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

To the Annual Conference of the Western Association of Broadcasters

Banff, Alberta
June 14, 2012

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Thank you for inviting me back to your annual conference and for making me feel so at home here in Alberta. Everything everyone says about western hospitality is true.

When I last spoke to your group a year ago, I was the new kid on the block at the Canadian Radio-television and Telecommunications Commission (CRTC). I’ve learned a lot—and a lot has happened—at the Commission since then.

Before I do, I want to stress that, for all the changes that have taken place over the past 12 months, my fundamental philosophy remains the same.

I am not here to tell you how to run your business. As long as you are being proud Canadian broadcasters and meeting your regulatory obligations, the CRTC has no business being involved in your day-to-day affairs.

If it ain’t broke, we won’t try to fix it. Of course, if our framework is broken, we want to hear from you.

Local radio

Listening to you is one of the important parts of my job. And last year I heard, loud and clear, your concerns about the impacts of new media on your businesses.

There is no question we are living in an increasingly connected world. Media content is migrating online and to mobile devices. Innovative services are giving Canadians access to this content, whether video or audio.

But this isn’t cause for alarm. Guess what Canadians are listening to on the Web? Your stations! Even if people are listening online, many continue to tune in to their local radio stations.

I’m a perfect example. No matter where I am, I still listen to talk radio out of Montreal.

There’s a reason for that: it’s because it is a source of unique content. Local news, local traffic, local weather and sports—content that is relevant to your listeners.

Recent revenue trends are further grounds for optimism. Ten days ago, we released our report on the 2011 financial results for the radio sector. The commercial sector enjoyed another strong year, with total revenues increasing to $1.6 billion and pre-tax profits crossing the $300-million mark for the first time since 2008.

In fact, stations here in the West did especially well. Stations in Manitoba, Saskatchewan and Alberta were responsible for $418.7 million of the total revenues. That’s no mean feat when you consider that the economic recovery in Canada remains fragile.

The intense competition for new licences is yet another indication of the sector’s health. Earlier this year, we held a public hearing in Calgary and granted two new FM licences to serve that market.

At the end of April, we announced a call for applications for the Winnipeg market. I should point out that the deadline for applications is July 9th for those who may be interested.

I would also note that the Canadian Broadcasting Corporation’s application for permission to air ads on Radio 2 and Espace musique will be considered as part of its licence renewal hearing. The hearing is scheduled to start on November 19th. It’s important that you make your views about this issue known to us. We’ll be publishing a revised notice of consultation, so keep watching our website for dates and deadlines.

And, while you’re at it, check out our Twitter accounts: @CRTCeng and @CRTCfra.

Procedural improvements

We also want to hear from you about how we can speed up and improve our processes. We’ve already started. You’ve likely noticed that applications to modify a radio licence are now published for comment on our website almost as soon as they’re received.

We’ve also made changes to the way we deal with non-compliance, something I talked about last year. Understanding that time is money, we now take a much more flexible approach, factoring in the severity of the breach and imposing appropriate sanctions. We won’t be calling anybody to a public hearing over minor incidents.

The hearing next week in Gatineau is a good example of this approach. We’ll be examining nine cases of apparent non-compliance with the Radio Regulationsor certain conditions of their licence. For some of them, it is the third time that they find themselves in this situation.

Another issue where we would like your input is simplifying the administration of contributions radio stations make to Canadian content development.

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

We will continue to explore ways to simplify our rules and look at whether more services or licensees can be exempted from them. We are actively seeking solutions. That’s where you come in. If you have any suggestions, I want to hear them.

One thing I will say is that I see Canadian content as a prime opportunity to demonstrate your sector’s leadership—the theme of this conference.

Radio stations have a vital role to play in defining and preserving Canadian culture and identity by supporting Canadian content. Every time you help to launch the careers of new Canadian artists, you also help to create a feeling of pride in being Canadian.

Think of how we feel when  Shania Twain performs at the Super Bowl, Arcade Fire backs up Mick Jagger on Saturday Night Live, Michael Bublé wins a Grammy or Saskatchewan’s own Sheepdogs are on the cover of Rolling Stone.

What a great industry you’re in. It’s really a win-win. You support Canadian artists and promote Canadiana around the world. That’s an excellent by-product of using the public airwaves for private profit.

If you are passionate about promoting and producing Canadian talent, opening doors to young people entering the music business, you will have our unqualified support.

Radio policies

One last item on the subject of radio is the Commission’s review of the commercial radio policy. It’s almost six years old now—a long time in today’s fast changing environment.

We will start by looking at issues specific to the French-language market. We hope to launch this review in the coming year. Once that’s completed, we will move to the English-language market.

Again, we are seeking your input on this issue. Tell us what you think about the policy. Do we need to do a complete overhaul or would you prefer just to make a few adjustments?

We are also planning to review the ethnic radio policy.

Local TV

I also want to talk, briefly, about local television.

In many ways, the story is similar to radio: advertising revenues were hurt by the recession, especially in smaller markets, and sales are only starting to rebound.

However, the financial results for 2011 indicate higher advertising revenues for local and national sales. That’s positive news and, hopefully, suggests a return to better days.

Also encouraging is the fact that companies like Rogers is looking to make strategic investments in conventional television. In addition, Rogers recently signed an affiliate agreement with the Jim Pattison Broadcast Group that will give Citytv access to three new markets in Western Canada, including Medicine Hat.

Digital platforms

Broadcasters are worried about threats from new competition, such as over-the-top (OTT) programming services. Again, the facts don’t substantiate the concern—at least not to this point.

The Commission has been monitoring OTT. All evidence indicates that it’s complementary to Canada’s traditional licensed broadcasting system.

Some countries are capitalizing on the potential of the new digital platforms, recognizing their potential to reach new audiences. For example, radio stations in the U.K. have joined forces to create a one-stop shop for Web radio broadcasts. It’s called Radio Player and they promote it as “UK radio in one place.” Check it out at www.radioplayer.co.uk.

Think of the possibilities for Canada, creating a single website for radio stations from coast to coast. This is the kind of innovation Canadian broadcasters need to stay competitive in today’s technology-driven world.

Even if you can’t get everybody on-board, the Western Association of Broadcasters already works as a team on multiple fronts. And we know that Westerners are both innovative and enterprising. Maybe you should take it on.

Or, better yet, pioneer something entirely revolutionary in this country. Because the eventual migration to digital media is inevitable and you need to find ways to monetize these platforms.

Technological convergence and corporate consolidation have completely changed the landscape. And the reality is that there are very few—if any—frequencies left in major markets.

As business people, I am sure you recognize this is an opportunity more than a challenge.

The importance of broadcasting

Certainly, that’s how we see it at the CRTC. That’s also why we are determined to keep our hands off decisions that belong to businesses—as long as you fulfill your end of the regulatory bargain.

A prime example of this philosophy is our recent French-language television licence renewals. Over the past three years, TVA invested an average of 45% of its gross annual revenues in Canadian programs. Given its track record, we felt justified in giving TVA more flexibility.

The Commission understands that a less dogmatic approach to regulation enables both the business and creative communities to take advantage of innovation.

We want to oxygenate the system, not smother creativity and innovation. Our role is to create an environment conducive to innovation so creative people can try out new ideas and introduce innovative programs and business models.

After all, those of you creating, producing, broadcasting and distributing the programming are in the best position to know what consumers and your shareholders want and your local advertisers demand.

It's essential that the broadcasting industry is prosperous and profitable. Profitability is good for shareholders, of course. But profitability is equally good for the artistic community and the broadcasting systems as a whole.

Because it provides the resources that allow broadcasting to support the social, cultural, educational and economic imperatives that are so important to Canadians.

Conclusion

In conclusion, micro-management should be left to people who have their money and their shareholders' money on the line. It's the CRTC's job to create the framework that ensures the overall aims of the Broadcasting Act are satisfied.

Within that framework, you should have creative licence to make programming that Canadians want to hear and see—and make money in the process.

I am confident that you will make the right choices as you make a successful transition to the future. I have no doubt your industry will adapt to a rapidly evolving environment and carry on its tradition of impressive profitability.

I wish you every success as you do.

Thank you.

 

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