has been monitoring over-the-top services (OTT) — the online and mobile broadcasting activity that's been developing so rapidly. We conducted a fact-finding exercise last year to determine what effect OTT was having on the broadcasting system and on Canadian content. The results were released in October, but they were inconclusive.

We found that the traditional broadcasting system is continuing to support Canadian programming.

Consumption of OTT is growing, but we don't yet have the measurement tools to build up an accurate picture of the trends in consumer behaviour. OTT seems to be complementary to traditional broadcasting. There's no evidence that Canadians are reducing or cancelling their TV subscriptions.

Canadian broadcasters and distributors are launching their own online and mobile services; Canadian creators are producing new digital content.

We were planning to hold another fact-finding exercise on OTT this month.

However, after monitoring the trends and reviewing expert analysis, we decided that the impact of OTT services has not been sufficient to justify another inquiry right now.

We'll continue to watch what's happening with OTT as the communications landscape evolves.

The importance of broadcasting

Broadcasting and telecommunications make a tremendous contribution to Canada's gross domestic product.

You here in this room represent an industry with great economic clout — right up there with oil, forestry or pharmaceuticals.

It's essential that the broadcasting industry be prosperous and profitable. That's good for your shareholders, of course.

But profitability also ensures the health of the whole broadcasting enterprise.

It provides the resources that enable broadcasting to support the social, cultural, educational and economic imperatives that are so important to Canadians. And it means there's more money for support of Canadian creativity in dramatic, musical and documentary programming.

The broadcasting ecosystem

There are a lot of diverse interests involved in broadcasting. Often they conflict, and there's nothing wrong with that.

But we in the industry should not make enemies of one another. Extreme positions of any kind do no good, whether it's an insistence on every last penny from the business side or unrealistic demands from creative unions.

These are challenging times and we have a lot of tough issues to deal with. I am confident that we can come to reasonable and balanced solutions.

The industry is an ecosystem and we're all in it together. It's the CRTC's job as the regulator to help all the stakeholders to work towards their own goals within the overall aims of the Broadcasting Act. Like all of us at the Commission, I look forward to continuing to work with you.

Thank you very much.

 

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