ARCHIVED -  Decision CRTC 91-423

Decision

Ottawa, 28 June 1991

Decision CRTC 91-423

Canadian Broadcasting Corporation

Toronto, Ontario; Goose Bay and Labrador City, Newfoundland; Calgary, Alberta; Saskatoon, Saskatchewan; Windsor, Ontario; Fermont, Matane, Rimouski and Sept-Îles, Quebec; Corner Brook and Labrador City, Newfoundland; and, Sydney, Nova Scotia - 910064500 - 910070200 - 910071000 - 910061100 - 910062900 - 910063700 - 910082700 - 910066000 - 910065200 - 910067800 - 910069400 - 910081900 - 910068600

Pages

Table of Contents

Background

The Commission's Findings

1. CBC Funding

2. The CBC's Principles and Priorities

3. The CBC's Programming Plans

4. The Regional Programming Concept

5. The Elimination of Local Programming

6. Local Advertising

7. The Commission's Conclusions and its Decision with Respect to the CBC's Applications.

Dissent by Commissionner Paul McRae

Appendix

Background

On 5 December 1990, the Board of Directors of the Canadian Broadcasting Corporation announced its intention to implement, effective immediately, various reductions in service and other measures intended to address an estimated budget shortfall of approximately $108 million for the fiscal year commencing 1 April 1991. The CBC stated that it was:

i) restructuring the Corporation's English- and French-language television services;

ii) downgrading three originating, local television stations to the status of rebroadcasters;

iii) converting eight others to the status of journalistic bureaus (subsequently, the CBC decided to convert three of the eight contributing bureaus to rebroadcasters); and,

iv) cancelling all non-news programming at each CBC owned-and-operated station across the country, representing, according to the CBC, the loss of more than 110 hours per week of local and regional television production, and reducing by approximately 1,100 the number of persons working for the Corporation, effective 5 April 1991.

The Corporation also announced that it could no longer bear the cost of operating the Parliamentary Channels and the international shortwave radio service Radio Canada International (RCI). The Commission notes in this regard that the Speaker of the House of Commons has since announced that his office would provide funds to ensure continuation of a modified Parliamentary service. With respect to RCI, the Department of External Affairs has committed funds to ensure the continuation of a more limited international shortwave service.

On 14 December 1990, the Chairman of the CRTC wrote the President of the CBC to express the Commission's concern that the actions taken by the CBC appeared to contravene certain terms and conditions of the Corporation's broadcasting licences, Commission expectations as expressed in previous decisions, and commitments the CBC had made in Promises of Performance for individual television stations. In light of the Commission's policy, the CBC was asked to comment on its plans regarding local advertising in those markets where it would no longer be providing local programming. Further, the letter raised several general questions
concerning the CBC's perception of its role in the Canadian broadcasting system and in the lives of Canadians.

The CRTC requested the CBC to file applications for the appropriate licence amendments and to provide the Commission, by 11 January 1991, with a detailed report on the impact of the announced service reductions on expectations attached to the licences of the CBC networks and individual television stations.

The CBC'S reply dated 11 January 1991 noted that the Corporation had not yet completed its expenditure analysis for each of the individual stations, and that the financial information pertaining to the CBC's programming commitments would be completed in February. The Corporation attached a summary explaining the revised programming role for each CBC owned-and-operated television station, lists of cancelled programs, and requests to amend the existing Promises of Performance in those instances where the amount of local origination would be less than the CBC had previously committed to provide.

In order to expedite the regulatory process, the Commission deemed this material to constitute applications to amend the licences for the stations where all local programming had ceased. The Corporation subsequently agreed to this process.

On 25 January 1991, following consideration of the CBC's response, the Commission issued CRTC - Notice of Public Hearing 1991-3 which announced a hearing commencing 18 March in the National Capital Region to discuss with the CBC and other interested parties the issues arising from the CBC's service reductions and the related licence amendments.

While the Commission recognizes that opportunities for greater public participation might have been possible if hearings had been held in the communities most affected by the CBC's budget cuts, the Commission determined that it was in the public interest to deal with the CBC's restructuring proposals as expeditiously as possible. Given the Commission's schedule, an early, single hearing in the National Capital Region was considered most appropriate. The Notice of Public Hearing indicated that the CRTC intended to review:

i) the changes requested by the CBC in light of the Corporation's mandate, its existing resources and potential further budget reductions;

ii) the CBC's position that "the public interest justifies exemption from the strict application of the [Commission's] local advertising policy"; and,

iii) the changes the CBC was seeking to make with respect to its Promises of Performance and the applications to amend its licences.

The Commission received a total of 213 written interventions. Seventy-five interveners asked to appear at the hearing.

The Commission's Findings

The findings set out below represent the views of a majority of the Commission with respect to the issues arising from the CBC's service reductions, addressed in the following order:

1.CBC Funding

2. The CBC's Principles and Priorities

3. The CBC's Programming Plans

4. The Regional Programming Concept

5. The Elimination of Local Programming

6. Local Advertising

1.  CBC Funding

The CBC attributed the $108 million budget shortfall announced on 5 December 1990 to the following:

. the ongoing impact of the $50 million expenditure reduction program announced in April 1989 ($32 million);

. inflationary increases in the cost of goods and services not met by Parliamentary appropriation ($18 million);

. declining television advertising revenues ($30 million);

. CBC pension fund contributions ($12 million); and,

. unavoidable new costs of maintaining existing operations, including taxes and expenditures related to employment equity and adherence to other statutory requirements such as health, safety and building standards ($16 million).

The CBC stated that it intended to make up for the projected budget shortfall in 1991/92 by savings realized through:

. cuts to the budget for regional television services ($46 million);

. cuts to network television service (a 2% overall reduction yielding a saving of $12 million); . cancellation of the Parliamentary television services ($5 million);

. cancellation of the RCI service and a 1% overall reduction in the domestic radio service budget ($20 million);

. reductions in non-programming expenditures ($7 million); and,

. increased revenues and further savings, including consolidation of certain radio and television operational expenditures ($18 million).

Although the financial information is based on the restructuring plans and indicates a balanced budget for the 1991/92 fiscal year, the CBC's President, Mr. Veilleux, remarked at the hearing that the Corporation faces a potential shortfall of more than $50 million for the 1992/93 fiscal year. The Commission notes that the updated financial projections provided by the Corporation indicate future budget shortfalls of even greater magnitude.

The CBC's revenues are drawn from its Parliamentary appropriation, which has remained essentially static in constant dollars since 1984, and advertising revenue, which grew markedly in the past decade due to the Corporation's increasing reliance on this source of revenue to finance its operations. At the hearing, the CBC commented on its expectations for future growth from each of these sources. While the CBC does not rule out the possibility that Parliament may provide it with some protection against inflation, the Corporation indicated that it cannot rely on any significant increase in its Parliamentary funding within the foreseeable future.

The President of the CBC pointed out at the hearing that the CBC's capacity to deal with a revenue shortfall is severely hampered by its statutory framework. According to the Corporation's President:

 We cannot have a fixed mandate, on the one hand, and yet have our funding and financing dependent on the exigencies of fiscal policies or other political requirements or the vagaries of the market.... We cannot smooth the bumps and the highs and the lows in the market, unlike the private sector. Because the CBC, by statute, cannot borrow one single penny; nor can it have a deficit.

The President emphasized that the CBC's financial difficulties are compounded because the additional costs associated with downsizing have been only partially compensated by Parliament.

Many of the individuals, organizations and other interested parties who commented specifically on the subject of CBC funding also expressed the view that Parliament should provide sufficient, guaranteed, long-term financial support to enable the Corporation to fulfil its mandated responsibilities. The CBC, too, called upon the Commission to endorse its request for multi-year funding from Parliament. With respect to its television advertising revenues, the CBC stated that it does not forecast any appreciable growth until 1993/94. After a period of fairly steady increases in the CBC's television advertising revenues in the seven years prior to 1989, from 17.6% of the operating budget in 1982 to 26.3% in 1988, the CBC has not achieved its projected commercial revenues in the past two years.

In discussing increasing commercial revenues as an alternative means of resolving the CBC's financial difficulties, Mr. Veilleux firmly rejected the possibility of recommercializing the CBC's radio services or increasing its commercial availabilities on television. He expressed the view that an increased dependence on commercial revenues is counterproductive "as the market softens and competition increases".

Indeed, the Corporation acknowledged in its 11 January 1991 letter that the CBC "is reaching, or has reached, the upper limit to which the national broadcaster should be dependent on commercial revenue."

The CBC's perception that an increase in its reliance on advertising revenues could be harmful was supported by most private broadcasters, particularly by the licensees of French-language television stations in Quebec.

A majority of the Commission acknowledges that the Corporation's financial circumstances required changes in the Corporation's operations in order to satisfy its mandate. The CBC argued at the hearing that any change to its existing revenue structure, or to any other aspect of its proposed restructuring plan, whether brought about by the vagaries of the marketplace, by further government cuts, or by Commission directive, could render it impossible for the CBC to discharge its mandate.

Nevertheless, despite repeated requests from the Commission that the CBC elaborate on its future plans, the Corporation was unwilling to provide any firm indication as to how it proposes to cope with the projected shortfalls in 1992/93 and beyond.

In the Commission's view, the Corporation's argument that its restructuring plan is inviolable, and that a change to any part of it would endanger the whole, is unacceptably inflexible. It is particularly difficult to support in light of the Corporation's acknowledgement that it is facing a shortfall of more than $50 million for the 1992/93 fiscal year, and is projecting greater budget shortfalls in succeeding years, while failing to explain how it will cope with these shortfalls.

A majority of the Commission concurs with the Corporation's conclusion that increased dependence upon commercial revenue could be harmful both for the CBC and for the broadcasting system as a whole. Nevertheless, the Commission considers it contradictory that the CBC, while seeking CRTC endorsement for a stable funding base, was not prepared to discuss a realistic strategy to deal with its significant, ongoing budgetary deficits. While the Commission reiterates its longstanding support of the CBC's request for stable, multi-year funding, and considers that a minimum period of three years would be reasonable in this regard, it expects the Corporation to formulate long-term plans based on the principles and priorities it has established. The Commission hereby advises the Corporation that these matters will be an essential element of the upcoming renewal of the CBC's television network licences.

2. The CBC's Principles and Priorities

At the hearing, the CBC President identified five principles that will shape the Corporation's programming agenda for the 1990's:

. a CBC that offers strong national services rooted in the regions of the country;

. a CBC that is an essential public service. Its programming is distinctive and relevant. It demonstrates the highest possible standards of quality, creativity and integrity. It meets needs that are not met elsewhere and its services are accessible in all parts of the country;

. a CBC that is valued by all Canadians. It offers a wide range of programming. It is not a mere alternative, designed to fill in the gaps left by other broadcasters. It is in the mainstream, not the margin, of the Canadian broadcasting system; . a CBC that is predominantly and distinctively Canadian. Ideally, it is almost entirely Canadian, supplemented by the best the rest of the world has to offer; and,

. a CBC that has a stable, predictable financial base so that it can effectively discharge its responsibilities to Canadians and be accountable for its trusteeship of public funds.

The Commission is satisfied that these principles are generally consistent with the Corporation's
mandate and appropriate to the current broadcast environment.

Based upon these principles, the Corporation has established four programming priorities:

. the maintenance of strong, complementary national networks in radio and television. In television, the CBC will emphasize Canadian content, and quality programming. The English- and French-language services will co-operate more closely;

. a more focused and distinctive role for regional television with redesigned supperhour news and information programs and an expanded network of journalistic bureaus;

. an inter-regional emphasis that will provide Canadians in various parts of the country with "a forum for the exchange of views and the enhancement of understanding"; and,
. local television service to be provided "as part of the new regional and inter-regional responsibilities." The CBC intends to continue providing regional/ local service on radio.

A majority of the Commission considers the four programming priorities identified by the Corporation and the ranking the CBC has given them to be consistent with the Corporation's mandate. Nevertheless, the Commission has a number of concerns with respect to the ultimate impact of these priorities upon the television network schedules and upon the individual owned-and-operated stations. How the Corporation implements these priorities will clearly affect the quality of service it provides to Canadians in all parts of the country.

3. The CBC's Programming Plans

The CBC acknowledged that its response to the budgetary situation in December 1990 represents a restructuring of the traditional manner in which the Corporation has delivered its services.

At the hearing, the CBC outlined in some detail its revised programming plans for the French- and English-language television services.

With respect to the French-language network service, Canadian content in peak viewing hours (7:00 p.m. - 11:00 p.m.) will reach 95% by the fall of 1991. The CBC also committed to establish a new program development fund, of which 20% will be allocated to regional productions.

The participation of regional stations in network programming will increase by more than 60%, from 339 hours in 1989-90 to 551 hours in 1991-92. This will be achieved through increased regional participation in existing network programs as well as through the addition of a new weekday public affairs magazine show to be produced in Quebec City. The network will establish new production crews in each of Vancouver, Edmonton, Regina and Winnipeg. In addition, the morning news and information program "Première Édition" will be extended by half an hour. It will be produced by regional crews co-ordinated by CBOFT Ottawa. Two of the regional early evening news programs will reflect larger coverage areas. The Quebec City newscast will broadcast items contributed by five bureaus located in eastern Quebec. The program from CBOFT Ottawa will include material prepared by bureaus in four other Ontario locations.

The Commission endorses the Corporation's plans to increase both its Canadian content and the contributions of regional stations to the French-language television network service.

With respect to the English-language television network, the Corporation announced that by September 1991 Canadian content will increase from the current level of 84% in peak viewing hours to 91%. This will be achieved by replacing two hours per week of foreign drama programming with a new half-hour, weekday network news and public affairs program entitled "Newsmagazine". This program, to be scheduled between 7:00 and 7:30 p.m., will include a national newscast followed by topical, magazine-style stories from the regions. The CBC also announced that it will hire three national reporters and crews to be located in Saskatchewan, the North and Quebec City, with the possibility of a fourth reporter to be allocated as required.

The CBC maintains that by utilizing bureaus, stringers and improved technology, the new supperhour programs will be "the primary way in which the provincial community shares its experiences and debates its future". The English-language supperhour news programs and their late-night counterparts will be redeveloped with a provincial focus. Each province will have one supperhour program with the exception of Ontario and Quebec, which will have two. The Yukon and the Northwest Territories will remain without any regional television news unless the Corporation receives additional funds for this purpose.

The CBC proposed to simulcast on the English-language television network the morning news programming of the CBC's specialty programming service, Newsworld. The program is being broadcast live from 7:00 to 9:00 a.m. on weekdays in each region of the country. According to the Corporation, the program is provided under contract by Newsworld. The contract price is based upon the commercial revenues generated by broadcasting the program on the English-language television network. The changes to the English-language schedule will result in an increase in regional programming on the network from the existing average of 22 hours per week to 35 hours per week in 1991/92 representing 39% of the network schedule.

While commending the CBC on surpassing, by an average of three hours per week, the expectation with respect to Canadian content set for the English-language television service in the most recent licence renewal decision, the Commission is concerned that the schedule of the English-language television network not become dominated by news and information programming to the extent that such programming impinges upon the CBC's ability to achieve a balanced programming service.

Clearly, the high cost of original Canadian entertainment programming, particularly drama, is the major reason for the CBC's decision to offer more information programming. According to the Corporation, the cost of replacing the last two and a half hours of foreign drama in peak viewing hours with comparable in-house dramatic programming could amount to as much as $70 million.

Nevertheless, the Commission considers that, in view of the high level of television news and information programming that the CBC plans to offer by September 1991, and taking into account the amount of news and information programming on Newsworld, it would be inappropriate for the Corporation to add more news and information programs to its English-language television network schedule beyond the level proposed. The Commission intends to discuss the diversity and range of the programming offered by the English-language television network at the upcoming licence renewal hearing.

At the 18 March hearing, the CBC provided few details regarding the orientation of its provincial supperhour news and public affairs programs. Subsequently, it filed with the Commission the objectives that have been established for these programs. The Commission notes the Corporation's intent to give the programs a provincial focus and considers that such a plan may provide viewers with a valuable perspective on news and public affairs.

The Commission will review in detail the development of the provincial supperhour shows, the additional English- and French-language network programs and the regional programs proposed for inclusion in the schedule of the French-language television service, at the appropriate licence renewal hearings.

The CBC's decision to simulcast on the English-language television network a total of ten hours per week of Newsworld programming is of considerable concern to the Commission. While this activity may not contravene the specific terms of the Newsworld licence, the Commission notes that the simulcasting of regularly-scheduled programming on the main network was not contemplated at the time the specialty service was licensed. Since the contract price for this programming is based upon the commercial revenues generated by broadcasting the program on the English-language television network, the question of cross-subsidization is raised. With respect to this issue, Decision CRTC 87-904 licensing Newsworld stated that:

 In establishing a licence term of three years for the CBC's proposed news and information specialty service, the Commission has determined that this period will enable the CRTC and the Canadian public to assess the degree of implementation of the service as well as the effectiveness of the cost separation measures taken to prevent any cross-subsidization by the existing services.

Accordingly, the Commission intends to examine the impact of this type of programming arrangement in more detail at the time it considers the renewal of the Newsworld licence and at the upcoming renewal of the CBC's television network licences.

Finally, the Commission finds the CBC's lack of specific plans to close caption the supperhour news programs to be of concern. While noting the CBC's commitment to install telecommunications devices for the deaf (TDDs) beginning in April 1991, the Commission considers that the provision of close captioned headlines and scripted portions of the supperhour newscasts is a reasonable minimum requirement of the national broadcasting service. Accordingly, the Commission expects the Corporation to provide such service at each owned-and-operated television station during the current licence term. These concerns noted, the Commission, by a majority, finds that the CBC's plans are consistent with its programming priorities. It will protect network services. Regional and inter-regional program priorities will be achieved, to some degree, through provincial information programs and through programs produced in the regions for broadcast on the networks. Reflection of local concerns will remain a significant priority for radio, but will be realized on television to a lesser degree, essentially through the insertion of news items into regional and network productions.

During the hearing, the Corporation emphasized that many aspects of its new programming plans would not be in place until September 1991. In essence, the Corporation is asking the Canadian public and the CRTC to trust that the CBC will ensure that the abstract principles and priorities it has identified will be fully realized in its programming.

The Commission has strong concerns on this point. Specifically, the Commission is not convinced that the CBC's new program plans can be realized if there are any further budget reductions. In the Commission's view, this reinforces the need for the CBC to prepare long-term strategic plans based upon a realistic appraisal of its financial situation.

Apart from the decision to eliminate local programming at 11 stations, the most controversial aspect of the CBC's new programming strategy is the concept of "regional programming". In the 5 December announcement of its service reductions, the CBC described its intention to reorganize its regional television operations on the basis of not more than one English- and one French-language regional television station per province, plus the respective network television production centres in Toronto and Montréal. Stations not designated as regional production centres would be downgraded to news bureaus or to retransmitters. Further, it was stated that regional production at the remaining stations would be curtailed to daily regional news and information programming. All other local and regional shows would be cancelled, although current network production activity would continue.

By September 1991, the CBC will have 12 originating English-language television stations (including Toronto) and 9 French-language originating stations. These stations will be supplemented by a total of 9 English- and 15 French-language television bureaus. In addition, the CBC will maintain the ability to draw upon the journalistic and production resources of its 23 English-language and 5 French-language private affiliates, as well as journalists associated with the CBC radio services.

The CBC intends, when resources permit, to open additional journalistic bureaus in communities that have never before had a permanent CBC television presence. The Corporation estimated that full implementation of this plan would cost an additional $10 million. The Commission is aware of the deeply-held views of interveners representing individual communities, regions, as well as entire provinces and territories who appeared at the hearing or submitted written comments regarding the unique characteristics of the part of the country in which they reside. Many offered eloquent arguments that to call each province a region ignored the geographic and sociological communities of interest within provinces and questioned the likelihood of any single television station being able to serve adequately the needs of Quebec City and eastern Quebec; of northern and southern Alberta; of all residents of Saskatchewan; of Halifax and Cape Breton; and of the west coast of Newfoundland and Labrador. Other concerns were raised about all Franco-Ontarians being served by CBOFT; the special circumstances of the Windsor market; and the particular needs of Francophones outside Quebec who have no other broadcast outlet for cultural expression. Most commentators stressed the importance of the CBC as a medium for Canada's various communities to speak to one another.

Under the current circumstances, a majority of the Commission views the CBC's equating of region to province as being an acceptable interpretation of its mandate. However, as the CBC concedes, its current structure is not consistent with the provincial model it espouses. While the CBC plans to maintain two regional supperhour programs in the provinces of Ontario and Quebec, there is no CBC owned-and-operated television station in New Brunswick, and the northern territories have no regional supperhour program. Moreover, the provincial capital of British Columbia, Victoria, has no originating station, while the three Maritime provinces receive a single French-language program service originating from CBAFT Moncton.

Furthermore, the Commission has a number of concerns with regard to how the Corporation will, in practice, respond to its second programming priority, regional programming.

The Commission questions whether the CBC, having allocated significantly fewer resources to regional programming, will be able to reflect the diversity of needs, viewpoints and cultural perspectives of Canadians. The Commission considers that the Corporation will have to allocate far greater resources to its provincial operations if its claim to be "rooted in the regions" is to have real validity.

Further, it is clear that even if resources were currently in place to reflect adequately the information needs of any of the regional coverage areas, the airtime available for such reflection has been drastically reduced. If the system of bureaus and stringers is to be expanded in the future, the result is likely to be more program material competing for exposure on the one-hour daily provincial news program.

At the hearing, the CBC stated that, should its financial position improve, it did not intend to reinstate local programming or build more stations. Rather, it would expand its network of journalistic bureaus. Mr. Veilleux emphasized that the Corporation's expenditures would be allocated in accordance with the programming priorities that have been established, beginning with national (or network) programming.

 I want to state to you that whenever financial resources are available, we will reinstate regional programming other than news.... We are leaving in place in the regions the capacity to do network productions, and that capacity will be available, or could be available, to do regional programming.

The Commission recognizes that the CBC has made a considerable effort to increase the amount of regionally-produced programming on the networks since the last network licence renewal decision. Nevertheless, the Commission foresees that the CBC's regional infrastructure and its emphasis on the production of news and information programming could preclude opportunities for the origination of non-news programming. In the Commission's view, the regions of Canada must not be deprived of the ability to express other aspects of life which are equally important to the realization of our social and cultural identity. Accordingly, the Commission encourages the CBC to broaden the range of programming offered to regional audiences.

As noted earlier in this decision, the Commission intends to review these matters in more detail at the upcoming renewal hearings.

5. The Elimination of Local Programming

In its statement of 5 December 1990, the CBC announced that it was:

 ... withdrawing from [television] programming intended for purely local audiences, to concentrate on regional, national and international programming.

The effect of these actions has been the elimination of all locally-originated CBC programming in Calgary, Saskatoon, Windsor, Toronto (French), Rimouski, Matane, Sept-Îles, Sydney, Corner Brook, Labrador City and Goose Bay. All non-news local programming, other than occasional specials such as telethons, was eliminated at the remaining owned-and-operated stations.

As noted earlier, the CBC made it clear that, even if funds were available, it would not elect to return to the production of purely local television programming. While CBC radio will remain locally-oriented, the Corporation's television programs will be regionally-based.

Local programming on television, in particular local news, has developed over the years in response to public demand and the licensing expectations of the CRTC. The Commission has always held that the reflection of local concerns is a particularly important responsibility. In most major Canadian markets, two or more private broadcasters provide a wide range of locally-produced programs, and local news programs, for the most part, attract large audiences. The objectives of station-produced CBC news programs have varied from market to market: in some cases they have been targeted largely to the urban audience in direct competition with the services offered by private broadcasters; in other circumstances, the CBC has developed a more regional approach.

The Commission has assessed the Corporation's applications and programming plans in light of the CBC's statutory mandate and taking into account the impact of the proposed changes on the broadcasting system as a whole and on each of the affected communities. Details regarding the media resources available in each affected market are set out in the Appendix to this decision.

In assessing the CBC's applications, the Commission has been particularly concerned about those communities that have been deprived of their only local television service. Calgary, Saskatoon and Rimouski each continue to be served by two private Canadian stations. While the elimination of local CBC service is clearly a loss to those communities, there does remain alternative sources of Canadian news and other local programming. In Sydney, the CTV affiliate CJCB-TV has a substantial production unit, which produces local stories for the ATV news programs originating from Halifax. The Commission notes, however, that Toronto, while well-served by English-language local television, has no other source of local television news in French. With respect to those communities in eastern Quebec that have seen the loss of three stations, namely those in Matane, Sept-Îles and Rimouski, the Commission recognizes that the continuing private service in Rimouski will not be able to provide the level of service that existed in the past and made a valued contribution to the life of the Lower St. Lawrence and the Gaspé. In Newfoundland and Labrador, the loss of the stations in Corner Brook, Goose Bay and Labrador City will leave these remote communities with little regular access to the airwaves. Service to that vast territory from St. John's will undoubtedly be an inadequate substitute for what has been lost.

Windsor, a community of more than 260,000 people, has no local Canadian private television service due in large part to its proximity to a major American market. The over-the-air reception of seventeen U.S. television services creates unique difficulties for any Canadian broadcaster in acquiring rights to broadcast U.S. programs in the Windsor area. While most of the programming on the CBC Windsor station originated from Toronto, for a number of years the CBC had been providing Windsor residents with a half-hour weekday local newscast at 5:30 p.m., in a time period when other CBC stations were broadcasting U.S. situation comedies. While CKCO-TV Kitchener, a CTV affiliate, provides a separate program feed, including six hours per week of news relevant to southwestern Ontario, its signal is not widely available over-the-air in Windsor. Further, the city's low cable penetration of approximately 48% means that relatively few Windsor residents receive this service. Interveners representing each of the 11 communities that had lost all locally-originated programming appeared at the public hearing. Interveners representing the affected communities opposed the CBC's decision and the resultant loss of an important community voice. Others, representing performers and production personnel, generally opposed the CBC's plans because of the implications for talent development and employment opportunities.

Francophones from outside the Province of Quebec who intervened at the hearing, and the Commissioner of Official Languages, were unanimous in denouncing the elimination of local programming other than news, and expressed concern that the cuts would have a negative impact on the viability and survival of official language minorities.

In contrast, private broadcasters endorsed the CBC's plans, contending that local programming had never been a specific element of the Corporation's mandate and was more properly the role of the private sector. The CAB recognized that the CBC's restructuring provided private broadcasters with an opportunity to enhance community service, and gave its assurance that its members did not intend to withdraw from purely local television production.

In addressing the serious concerns raised by the public and the CRTC regarding those communities that are now without any local television service, the Corporation acknowledged that it had, "received and considered very carefully a number of proposals to replace local program services". The CBC, however, emphasized that it had established three preconditions in assessing such proposals. It stated that it is not interested in traditional private affiliate relationships, out of concern that this could lead to a "step by step" privatization of the CBC. The CBC also insisted that the new provincial supperhour programs be "delivered to all of our audiences" and that the CBC not be exposed to any further financial risk. Any proposal must be "cost neutral", which the CBC defined as neither adding to its expenditures nor reducing its revenues.

The Commission, by a majority, has determined that there is no legislative requirement that the CBC serve local audiences and that the CBC's concept of region is not at variance with its statutory obligations. Nevertheless, the Commission encourages the CBC to make every effort to ensure that there is a fair representation of the values and concerns of Canadians from both large and small communities within CBC regional and network television programs, and to consider, in light of its own criteria and this decision, whether any of the options presented to it for the replacement of local service in communities with no other alternative might warrant reconsideration.

6. Local Advertising

The Commission's policy linking local advertising to the provision of a local program service was first articulated sixteen years ago, and was reaffirmed, with specific reference to its applicability to the CBC, in Public Notice CRTC 1988-131 dated 5 August 1988. The notice stated, in part:

 The Commission remains convinced that the existing policy linking the ability to solicit local advertising with the provision of local programming is of significant benefit to the Canadian broadcasting system as a whole. The policy encourages all broadcasters to provide a local program service and protects those broadcasters who provide such a service from some of the competition resulting from the importation of distant signals.
 .... Considering the information and analysis presented by the Corporation regarding cross-subsidization, the Commission does not consider it necessary or appropriate to treat the CBC differently in this respect.

 The Commission therefore reaffirms its policy prohibiting access to a local television advertising market unless the broadcaster provides a local program service to that market.

In its written submission dated 11 January, the CBC contended that "the financial situation which dictated the recent restructuring of the Corporation's services fundamentally alters the conditions under which it must operate, and thus, alters the manner in which the Commission's policy should be applied." In the Corporation's view, these special circumstances justify a different application of the policy for the public sector of the broadcasting system.

The CBC also argued that its new "regional" programming structure, making use of contributing news bureaus to provide local reflection warrants a reinterpretation of the Commission's policy.

The Commission notes that the Corporation's total local advertising revenue for 1990 was approximately $32.5 million, of which $5.1 million is attributable to markets where it has decided to eliminate program origination. The CBC is forecasting relatively flat commercial revenues for the next several years and, in fact, anticipates a decrease in local advertising revenues until its new regional programming concept is fully implemented.

The CBC has determined that it will be financially viable to continue sales activity in only five of the locations where it has discontinued local production: Corner Brook, Sydney, Windsor, Saskatoon and Calgary. The CBC noted that if it were required to cease local advertising activities in Windsor and Corner Brook, where there are no competing local broadcasters, businesses in those communities would be deprived of an advertising outlet.

It also stated that it is not seeking to go into new markets; rather it is asking to remain in markets where it already has a presence. The Corporation claimed that, given the integrated nature of its sales operations, it would be retaining its sales forces in some of these communities in any case.

The CBC also asked the Commission to take into consideration the high level of Canadian content provided by the Corporation's television services and its need for sufficient revenues to support this programming. The Corporation suggested that the "complementarity" of its radio and television services, and the fact that CBC radio continues to provide a traditional form of local service in many of these communities, were extenuating circumstances that supported its case.

With the exception of a few interveners who supported the Corporation's contention that the loss of an advertising outlet in their communities would hurt the local economy, the vast majority of community groups and individuals opposed the CBC's request on principle.

The CAB suggested that the CBC's approach to local programs "subverts the role of genuine local programming" and denies the right and the need of local communities to have their own local television service:

 The surest way to affect the ability of private broadcasters to provide local news and information to communities is to allow the CBC to enrich its regional and national services by siphoning off the revenues that the communities need to support their local services. The Commission has carefully evaluated all of the evidence presented by the CBC and by the interveners and considers that the conclusions reached in Public Notice CRTC 1988-131 are as valid today as they were in 1988. The Commission is not convinced that the Corporation's concerns about restrictions on its access to local advertising revenue outweigh the need to preserve the integrity of the local advertising policy.

In its submission at the hearing, the CBC suggested that the Commission has demonstrated some flexibility in interpreting its local advertising policy. The Corporation cited Decision CRTC 91-135 dated 15 March 1991, in which the Commission approved applications by Shamrock Television System Inc. (Shamrock) to solicit and broadcast local advertising in three small Saskatchewan communities that are served only by rebroadcasting transmitters of Shamrock's "twin-stick" television stations in Prince Albert and Yorkton.

There are two aspects of Shamrock's arguments in support of its applications that the CBC considered to be pertinent to its own circumstances: first, Shamrock had contended that the regional programming it provides is relevant to the local communities it serves; secondly, Shamrock had argued that prohibition of local sales would have negatively affected its ability to sustain current levels of service.

The CAB disputed that this was a comparable situation, inasmuch as Shamrock will provide separate feeds to each community, in order to air local programs. The approval granted in Decision CRTC 91-135 to Shamrock to solicit local advertising in Melfort, Wynyard and Humboldt was based on the fact that the licensee "...has been producing programming of specific relevance to, and has been soliciting local advertising in, these communities for a number of years". In fact, Shamrock has engaged in this practice for approximately thirty years, long before there was a policy on the matter.

It should be noted that the Commission also denied a similar request by Shamrock to solicit local advertising in the larger market of North Battleford, stating that:

 ...the Commission has taken into consideration the concerns raised by the opposing interveners and, in particular, Northwestern Radio Partnership, licensee of CJNB, with respect to the potential negative impact that solicitation of advertising by Shamrock's Prince Albert undertakings would have on the existing advertising market in North Battleford.

The Corporation also referred to the local programming provided by CHUM Limited's Atlantic Television System (known as ATV) as an example of the kind of regional programming the CBC is proposing to implement. In Decision CRTC 89-153 dated 6 April 1989, the Commission recognized the co-operative productions of CJCH-TV Halifax, CJCB-TV Sydney, CKCW-TV Moncton and CKLT Saint John as local programs, and noted that CHUM Limited operates the stations as part of an integrated Maritime service that broadcasts essentially the same programming on all four stations. While each station has production facilities, the studios are primarily used to prepare news items for transmission to Halifax for inclusion in CJCH-TV's regional newscast.

The CAB observed that the ATV system was not comparable to the CBC's planned regional programming service, since "an extensive two-way microwave system links all the ATV stations and allows live transmission of programs from any station to the Halifax distribution centre." It is important to note that the provision in the ATV decision deeming co-operatively produced programming to be "local" is specifically for the duration of the current licence term. In its decision, the Commission made note of ATV's capacity to originate programming independently from each location. The Commission will re-examine the degree to which local service is, in fact, being provided by ATV at the end of the current licence term. The ATV situation should not, therefore, be regarded as an intention by the Commission to alter its policy on local advertising.

Since the licences of the Sydney stations held by the CBC and CHUM Limited expire 31 August 1994, the Commission will have an opportunity to review this situation in the context of its consideration of the renewal of these licences. For this reason, in the interest of providing equitable treatment to these licensees operating in the same market, the Commission is prepared to permit the CBC to continue soliciting local advertising in Sydney for the duration of this licence term. The Commission wishes to emphasize that it upholds its established concept of a local program service as consisting of locally-produced, locally-oriented programs.

7. The Commission's Conclusions and its Decision with Respect to the CBC's Applications

The Commission views with strong disapprobation the CBC's failure to seek prior approval for the changes made to the status of several of its television stations and to the program source of others, as well as the reductions in the program commitments of virtually all of the CBC's owned-and-operated television stations. The attitude towards the public process demonstrated by this failure falls well short of that expected and required of the public broadcaster.

The Commission recognizes the financial pressures that forced the CBC to restructure its television operations. However, at the 18 March hearing, the CBC made it clear that its decision to withdraw from local programming was not simply a response to immediate budgetary concerns; in fact, it asserted that its restructuring plans were well underway prior to the full realization of the impact of the 1990 budget shortfall.

While the Corporation has set out a clear statement of its principles, programming priorities and short-term program initiatives for television, it did not provide the Commission at the hearing with detailed plans for future years based upon its own financial forecasts. Thus, the Commission and the Canadian public do not have a clear idea as to the actions the CBC may take in the event of further budget reductions.

The Commission, by a majority, has determined that the Corporation's approach to regional and local reflection is not unreasonable. However, with the CBC no longer providing local television news and information programming, the Commission will wish to be assured that local programming needs are met through the CBC's use of its journalistic bureaus. The Commission is not satisfied that the resources allocated to the regional programming initiatives announced at the hearing will be sufficient to fulfil the demanding objectives that the CBC has set for itself.

As noted earlier, the Commission has serious concerns about the implementation of some of the CBC's plans, including the simulcasting of scheduled programming with Newsworld. These matters, among others, will be analyzed and evaluated fully at the upcoming licence renewal hearings for the CBC television networks and for Newsworld.

With respect to the individual licence amendments requested by the Corporation, the Commission, by a majority, approves the applications by the CBC for authority to change the status of six of its owned-and-operated television stations to rebroadcasters, specifically: to change the status of CBLFT Toronto to that of a full-time rebroadcaster of CBOFT Ottawa; CFLA-TV Goose Bay and CBNLT Labrador City to become rebroadcasting transmitters of CBNT St. John's, and CBGAT Matane, CJBR-TV Rimouski and CBST Sept-Îles to become rebroadcasters of CBVT Quebec City.

With respect to the Matane, Rimouski and Sept-Îles stations, the CBC had indicated in a letter to the Commission dated 24 January 1991 that it intended to retain the capability to feed separate station identification, public service announcements and commercial messages to these stations from CBVT Quebec City. The Commission also understood that it was the CBC's intention to originate occasional specials at the three communities concerned. Hence, the Commission gazetted the applications pertaining to the changes affecting the three Quebec undertakings as proposals to change their program source rather than change their status to that of rebroadcasters. Subsequently, the CBC confirmed that it intended to operate the television facilities at Matane, Rimouski and Sept-Îles as rebroadcasters of the Quebec City station.

The Commission, by a majority, also approves the CBC's applications for authority to change the programming sources of two existing rebroadcasting undertakings, CBST-5 Fermont and CBST-3 Labrador City, to indicate in each case that programming will originate from the studios of CBFT Montréal (received via satellite) instead of from CBST Sept-Îles.

Further, the Commission, by a majority, approves the applications by the CBC to change the program sources identified in the licences for another five stations by adding the following: in the case of CBRT Calgary, programming originating from the studios of CBXT Edmonton; in the case of CBKST Saskatoon, programming originating from the studios of CBKT Regina; in the case of CBET Windsor, programming originating from the studios of CBLT Toronto; in the case of CBYT Corner Brook, programming originating from the studios of CBNT St. John's; and, in the case of CBIT Sydney, programming originating from studios at CBHT Halifax.

At the hearing, the CBC confirmed its intention not to change the five stations noted above to rebroadcasters, but to operate them as contributing bureaus and to maintain master control facilities at each, thus allowing the stations to continue to broadcast station identification (including call sign, channel designation and location) as required by the Department of Communications, as well as public service announcements, occasional specials, and commercial messages.

In the absence of plans by the CBC to broadcast any regularly-scheduled local programming at the communities concerned, the Corporation's intention to continue local commercial activities would be contrary to the Commission's policy concerning local television advertising.

Accordingly, in respect of each of CBRT Calgary, CBKST Saskatoon, CBET Windsor, CBLFT Toronto, CBGAT Matane, CJBR-TV Rimouski, CBST Sept-Îles, CBYT Corner Brook, CFLA-TV Goose Bay and CBNLT Labrador City, effective today's date, the CBC shall solicit only sales of national and regional (and not local) advertising. For the purpose of clarity, the Commission defines "sales of national and regional advertising" as being sales of advertising to persons who provide goods or services in more than one market and/ or province.

It should be noted that the Commission would not have contemplated approving the requested amendments unless the CRTC was confident that the CBC would comply with the above-mentioned limitation on its commercial operations.

The CRTC notes that subsection 12(2) and paragraph 18(1)(d) of the Broadcasting Act provide the ability to issue an order to effect compliance with this requirement.

As noted earlier in this document, the Commission considers that there is a resemblance between the CBC's regional programming concept and the integrated Maritime service provided by CHUM Limited on its stations at Halifax, Moncton, Saint John and Sydney, collectively known as the Atlantic Television System (ATV), and has decided to permit the CBC to continue to solicit local advertising in Sydney for the duration of the licence term. The Commission will review this situation at the time it considers the renewal of the CJCB-TV and the CBIT licences, both of which expire 31 August 1994.

Allan J. Darling
Secretary General

Dissent by Commissioner Paul McRae to Decision CRTC 91-423

This dissent is based on my conclu- sions that the CBC's actions repre- sent a restructuring of its televi- sion programming far more fundamental than anything envisioned by Parliament in its recent deliberations, and that this is probably only one in a series of cuts which could ultimately result in just two production centres, one in Toronto and the other in Montréal.

As part of the information filed for this hearing, the CBC submitted a list of alternatives it had considered to deal with a budget short-fall of $108 million. One alternative was the consolidation of tele- vision production into an English- and French-language production centre in each of five super regions, plus the CBC's Northern Television Service. Another alternative was the further downsizing of all or most local and regional television stations to contributing bureaus. The Corporation also provided data that indicated a budget shortfall of approximately $50 million in 1992/93, and a further shortfall of approximately $75 million in 1993/94. Add to this the loss of local advertising revenue and you have a situation which could, I believe, result in an announcement by the CBC of plans to implement the former alternative as early as this fall, and that the further consolidation of these super regions into single English- and French-language production centres could be announced as early as the fall of 1992. One might have some inclination to consider supporting the first step, or part thereof, as a temporary measure given the economic conditions that prevail at present. However, as indicated in this decision, the CBC has made it abundantly clear that, even if funds were available, it did not intend to restore its television services to the levels they were at prior to 5 December 1990. I can only conclude that these cuts have fundamentally and irrevocably altered the CBC's programming structure in a way that was never contemplated by Parliament. This situation would only be exacerbated by further cuts.

Traditionally, both the Corporation and the Commission have taken the view that, in order to truly represent the aspirations of all Canadians, the national broadcasting service must originate in the country's various communities and regions. Previous Commission decisions have strongly favoured the provision by the CBC of regional television and radio programming and have expected the Corporation to adhere to its commitments with respect to local program origination. At a time when the concepts of regionalism and community are being promoted by government and strongly supported by Canadians, it strikes me as being strange that the CBC, which is one of our most important institutions, is moving in the opposite direction.

In my seven years as a Commissioner and in my twelve years of public life before coming to the Commission, I have never been addressed with such conviction and passion by so many Canadians. Each individual and group vividly described the loss of local programming in the eleven affected communities. For eight long days they beseeched the Commission to do whatever was possible to restore the programming that had been eliminated due to the budget cuts. They were virtually unanimous in declaring that the CBC's equating of province to region does not, and could not, adequately meet the needs of individual communities and regions.

Stretching for some 300 kilometres from Port-aux-Basques to St. Anthony along the Newfoundland shores of the Gulf of St. Lawrence is a region of this country whose largest community is Corner Brook. From groups and individuals who live in this part of the country, including mayors, councillors, Members of the Legislative Assembly and Members of Parliament, we heard how local CBC television programming has contributed to the entire peninsula's sense of community. Interveners did not consider that the solution offered by the CBC, a storefront operation in Corner Brook and production and broadcasting facilities in St. John's, would adequately serve the needs of that larger community. The same story was told by individuals and groups from Matane, Sept-Îles and Rimouski who now receive CBC television service from Quebec City. Clearly, the cuts announced last December were devastating to these and each of the other affected communities.

My first concern is for those regions or communities where no local private television alternative exists, nor will one in the foreseeable future. These include Corner Brook, Matane, Sept-Îles, Labrador City, Goose Bay, Windsor, Sydney, and the French-language community in Toronto. The situation in Windsor is of particular concern and requires immediate redress. This community in southwestern Ontario with a population of approximately 300,000 is bombarded by the signals of some seventeen powerful broadcasting stations in the Detroit area. No private Canadian television broadcaster could survive such competition. No other Canadian community of Windsor's size is without at least one local private television station. Through their Mayor, their Members of Parliament, and other groups and individuals, the people of the region have expressed their feeling of abandonment by the CBC.

My second concern is for the communities of Calgary, Saskatoon and Rimouski. While they do have access to local private alternatives, they nonetheless indicated strong support for local CBC television programming and a sense of loss following the program cuts. In the past, the CBC has offered an alternative to other local programming. This cannot possibly be provided out of a single province-wide production centre. Interveners from the Calgary area stressed the differences between southern Alberta, of which Calgary is the focus, and the mid-northern part, which is centred in Edmonton.

My third concern has to do with the elimination of all non-news local CBC television programming. Cultural, social and community programming throughout the country will only be seen if it has national impact and is broadcast on the CBC's English- and French-language television networks. Strong resentment for the loss of these types of programming was expressed in particular by Acadians, who had previously benefitted from a substantial amount of cultural programming directed to their needs and interests. The loss of the very popular "Land and Sea" program was regretted by those in the Atlantic provinces who considered this program to be a very important reflection of that region of the country.

The direction chosen by the CBC indicates to me a strong move toward centralization. First, there is the consolidation of news programming at the provincial level. As for non-news programming, centralization at the network level has already taken place. Will a similar consolidation of news programming follow?

Surely centralization is not the direction in which Canadians or their government are moving at the present time. I believe fervently that these cuts by the CBC were improper and, thus, the licence amendments should be refused. New policies more in harmony with our national direction should be established. I would add that, although I do not agree with approving the amendments proposed by the CBC, given the decision to do so, I support the prohibition against the CBC's solicitation of local advertisements in those communities where no local programming is being provided.