ARCHIVED -  Public Notice CRTC 1986-355

Public Notice

Ottawa, 23 December 1986

Public Notice CRTC 1986-355

REVIEW OF RADIO NETWORKING, SYNDICATION, AND OTHER NEW AUDIO PROGRAM DEVELOPMENTS; REVIEW OF TELEVISION NETWORK POLICY

Related documents: Public Notices CRTC 1986-248 dated 19 September 1986 and CRTC 1986-176 dated 23 July 1986; Decision CRTC 80-704 dated 17 October 1980.

I. INTRODUCTION

In Public Notice CRTC 1986-248 dated 19 September 1986, the Commission issued new Regulations Respecting Radio Broadcasting which govern both AM and FM radio broadcasting. In the new Radio Regulations, 1986 the Commission deleted all previous regulatory provisions for networking, or "Chain Broadcasting", with the exception of the provision which prohibits radio stations from affiliating with a foreign network. At the same time, the Commission implemented a new incentive scheme for the broadcast of certain foreground format programs designed to encourage radio networking and syndication and the production of high quality Canadian programming. The Commission also announced its intention to conduct a review of networking and syndication, which would include the related issue of new satellite-delivered audio services such as pay cable audio and radio superstations.

In Public Notice 1986-176 dated 23 July 1986, the Commission issued for public comment Proposed Regulations Respecting Television Broadcasting. As with the new Radio Regulations, l986 the proposed television regulations delete the existing provisions entitled "Chain Broadcasting", except for the prohibition against licensees entering into an affiliation agreement with a non-Canadian operator.

To assist in the review of radio and television networking and other new audio programming developments, whether in English, French or native languages or for ethnic groups, the Commission invites comments on the issues outlined in this Notice. The Commission will hold a Public Hearing, involving separate discussions of radio and television, beginning 13 April l987 in Hull, Quebec to discuss the comments received. Details concerning the submission of public comments can be found at the end of this Notice.

In keeping with its recent reviews of cable, radio and television regulations, the Commission's primary objective in this examination of network-related issues is to provide a more streamlined and rationalized regulatory framework to meet the objectives of the Broadcasting Act (the Act). In doing so, the Commission will also wish to ensure that the various components of the Canadian broadcasting system remain financially viable, in order to meet the Commission's increased emphasis on Canadian creative resources within the context of a rapidly evolving communications environment.

The Commission wishes to emphasize that this Notice is not a formal call for applications for new network services. Instead, this examination is intended to stimulate discussion on the development of new policies for networking, syndication and other new programming services delivered by satellite or cable, as announced in Public Notice CRTC 1986-248. It will also examine possible incentives for broadcasters, program producers and network operators to provide more diverse and improved radio and television services for Canadians. While this review will pertain to general policy issues associated with both radio and television, some of the television issues have already been examined in conjunction with the licensing of pay and specialty television services and the introduction of distant Canadian television signals and, hence, will not be part of this discussion.

II. BACKGROUND

In Canada, network activity has been subject to regulatory scrutiny virtually from the beginning of radio broadcasting. In 1932, the Canadian Radio Broadcasting Commission (CRBC) enacted a regulation which prohibited the formation of a network, defined as the linking of two or more stations, unless approved by the CRBC. In 1936, the Canadian Broadcasting Corporation (CBC), which had succeed ed the CRBC as both the regulatory authority and the public broadcaster, enacted a regulation which prohibited affiliation with non-Canadian network operators. In 1961, following a lengthy public review process, the Board of Broadcast Governors (BBG), which succeeded the CBC as the regulatory authority, passed networking regulations that were identical for both radio and television. Indeed, these regulations have governed radio and television broadcasting for twenty-five years, until the Commission's review of the radio and television regulations this year.

Historically, the regulatory concern for networking has resulted from the special circumstances affecting broadcasting in Canada. In the l920's, proponents of an independent Canadian broadcasting system feared the cultural and industrial consequences of the broadcasting of lower-cost programs acquired from non-Canadian sources; at the time a number of Canadian radio stations were moving toward affiliation with the major U.S. broadcasting companies. Furthermore, as the CBC was developing its national networks, the formation of private networks was viewed as a duplication of and a threat to the CBC. It was also believed that networking would reduce the ability and responsibility of licensees to fulfill the programming and information needs of local communities. In addition, there was a fundamental concern about the potential power and influence accorded to individuals capable of reaching large segments of the population through broadcast networks, and safeguards to ensure accountability to the public were advocated. At the same time, local licensees recognized that it was in their best interests that program suppliers be held responsible for the content of programming over which the local licensee could exercise no effective control.

III. CURRENT ENVIRONMENT

A central tenet of the Commission's approach to the licensing of local radio and television stations is the responsibility of licensees to provide local service to their communities. To this end, the Commission has sought to ensure that local stations broadcast programming of direct relevance to their communities.

At the same time, the Commission has recognized the benefits that may accrue to local licensees and their respective communities from programming acquired from other sources. Indeed, network and syndicated programming provide listeners and viewers with a variety of high quality information and entertainment programming that would not otherwise be available. For local stations, the production and entertainment values of acquired programming can help to strengthen their position in an increasingly competitive environment, while the greater cost efficiency of such programming can serve to improve a station's overall financial position.

In terms of syndication, particularly with respect to radio, the amount and variety of programming is growing as program distributors realize the cost-efficiency of satellite transmission compared to the traditional method of duplicating, packaging and bicycling tapes. As with television, satellite transmission is also facilitating the creation of new satellite-to-cable audio developments such as pay cable audio specialty channels, radio superstations, and possibly direct-to-home audio services.

Indeed, networking via satellite is being used extensively in the North by recently-licensed native communications associations to provide service to native communities.

These recent advances in the efficiency and application of new distribution technologies are creating new opportunities for radio and television broadcasters, but they also present significant new challenges to the structure of broadcasting and to the Commission's regulatory approach to network and syndication activity, and to the development of new programming services. For example, while the use of satellite transmission and networking can increase the ability of local stations to provide high quality programming and may enhance stations' financial viability, it can also lead to uniformity in programming at the expense of diversity and of local programming. An other concern relates to the use of satellite transmission in program syndication which may transform the program distributor into a network operator whether or not that is the distributor's intention. Consequently, program distributors are unsure whether their distribution arrange ments with stations fall within the definition of a network as outlined in the Act.

In order for the Commission to develop comprehensive policies with respect to radio and television networking and syndication, coupled with new audio programming services, and to establish an appropriate regulatory framework for development, it is necessary to identify the objectives to be met by these services in the Canadian broadcasting system. It is therefore useful to examine a number of issues which arise from the Commission's mandate in the Act. For purposes of discussion, the central policy issues are identified within the following broad contexts:

i) the statutory requirements of the Act relating to networks,

ii) syndicated radio services,

iii) the introduction of new audio services, and

iv) other concerns.

The Commission invites comments from interested parties on the issues set out below, as well as on other matters relevant to radio and television networking, radio program syndication and new audio services. It is to be noted that the second, third and fourth sections relate to radio only.

IV. ISSUES

l) Statutory Requirement (Radio and Television)

a) Delegation of Control

The Act requires the Commission to licence networks. A network is defined as including:

any operation involving two or more broadcasting undertakings whereby control over all or any part of the programs or program schedules of any of the broadcasting undertakings involved in the operation is delegated to a network operator.

To determine the existence of delegation of control to a network operation and the need for a network licence, the Commission has applied several criteria. These include the existence of affiliation agreements, network reserved time commitments, simultaneous program delivery, and the exercise of any editorial or similar control on programming or its scheduling. In some circumstances, the Commission has determined the control of a program or program schedule has been delegated on a de facto rather than a contractual basis. In other situations, the Commission has not issued a network licence but instead has authorized the local live broadcast of acquired programming.

To ensure clarity, cohesion and equity in its regulatory approach, the Commission wishes to review the criteria for defining and licensing a network operation. To this end, a number of questions arise:

. What criteria should be used to determine the existence of delegation of control for the purposes of distinguishing between network and non-network operations?

. What are the implications of tape delay with respect to "delegation of control" and the definition of a network?

. Should the Commission give consideration to other criteria in determining the existence of a network operator?

. Under what circumstances does the retransmission of broadcast signals constitute a network activity?

b) Role of Networks

The Act requires that the Commission's regulation and supervision of the broadcasting system be flexible to technological change. The use of satellites has facilitated the delivery of non-local programming. In radio, the local licensee has been the major producer of programming while in television, networks have played a more significant role.

. What obligations to the Canadian broadcasting system might be expected of networks in terms of:

- complementing the locally-produced programming of affiliates,

- the quality and variety of programming,

- the deployment of Canadian talent and resources,

- using local programming of affiliates,

- the ability of local stations to pre-empt network programming.

. Should these obligations vary depending on the size or reach of the network?

. Will the development of networks, particularly in radio, change the role of the local station?

. Should policies or regulations for networks be the same for "overnight" periods (midnight to 6:00 a.m.) to reflect their limited audience and service functions?

. Should Canadian news programming services be considered as distinct from other types of distributed programming?

c) Regulatory Framework

The objectives of the Act can be met either through the Commission's regulation and supervision of network programming at the network level, with the local broadcaster, or both.

. What kind of regulatory approach is most appropriate for each of radio and television to ensure that obligations for network operators are fulfilled? More specifically, should the Commission issue general policies, regulations or conditions of licence for network operators; or at the level of the local licensee, regulations or conditions of licence concerning the amount of locally-produced programming, acquired programming and non-Canadian programming?

. How do current regulatory requirements, such as those relating to Canadian content, foreground programming and commercial content, influence local stations in their acquisition of network and syndicated programming?

d) Licensing Process

The formation of networks, particularly with regard to arrangements for affiliation, acquisition of programming and contracts for satellite distribution sometimes occur at short notice. Some operators have expressed concern that the licensing process has seriously constrained the formation and expansion of networks.

. How could the Commission's public notice process be more effective in terms of applications to implement new network operations or to amend existing ones?

. What are the costs and benefits of holding a network licence, in relation to non-licensed services?

. To what extent do the statutory limitations on temporary networks conflict with current industry practices for network programs of limited duration?

. What are the effects of licensing network operators to distribute a schedule of programs as opposed to authorizing the distribution of individual programs?

2) Syndicated Services (Radio only)

Satellite transmission has facilitated unprecedented growth in syndicated programming services. Increasingly, broadcasters have available to them a wide variety of affordable, high quality programming, either on a cash, barter or cash-and-barter basis. In addition, many non-Canadian syndicated services are distributed in Canada by Canadian distributors. While syndicated services are not required to hold broadcast licences, and therefore not subject to statutory requirements, they do in some cases resemble networks in structure, form and delivery.

. Given that some network and syndication services are being consolidated, should they continue to be regarded as separate entities?

. At what point should a syndicated service be considered a network?

. Is it a valid policy objective to require syndicated services to contribute to the objectives of the Canadian broadcasting system as a quid pro quo for access to that system? If so, what contributions should be expected of syndicators?

. Is the cross-subsidization of Canadian syndicated program productions by revenues derived from the distribution of non-Canadian services an acceptable trade-off? To what extent?

. Should individual stations and networks be encouraged to support the work of independent program producers? If so, what regulatory initiatives or incentives should be implemented?

. What is the cultural and economic impact of non-Canadian syndicated programming on Canadian broadcasting and Canadian program producers?

3. New Audio Services (Radio only)

As new communications technology transforms the traditional structure and role of conventional networks and syndication, it is also giving birth to a variety of new services. Indeed, the increasing use of satellites for the delivery of programming, combined with the ability of cable systems to distribute new services, bodes well for the development and success of greater listener and viewer choice. The distribution of distant Canadian broadcast signals, either by satellite-to-cable or over-the-air retransmission, the introduction of pay specialty audio channels and cable-originated audio programming channels are examples of new programming concepts.

The Commission has developed policies, regulations and guidelines for the introduction of new television programming channels and for the extension of services. Unlike the television experience, however, parallel developments in the field of audio programming have been slower in materializing. Currently, the Commission's Cable Television Regulations, l986 set out conditions for the cable carriage of local and non-local Canadian radio signals on a priority basis, and for the carriage of non-Canadian radio signals. The Canadian Satellite Communications Inc. (CANCOM) has been authorized by the Commission to distribute the signals of a number of Canadian television and radio stations.

With respect to such services as the extension or carriage of existing radio signals via satellite, cable-originated services, and the satellite distribution of specialty audio programming services on the FM cable band, a number of issues must be considered:

. the potential demand for these services;

. conditions for the extension of over-the-air radio signals; - should such stations take on additional programming requirements to reflect the extended service market?

- what impact would the extension of service have on the ability of the station to provide relevant programming to the community which the station was originally licensed to serve?

. the impact of the existing carriage of audio services on the FM cable band;

. the impact of the existing technical quality of the FM cable band on the launch of new audio services;

. options for the financing of new services by subscriber or advertising revenues, or other means;

. the contributions of new programming services to further the aims and objectives of the Act, in terms of increased diversity of programming, enhanced quality and distinction of Canadian programs, and increased access for Canadian talent;

. the impact of such new services on existing services and the balance between Canadian and foreign specialty programming services distributed in Canada;

. the particularities of the development and distribution of new French-language services.

4. Other Issues (Radio only)

Several other issues relating to networking and syndication are relevant to the development of a regulatory framework. These include the following:

. additional incentives that could be implemented to encourage the production of high quality syndicated programs in a variety of formats, as set out in Public Notice CRTC l986-248;

. the potential impact of various incompatible satellite distribution systems on the development of new and expanded programming opportunities;

. measures to assist in the production and distribution of network and syndicated programming for both the French-language and English-language markets;

. the potential impact of the Department of Communication's "Sound Recording Development Program" on the independent program production sector of the broadcast industry, as it relates to syndication and networking.

V. SUBMISSION OF PUBLIC COMMENTS

As noted earlier, the Commission invites comments from interested parties on the issues of radio and television networking, syndication and other new developments for programming distribution as indicated above. Comments should be submitted on or before 20 February 1987 indicating clearly whether they apply to radio or to television. A Public Hearing will be held in Hull, Quebec at Phase IV, Place du Portage begin ning 13 April 1987 to discuss the comments received. Written comments should be addressed as follows: Secretary General, CRTC, Ottawa, Ontario, K1A 0N2.

Fernand Bélisle Secretary General