Speech by Scott Hutton, Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission

To the 65th annual conference of the British Columbia Association of Broadcasters

Vancouver, British Columbia
May 10, 2012

Check against delivery

 

Thank you for that kind introduction.

It’s a pleasure for me to visit with the people who are responsible for the dynamic broadcasting industry here in British Columbia. Let me start by offering my congratulations to the British Columbia Association of Broadcasters on its 65th annual conference, and to the finalists of the BCAB Excellence Awards.

I’d like to take the next few minutes to give you an update of the CRTC’s recent activities and its agenda for the coming months.

Local television

For many years, local television stations have played an important role in this province and in the larger broadcasting system. Your strongest asset—the key to your success—has always been stations that are focused on the local community. We know that your ability to finance this type of operation was severely impacted by the recession, especially in smaller markets.

Some even suggested that the conventional television model was dead.

The financial results for 2011 tell a different story. Broadcasters in British Columbia and the Yukon reported higher advertising revenues for local and national sales. That’s encouraging news, and it hopefully suggests a return to better days.

This doesn’t mean that business model is the same as it was before the recession. It is evolving and companies are adapting. Any questions regarding the importance of conventional television are put to rest when we see companies like Rogers make significant investments to compete with BCE and Shaw.

The CRTC created the Local Programming Improvement Fund to assist stations in smaller markets. Cable and satellite companies were required to contribute 1% of their gross broadcasting revenues to the Fund. This percentage was later raised to 1.5%.

In its first two years of operation, the Fund distributed over $200 million to 80 stations across Canada. Television stations here in B.C. used this funding to offer viewers more hours of quality local programming.

From the very beginning, we said that we would review the Fund during its third year of existence. We held a public hearing in Gatineau last month where we heard from a wide variety of parties. Opinions ran the gamut from those who argued that the Fund should be maintained under its current mandate and structure, to those who think it should be wound down.

We are currently reviewing the public record and will announce our decision this summer.

Local radio

I’d now like to turn to the radio sector. Earlier this morning, we heard an interesting debate on the future of radio. While some observers are filled with doom and gloom, I think it’s telling that radio continues to thrive even as content moves to digital platforms.

A recent survey by Media Technology Monitor found that 55% of anglophones and 50% of francophones stream audio content. Most of them, however, appear to be streaming local and out-of-market radio stations. Only 4% of anglophones and 2% of francophones said they stream a Web radio service, and even fewer respondents subscribed to an online radio service.

Not only are Canadians listening to traditional stations, they’re doing so across all platforms. One of the reasons that people like radio so much is that it offers unique local content. News, traffic, weather, sports—this is the type of content that is relevant to listeners. Even as your peers in the U.S. moved to syndicated programming, you never lost sight of the importance of local content.

Our report on the 2011 financial results for the radio sector will be coming out in the next few weeks. The preliminary figures indicate that radio stations across Canada have weathered the economic storm of the last few years.

The intense competition for new licences is another indication of the sector’s health. After taking a pause during the recession, the CRTC has resumed its competitive process:

The availability of content on other platforms is not yet having an impact on your bottom line or diminishing your interest in launching new services. The question is: Will there be a tipping point that will radically change the landscape?

A few years ago, some observers were convinced that the arrival of commercial-free satellite radio would sound the death knell for traditional radio. Obviously, those dire predictions haven’t come true. Those same people are now making similar predictions about in-car streaming. Will they be right this time?

Regardless of the impact new technologies may or may not have on your businesses, you need to be responsive to how Canadians are consuming audio content. You need to establish a market presence before someone else beats you to it. The music industry learnt this lesson the hard way over the last decade.

My message to you today is the following: do not be afraid to innovate in the digital space. The CRTC is staying out of your way. In the analog world, the scarcity of spectrum required the regulator to act as a gatekeeper. There is no shortage of bandwidth or opportunities in the digital environment. It’s up to you to make the most of it.

Procedural improvements

In 2010, we held industry consultations with the radio sector. The stakeholders that participated in the consultations asked us to look for ways to improve and speed up our processes. I’d like to give you an update of the steps we have taken in this direction.

Last year, we adopted converged procedural rules for our public proceedings. As I’m sure you’ve noticed, applications to modify a radio licence are now published for comment on our website almost as soon as they’re received. This has made for a much quicker and more transparent process.

Many of you expressed frustration over our approach to non-compliance. In your view, it was too rigid and, as a result, licensees were being called to hearings over minor infractions. This is another area where we have made an improvement. We now have the flexibility to take into account the severity of the breach and impose appropriate sanctions. For example, there is a difference between submitting your annual returns a few weeks late and not filing them at all.

To learn more about our revised approach, I encourage you to have a look at the information bulletin we published in May 2011 (Broadcasting Information Bulletin CRTC 2011-347).

We have also taken note of your concerns regarding the contributions you are required to make to support Canadian content development. It seems there is some confusion regarding whether certain initiatives qualify, especially when it comes to projects that assist local artists. This problem is compounded by the fact that sometimes it’s not clear from the annual returns if funds were directed to eligible initiatives.

Last December, we proposed solutions to address the current situation. We are currently reviewing the comments we received, with the intention of issuing a decision later this year.

In the coming months, we will continue to explore ideas to simplify our rules. We will also look at whether more services or licensees can be exempted from our rules. If you have any suggestions, I’d be happy to hear them.

Review of the commercial radio policy

I’d like to conclude by telling about our plans for the commercial radio policy, which was last reviewed in 2006. The time has come to see if it needs to be updated.

We are starting the process by looking at the issues that are specific to the French-language market. This became a pressing concern after we found that some stations were skirting our rules on French-language vocal music by airing long montages composed almost exclusively of popular English-language and non-Canadian music. Certain broadcasters also told us that the current quotas for French-language vocal music present a challenge.

In March, we convened the French-language music industry and the commercial radio sector to a symposium in Montreal to discuss the issue. Following this meeting, a working group of representatives from the radio sector and the artistic community was formed to propose solutions.

This will give us a useful starting point for our review of the commercial radio policy as it relates to the French-language market. We hope to launch this review in the coming year.

Once that’s done, we will turn our attention to the English-language market. Let me use this opportunity to ask you: Does the policy need to be reviewed? And if so, does it need to be overhauled? Or would you prefer to make a few adjustments to the existing policy?

Conclusion

At the end of the day, we want you all to succeed so that you can serve your communities and your shareholders to the best of your abilities. Our goal is to establish a playing field where you can develop and promote content for Canadians and international audiences, and provide this content on whatever platforms consumers are using.

What is the best way to achieve this goal? We are interested in hearing your views and your ideas, whether today at the conference or in the future.

Thank you.

 

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